Your Directors have pleasure in presenting the Forty Sixth Annual Report of the Companytogether with the Annual Statements of Accounts for the year ended 31st March2017.
|FINANCIAL RESULTS AND PERFORMANCE: || || |
| || ||(Rs. in Lakhs) |
|PARTICULARS ||2016-2017 ||2015-16 |
|Profit/(Loss) before Interest Depreciation and Tax ||2178.56 ||4944.31 |
|Interest ||451.89 ||340.45 |
|Depreciation ||796.77 ||896.22 |
|Profit / (Loss) before Tax ||929.90 ||3707.64 |
|Provision for Taxation: ||. ||. |
|Current ||237.65 ||1346.48 |
|Earlier years' Tax ||. ||. |
|Deferred Tax ||. ||. |
|Profit / (Loss) after Tax ||692.25 ||2361.16 |
|Prior Period Adjustments ||. ||. |
|Net Profit ||692.25 ||2361.16 |
|Balance brought forward from the previous year ||7357.93 ||5756.76 |
|Balance Carried to Balance Sheet ||8050.18 ||7357.93 |
COMPANY PERFORMANCE AND OPERATIONS:
Financial Year 2016-2017 witnessed challenges in capacity utilization majorly onaccount of competition from Chinese Suppliers weak global demand and volatile exchangerates in Indian Economy. Your Company supplies products to Refractory and Abrasiveindustry wherein it was observed that refractory industry has faced various challenges dueto major impact on steel industry.
This has impacted the gross turnover which stood at Rs. 24185.27 Lakhs for the yearended 31st March 2017 i.e. approx. 23% down as compared to the previousfinancial year majorly on account of reduction in Raw Bauxite sales.
Further the Company reported substantial drop in Profit Before Tax (PBT) which camedown to Rs. 929.90 Lakhs for the FY 2016-2017 as against Rs. 3707.64 Lakhs for theprevious financial year. The main reasons for low profitability primarily reasons beingincreased prices of Raw materials and consumables especially Coal.
During the year under review the Company sold low grade bauxite amounting to Rs.2449.26 Lakhs as compared to Rs. 7249.24 Lakhs in the previous year.
Your Company also runs wind power plants of 11.1 M.W. in Rajasthan & Karnataka. Theplant in Karnataka is operating satisfactorily however the wind power plant in Rajasthanfaced several problems like theft of cables etc. Therefore the generation of power waslower compared to the previous year. During the year the gross revenue from sale of powerto respective state power distribution companies stood at Rs. 808.72 Lakhs as compare toRs. 666.53 Lakhs in previous year meaning thereby that there was improvement inperformance on Power count. Your Company is taking control of situation and deliberatingon measures required to be taken for improvement on this count as well. Your Company has apower plant capacity of 18 Mega Watt M.W. out of which 9.6 M.W. is coal based whereas - 9M.W. on furnace oil. Due to unaffordable price of furnace oil the furnace oil based powerplant is used as and when required.
The management is getting accustomed to state of affairs of your Company hence in timeto come the performance of your company shall improve.
Your Company envisages better performance for the Financial Year 2017-18 consideringthe positive changes in the economy at the domestic and Global levels. Considering theincrease in potential demand your Company has invested in expansion for increasedcapacity and modernisation of the Plant resulting better operational efficiency in orderto reduce the cost at various levels.
Your Directors are pleased to recommend dividend @ 25 % per share on the face value ofRs. 1/- each viz. Rs. 0.25/- per Equity Share for the financial year ended 31stMarch 2017. Payment of dividend is subject to the approval of the shareholders at theensuing Annual General Meeting.
The Dividend if declared will involve total outflow of Rs. 359.99 Lakhs wherein Rs.299.10 Lakhs will be towards dividend and Rs. 69.80 Lakhs towards dividend tax.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND:
During the year under review your Company has transferred a sum of Rs. 18.93 Lakhs tothe Investors Education and Protection Fund of Central Government in compliance withSection 205C of the Companies Act 1956. This amount represent dividends for the financialyear 2008-09 which had been lying unclaimed with the Company for a period of 7 years fromthe due date of the payment.
