Action Construction Equipments Ltd.
|BSE: 532762||Sector: Engineering|
|NSE: ACE||ISIN Code: INE731H01025|
|BSE 00:00 | 18 Oct||80.25||
|NSE 00:00 | 18 Oct||80.10||
|Mkt Cap.(Rs cr)||941|
|Mkt Cap.(Rs cr)||941.33|
Action Construction Equipments Ltd. (ACE) - Director Report
Company director report
The Directors are pleased to present the 24th Annual Report on the business andoperation of the Company together with Audited Statement of Accounts for the financialyear ended March 31 2018.
(Rs. in Lakhs)
FINANCIAL PERFORMANCE OVERVIEW (STANDALONE BASIS)
The brief highlights of the Company's performance (standalone) for the financial yearended March 31 2018 are:-
Total Revenue from operations of the Company for FY 2018 of ' 109864 Lakhs washigher by 37.84% over the last year (Rs. 79706 Lakhs in FY 2017).
Profit Before Interest Depreciation Amortisation Exceptional Items & Taxstood at ' 10007 Lakhs was higher by 109.78%.
Profit Before Tax (PBT) stood at ' 7461 Lakhs and Profit After Tax (PAT) stoodat ' 5264 Lakhs higher by 279.31% and 263.79% respectively.
Earnings per share is ' 4.49 for the year under review.
Your Company has taken several steps to reduce the cost and increase its market sharein all products.
STATE OF COMPANY'S AFFAIRS
The Financial Year 2017-18 was a significant year in terms of growth and sustainabilityand the Company has been able to clock the highest ever turnover in the history of theCompany during this financial year.
Against the backdrop of challenging market environment your Company's businesscontinues to track ahead satisfactorily on the back of dynamic response to market trendsenduring customer relationships "Customer First approach" and strong productportfolio.
The financial year 2017-18 saw a resilience in the operating margins due to focusedcost efficiency measures price discipline and optimzation of working capital requirementsin order to minimize financing Costs. We believe that these measures will continue to beour focus in the future as we move towards increasing our margin profile.
During the year we introduced smart features in our existing product range that notonly helped us to increase our market share but also adhere to our core philosophy ofproviding customised soluti ons to our customers. ACE realigned its focus on domesticmarkets and growth. ACE sustained its investment in brand and manpower to prepare for nextgrowth phase.
INDIAN ACCOUNTING STANDARDS (Ind AS)
In accordance with the notification issued by the Ministry of Corporate Affairs (MCA)your Company is required to prepare financial statements under Indian Accounting Standards(Ind AS) prescribed under section 133 of the Companies Act 2013 read with Rule 3 of theCompanies (Indian Accounting Standards) Rules 2015 and Companies (Indian AccountingStandards) Amendment Rules 2016 with effect from April 1 2017. Ind AS has replaced theexisting Indian GAAP prescribed under Section 133 of the Companies Act 2013 read withRule 7 of Companies (Accounts) Rules 2014.
Accordingly your Company has adopted Indian Accounting Standard ("Ind AS")with effect from April 1 2017 with the transition date of April 1 2016 and the FinancialStatements for the year ended March 31 2018 have been prepared in accordance with Ind AS.The financial statements for the year ended March 31 2017 have been restated to complywith Ind AS to make them comparable.
Explanations capturing areas of differences and reconciliations from Indian GAAP to IndAS have been provided in the notes to accounts to the standalone and consolidatedfinancial statements.
AMOUNTS TRANSFERRED TO RESERVES
The Company proposes to transfer ' 100 lakhs in the General Reserve and ' 1313.16lakhs in the Capital Redemption Reserve out of the amount available for appropriation inthe Profit & Loss account.
The Board has recommended a final dividend of ' 0.50 i.e. (25%) per equity share forthe financial year ended March 31 2018 which will result in an outflow of ' 706.04 lakhs(including Corporate Dividend Tax of ' 119.42 lakhs).
The Board has recommended a dividend of 8% on Preference Share Capital of the Companywhich will result in an outflow of ' 287.50 lakhs (including Corporate Dividend Tax of '48.63 lakhs).
The payment of dividends is subject to the approval of the shareholders at the ensuingAnnual General Meeting (AGM) of the Company.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in the nature of the business of the Company during the financialyear ended March 31 2018.
