The Directors are pleased to present the 23rd Annual Report on the business andoperation of the Company together with Audited Statement of Accounts for the financialyear ended March 312017.
| || ||(Rs. in Lakh) |
|FINANCIAL RESULTS ||2016-17 ||2015-16 |
|Gross Turnover ||77551 ||65005 |
|Excise Duty ||4603 ||3616 |
|Net Turnover ||72948 ||61389 |
|Operating and Other Income ||2821 ||3288 |
|Total Income ||75769 ||64677 |
|Profit before Depreciation Interest and Tax ||5018 ||4043 |
|Less: || || |
|Depreciation ||1254 ||1135 |
|Interest ||1305 ||1401 |
|Provision for Taxation ||495 ||626 |
|Net Profit after Tax ||1964 ||881 |
|Profit brought forward ||6241 ||4894 |
|Balance of Amalgamating Company ||- ||918 |
|Profit available for Appropriation ||8205 ||6693 |
|Appropriations: || || |
|Dividend ||594 ||209 |
|Corporate Tax on Dividend ||121 ||43 |
|Amount transferred to General Reserve ||200 ||200 |
|Profit carried to Balance Sheet ||7290 ||6241 |
During the financial year under review on a standalone basis your Company hasachieved gross turnover of Rs.77551 lakh as compared to Rs.65005 lakh in the previousyear thereby registering a growth of 19.30%. The profit before depreciation interest andtax stood at Rs. 5018 lakh in the year 2016-17 as against Rs. 4043 lakh in the previousyear representing a growth of 24.12%.
The profit after tax is Rs.1964 lakh in the year 2016-17 as against Rs. 881 lakh inthe previous year i.e. an increase of 123%.
The Company could achieve such a growth and performance due to tighter operatingcontrols prudent raw material sourcing new customer addition and controlled overheads.Your Company has taken several steps to reduce the cost and increase its market share inall products.
STATE OF COMPANY'S AFFAIRS
The financial year 2016-17 embarked upon visible improvement in operating margins dueto focused cost efficiency measures price discipline and low commodity prices. During theyear we introduced smart features in our existing product range that not only helped usto increase our market share but also adhere to our core philosophy of providingcustomised solutions to our customers. ACE realigned its focus on domestic markets andgrowth. ACE sustained its investment in brand and manpower to prepare for next growthphase. The Company continues to invest in future technology products and people. TheCompany is ready for next phase of growth.
Your Company proposes to transfer Rs. 200.00 Lakh to the general reserve out of theamount available for appropriation.
The Board has recommended the dividend of 8% on Preference Share Capital of the Companywhich will result in an outflow of Rs. 290.97 lakh (including Corporate Dividend Tax ofRs. 49.22 lakh).
The Board has recommended a final dividend of Rs. 0.30 i.e (15%) per equity share forthe financial year ended March 31 2017 which will result in an outflow of Rs. 423.62lakh (including Corporate Dividend Tax of Rs. 71.65 lakh).
The payment of dividends are subject to the approval of the shareholders at the ensuingAnnual General Meeting (AGM) of the Company.
CHANGE INTHE NATURE OF BUSINESS IF ANY
There is no change in the business of the Company during the financial year ended March312017.
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.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
Your Company has a wholly Owned Subsidiary and a Fellow Subsidiary as on March 312017namely:
1. Frested Limited Cyprus-wholly Owned Subsidiary
2. SC Forma SA Romania - Fellow Subsidiary
There has been no material change in the nature of the business of the subsidiaries.
In accordance with section 129(3) of the Companies Act 2013 and Accounting Standard(AS) - 21 on Consolidated Financial Statements the Company has prepared consolidatedfinancial statements of the Company and all its subsidiaries which form part of thisAnnual Report.
Pursuant to sub-section (3) of section 129 of the Act the statement containing thesalient feature of the financial statement/Highlights of performance of a company'ssubsidiary or subsidiaries is given in the prescribed form AOC-1 as Annexure-I tothis report.
The Policy for determining material subsidiaries may be accessed on the Company'swebsite viz www.ace-cranes.com .
BOARD OF DIRECTORS
The Board consists of executive and non-executive directors those have wide and variedexperience in different disciplines of corporate functioning.
Mrs. Surbhi Garg (DIN:01558782) has been reappointed as Whole Time Director (ExecutiveDirector) of the Company by the Board in their meeting held on May 19 2016 duly approvedby the members of the Company in their Annual General Meeting held on September 23 2016for a period of three (3) years with effect from April 12017.
In accordance with Article 88(1) of the Articles of Association of the Company Mr.Sorab Agarwal (DIN : 00057666) will be liable to retire by rotation in ensuing AnnualGeneral Meeting and being eligible offer himself for re-appointment at the forthcomingAGM.
The Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Act and there has beenno change in the circumstances which may affect their status as independent directorduring the year.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees for the purpose ofattending meetings of the Company.
None of the Directors of the Company is disqualified under Section 164(2) of theCompanies Act 2013 and Rules made there under.