Your Company updates the details of unclaimed dividend on its websitewww.orientabraisves.com. The shareholders who have not yet claimed any of theirdividends are requested to contact the Company's Registrar and Share Transfer Agent("RTA") for timely claiming the same. Contact details of the RTA are provided inthis Annual Report as well as available on the Company's website.
INDIAN ACCOUNTING STANDARDS (IND AS):
Pursuant to the provisions of Companies (Indian Accounting Standards) Rules 2015 theIndian Accounting Standards have been adopted and implemented in the Company w.e.f. 1stApril 2017.
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V Acceptance of Deposits by Companies of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANY:
The Company does not have Subsidiary/Joint Venture or Associate Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN 31st MARCH 2017 AND 10th AUGUST 2017 (DATEOF THE REPORT):
During the year under review there are no material changes and commitments affectingthe financial position of the Company between the end of the financial year and the dateof the report save and except as mentioned above.
SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATIONS:
During the year under review no significant material orders were passed by theregulators or courts or tribunals impacting the going concern status and the Company'soperations save and except as mentioned above.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A report on Corporate Governance' along with the Certificate from M/s. JatinGupta & Associates Company Secretary regarding its compliance and ManagementDiscussion and Analysis' Report as stipulated by Regulation 34 of the Securities &Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) are set out separately which form part of this Annual Report.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In pursuance of Section 134(5) of the Companies Act 2013 the Directors hereby confirmthat:
(a) in the preparation of the annual accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe PROFIT of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Appointment of Directors:
I. The Board of Directors of the Company at its meeting held on 29thSeptember 2016 on the recommendation of the Nomination & Remuneration Committeeco-opted Mr. Bharatkumar Makhecha as an Additional Director (Non-Executive IndependentDirector) of the Company subject to the approval of shareholders at the ensuing AnnualGeneral Meeting in accordance with the provisions of Sections 149 152 161 read withSchedule IV and any other applicable provisions if any of the Companies Act 2013 andRules framed thereunder.
The Company has pursuant to the provisions of Section 160 of the Companies Act 2013received a notice in writing proposing the candidature of Mr. Bharatkumar Makhecha for theoffice of Independent Director for a period of five (5) consecutive years w.e.f. 29thSeptember 2016 not liable to retire by rotation.
The Company has received a declaration from him confirming that he meets the criteriaof independence as prescribed under Section 149 (6) of the Companies Act 2013.
The relevant details of Mr. Bharatkumar Makhecha as required pursuant the provisions ofthe Act and the Listing Regulations are furnished in the Notice of the ensuing AnnualGeneral Meeting.
II. The Board of Directors of the Company at its meeting held on 13th June2017 appointed Mr. Manubhai Rathod as an Additional Director w.e.f 15th June2017 to hold office till the date ensuing Annual General Meeting. Further Mr. ManubhaiRathod has been appointed as Whole Time Director & Chief Executive Officer' ofthe Company for a period of 3 (Three) years w.e.f 15th June 2017 subject toapproval of shareholders and accordingly a resolution is included in the Notice of AnnualGeneral Meeting. The Company has received notice in writing under Section 160 of theCompanies Act 2013 proposing appointment of Mr. Manubhai Rathod Whole Time Director &CEO. The Board recommends his appointment.
During the year under review following changes were reported;
Mr. S. G. Rajgarhia resigned as Non- Executive Director of the Companyw.e.f 13th October 2016.
Mr. Kamlesh Mundra resigned from the post of Company Secretary w.e.f 30thApril 2017.
Mr. Mihir Devani demitted from the post of Whole Time Director & CEO ofthe Company w.e.f. on 15th June 2017.
Your Board of Directors take this opportunity to express their appreciation for thevaluable services rendered during their tenure as Directors and Key Managerial Personnel(KMP).
Retire by Rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 read withthe Companies (Appointment and Qualification of Directors) Rules 2014 and the Articles ofAssociation of your Company Mr. Hemul Shah Non-Executive Director retires by rotationat the ensuing Annual General Meeting and being eligible has offered himself forre-appointment.
