To the Members
The Directors are delighted to present the 44th Annual Report on the businessoperations of the Company and the financial statements for the year ended March 31 2019.
| || |
|Details ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue ||18723 ||15474 ||18934 ||15602 |
|Earnings before interest tax and depreciation ||2283 ||1728 ||1972 ||1534 |
|Finance/Interest cost ||- ||- ||(15) ||(15) |
|Depreciation ||(276) ||(302) ||(328) ||(346) |
|Write-off of old stock inventories ||- ||(84) ||- ||(84) |
|Profit before tax ||2007 ||1342 ||1629 ||1089 |
|Tax ||(625) ||(444) ||(530) ||(394) |
|Profit after tax ||1382 ||898 ||1099 ||695 |
|Opening balance of profit ||3049 ||2251 ||2571 ||1976 |
|Transfer to General reserve ||(200) ||(100) ||(200) ||(100) |
|Dividend including distribution tax ||(630) ||- ||(632) ||- |
|Closing balance of profit ||3601 ||3049 ||2838 ||2571 |
|Total comprehensive income ||1440 ||943 ||1158 ||740 |
The Board of Directors is pleased to recommend a dividend of ?. 3.50/- (Rupees threeand paise fifty only) per equity share of the face value of ?. 2/- each being one hundredand seventy five percent which is inclusive of a special dividend of twenty five percentto commemorate the 40 th year of business operations in to life enhancement of industrialcomponents.
The outflow on account of dividend and distribution tax envisaged is ?. 739 lakhscomprising ?. 613 lakhs and ?. 126 lakhs respectively. The pay out towards the same willbe from the Reserves of the Company. Dividend shall be paid to those Shareholders whosenames appear in the Register of Members as on the date of the book closure.
REVIEW OF BUSINESS OPERATIONS
The Company showed significant growth during the financial year 2018-19. The totalincome increased by ?. 3249 lakhs from ?. 15474 lakhs (2017-18) to ?. 18723 lakhs(201819) being a growth of 21% and the profit before tax (PBT) also registered anincrease of 50% from ?. 1342 lakhs (2017-18) to ?. 2007 lakhs (2018-19).
The growth is an outcome of congenial economic and industrial environment exemplarycontribution by the employees process improvements product rationalisation and thrivingperformance of all business verticals/strategic business units.
Going forward the Company would continue to remain focused on (i) The Service sectorin terms of repairs and refurbishment operations (ii) Transplantation of case studies(iii) Performance management system and training (iv) Focused working capital management.
3D Future Technologies Private Limited (3DFT) registered a growth in revenue of ?. 83lakhs from ?. 128 lakhs to ?. 211 lakhs. There were 376 certified Orthodontists associatedwith the Company and jointly 737 aligner cases have been successfully delivered. Duringthe year the manufacturing hub of the Company shifted from Mumbai to Pune as it was feltit would provide an effective operational base. The total investment in equity stood at ?.850 lakhs as on March 31 2019 of which ?. 200 lakhs was funded by Ador Fontech Limitedduring the financial year 2018-19. The Company has also provided lien mark on itsinvestments to the extent of ?. 500 lakhs to facilitate 3DFT to manage its working capitaland remain self-sustaining.
FINANCE AND ACCOUNTS
As mandated by the Ministry of Corporate Affairs the financial statements for the yearended March 31 2019 have been prepared in accordance with the Indian Accounting Standards(Ind-AS) notified under Section 133 of the Companies Act 2013 (hereinafter referred to asthe Act') read with the Companies (Accounts) Rules 2014 as amended from time totime. The estimates and judgements relating to the financial statements are made on aprudent basis so as to reflect in a true and fair manner the form and substance oftransactions and reasonably present the Company's state of affairs profits and cash flowsfor the year ended March 31 2019.