LISTING OF SHARES
The equity shares of the Company are listed on the National Stock Exchange of IndiaLtd. (NSE) and BSE Limited (BSE). The listing fee for the year 2018-19 has already beenpaid to the credit of both the Stock Exchanges.
Company's 8% cumulative non-participating redeemable
preference shares are not listed on any of the Stock Exchange(s).
During the year CRISIL has upgraded Company's rating on the long term bank facilitiesto CRISIL A+/stable from CRISIL A/positive and reaffirmed the rati ng on the short-termbank facilities and commercial paper programme at CRISIL A1.
The rating upgrade reflects expectation of continued improvement in the business riskprofile over medium term driven by sustained pick-up in demand from the constructionsector particularly roads. The ratings reflect a diversified customer base in thematerialhandling equipment cranes and tractor industries a strong market position inthe cranes business and comfortable liquidity.
As at financial year ended March 31 2018 your Company has one wholly owned subsidiary(WOS) viz; Frested Limited Mauritius and one Indirect subsidiary (Fellow Subsidiary) i.e.SC Forma SA Romania.
There are no associate companies within the meaning of Section 2(6) of the CompaniesAct 2013 (Act). There has been no material change in the nature of the business of thesubsidiaries.
In accordance with Secti on 129(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company and its subsidiaries which form part ofthe Annual Report. For details please refer the Consolidated Financial Statements.
Further a statement containing the salient features of the financialstatement/highlights of performance of our subsidiaries in the prescribed Form AOC 1 isattached as Annexure-1 to this Report.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on our website www.ace-cranes.com. These documents will also be available for inspection during business hours at ourRegistered office.
The Policy for determining material subsidiaries may be accessed on the Company'swebsite at www.ace-cranes.com .
BOARD OF DIRECTORS
In accordance with the provisions of Companies Act 2013 (hereinafter referred as"the Act") and Articles of Association of the Company Mrs. Mona Agarwal (DIN:00057653) Whole-Time Director will retire by rotati on at the ensuing AGM and beingeligible offers herself for re-appointment.
The Board of Directors in their meeti ng held on May 21 2018 had recommended there-appointment and remuneration of Mr. Vijay Agarwal (DIN:00057634) as Chairman &Managing Director Mrs. Mona Agarwal (DIN:00057653) as Executive Director and Mr. SorabAgarwal (DIN:00057666) as Executive Director for a further period of 5 years w.e.f.October 1 2018 subject to the approval of the shareholders in the ensuing Annual GeneralMeeting. Their appointment is appropriate and in the best interest of the Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with criteria of independence as prescribed under sub-secti on(6) of Section 149 of the Act and under Regulation 16(1)(b) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (hereinafter referred as "the ListingRegulations").
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 and Executive Directors. In accordance with the Policy aprocess of evaluation was followed by the Board for its own performance and that of itsCommittees and individual Directors. The remunerati on policy for directors keymanagerial personnel and other employees is annexed as Annexure-2 and forms anintegral part of this Report.
The brief resumes and other details relating to the Directors who are proposed to beappointed/ re-appointed as required to be disclosed under the Listing Regulations isgiven in the Annexure to the Notice of the 24th AGM.
Your Directors recommend the appointment/ reappointment of the above said Directors atthe ensuing AGM.
During the year none of the Directors of the Company have resigned from the post ofDirectorship of the Company.
KEY MANAGERIAL PERSONNELS (KMP)
Pursuant to the provisions of Section 203 of the Companies Act 2013 read with Rulesmade thereunder following are designated as Key Managerial Personnel (KMP) of the Company:
Mr. Vijay Agarwal Chairman & Managing Director;
Mrs. Mona Agarwal Whole-Time Director;
Mr. Sorab Agarwal Whole-Time Director;
Mrs. Surbhi Garg Whole-Time Director;
Mr. Rajan Luthra Chief Financial Officer (CFO) and
Mr. Anil Kumar Company Secretary & Compliance Officer
During the year Mr. Anil Kumar has been appointed as Company Secretary and Complianceofficer of the Company in place of Mrs. Yashika Kansal who has resigned from the post ofCompany Secretary and Compliance Officer.
NUMBER OF BOARD MEETINGS
During the financial year 2017-18 four (4) Board Meetings were held. For detailsthereof kindly refer to the Corporate Governance Report forming part of this AnnualReport.
