The Directors of your Company are presenting their 24th Annual Report together with theAudited Statement of Accounts of Pact Industries Limited for the year ended 31st March2017.
1. FINANCIAL HIGHLIGHTS.
The summary of the financial performance of the Company for the financial year endedMarch 31 2017 compared to the previous year ended March 31 2016 is given below:
| || ||(in lakh) |
|Particulars ||Year Ended March 312017 ||Year Ended March 312016 |
|Net Sales/Income ||5221.92 ||5088.49 |
|Gross profit before interest and depreciation ||229.17 ||221.23 |
|Finance cost ||159.15 ||143.77 |
|Profit before depreciation and amortisation- (Cash Profit) ||70.01 ||77.46 |
|Depreciation and Amortisation ||29.73 ||48.23 |
|PBT before exceptional items ||40.28 ||29.23 |
|Exceptional items ||1.96 ||0.00 |
|Profit before Tax (PBT) ||38.32 ||29.23 |
|Provision for Tax- Current ||12.75 ||6.80 |
|Provision for Tax- Deferred ||3.70 ||2.42 |
|Profit after Tax ||21.87 ||20.01 |
|Earning per Share (EPS) (in Rs) (after exceptional item ) ||0.04 ||0.40 |
|- Basic Diluted || || |
2. OPERATIONAL REVIEW :
The net sale for the year is Rs. 5221.92 as compared to Rs. 5088.49 Lakh of previousyear.
3. MANAGEMENT DISCUSSION & ANALYSIS REPORT
3.1 Industry And Economic Scenario & Outlook
Underneath current benign inflation conditions there are broad-based inflationpressures which make the inflation outlook for 2017-18 challenging. Growth in real grossvalue added is expected to accelerate in 2017-18 underpinned by strong consumption demandeven as investment activity remains muted and external demand uncertain.
Under the monetary policy framework ushered in by amendments to the Reserve Bank ofIndia (RBI) Act the monetary policy decision has been vested in a six member monetarypolicy committee (MPC). Following its decision to lower the policy repo rate by 25 basispoints ( bps) at the time of the October 2016 Monetary Policy Report ( MPR) the MPCdecided to hold the policy rate in the December 2016 and February 2017 meetings of itsbi-monthly schedule.
Four features distinguish these initial decisions under the new regime. First therewas a calibrated shift in the policy stance from accommodative to neutral. Second therewas an overwhelming preference for waiting out the transitory effects of demonetisationand the unsettled political climate globally. Third each decision was taken by unanimity.Fourth within the consensus members' decisions appear to have been driven byindividualistic approaches to arriving at them as revealed in their written publicstatements.
The recent experience of MPCs in the UK Sweden Brazil Thailand Czech Republic andHungary suggests that rate decisions have been based on unanimity. Other recent cases inpoint are the decisions of the US
Federal Open Market Committee (FOMC) in its December 2016 and February 2017 meetingsand the Bank of England's MPC in its meetings during October-February. Differences havebeen typically confined to the size of the change in the policy rate rather thancontesting the overarching policy stance.1Existing research on monetary policy decisionmaking suggests that divergences stem mainly from (i) MPC members' policy preferences the relative weight on price stability and output stabilisation in theirreaction functions and (ii) assessment of expected economic conditions theevolution of inflation and output gaps. Does the formative experience of the MPC in Indiasuggest similar policy preferences and assessments of the outlook? It is too early totell.
3.2 Opportunities And Threats
a) Large potential Domestic and International Market.
b) Product Development and Diversification to cater Global Needs.
c) Greater Investment and FDI opportunities are available.
d) Industry has large and diversified segments that provide wide variety of products.
a) Unfavorable Labour Laws.
b) High Indirect Taxes Power and Interest Rates.
c) Unfavorable Government policies.
d) Lower Productivity in various segments.
e) To balance between Demand and Supply
3.2 Business Risk Management
Although the company had long been following the principle of risk minimization as isthe norm in every industry it became a compulsion during more recent times.