The paid-up Equity Share Capital as on March 31 2019 was ?. 350 lakhs divided in to175 lakhs equity shares of ?. 2/- each. During the year under review there was no changein the capital structure. Further as on March 31 2019 none of the Directors of theCompany held any instrument convertible in to equity shares of the Company.
TRANSFER TO RESERVES
The Directors propose to transfer rupees two crores (previous year: rupees one croreonly) to the General Reserve.
BOARD AND ITS COMPOSITION
The Company had an appropriate mix of Executive NonExecutive and Independent Directorswith distinctiveness in the functions of governance and management. At the end of fiscalyear 2018-19 the Company had two Executive Directors and four Non-Executive-Directorsout of whom three of them were Independent Directors.
The Board had met four times during the year and so did the Committees of the Boarddetails of which are provided in the Corporate Governance Report that forms part of thisAnnual Report. The intervening gap between the meetings was within the period prescribedunder the Companies Act 2013 and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
As required under the provisions of sub-section (3) of Section 178 of the CompaniesAct 2013 the Company has adopted optimum policies for Director's appointment andremuneration.
In accordance with the provisions of Section 152(6) of the Companies Act 2013 readwith relevant provisions of the Articles of Association of the Company Mrs. N MalkaniNagpal Non-Executive/Woman Director is liable to retire by rotation and being eligiblehas offered her candidature for reappointment.
The tenure of the two Independent Directors
Mr. N S Marshall and Mr. Santosh Janakiram would elapse on August 19 2019. The Boardevaluated their performance and based on their skill levels expertise in legal andbusiness management have recommended for their reappointment.
Further all Independent Directors have submitted declaration of independence asstipulated under the Companies Act 2013 and SEBI (LODR) Regulations (including Section149(6) and Regulation 25(8) of the said enactments) besides compliance in terms of theGuidance Note issued by the Institute of company Secretaries of India.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Sections 134(3)(c) and 134(5) of the Companies Actwith respect to the Directors' Responsibility Statement it is hereby confirmed:
In the preparation of the annual accounts for the year ended March 31 2019; theapplicable accounting standards read with requirements as set out under Schedule III tothe Act have been followed and there are no material departures from the same.
The Directors have selected accounting policies and applied them consistentlymade 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 March 31 2019 and of the profitsfor the year ended on that date.
The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing/detecting fraud(s) and other irregularities.
The Directors have prepared the annual accounts on a going concern basis.
The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate & operating effectivelyand
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws.
DETAILS OF CHANGES IN DIRECTORS AND/OR KEY MANAGERIAL PERSONNEL
The Board has appointed Mr. P Gopa Kumar as the Chief Financial Officer (CFO) of theCompany at its meeting held on May 17 2019.
Mr. P Gopa Kumar has extensive experience of over 40 years in Finance Accounts andAdministration. He has worked with Ador Fontech Limited in a range of roles starting froman Accountant to Senior General Manager.
His previous employment was with Carter Wallace Limited.
There were no changes in the Board during the financial year 2018-19.
AUDIT COMMITTEE RECOMMENDATIONS
The Board has accepted all the recommendations of the Audit Committee and hence nofurther explanations have been provided for in this Report.
(i) The Board
The Company has during the year conducted an evaluation of the Board as a whole itscommittees and individual Directors (including Independent Directors) as stipulated in theNomination and Remuneration Policy adopted by the Company and as per the provisions of theCompanies Act 2013 and Regulation 17(10) of the SEBI (LODR) Regulations 2015. Theevaluation was carried out on the basis of the below set targets:
Performance of products
Committee wise reviews
Other parameters of evaluation comprised level of participation integrityindependence knowledge impact and influence on the Board. The Independent Directors ofthe Company also convened a separate meeting on February 6 2019 and evaluated theperformance of the Board Non-Independent-Directors and the Chairman. The Board isconfident that collectively and individually best possible efforts have been made.