ANNUAL GENERAL MEETING
During the financial year 2017-18 23rd Annual General Meeting of the Company was heldon September 29 2017 at 11:30 a.m. at Aravali Golf Club New Industrial Township (NIT)Faridabad Haryana-121001.
COMMITTEES OF THE BOARD
Detailed information on the Board and its Committees is provided in the CorporateGovernance Report forming part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of clause (c) of Sub- secti on (3) of Secti on 134 of theCompanies Act 2013 your Directors hereby confirm that they:
i) Have followed in the preparation of Annual Accounts for the financial year 2017-18the applicable Accounting Standards and no material departures have been made for thesame;
ii) Had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2018 and of the profit of theCompany for the year ended on that date;
iii) Had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventi ng and detecti ng fraud and other irregularities;
iv) Had prepared the annual accounts on a going concern basis;
v) Have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and are operating effectively; and
vi) Have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such system are adequate and operating effectively.
ANNUAL PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to the provisions of Companies Act 2013 and Regulation 25 (3) of Securiti esExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 Independent Directors at their separate meeti ng without participation of theNon-Independent Directors and Management have considered and evaluated the Board'sperformance and performance of the
Chairman and Non-Independent Directors. The Independent Directors in the said meetinghave also assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board.
The Board of Directors has evaluated the performance of each of the IndependentDirectors (without participate on of the relevant Director). The Board has carried out theannual evaluation of its own performance and that of its Directors individually. Theevaluation criteria as approved by the Nomination and Remuneration Committee includedvarious aspects of the functioning of Board such as composition process and proceduresincluding adequate and timely information attendance decision making roles andresponsibilities etc.
The performance of individual directors including the Chairman was evaluated on variousparameters such as industry knowledge & experience vision commitment time devotedetc. The evaluation of Independent Directors was based on aspects like participation &contribute on to the Board decisions knowledge experience integrity etc.
As per provisions of Section 139(1) of the Act the Company has appointed M/s BRAN& Associates Chartered Accountants (Firm Regn. No. 014544N) as Statutory Auditors fora period of 5 (Five) years in the AGM of the company held on September 29 2017.
Statutory Auditors' Report
The observations of Statutory Auditor in its reports on standalone and consolidatedfinancials are self-explanatory and therefore do not call for any further comments.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withcorresponding Rules framed thereunder M/s MZ & Associates were appointed as theSecretarial Auditors of the Company to carry out the secretarial audit for the year endingMarch 31 2018.
Secretarial Audit Report
A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 isannexed with this Report as Annexure-3. There are no qualifications reservationsor adverse remarks made by Secretarial Auditors in their Report.
As per Section 148 of the Companies Act 2013 the Company is required to have theaudit of its cost records conducted by a Cost Accountant in practice.
Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act2013 and Rules made thereunder M/s Vandana Bansal & Associates Cost Accountants(Firm registration No. 100203) was appointed as the Cost Auditor of the Company for theyear ending March 31 2018.
Cost audit report for financial year 2017-18 will be filed with the Ministry ofCorporate Affairs within stipulated time period.
On the recommendati on of the Audit Committee the Board of Directors of the Companyhas appointed M/s Ernst and Young LLP as Internal Auditors of the Company to audit thefunction and activities of the Company and to review various operations of the Company;the Company continued to implement their suggestions and recommendations to improve thecontrol environment.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLETO THE CENTRAL GOVERNMENT
The Statutory Auditors Cost Auditors or Secretarial Auditors of the Company have notreported any frauds to the Audit Committee or to the Board of Directors under Section143(12) of the Companies Act 2013 including rules made thereunder.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
ACE is an early adopter of Corporate Social Responsibility (CSR) initiatives. TheCompany works primarily through its trust namely ACE Emergency Response Services. The CSRCommittee of the Board of Directors has been formed comprising of three directors withChairman being Independent Director. CSR Committee has framed and formulated a CSR Policyindicating the activities to be undertaken by the Company in accordance with schedule VIIof the Act and the Companies (Corporate Social Responsibility Policy) Rules 2014 issuedunder the Act. The same has also been approved and reviewed from time to time by theBoard. The CSR policy is available at the website of the Company at www.ace-cranes.com .The ACE was mandatory required to spend ' 35.60 lakhs on CSR activities in financial year2017-18 whereas the Company has spent ' 40.00 lakhs on CSR activities which are more thanthe mandatory requirement. The Annual Report on CSR Activiti es as stipulated under theAct forms an integral part of this Report and is appended as Annexure-IV.