Therefore in accordance with erstwhile clause 49 of the listing agreement the Boardmembers were informed about risk assessment and minimization procedures after which theBoard formally adopted steps for framing implementing and monitoring the risk managementplan for the company.
The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues.
In accordance with newly introduced Regulation 17(9) of the SEBI ( Listing Obligationsand Disclosure Requirements) Regulation 2015 the Board ensures adherence and continuationof such risk management policy.
In today's challenging and competitive environment strategies for mitigating inherentrisks in accomplishing the growth plans of the Company are imperative. The common risksinter alia are: Regulations competition Business risk Technology obsolescenceInvestments retention of talent and expansion of facilities.
Business risk inter-alia further includes financial risk political risk fidelityrisk legal risk.
As a matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.
3.3 Internal Control Systems And Their Adequacy
The system of internal control maintained by the company is adequate and also uptodate. Only after ensuring authenticity and genuineness of various transactions they arerecorded and reported to management. The company always follows relevant and applicableAccounting Standards for properly maintaining the books of accounts and reportingfinancial statements. The internal auditor follows the internal control system on aconsistent basis. Even through this non-production period the Company continues to ensureproper and adequate systems and procedures commensurate with its size and nature of itsbusiness.
3.4 Human Resources/ Human Resource Management.
Inspite of enduring perhaps the toughest phase in the company's history it must bementioned that the trusted loyal work force has always stood firmly in the hour of need.The company also looks after its human resources well and has always judiciously rewardedperformance.
4. TRANSFER TO RESERVE
The company has transferred profits in Reserves and surplus.
Directors are of the view that as the Expansion Programme has already been announcedand to implement the capital-intensive plans together with loan repayment; these shall bemade from operating surplus. The reserves & surplus of the Company have been keptintact to facilitate this purpose so dividends have not been recommended for the yearending 31.03.2017 in the long term interest of the company.
6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND
Since there was no unpaid/unclaimed Dividend declared and paid last year theprovisions of Section 125 of the Companies Act 2013 do not apply.
7. SHARE CAPITAL
"The Authorized Share Capital of the Company is Rs. 60000000/- (Rupees SixCrores only) consisting of 50000000 (Five Crores) equity shares of Rs. 1/- each and1000000 (Ten lakh ) Redeemable Preference Shares of Rs. 10/-(Rupees Ten ) each andpaid-up Capital of the Company is Rs 49408000(Rupees Four Crore Ninety four Lakhs EightThousand Only) comprising of 49408000 ( Forty crore ninety four lakhs and eightthousand) equity shares of Rs. 1/- each and 1000000(Ten Lakh) Redeemable Preferenceshares of Rs. 10/- each.
7.1 BUY BACK OF SECURITIES
The Company has not bought back any of its securities during the year under review.
7.2 SWEAT EQUITY
The Company has not issued any Sweat Equity Shares during the year under review.
7.3 BONUS SHARES
No Bonus Shares were issued during the year under review.
7.4 EMPLOYEES STOCK OPTION PLAN
The Company has not provided any Stock Option Scheme to the employees.
8.1 CASH AND CASH EQUIVALENT
Cash and Cash equivalent as at 31st March 2017 is Rs. 46.27 Lakh. TheCompany continues to focus on judicious management of working capital. Working Capitalparameters are kept under strict check through continuous monitoring.
8.2 DEPOSITS/ FIXED DEPOSITS
During the year Company has not accepted deposit from the public falling within theambit of Section 73 of Companies Act 2013 and the Companies (Acceptance of Deposits)Rules 2014. Further the Company has not repaid any deposit to public and there is nodeposits are pending as on 31st March 2017.
8.3 PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Detail of Loans Guarantees and Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes of Financial Statements.
The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage.
9.1 No. Of Meetings Of The Board
During the year Seven(7) Board Meetings and Five (5) Audit Committee Meetings wereconvened and held. The details of which are given in the Corporate Governance Report. Theprovisions of Companies Act 2013 and listing agreement and SEBI (Listing Obligations andDisclosure) Regulation 2015 were adhered to while considering the time gap between twomeetings.