(ii) Staff members
While the Company has adopted Performance Management System (PMS) to facilitateemployee engagement and compensation during the year 2018-19 it facilitated a half yearlyreview which provided requisite feedback mechanism to the employees to introspect theirperformance. The employees in general also expressed their satisfaction on the systembeing followed and the collective efforts to improvise the same.
COMMITTEES OF THE BOARD
In consonance with the provisions of the Companies Act 2013 and SEBI (LODR)Regulations 2015 the Company has the following four committees:
Management Development Nomination and Remuneration Committee
Stakeholders' Relationship Committee
Corporate Social Responsibility Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the Corporate Governance Report'.
INTERNAL CONTROL SYSTEMS
The Company has in place an effective internal control system commensurate with itssize and complexity of business. It believes that such systems provide an assurance thatall material transactions are carried out with authorisations of the Management and areproperly recorded in the financial statements resulting in an efficient conduct ofbusiness safeguarding of assets prevention/detection of frauds and errors. Such internalcontrol system is further supported through an extensive quarterly internal audit andperiodic review by the Audit Committee. Further the Statutory Auditors have also carriedout an audit and their report on internal financial controls forms part of the AnnualReport.
During the year under review neither the Statutory Auditors nor the SecretarialAuditor have reported to the Audit Committee under Section 143(12) of the Companies Act2013 any instance of fraud committed against the Company by its officers or employees thedetails of which need to be mentioned in the Board's report.
In respect of the financial year 2018-19 there were no qualification(s) orreservation(s) or adverse remark(s) or disclaimer(s) specified in the audit reports. Henceexplanations or comments on the same do not become applicable.
The Company has complied with all the applicable provisions of Secretarial Standardsand the Secretarial Audit Report for the financial year 2018-19 forms part of this Report.
The Company maintains cost accounting records and has cost control measures in place.As per best practices the Company suo motto ensures conduct of cost audit.
M/s. Srinivas & Subbalakshmi Chartered Accountants (Firm Registration No.011350S) having office at No. 237 2nd cross Cambridge Layout Halasuru Bengaluru 560008 have been appointed as the Statutory Auditors for a term of five years which willconclude at the end of the 47 th Annual General Meeting. The Company has receivedcommunication from the Auditors to the effect that their appointment will be in accordancewith the provisions of Section 141 of the Companies Act 2013.
The Board has appointed Ms. Manjula Narayan Company Secretary in Practice (ACSMembership No. 28374 & COP No.10150) having office at No.22/A 4th CrossVenkateshwara Theatre Road Devasandra Krishnarajapuram Bengaluru - 560 036 as theSecretarial Auditor of the Company for the financial year 2019-20.
M/s. Rao Murthy and Associates Cost Accountants (Firm Registration No. 000065) havingoffice at 23/33
Surveyor's Street Basavanagudi Bengaluru 560 004 have been appointed as the CostAuditor and resolution for approval/ratification of remuneration have been placed beforethe Members.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return for the year 2018-19 in form MGT-9 and MGT-7 in respectof the previous year have been uploaded on the website of the Company athttp://www.adorfon.com/mgt9.html and a brief summary of the same forms part of thisreport.
TRANSFER OF UNCLAIMED DIVIDEND & SHARES TO IEPF
Pursuant to the provisions of the Companies Act 2013 read with the IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 (the Rules') notified by theMinistry of Corporate Affairs unclaimed dividends are required to be transferred by theCompany to the Investor Education and Protection Fund as per the Rules specified therein.
Further the shares on which dividends have not been paid or claimed by theShareholders for seven consecutive years or more will also have to be transferred to thedemat account of the IEPF Authority.
Accordingly the Company has transferred dividends amounting to ?. 1013323/- (Rupeesten lakhs thirteen thousand three hundred and twenty three only) and 34000 equityshares of ?. 2/- each to the Investor Education and Protection Fund. The details of thesame have been hosted on the website of the Company.
