Your Directors are pleased to present the fortieth Annual Report and the Companysaudited financial statement for the financial year ended 31st March 2016.
The Companys financial performance for the year ended 31st March 2016 issummarized below:
| || || |
(Rs. in lacs)
|Particulars ||Consolidated ||Standalone |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Gross sales ||148054 ||144242 ||98564 ||95292 |
|Operating profit (PBIDT) ||15133 ||12086 ||8092 ||7038 |
|Profit before tax (PBT) ||9404 ||6660 ||4159 ||3337 |
|Income Tax and Deferred Tax ||3580 ||2347 ||1457 ||1204 |
|Profit after tax (PAT) ||4385 ||3590 ||2702 ||2133 |
|Profit brought forward from previous year ||22466 ||18883 ||17406 ||15273 |
|Surplus available for appropriation ||26851 ||22466 ||20108 ||17406 |
|Appropriations || || || || |
|Dividend ||- ||- ||- ||- |
|Corporate tax on proposed dividend ||- ||- ||- ||- |
|Transfer to General Reserve ||- ||- ||- ||- |
|Transfer to Capital Redemption Reserve ||- ||- ||- ||- |
|Balance of profit carried to Balance Sheet ||26851 ||22466 ||20108 ||17406 |
Result of Operations and the state of Companys a_airs:
Your company has delivered good growth in sales as well as profitability. Ourinvestment in developing new products and ability to attract new customers has helped usin this environment of high volatility in steel prices. Most of the business units of thecompany have achieved double digit growth in sales and profitability.
The consolidated gross sales of your company stood at RS. 1480.5 crores EBIDTA of RS.151.3 crores up by 25.2 % against previous year. Net profit of H43.9 crores up by 22.1%against previous year
Consolidated Financial Statement:
In accordance with the Companies Act 2013 ("the Act") and AccountingStandard (AS) - 21 on Consolidated Financial Statements the audited consolidatedfinancial statement is provided in the Annual Report.
The following are three subsidiaries of the company as on 31st March 2016. a. M/s.Pennar Engineered Building Systems Limited b. M/s. Pennar Enviro Limited c. M/s. New EraEnviro Ventures (Karimnagar) Private Limited
The performance of the subsidiaries is as hereunder:
(a) M/s. Pennar Engineered Building Systems Limited (PEBSL)
Your companys subsidiary M/s. Pennar Engineered Building Systems Limited is oneamong the top players of pre engineering building segment in India with gross sales of RS.508.63 Crores. EBIDTA of H65.04 crores up by 39% compared to previous year. PEBSL hasrecorded a net profit of H30.16 crores representing 38% of growth compared to previousfinancial year.
(b) M/s. Pennar Enviro Limited (PEL)
Your companys subsidiary M/s Pennar Enviro Limited has recorded gross sales ofRS. 100.50 crores as against H29.43 crore during previous year. EBIDTA of RS. 5.57 croresup by 207% compared to previous year. PEL has recorded a net profit of RS. 1.45 crores.
(c) M/s. New Era Enviro Ventures (Karimnagar) Private Limited (NEEVKPL)
Your companys subsidiary has commissioned 28 DC MW solar power plants under a PPAwith Telangana government at H6.45. The plants are located at 3 locations near HyderabadTelangana.
The financial position of each of the subsidiaries as per the Companies Act 2013 isannexed. The Policy for determining material subsidiaries may be accessed on theCompanys website at the link:http://www.pennarindia.com/policy-determining-material.html.
The information on subsidiaries pursuant to Section 129(3) of the Act read with rule 5of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure - A in Form AOC -1.
Material Changes and Commitments if any affecting the finan-cial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report:
There are no material changes and commitments affecting the financial position of theCompany.
Dividend Fixed Deposits and General Reserves:
The company has undertaken capacity expansion and product diversification in FinancialYear 2015-16 and shall continue the same for the Financial Year 2016-17. This will helpthe company to achieve margin and revenue growth in the coming years. The company isfunding these activities through internal accruals. The company till date has not takenany term loan to fund these. Therefore your Directors are not recommending a dividend onequity shares. However the company has redeemed the third and final annual installment of0.01% Cumulative Redeemable Preference shares of RS. 1.67/- each @ RS. 1.67/- per sharealong with Dividend at 0.01% during the year 2015-16.
Your Company has not accepted any fixed deposits and no amount has been carried toGeneral Reserves during the year.
Particulars of Loans given Investments made Guarantees given and Securities provided:
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the standalone financial statement.
Internal Financial Controls:
The details in respect of internal financial control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.
Contract and Arrangement with Related Parties:
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had entered into contract / arrangement /transaction with material related party which could be considered material in accordancewith the policy of the Company on materiality of related party transactions. The Policy onmateriality of related party transactions and dealing with related party transactions asapproved by the Board may be accessed on the Companys website at the link:http://www. pennarindia.com/policy-related-party-transactions.html.
