TO THE MEMBERS OF
ARCHIDPLY INDUSTRIES LIMITED
Your Directors are pleased to present the Twenty third Annual Reporttogether with the Audited Statement of Accounts for the year ended 31 March 2018.
The financial results of the Company during the year under review aresummarized as under:
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(Rs. In Lakhs)
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Year ended 31 March2018
Year ended . 31 March2017
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|Other Income || |
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|Profit Before Financial expenses & Depreciation || |
|Less: Depreciation & Amortization Expenses || |
|Less: Finance Costs || |
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|Taxation || |
|Profit after tax || |
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The highlights of the Company's standalone performance are as under:
The Total Income of the Company during the year under review increasedby 5% from Rs. 29679.94 lakhs to Rs. 31166.22lakhs.
The Profit Before Tax (PBT) decreased by 53.90% from Rs.831.92lakhs inthe previous year to Rs. 383.45 Lakh.
Profit after tax (PAT)decreased by 62.54% from Rs. 669.88 lakhs in theprevious year to Rs. 250.89 Lakh.
The Profits of the Company has decreased during the current financialyear because of the following:
(i) The company has made the provision of Rs. 1.23 crores towards theadvance made to Wartayar Veneer Industries P Limited Myanmar for supply of Face Veneeras the production at Wartayar Veneer Ind P ltd Myanmar has been stopped due tonon-availability of Timber. (ii) The increase in Depreciation due to the capitalexpenditure by Company for expansion of capacity of Laminate Division. (iii) The increasein the cost of Goods consumed by 19.48% and not able to pass on the same to the customerfully as due to the increased competition
DEMERGER OF THE COMPANY:
In order to achieve geographical operational efficiencies and unlockshareholders value and to concentrate its growth efforts in a focused manner introducedifferent strategies for growth and different focus for alliance / ventures the managementof the Company has proposed to separate each business undertaking based on the commercialobjectives and relevant geographies of the undertaking into separate company.
At present the company has two manufacturing units one at Rudrapur-Uttarakhand and another at Chintamani Karnataka. The demerger of the units in twocompanies will give each company an opportunity to concentrate its growth efforts infocused manner.
The Board of Directors in the meeting held on 30th May 2018 haveapproved the scheme of arrangement for demerger of Chintamani Unit into Archidply DecorLtd. subject to necessary approval of Creditors Banks Stock Exchange and NationalCompany Law Tribunal under the Company's Act and other applicable laws. The detailedscheme of Demerger is available on the website of the Company www.archidply.com.
Keeping in view to further improve the capacity utilization andconsolidate its existing facilities the Board has considered prudent to conserve andretain the profit for further improvement. The Board regrets its inability to recommendany dividend.
The paid up equity capital as on March 31 2018 was Rs. 2206.50 Lakhs.The Company has not issued shares with differential voting rights nor granted stockoptions nor sweat equity during the year.
Cash and cash equivalents and bank balances as at March 31 2018 wasRs. 1254.92lakhs. The company continues to focus on judicious management of its workingcapital Receivables inventories and other working capital parameters were kept understrict check through continuous monitoring.
Brickwork Rating India Pvt.Limited continued to reaffirm their ratingof BBB(outlook stable)for your Company's Banking Facilities throughout the year enablingyour Company to avail facilities from banks at attractive rates indicating a degree ofsafety for timely payment of financial obligations.
During the financial year under review the company did not accept anydeposits covered under chapter V of the Companies Act 2013 and Section 73 of theCompanies Act 2013 and theCompanies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
There were no Loans Guarantees and Investments covered under Section186 of the Companies Act 2013.
The details of the investments made by company is given in the notes tothe financial statements.
MATERIAL CHANGE AND COMMITMENT
There have been no material changes and commitments affecting thefinancial position of the Company between the close of the year till the date of thisreport. There has been no change which affect the financial position of the Company.
As such there is no significant and material order by theregulator/court/tribunal/ impacting the going concern status and the Company operation infuture.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
Internal Financial Controls are an integrated part of the riskmanagement process addressing financial and financial reporting risks. The internalfinancial controls have been embedded in the business processes and continuous monitoringof the internal financial control systems by the internal auditors during the course oftheir audits.