The relevant details of Mr. Hemul Shah as required pursuant to the provisions of theCompanies Act 2013 and the Listing Regulations are furnished in the Notice of the ensuingAnnual General Meeting.
Declaration by Independent Directors:
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence in accordance with the provisionsof the Companies Act 2013 and the Listing Regulations.
Appointment of Key Managerial Personnel:
Mr. Bimal Parmar has been appointed as the Company Secretary and ComplianceOfficer of the Company under Section 203(2) of the Companies Act 2013 w.e.f. 1stNovember 2016. Mr. Bimal Parmar is an Associate Member of the Institute of CompanySecretaries of India and possesses requisite qualification prescribed under Companies(Appointment and Qualification of Secretary) Rules 1988.
In addition upon resignation of Mr. Mihir Devani from the post of Wholetime Director & CEO the Board of Directors of the Company at its meeting held on 13thJune 2017 approved the appointment of Mr. Manubhai Rathod as an Additional Director &upon such appointment as Whole-Time Director & CEO of the Company for a period of 3(Three) years w.e.f 15th June 2017 subject to approval of Shareholders at the ensuingAnnual General Meeting of the Company. Further pursuant to provision of Section 203 ofthe Companies Act 2013 upon appointment as Whole-Time Director & CEO of the CompanyMr. Manubhai Rathod be considered as Key Managerial Personnel of the Company. The relevantdetails of Mr. Manubhai Rathod as required pursuant the provisions of the Act and theListing Regulations are furnished in the Notice of the ensuing Annual General Meeting.
Pursuant to the provisions of Companies Act 2013 Listing Regulations and PerformanceEvaluation Policy of the Company the Board of Directors in consultation with theNomination & Remuneration Committee and Independent Directors carried out &analysed the annual performance evaluation of all the Directors the Board as a whole andits Committees.
The performance evaluation framework was designed keeping in view the Guidance Note onBoard Evaluation issued by SEBI and accordingly a structured questionnaire was formulatedhaving qualitative parameters such as functioning information availability leadershipqualities compliance and governance effectiveness etc.
Evaluation of the Board was based on criteria such as composition and role of theBoard Board communication and relationships functioning of Board Committees strategicplanning etc.
Evaluation of Directors was based on criteria such as participation and contribution inBoard and Committee meetings experience and expertise to provide feedback and guidance totop management on business strategy governance and risk understanding of theorganization's strategy risk and environment etc.
Based on the annual performance evaluation the Board expressed its satisfaction withthe evaluation process.
NOMINATION & REMUNERATION POLICY:
Pursuant to the provisions of the Company Act 2013 and Listing Regulations theNomination & Remuneration Committee formulated the Nomination & RemunerationPolicy that was duly adopted by the Board of Directors to ensure that level andcomposition of remuneration is reasonable and sufficient relationship of remuneration toperformance is clear and to meet appropriate performance benchmark. The Nomination &Remuneration Policy lays down the framework for selection and appointment of Directorsincluding determining qualifications and independence of a Director Key ManagerialPersonnel Senior Management Personnel and their remuneration.
The Nomination & Remuneration Committee after identifying and ascertaining theintegrity quotient qualification expertise and experience of the person for appointmentas Director KMP or at Senior Management Level recommends his/her appointment to theBoard of Directors. The remuneration and commission paid to the Whole-Time Director is inaccordance with the percentage/slabs/ conditions as per the provisions of the CompaniesAct 2013. The KMPs Senior Management Personnel and other employees of the Company arepaid monthly remuneration as per the Company's HR policies and/or as may be approved bythe Committee. If the remuneration of KMPs or any other officer is to be specificallyapproved by the Committee and/or the Board of Directors then such approval will beaccordingly procured.
The Policy on Nomination & Remuneration is available on the website of the Companyviz. www.orientabrasives.com. The details about the Nomination & RemunerationCommittee and payment of remuneration to the Directors are provided in the Report onCorporate Governance which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in "Annexure A" to thisReport.