JOINT VENTURE AND SUBSIDIARY
As at December 31 2018 the Balance Sheet of the Joint Venture was completely writtenoff with only capital subsisting. Parleys are on with the Malaysian Venture Partner (M/sDualrank Fontech (M) Sdn. Bhd) for closure of the entity as per Malaysian laws.
While the subsidiary 3D Future Technologies Private Limited continued to incur lossesit may be pertinent to note that the Company is operating on a minimal capital base withthe holding company providing intermittent contributions each year. While the currenttarget of the Subsidiary is to skim the market it is opined that it will take a couple ofyears to get in to profits. Every effort is being consistently made to raise theperformance levels with the available limited resources given the adopted scale ofbusiness operations.
The Company's products are manufactured to international standards with adherence toquality systems and marketed under Registered Trademarks.
Further the primary logo of the Company Ador Fontech' is a registered markunder Class 6737 and 40 of the Trademarks Act.
PARTICULARS OF LOANS GUARANTEE & INVESTMENTS
During the financial year 2018-19 the Company made an equity investment of rupees twocrores in its wholly owned subsidiary-3D Future Technologies Pvt. Ltd.
Further Inter-corporate-deposit (ICD) to Ador Powertron Limited (APL) was facilitatedof which principal along with interest were duly repaid.
The reckoning of interest was a clear three point seven five percent above the bankrate and safety of investment was covered through legal documentation entailing rightsover the assets of APL next only to their banker's charge. Details of ICD were duly filedwith the Registrar of Companies/Ministry of Corporate Affairs vide SRN G83766147 datedApril 16 2018.
It may be pertinent to state that APL is in to digital electronics. They are a leadingmanufacturer of high voltage rectifier transformer sets power solution provider anddesign customised equipment. The Company has been in operation since 1995. The purpose forwhich APL had requested for ICD was to bridge finance their short term working capitalrequirements.
Note: Aggregate of investments and loans provided are within the powers and limitsspecified under Section 179 185 and 186 of the Companies Act 2013.
The Company has spent ?. 115 lakhs in aggregate towards ERM (Enterprise ResourceManagement) which is held under capital work-in-progress. The same will be capitalised onsuccessful implementation.
The Company has not accepted any deposits from the public and as such no amount onaccount of principal or interest on deposits from the public was outstanding as on thedate of the Balance Sheet.
CORPORATE SOCIAL RESPONSIBILITY
During the financial year 2018-19 the Company has spent more than the requisite amountto be defrayed as per the Companies Act in the discharge of its Corporate SocialResponsibility.
MATERIAL CHANGES COMMITMENTS & ORDERS
There has been no significant material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year and thedate of this report. There were no significant orders passed against the Company by theRegulators or Courts or Tribunals impacting the going concern status and Company'soperations in the future.
EMPLOYEES AND WORKPLACE CULTURE
The Company recognises the significance of human capital and remains focused to hireand retain the best brains of the industry. The Company organises various trainingprogrammes and seminars throughout the country for effective development of employeetalent and efficiency. The Company is committed to provide equal opportunity to all itsemployees without any bias on the basis of caste gender creed religion or nationality.
The Company has a strong vigil mechanism (whistleblower) policy and all employees haveaccess to the Chairman of the Audit Committee to report any of their concerns.
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company believes in providing a safe work environment to its employees. To ensuresuch environment the Company has adopted Anti-Sexual- Harassment policy which is in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and Rules framed thereunder.
An internal complaints committee has been specially constituted to redress complaintsunder sexual harassment. During the fiscal year 2018-19 there were no complaints receivedunder this category.
HEALTH AND SAFETY
The Company has adopted various measures to create a healthy and illness freeatmosphere across the Company. The Health of employees is monitored through pre-medicalcheck-ups and health camps organised from time to time.
Further in respect of the factories/business units the Company has appointed theChief Operating Officer (COO) and Plant-in-charge(s)/Unit head(s) to ensure industrial andsafety law compliance(s). The Company makes available necessary health and safetyequipment to its employees and there are no let or hindrance whatsoever on this account.