9.2 Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
9.3 Declaration By Independent Directors
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and regulation 16(b) of SEBI(Listing Obligations & Disclosure Requirements) Regulation 2015.
9.4 Board Evaluation
Pursuant to the provisions of companies Act 2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulation 2015 the Board has carried out annual performanceevaluation of its own performance the directors individually as well the evaluation ofthe working of its Audit Nomination & Remuneration and Stakeholder Relationshipcommittee. The manner in which the evaluation has been carried out has been explained inCorporate Governance Report.
9.5 Training of Independent Directors.
Every new independent director of the Board attends an orientation program. Tofamiliarize the new inductees with the strategy operations and functions of our Companythe executive directors / senior managerial personnel make presentations to the inducteesabout the Company's strategy operations product markets organization structurefinance human resources technology quality facilities and risk management.
9.6 Re- Appointments
Pursuant to the provisions of companies Act 2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 the details of Director appointed/reappointment are given in this annual Report and forms part of this report.
9.7 Retirements and Resignations
During the year none of the directors has resigned from the directorship of thecompany.
10. COMMITTEES OF THE BOARD
a) Audit Committee : The company is having Audit Committee comprising of thefollowing directors.
|Name ||Status ||Category |
|Mr. Narinderjit Singh ||Chairman ||Independent and Non-Executive Director |
|Mr. Amandeep Singh ||Member ||Independent and Non-Executive Director |
|Mr. Harpreet Singh ||Member ||Executive Director |
b) Nomination and Remuneration Committee : The company is having a Nomination andRemuneration Committee comprising of the following directors:
|Name ||Status ||Category |
|Mr. Narinderjit Singh ||Chairman ||Independent and Non-Executive Director |
|Mr. Amandeep Singh ||Member ||Independent and Non-Executive Director |
|Mrs. Jasjeet Kaur ||Member ||Independent and Non-Executive Director |
c) Corporate Social Responsibility Committee: Even though the provisions ofCompanies Act 2013 regarding Corporate Social Responsibility are not attracted to thecompany yet the Company has been over the years pursuing as part of its corporatephilosophy an unwritten CSR policy voluntarily which goes much beyond mere philanthropicgestures and integrates interest welfare and aspirations of the community with those ofthe Company itself in an environment of partnership for inclusive development.
d) Stakeholder Remuneration Committee : The Stakeholders' Relationship Committeewas constituted by the Board on consequent to the dissolution of the Share transfer cumInvestors' Grievance Committee. This Committee includes Mr. Narinderjit Singh (Chairman)and Mr. Amandeep Singh (member) and Mr. Harpreet Singh (member).
Term of reference and other details are given in Corporate Governance Report and formspart of this report.
e) Risk Management Committee: The Company has formed the Risk Management Committeewith its members as Mr. Amandeep Singh (Chairman) Mr. Narinderjit Singh (member) and Mrs.Jasjeet Kaur and the committee will perform its activities according to the Risk Policyfinalized by the Board indicating the development and implementation of Risk Management.
11. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3) (C) of the Companies Act 2013:
a) that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b) that such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2017 and of the profit of the Company for the year ended on thatdate; c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f) that systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
12.1 Statutory Auditors
At the Annual General Meeting the members will be required to appoint Auditors and fixtheir remuneration. M/s. Rajesh Mehru & Co. Chartered Accountants statutoryauditors of the company are retiring at the ensuing Annual General Meeting .and is noteligible for re-appointment pursuant to Sec 139(2) of the Companies Act 2013. Therefore M/SGaur & Associates Statutory Auditor (FRN No. 014727N & Membership No 085161) iseligible for appointment. The appointment if approved will be for a period of five yearsas required by Sec 139(1) of the act.