MEETINGS OF THE BOARD:
During the year under review the Board of Directors met Five (5) times. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013 and the Listing Regulations. The dates of the meetings alongwith the attendanceof the Directors therein have been disclosed in the Corporate Governance Report.
The Company has an Audit Committee of the Board of Directors in place. The terms ofreference of the Audit Committee are in line with Section 177 of the Companies Act 2013read with the Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 18of the Listing Regulations. Detailed information pertaining to the Audit Committeeincluding its composition has been provided in the Corporate Governance Report whichforms part of this Annual Report.
AUDITORS AND AUDITORS' REPORT
As per the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 the term of office of M/s. S R B C & CO. LLP CharteredAccountants (Firm Registration Number E300003) as Statutory Auditors of the Company willconclude from the close of the forthcoming Annual General Meeting of the Company.
In view of above the need to appoint M/s. Sanghavi & Co. Statutory Auditors inplace of M/s. S R B C & CO. LLP. and accordingly the Board of Directors at theirMeeting held on 10th August 2017 recommended that M/s. Sanghavi & Co.Chartered Accountants be appointed as Statutory Auditor of the Company for a period offive years so as to hold the office till the conclusion of 51st Annual GeneralMeeting to be held in the year 2022 subject to the ratification of Members of the Companyat every Annual General Meeting.
The Company has received a written consent and certificate from M/s. Sanghavi &Co. confirming that they satisfy the criteria provided under Section 141 of the Act andthat the appointment if made shall be in accordance with the applicable provisions ofthe Act and rules framed thereunder.
The Board of Directors places on record its appreciation for the services rendered byM/s. S R B C & CO. LLP as the Statutory Auditors of the Company.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors hason recommendation of the Audit Committee appointed M/s. S. K. Rajani & Co. CostAccountants as the Cost Auditors of the Company to conduct audit of the Company's CostAccounting Records in respect of the products of the Company for the financial year2017-2018 at the remuneration of Rs. 125000/- (Rupees One Lakh Twenty Five Only) perannum. (including reimbursement of actual travel & out of pocket expenses)
Your Company has received consent from M/s. S. K. Rajani & Co. Cost Accountantsto act as the Cost Auditors of your Company for the financial year 2017-2018 along with acertificate confirming their independence. As per the provisions of the Companies Act2013 a resolution seeking approval of the Members for the remuneration payable to theCost Auditors forms part of the Notice convening Annual General Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Mr. Jatin Gupta Company Secretary in Practice Delhi toconduct the Secretarial Audit of the Company for the financial year ended 31stMarch 2017.
The Secretarial Audit Report (in Form MR-3) is annexed as "Annexure B"to this Report.
SECRETARIAL AUDITOR'S OBSERVATIONS:
The Secretarial Auditors report contained following qualification reservation oradverse remarks:
The Company has not appointed Chief Financial Officer as required under Section 203 (1)of the Companies Act 2013 during the audit period under review.
BOARD EXPLANATION/COMMENTS ON ABOVE REMARKS:
Your Directors would like to bring to the notice of the Members that after retirementof erstwhile Chief Financial Officer the Company has been finding it difficult to inductwilling candidates to hold fiduciary positions including that of the Chief FinancialOfficer i.e. Key Managerial Personnel as required under the provisions of the CompaniesAct 2013.
However your company is taking all efforts in shortlisting suitable Professional ChiefFinancial Officer of the company that suits & under stands the multi dimensionalbusiness anatomy.
INTERNAL CONTROL SYSTEM & THIER ADEQUACY:
The Company has in place internal control systems commensurate with the size and natureof the business and has experienced personnel positioned adequately in the organization toensure internal control processes and compliances.
The Company takes abundant care in designing reviewing and monitoring regularly theworking of inter control systems and their compliances for all important financialinternal control processes. Internal Auditors comprising of professional firms ofChartered Accountants have been entrusted the job to conduct regular internal audit at allunits/location and report to the management the observation if any. The Audit findingsare reported on quarterly basis to the Audit Committee of the Board headed by aNon-executive Independent Director.