The Information on transactions with related parties pursuant to Section 134(3) (h) ofthe Act read with rule 8(2) of the Companies (Accounts) Rules 2014 are annexed herewithas Annexure - B in Form AOC-2.
Change in the nature of business if any:
There is no material change in the nature of business affecting the financial positionof the Company for the year ended 31st March 2016.
CARE has reaffirmed the CARE A(Single A) rating assigned to long term bankfacilities of Pennar. This rating is applicable to facilities having tenure of more thanone year. Instruments with CARE A rating are considered to have adequatedegree of safety regarding timely servicing of financial obligations. Further CARE hasalso reaffirmed the CARE A1 (A One) rating to short term bank facilities ofthe Company. This rating is applicable to facilities having a tenure upto one year.Instruments with CARE A1 rating are considered to have very strong degree ofsafety regarding timely payment of financial obligations and carry lowest credit risk.
Your company has undertaken number of steps to maintain strong liquidity levels. Theconsolidated net debt level is at RS. 171.32 Crore. Your company continues to focus ongenerating strong cash flows to meet its future growth plans and is comfortable with itscurrent liquidity positions.
Board of Directors and Key Managerial Personnel:
None of the Directors of the company are disqualified under the provisions of the Actor under the Listing Regulations.
Mr. Aditya Rao and Mr. Vishal Sood who retire by rotation and being eligible offerthemselves for re-appointment. Your Board recommends their appointment.
The Board of Directors appointed Mr. C Parthasarathy as Additional Non-ExecutiveIndependent Director of the Company at its meeting held on 9th November 2015. Hisappointment has to be ratified by the Members at the ensuing Annual General Meeting. YourBoard recommends his appointment.
The Board of Directors appointed Mr. P V Rao as Additional Non-Executive Director ofthe Company by a resolution passed by circulation on 30th March 2016. His appointment hasto be ratified by the Members at the ensuing Annual General Meeting. Your Board recommendshis appointment.
Pursuant to the provisions of Listing Regulations brief particulars of the Directorswho are proposed to be appointed/reappointed are provided as an annexure to the noticeconvening the Annual General Meeting.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both undersub-section (6) of Section 149 of the Companies Act 2013 and under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the Non-Executive Directors and Executive Directors. The details ofprogrammes for familiarisation of Independent Directors with the Company their rolesrights responsibilities in the Company nature of the industry in which the Companyoperates business model of the Company and related matters are put up on the website ofthe Company at the link: http://www.pennarindia.com/policy-familiarization-programme.html.
Meetings of the Board:
Five meetings of the Board of Directors were held during the year. For further detailsplease refer the same in Corporate Governance report in this Annual Report.
Directors Responsibility Statement:
Your Directors state that:
a) in the preparation of the annual accounts for the year ended 31st March 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and of the profitof the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concernbasis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
The Company is committed to maintain the highest standard of corporate governance andadhere to the corporate governance requirements set out by Securities Exchange Board ofIndia. The Report on corporate governance as stipulated under the Listing Regulations isannexed herewith as Annexure - C. The requisite certificate from M/s. Mohammed Irfan &Associates Company Secretaries confirming compliance with the conditions of corporategovernance is annexed herewith as Annexure - D.
Corporate Social Responsibility (CSR):
In terms of section 135 and Schedule VII of the Companies Act 2013 and the rules madethereunder the Board of Directors of your Company has constituted a CSR Committee. TheCommittee comprises of two Independent Directors and two Executive Directors. TheCorporate Social Responsibility Committee (CSR Committee) has formulated and recommendedto the Board a Corporate Social Responsibility Policy (CSR Policy) indicating theactivities to be undertaken which has been approved by the Board.
Your company has formed a foundation named Pennar Foundation forundertaking some CSR activities. The Annual Report on CSR activities is annexed herewithas Annexure - E.
Nomination and Remuneration Policy:
The Nomination and Remuneration Committee of the Company identifies the persons whoare qualified to become Directors of the Company / who may be appointed in SeniorManagement in accordance with the criteria laid down and recommend to the Board for theirappointment and removal. The Committee also carries out evaluation of everyDirectors performance. The Committee has formulated the criteria for determiningqualifications attributes independence of the Directors and recommend to the Board aPolicy relating to the remuneration for the Directors Key Managerial Personnel and otheremployees.
Pursuant to section 134 (3) (n) of the Companies Act 2013 and SEBI (LODR) Regulations2015 the company has formulated a policy on risk management. At present the company hasnot identified any element of risk which may threaten the existence of the company.