12.2 Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/S Brij K. Tiwari & Associates ( CP No.: 2831 FCS: 4442)CompanySecretaries to undertake the secretarial audit of the company. The Secretarial AuditReport is annexed herewith as Annexure - A'.
12.3 Internal Auditors
Mr. Bipin Bihari Singh performs the duties of internal auditors of the company andtheir report is reviewed by the audit committee from time to time.
12.4 Cost Auditor
The Cost Audit was not applicable on the Company during the Financial Year 2016-17 asper Companies (Cost record & audit) Rules 2014.
13. LISTING OF SECURITIES
The Securities of the Company are listed on Bombay Stock Exchange Limited andMetropolitan Stock Exchange of India Ltd. The Company has not paid annual listing fee toexchanges for the year 2017-18.
14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
15. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure- B'
16. VIGIL MECHANISM / WHISTLE BLOWER POLICY.
The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal withinstance of fraud and mismanagement if any. The details of the Whistle Blower Policy isexplained in the Corporate Governance Report and also posted on the website of theCompany.
17. SUBSIDIARIESJOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint venture or Associate Company.
18. RELATED PARTY TRANSACTIONS/ PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITHRELATED
All transactions entered into with Related Parties as defined under Clause 49 of theListing Agreement and SEBI (Listing Obligations & Disclosure Requirements) Regulation2015. During the financial year were in the ordinary course of business and on an armslength pricing basis and do not attract the provisions of Section 188 of the CompaniesAct 2013. There were no materially significant transactions with related parties duringthe financial year which were in conflict with the interest of the Company. Suitabledisclosure as required by the Accounting Standards (AS18) has been made in the notes tothe Financial Statements. The report of the Board in respect of the particular ofcontracts or arrangements with related parties referred to sub section (1) of Section 188in form AOC-2 is annexed to this report in annexure- C
19. CORPORATE GOVERNANCE
SEBI ( Listing Obligations and Disclosure Requirements) Regulation 2015 with theStock Exchanges a separate section on corporate governance practices followed by theCompany together with a certificate from Practicing Company Secretary confirmingcompliance forms an integral part of this Report.
20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE ( PREVENTIONPROHIBITION
AND REDRESSAL) ACT 2013.
The Company has in place a prevention of sexual Harassment policy in line with therequirements of the sexual Harassment of Women at the Workplace (prevention prohibitionand Redressal) Act 2013. During the year 2016-17 no complaint were received by theCompany related to sexual Harassment.
21. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under section 134 (3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as"Annexure- D"
22. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is as follows:
The company has two Executive Director and due to financial constraints being faced bythe company it has forgone remuneration paid to one executive director. Further nositting fees have been paid to any director during the year.
The particulars of the employees who are covered by the provisions contained in Rule5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are:
a) Employed throughout the year Nil
b) Employed for part of the year Nil
The remuneration paid to all Key management Personnel was in accordance withremuneration policy adopted by the company.
23. APPRECIATION AND ACKNOWLEDGEMENTS
The company has been very well supported from all quarters and therefore your directorswish to place on record their sincere appreciation for the support and co-operationreceived from Employees Dealers Suppliers Central and
State Governments Bankers and others associated with the Company. Your Directors wishto thank the banks financial institutions shareholders and business associates for theircontinued support and cooperation. We look forward to receiving the continued patronagefrom all quarters to become a better and stronger company.
24. CAUTIONARY STATEMENT
The statements contained in the Board's Report and Management Discussion and Analysiscontain certain statements relating to the future and therefore are forward looking withinthe meaning of applicable securities laws and regulations.
Various factors such as economic conditions changes in government regulations taxregime other statues market forces and other associated and incidental factors mayhowever lead to variation in actual results.
| || ||For and on behalf of the Board |
| || ||For PACT INDUSTRIES LIMITED |
| ||Sd/- ||Sd/- |
| ||(Avtar Singh) ||(Harpreet Singh) |
| ||Chairman ||Managing Director |
|Place: Ludhiana || || |
|Date: 21.06.2017 || || |