Your Company reaffirms its commitment to the good corporate governance practices andhas adopted the Code of Conduct which has set out the systems processes and policyconforming to international standards.
A certificate from Practicing Company Secretary regarding compliance of the conditionsof Corporate Governance as stipulated under Schedule V of the Listing Regulations isattached in Corporate Governance Report forming part of Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis for the year as stipulated under Schedule V ofSecuriti es Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is separately given and forms part of this Annual Report and
provides a more detailed analysis on the performance of individual businesses and theiroutlook.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts or arrangements or transact! ons that were entered into by the Companyduring the financial year with related parties were on an arm's length basis and in theordinary course of business. During the year the Company had not entered into anycontracts or arrangements or transactions with related parties which could be consideredmaterial in accordance with the policy of the Company on materiality of related partytransaction. All Related Party Transactions have been approved by the Audit Committee andBoard.
Further the prescribed details of related party transactions of the Company in FormNo. AOC-2 in terms of section 134 of the Act read with Rule 8 of the Company (Accounts)Rules 2014 is given as Annexure-V to this report.
DISCLOSURE ON AUDIT COMMITTEE
The Audit Committee as on March 31 2018 comprises of the following Directors: Mr.Subhash Chander Verma (Chairman) Mr. Vijay Agarwal Mr. Grish Narain Mehra (IAS Retd.)and Dr. Amar Singhal as Members. For more details kindly refer to the section 'Committeesof the Board-Audit Committee' in the Corporate Governance Report which forms part ofthis Annual Report. All recommendations of Audit Committee were accepted by the Board ofDirectors.
The Company has implemented a comprehensive and fully integrated 'Enterprise RiskManagement' framework in order to anticipate identify measure manage mitigate monitorand report the principal risks and uncertainly es that can impact its ability to achieveits strategic business objectives.
This integration is enabled by alignment of Risk Management Internal Audit Legal andcompliance methodologies and processes in order to maximize enterprise value of theCompany and ensure high value creation for our stakeholder over a period of time.
The details of the Enterprise Risk Management framework with details of the principalrisks and the plans to mitigate the same are given in the 'Risk and Concerns' section ofthe 'Management Discussion and Analysis Report' which forms part of this Annual Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. Such controls were tested during the financial year and no materialweaknesses in the design or operation were observed. Review of the financial controls isdone on an ongoing basis.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company maintains adequate internal control system and procedures commensuratewith its size and nature of operations. The internal control systems are designed toprovide a reasonable assurance over reliability in financial reporting ensure appropriateauthorization of transactions safeguarding the assets of the Company and prevent misuse/losses and legal compliances.
The internal control system includes a well-defined delegation of authority and acomprehensive Management Information System coupled with quarterly reviews of operationaland financial performance a well-structured budgeti ng process with regular monitoring ofexpenses and Internal audit. The Internal Audit reports are periodically reviewed by themanagement and the Audit Committee and necessary improvements are undertaken if required.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has a vigil mechanism for Directors and Employees to report their concernsabout unethical behavior actual or suspected fraud or violation of the Company's Code ofConduct. The mechanism provides for adequate safeguards against victimization of effectedDirector(s) and Employee(s). In exceptional cases Directors and Employees have directaccess to the Chairman of the Audit Committee. The Whistle Blower Policy is available onCompany's website at www.ace-cranes.com .
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN ATWORKPLACE
The Company has laid down sexual harassment policy pursuant to provision of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 andRules made thereunder. The objective of this policy is to provide protection againstsexual harassment of women at workplace and for the prevention and redressal of complaintsof sexual harassment and for matters connected therewith. The Company has zero toleranceon sexual harassment at workplace. During the financial year 201718 no complaint wasreceived under this policy. This Policy is made available at the website of the Company atwww.ace-cranes.com .
RESEARCH AND DEVELOPMENT
Your Company conti nues to invest in a comprehensive Research & Development(R&D) programme to develop a unique source of sustainable competitive advantage andbuild future readiness by leveraging contemporary advances in several relevant areas ofscience and technology and blending the same with classical concepts of productdevelopment.