KEY MANAGERIAL PERSONNELS
Pursuant to the Provisions of Section 203 of the Companies Act 2013 Mr. VijayAgarwal Chairman & Managing Director Mrs. Mona Agarwal Mr. Sorab Agarwal & Mrs.Surbhi Garg Whole-Time Directors Mr. Rajan Luthra CFO and Mrs. Yashika CompanySecretary are designated as Key Managerial Personnel of the Company.
ANNUAL GENERAL MEETING
During the Financial Year 2016-17 22nd Annual General Meeting of the Company was heldon September 23 2016 at 11:00a.m. atAravali Golf Club New IndustrialTownship (NIT)Faridabad Flaryana-121001.
ATTRIBUTES QUALIFICATIONS INDEPENDENCE AND REMUNERATION OF DIRECTORS AND THEIRAPPOINTMENT
The criteria for determining qualifications positive attributes and independence interms of Act and the Rules thereunder both in respect of independent and the otherDirectors as applicable has been approved by the Nomination and Remuneration Committee.The Board is well diversified and have balance of skills experience and diversity ofperspectives appropriates to the Company.
Directors are appointed / re-appointed with the approval of the Members for a period ofthree to five years or a shorter duration. All directors other than independent directorsand Managing Director are liable to retire by rotation unless approved by the members.One-third of the Directors who are liable to retire by rotation retire every year and areeligible for re-election.
Sitting fee of independent directors for attending the board meetings and othercommittee meeting has been increased from Rs.10000/- (Rupees Ten Thousand only) toRs.15000/- (Rupees Fifteen Thousand only) per meeting with effect from February 7 2017as decided by Board of directors of the Company.
The Company's policy relating to remuneration of Directors key managerial personneland other employee is displayed on the website of the Company at www.ace-cranes.com and isprovided as Annexure -II to this Report.
COMMITTEES OFTHE BOARD
Detailed information on the Board and its Committees is provided in the Report onCorporate Governance forming part of this Annual Report.
NUMBEROF BOARD MEETINGS
Five meetings of the Board were held during the year. For details of the meetings ofthe board please refer to the Corporate Governance Report forming part of this AnnualReport.
Pursuant to the provisions of clause (c) of Sub- section (3) of Section 134 of theCompanies Act 2013 your Directors hereby confirm that they:
i) Have followed in the preparation of Annual Accounts for the financial year 2016-17the applicable Accounting Standards and no material departures have been made forthesame;
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 2017 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 preventing and detecting 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.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis for the year as stipulated under Schedule V ofSecurities Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is separately given and forms part of this Annual Report and provides amore detailed analysis on the performance of individual businesses and their outlook.
REPORT ON CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under Part C of Schedule V of Securities Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 from a PracticingCompany Secretary confirming compliance of the conditions of corporate governance isattached to the Report on Corporate Governance.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
All contracts or arrangements or transactions 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.
The policy on Related Party Transactions as adopted by the Board is available onwebsite of the Company viz www.ace- cranes.com .
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-lll to this report.
CORPORATE SOCIAL RESPONSIBILITY(CSR)
ACE has been an early adopter of Corporate Social Responsibility (CSR) initiatives. TheCompany works primarily through its trust namely ACE Emergency Response Services.
The CSR Committee of the Board of Directors has been formed comprising of threedirectors with Chairman being Independent Director. CSR Committee has framed andformulated a CSR Policy indicating the activities to be undertaken by the Company inaccordance with schedule VII of the Act and the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 issued under the Act. The same has also been approved and reviewedtime to time by the Board. The CSR policy is available at the website of the Company vizwww.ace-cranes.com . The ACE was mandatory required to spend Rs. 22.70 lakh on CSRactivities in financial year 2016-17 whereas the Company has spent Rs. 100.00 lakh on CSRactivities which are more than the mandatory requirement. The Annual Report on CSRActivities as stipulated under the Act forms an integral part of this Report and isappended as Annexure-IV.
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 uncertainties 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 Concern' 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.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has a Whistle Blower Policy (the "WB Policy") with a view toprovide vigil mechanism to Directors employees and other stakeholders to discloseinstances of wrong doing in the workplace and report instances of unethical behavioractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The Policy provides that the Company investigates such incidents when reported in animpartial manner and takes appropriate action. The WB Policy also provides mechanism foradequate safeguards against victimization of Director(s)/ Employees who avail of themechanism and also provide for direct access to the Chairman of the Audit Committee inexceptional cases. The Whistle Blower Policy has been posted on the website of the Companyand the details of the same are explained in the Report on Corporate Governance formingpart of this Annual Report. The Whistle Blower Policy is available at the website of theCompanyvizwww.ace-cranes.com .
SEXUAL HARASSMENT POLICY
The Company has laid down sexual harassment policy pursuant to provision of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Theobjective of this policy is to provide protection against sexual harassment of women atworkplace and for the prevention and redressal of complaints of sexual harassment and formatters connected therewith. The Company has zero tolerance on sexual harassment atworkplace. During the financial year 2016-17 no complaint was received under this policy.This policy is made available at the website of the Companyvizwww.ace-cranes.com .