The Company has also mandated for employees to adhere to the highest standards ofethical and legal conduct of business operations besides adherence to safety standardsduring the course of employment be it in the work area or at external premises.
The Company has been bestowed with ISO 9001 14001 and OHSAS 18001 Management SystemCertificates by DNV-GL-Business Assurance.
The Company has adopted Risk Management Policy' to identify assess monitor andmitigate various risks which may impact the Company's business. The Company has anadequate framework to curtail any adverse impact on its core operations. The Board ofDirectors and Management are committed towards identifying major risks exposed to thebusiness and means to mitigate the same.
The Company has sufficient insurance coverage encompassing (i) Assets (ii) Inventories(iii) Transit of materials during the course of shipment etc.
The Company has also covered employees under Personnel accident Workmen compensationpolicy Employees deposit linked insurance scheme etc. in order to safeguard theirinterests.
NOMINATION AND REMUNERATION POLICIES
As required under the provisions of Section 178(3) of the Companies Act 2013 and SEBI(LODR) Regulations 2015 the Company had adopted policy for Directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of Directors etc. Details on remuneration policy are explained in theCorporate Governance Report.
(i) Related party transactions
All transactions entered in to with Related Parties as defined under the Companies Act2013 and Regulation 23 of the SEBI (LODR) Regulations 2015 during the financial yearwere in the ordinary course of business and on an arm's length pricing basis and do notattract the provisions of Section 188 of the Companies Act 2013. There were no materialsignificant transactions with related parties during the financial year which were inconflict with the interest of the Company. Suitable disclosures as required by theAccounting Standards have been provided in the notes to the Standalone and ConsolidatedFinancial Statements. The approved policy on Related Party Transactions' has beenmade available on the website of the Company.
(ii) Insider trading
The Company has adopted Code of Conduct' for prevention of Insider Trading with aview to regulate trading in securities by the Directors and designated persons of theCompany.
(iii) Details of fees paid to the Statutory Auditors
The total fees for all services paid by Ador Fontech Limited and its subsidiary on aconsolidated basis to M/s Srinivas & Subbalakshmi Statutory Auditors for the yearended March 31 2019 are as follows:
| ||Rupees In Lakhs |
|Particulars ||Amount |
|Audit fees ||4 |
|Certifications ||1 |
|TOTAL ||5 |
(iv) Details of utilisation of funds raised through preferential allotment or qualifiedinstitutional placement as specified under Regulation 32
There were no funds raised by the Company through preferential allotment or qualifiedinstitutional placement during the financial year 2018-19.
(v) Certificate on nondisqualification of Directors
A Certificate from the Practicing Company Secretary has been received by the Companystating that none of the Directors on the Board of the Company have been debarred ordisqualified from being appointed or to continue as Directors.
(vi) Other disclosures
The following reports have been annexed/appended and forms part of the Directors'Report:
Management discussion and analysis report
Corporate governance report
Report on CSR activities
Conservation of energy technology absorption foreign exchange earnings &outgo
Particulars of arrangements/transactions made with related parties
Particulars of employees
Details of Subsidiary Associates and Joint venture
(vii) Web link
All requisite policies and documents have been uploaded on the website of the Companywww.adorfon.com'.
The Company continues to sustain its commitment to the highest levels of qualitysuperior service management robust information security practices and mature businesscontinuity management. These fundamental ethos and integrity will continue to transcend inthe years to come.
The Board wishes to place on record its deep sense of appreciation to the contributionsmade by employees at all levels for enabling the Company's consistent growth over theyears and in particular during the financial year 2018-19. It also extends special thanksto all the stakeholders who have been associated with the Company through the last fourdecades.
| ||For ADOR FONTECH LIMITED |
| ||A T MALKANI |
|Mumbai ||Chairman |
|May 17 2019 ||DIN:01585637 |