The Company has dedicated R&D centres at Jajru Road Faridabad and at Dudhola LinkRoad Dudhola Village Palwal. Both these centres have accreditations from the Ministry ofScience and Technology Govt. of India. Both the centres continuously carries
out Research and Developments for developing new products and also focus on the qualityof products making them more economical cost effective and user friendly.
REDEMPTION OF PREFERENCE SHARES
The Company has partly redeemed preference shares as per terms and conditions ofredemption as per details given below:
1500000 8% cumulative non-participating redeemable preference shares of ' 10each on January 11 2018.
11631628 8% cumulative non-participating redeemable preference shares of '10 each on March 31 2018.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There was no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
MATERIAL CHANGES AND COMMITMENTS IF ANY
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statement relateand the date of this report.
PARTICULARS OF REMUNERATION OF DIRECTORS/ KMP/ EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 and Rule 5(1) 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached as 'Annexure-VIto this Report.
During the year your Company did not accept any public deposits under Chapter V of theCompanies Act 2013 and as such no amount on account of principal or interest on publicdeposits was outstanding as of March 31 2018.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
Particulars of loans guarantees and investments under Section 186 of the CompaniesAct 2013 as at the end of the financial year 201718 are provided in the notes tostandalone financial statements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pursuant to conservation of energy technology absorption and foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013 isannexed as Annexure-VII and forms a part of this report.
EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return in Form No. MGT - 9 forms part of the Board's Reportand is annexed herewith as Annexure-VIII.
INVESTORS EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of Secti on 124 (5) of the Companies Act 2013 the Companyhas transferred the unpaid or unclaimed dividends upto FY 2009-10 and unpaid/unclaimedInterim Dividend FY 2010-11 to the Investor Education and Protection Fund (IEPF)established by the Central Government. The Company has uploaded the details of unpaid andunclaimed dividend amounts lying with the Company as on September 29 2017 (date of theprevious Annual General Meeting) on the website of the Company at www.ace-cranes.com . Thesaid details have also been uploaded on the website of the Ministry of Corporate Affairsand the same can be accessed at www.mca.gov.in . The due date for transfer of unpaiddividend to IEPF for subsequent years is given in the Corporate Governance Report.
Attenti on of the members is drawn to the provisions of Section 124(6) of the Act whichrequire a Company to transfer in the name of IEPF Authority all shares in respect of whichdividend has not been paid or claimed for 7 (seven) consecutive years or more. Inaccordance with the aforesaid provision of the Act read with the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 asamended the Company has already transferred all shares in respect of which dividenddeclared up to FY 2009-10 and Interim Dividend FY 2010-11 which has not been paid orclaimed by the members for 7 (seven) consecutive years or more to IEPF Authority.
AWARDS AND RECOGNITIONS
Your Company continues to deliver unmatched performance amongst its peers and has beenconferred with awards every year. The Company was awarded with many awards andrecognition. The significate award includes:
Best Seller in Mobile Cranes Category Award-4th Equipment India;
"70 Most Trusted Power Brands of India" Award;
Economic Times "Infra Focus" Award;
India's Most Trusted Company Award-IBC USA;
India's Top Challengers Award-Construction World;
Best Seller in Mobile Cranes Category Award-5th Equipment India;
India's Best Material handling & Construction Equipment ManufacturingCompany Award-IBC USA.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on
these items during the year under review or said items are not applicable to theCompany:
1. The Managing Director and the Whole-Time Directors has not received any remunerationor commission from any of its subsidiaries.
2. Issue of shares with differential right: Not issued.
3. Buy back of securities: No.
4. Issue of sweat equity shares: Not Issued.
5. Bonus shares: Not Issued.
6. Employees Stock option: Not Issued.
7. Business Responsibility Report: Not applicable.
8. Dividend Distribution Policy: Not applicable.
The Board places on record its appreciation for the support and continued co-operationextended by all the customers vendors dealers bankers regulators and businessassociates. The Board places on record its appreciation to all the employees for theirdedicated and committed services. Your Directors deeply acknowledge the continued trustand confidence that the shareholders place in the management and is confident that withtheir continued support the Company will achieve its objectives and emerge stronger inthe coming years.
For and on behalf of the Board of Action Construction Equipment Limited
Vijay Agarwal Chairman & Managing Director DIN:00057634
Place: New Delhi Dated: May 21 2018