RESEARCH AND DEVELOPMENT
Your Company continues 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 Researchand Developments for developing new products and also focus on the quality of productsmaking them more economical cost effective and user friendly.
STATUTORY AUDITORS AND AUDITOR'S REPORT
M/s Rajan Chhabra & Co. Chartered Accountants Statutory Auditor of the Companywere appointed in the 20th Annual General Meeting to hold office until the conclusion of23rd Annual General Meeting.
As per Companies Act 2013 ('The Act') and rules made thereunder. M/s Rajan Chhabra& Co have completed their term and are not eligible for re-appointment. Based onrecommendation of Audit Committee your company seeks approval for the appointment of M/sBRAN & Associates Chartered Accountants (Firm Registration No. 014544N) as thestatutory auditors of the Company to hold office for a period of five consecutive yearsfrom the conclusion of this Annual General Meeting of the Company till the conclusion ofthe 28th Annual General Meeting to be held in the calendar year2022.
There is no qualification or reservation or remarks made by the Auditors in theirReport. The Notes on Financial Statements referred to in the Auditors report areself-explanatory and do not require any further comments.
In terms of the provisions of Section 148 read with Companies (Cost Record and Audit)Rules 2014 and other applicable provisions if any of the Companies Act 2013 the Boardhas appointed M/s Vandana Bansal & Associates Cost Accountants (Firm registration No.100203) as cost auditors of Company for the financial year 2016-17 to conduct audit of thecost records of the Company. Cost audit report for financial year 2016-17 will be filedwith the Ministry of Corporate Affairs within stipulated time period.
Further as per the provisions of the Companies Act 2013 the Board of Directors ofyour Company on the recommendations of the Audit Committee has appointed M/s. VandanaBansal & Associates Cost Accountants as the Cost Auditor for the financial year2017-18. The remuneration proposed to be paid to cost auditor requires ratification of theshareholders of the Company in view of this your ratification for payment ofremuneration to Cost Auditors is being sought at the ensuing AGM.
SECRETARIAL AUDITOR AND REPORT
In terms of Section 204 of the Companies Act 2013 and Rules made there under M/s MZ& Associates Practicing Company Secretary was appointed to conduct the SecretarialAudit of the Company for the financial year 2016-17. The Secretarial Audit Report isannexed to this Report as Annexure V.
The report is self-explanatory and do not call for any further comments. TheSecretarial Audit Report does not contain any qualification reservation or adverseremark.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES
The total number of permanent employees as on March 31 2017 stood at 1014 employees ascompared to 1062 as on March 312016.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 form part of this Report and are annexed as Annexure-VI.
During the year your Company did not accepted any public deposits under Chapter V ofthe Companies Act 2013 and as such no amount on account of principal or interest onpublic deposits was outstanding as of March 312017.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are provided in the notes to standalone financialstatements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORBTION 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 ANNUAL RETURN
In accordance with section 134(3)(a) of the Companies Act 2013 the extract of Annualreturn pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 in form MGT-9 is annexed herewith asAnnexure -VIII and forms a part of this report.
FORMAL ANNUAL PERFORMANCE EVALUATION OF THE BOARD AND THAT OF ITS COMMITTEES ANDINDIVIDUAL DIRECTORS
Pursuant to the provisions of Companies Act 2013 and Regulation 25 (3) of SecuritiesExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 Independent Directors at their separate meeting without participation of theNon-Independent Directors and Management have considered and evaluated the Board'sperformance and performance of the Chairman and Non- Independent Directors. TheIndependent Directors in the said meeting have also assessed the quality quantity andtimeliness of flow of information between the Company Management and the Board.
The Board of Directors has evaluated the performance of each of Independent Directors(without participation of the relevant Director). The Board has carried out the annualevaluation of its own performance and that of its Directors individually. The evaluationcriteria as approved by the Nomination and Remuneration Committee included various aspectsof the functioning of Board such as composition process and procedures including adequateand timely information attendance decision making roles and responsibilities 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 &contribution to the Board decisions knowledge experience integrity etc.
Your Directors state that no disclosure or reporting is required in respect of thefollowing matters as there were no transactions on these matters in the financial year2016-17:
1. Issue of shares with differential rights: Not issued
2. Buy back of securities :No
3. Issue of sweat equity shares: Not issued
4. Bonus shares: Not issued
5. Employees stockoption: Not issued
6. The Managing Director and the Whole-time Directors does not receive any remunerationor commission from any of its subsidiaries.
7. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company's operations in future.
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 confidencethatthe shareholder place in the managementand is confident that with theircontinued support the Company will achieve its objectives and emerge stronger in thecoming years.
| ||For and on behalf of the Board of |
| ||Action Construction Equipment Limited |
| ||Sd/ |
| ||Vijay Agarwal |
| ||Chairman & Managing Director |
| ||DIN :00057634 |
|Place : New Delhi || |
|Dated: May 19 2017 || |