CORPORATE SOCIAL RESPONSIBILITY:
Your Company embraces responsibility for impact of its operations and actions on allstakeholders including society and community at large. As per requirements of CompaniesAct 2013 the Company had duly constituted Corporate Social Responsibility Committee. Thebrief outline of the Corporate Social Responsibility (CSR) policy of the Company and theinitiative undertaken by the Company on CSR activities during the year are set out in"Annexure C" of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The details of composition of CSRCommittee etc. are provided under the Corporate Governance Report.
VIGIL MECHANISM- WHISTLE BLOWER POLICY:
The Company has established a vigil mechanism' for its directors and employees toreport genuine concerns or grievances and accordingly formulated the Whistle Blower Policyin compliance with the provisions of Section 177 of the Companies Act 2013 and theListing Regulations. The Policy has been formulated with an objective to build andstrengthen a culture of transparency and trust within the Company and to provide aframework to its directors and employees for responsible and secure reporting of improperactivities (whistle blowing); and also to provide for adequate safeguards againstvictimization of directors/employees who avail of the mechanism; and for direct access tothe Chairman of the Audit Committee. The said Policy is available on the website of theCompany viz. www.orientabrasives.com.
During the year under review no compliant has been received under the Whistle BlowerPolicy (Vigil Mechanism). Further information on the Vigil Mechanism and the WhistleBlower Policy of your Company can be referred to in the Report on Corporate Governance.
RISK MANAGEMENT POLICY:
The Board of Directors of your Company has laid down a Risk Management Policy for theCompany that identifies elements of risks inherent to the business and have entrusted theAudit Committee with the responsibility of reviewing the said policy.
RELATED PARTY TRANSACTIONS:
All contracts/arrangements/transactions entered by the Company during the financialyear under review with the Related Parties were in the ordinary course of business and onan arm's length basis. During the year the Company had not entered into any contract/arrangement/transaction with the Related Parties which could be considered as material inaccordance with the Company's Policy on Related Party Transactions. In view thereof thedisclosure in Form AOC-2 is not required to be provided.
The Company places all Related Party Transactions before the Audit Committee and alsobefore the Board of Directors for approval on quarterly basis. The omnibus approval wasobtained from the Audit Committee in respect of transactions which are repetitive innature in accordance with the Company's Policy on Related Party Transactions. The AuditCommittee also reviewed the details of such Related Party Transactions entered into by theCompany pursuant to each of the omnibus approval given on a quarterly basis.
The Policy on Related Party Transactions as approved by the Board of Directors of theCompany is available on the website of the Company viz. www.orientabrasives.com
Your Directors draw attention of the members to Note no. 26 to the financial statementswhich sets out related party disclosures.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED:
During the year under review no loans given investments made guarantees given andsecurities provided in accordance with the provisions of Section 186 of the Companies Act2013.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013are provided in "Annexure D" to this Report.
EXTRACT OF ANNUAL RETURN:
The Extract of Annual Return of the Company in Form MGT-9 as provided under Section92(3) of the Companies Act 2013 is annexed herewith as "Annexure E" tothis Report.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:
The Company has adopted an Policy in line with the requirements of The SexualHarassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013.The Company has set up an Internal Complaint Committee to redress the complaints if anyreceived.
During the year under review no complaint was received from any employee of theCompany involving sexual harassment and thus no case was filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors wish to express their appreciation for the assistance and co-operationreceived from the financial institutions banks employees investors customersGovernment & Government agencies Members & Shareholders and all other businessassociates for the continuous support given by them to the Company and their confidence inits management during the year under review and look forward for their contributed supportin future.
| ||FOR AND ON BEHALF OF THE BOARD OF DIRECTORS || |
| ||Sd/- ||Sd/- |
| ||MANUBHAI RATHOD ||HEMUL SHAH |
| ||WHOLE TIME DIRECTOR & CEO ||DIRECTOR (NON-EXECUTIVE) |
| ||(DIN: 07618837) ||(DIN: 00058558) |
|Place : Mumbai || || |
|Date: 10th August 2017 || || |
|- E & OE are regretted || || |