Pursuant to the provisions of section 139 of the Act and the rules framed thereunderM/s. Rambabu & Co. Chartered Accountants were appointed as statutory auditors of thecompany from the conclusion of the 38th Annual General Meeting of the company held on 30thSeptember 2014 till the conclusion of the 41st Annual General Meeting to be held in theyear 2017 subject to ratification of their appointment at every Annual General Meeting.The Notes on financial statements referred to in the Auditors Report areself-explanatory and do not call for any further comments. The Auditors Report doesnot contain any qualification reservation or adverse remark.
The Cost Audit Report for the year ended 31st March 2015 was reviewed by the AuditCommittee at its meeting held on 11th August 2015 and has been filed with Registrar ofCompanies on 1st October 2015.
The Cost Audit for the year ended 31st March 2016 is in progress and the Cost AuditReport will be filed with the Registrar of Companies within the stipulated time. The Boardof Directors at its meeting held on 12th August 2016 appointed M/s. Shaik &Associates. Cost Accountants Hyderabad as Cost auditors of the company for the yearending 31st March 2017.
Auditor to conduct Secretarial Audit:
The Board has appointed M/s. Mohammed Irfan and Associates Company Secretaries toconduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report forthe financial year ended 31st March 2016 is annexed herewith as Annexure - F. TheSecretarial Audit Report does not contain any qualification reservation or adverseremark.
The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of annual report.
Vigil Mechanism/Whistle Blower Policy:
Pursuant to Section 177 of the Companies Act 2013 read with Rule 7 of Companies(Meetings of Board and its Powers) Rules 2014 the Company has established a WhistleBlower Policy to deal with instance of fraud and mismanagement if any. The details of theWhistle Blower Policy are explained in the Corporate Governance Report. The Policy onvigil mechanism and whistle blower policy may be accessed on the Companys website atthe link: http:// www.pennarindia.com/vigil-mechanism. html
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 Act is annexedherewith as Annexure - G.
Extract of Annual Return:
Extract of Annual Return of the Company is annexed herewith as Annexure - H.
Particulars of Employees and related disclosures:
The information required under section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and the Statement under Section 134 of the Companies Act 2013 read with Rule 5 (2) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedherewith as Annexure - I.
Disclosure under Sexual Harassment of Women at Work-place (Prevention Prohibition andRedressal) Act 2013:
The Company has in place an Internal Complaints Committee which has been set up toredress complaints regarding sexual harassment. The following is the summary of sexualharassment complaints received and disposed off during the year:
i) No. of complaints received : nil ii) No. of complaints disposed off: nil
Listing of Equity Shares:
The Companys equity shares are listed at the Bombay Stock Exchange LimitedNational Stock Exchange of India Limited and Metropolitan Stock Exchange of India Limited.
Dematerialisation of Shares:
98.50 % of the companys paid-up Equity Share Capital is in dematerialized form ason 31st March 2016 and balance 1.50% is in physical form.
Redemption of 0.01% Cumulative Redeemable Preference Shares:
The company has redeemed the third and final annual installment of 16649119Cumulative Redeemable Preference Shares of RS. 1.67/- each at a rate of RS. 1.67/- pershare along with dividend at 0.01% on redemption value as per the terms and conditions ofthe Scheme of Reconstruction and Arrangement sanctioned by the High Court ofAndhra Pradesh.
Your company has filed necessary Corporate Action form for extinguishment of ISINnumber for the aforesaid preference shares and the same stands extinguished as on date.
Managing Director Certification under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015:
The Vice-Chairman & Managing Director certification under SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 is annexed herewith as Annexure-J.
Personnel / Industrial Relations:
The Company maintained cordial and harmonious relations at all levels at the officesand plants of the Company and its subsidiaries throughout the year under review.
The details of significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and companys operations in future:
In terms of sub rule 5(vii) of Rule 8 of Companies (Accounts) Rules 2014 there are nosignificant material orders passed by the Regulators / Courts which would impact the goingconcern status of the Company and its future operations.
Management Discussion and Analysis:
The "Management Discussion and Analysis Report" highlighting the industrystructure and developments opportunities and threats future outlook risks and concernsetc. is furnished separately and forms part of this Boards Report.
The Securities and Exchange Board of India (SEBI) on 2nd September 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effective1st December
2015. Accordingly all listed entities were required to enter into the ListingAgreement within six months from the effective date. The Company entered into ListingAgreement with National Stock Exchange of India Limited BSE Limited and Metro PolitianStock Exchange of India Limited.
Your directors take this opportunity to express their appreciation for the cooperationto all the suppliers and customers who have been associated with the Company as partners.The Directors would also like to take this opportunity to thank the financialinstitutions banks regulatory and government authorities as well as the shareholders fortheir continued cooperation and support. The Directors also wish to place on record theirappreciation of the devoted and dedicated services rendered by all employees of theCompany. We look forward to further support.
| ||By Order of the Board |
|for Pennar Industries Limited || |
|Place : Hyderabad ||Nrupender Rao |
|Date : 12.08.2016 ||Executive Chairman |
| ||Din: 00089922 |