We believe that these systems provide reasonable assurance that ourinternal financial controls are designed effectively and are operating as intended.Tomaintain its objectivity and independence the Internal Audit function reports to theChairman of the Audit Committee of the Board & to the Chairman & ManagingDirector.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
During the year the company has spent Rs.2450720 towards corporatesocial responsibility (CSR) under Section 135 of the Companies Act 2013 and rules thereonby way of contribution to schools for their development and eye checkup Camps.The Companyhas spent the last year kept aside amount of Rs.1169155 for CSR in the current financialyear 2017-18
Details about the CSR policy is available on our websitehttp://www.archidply.com/.
The annual report on our CSR activities is appended as Annexure A tothe Board's report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO:
The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed under theAct are provided in Annexure "C"to this Report.
During the year under review your Company enjoyed cordial relationshipwith workers and employees at all levels.
DIRECTORS & KEY MANAGERIAL PERSON:
Mr. Rajiv Daga Managing Director of the Company retire at this AGMbeing eligible for appointment offer himself for its- appointment at this AGM.
None of the Directors of your Company is disqualified as per provisionsof Section 164(2) of the Companies Act 2013. The Directors of the Company have madenecessary disclosures as required under various provisions of the Companies Act.
All independent directors have given declarations that they meet thecriteria of independence as laid down under section 149(6) of the Companies Act 2013 andas per the requirement of SEBI (LODR) Regulation 2015.
During the year under review Mr. Shyam Daga Executive Director &Chief Financial Officer (CFO) has step down from the position of CFO but will continueas an Executive Director of the Company.
The Board on the recommendation of the Audit Committee had at itsmeeting held on May 30 2017 appointed Mr. Anil Sureka as the Chief Financial Officer(CFO) with effect from May 30 2017.
CORPORATE GOVERNANCE REPORT:
Your Company is committed to maintain the highest standards ofcorporate governance. We believe sound corporate governance is critical to enhance andretain investor trust. Our disclosures seek to attain the best practices in corporategovernance as prevalent globally. We have implemented several best corporate governancepractices in the Company to enhance long-term shareholder value and respect minorityrights in all our business decisions. Our corporate governance report for FY 2017-18 formspart of this Annual Report. The requisite certificate from the auditors of the Companyconfirming compliance with the conditions of corporate governance as stipulated under SEBILODR is annexed to the corporate governance report.
Pursuant to the provisions of the Companies Act 2013 and ListingRegulationsthe Company has devised a Policy for performance evaluation of the BoardCommittees and other individual Directors (including Independent Directors) which includescriteria for performance evaluation of the Non-executive Directors and ExecutiveDirectors. The evaluation process inter aliaconsiders attendance of Directors at Board andcommittee meetings acquaintance with business communicating inter se board memberseffective participation domain knowledge compliance with code of conduct vision andstrategy benchmarks established by global peers etc. which is incompliance withapplicable laws regulations and guidelines.
The Board carried out annual performance evaluation of the Board BoardCommittees and Individual Directors and Chairperson. The Chairman of the respective BoardCommittees shared the report on evaluation with the respective Committee members. Theperformance of each Committee was evaluated by the Board based on report on evaluationreceived from respective Board Committees.
The reports on performance evaluation of the Individual Directors werereviewed by the Chairman of the Board.
The board met seven times during the financial year the details ofwhich are given in the corporate governance report. The maximum interval between any twomeetings did not exceed 120 days as prescribed in the Companies Act 2013.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Based on the framework of internal financial controls established andmaintained by the Company work performed by the internal statutory and secretarialauditors and reviews performed by Management in concurrence with the Audit Committee theBoard is of the opinion that the Company's internal financial controls were adequate andeffective during the financial year 2017-18.
In Compliance with section 134(5) of the Companies Act 2013 the Boardof Directors to the best of their knowledge and hereby confirm the following:
(a) In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;
(b) The directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;
(c) The directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;
(d) The directors had prepared the annual accounts on a going concernbasis;
(e) The Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate andoperating effectively.
(f) The directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in ordinary course of business and onarms' length basis.
During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the Policy of the Company on materiality of related party transactions.
All Related Party Transactions are placed before the Audit Committee.Prior omnibus approval of the Audit Committee is obtained on a yearly basis for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee for their approval ona quarterly basis.
The policy on Related Party Transactions as approved by the Board hasbeen uploaded on the Company's website www.archidply.com.There are no materiallysignificant related party transactionsthat may have potential conflict with interest ofthe Company at large.
The Company does not have any subsidiary company.
The details of the faimiliarisation programme undertaken have beenprovided in the Corporate Governance Report .
EXTRACT OF THE ANNUAL RETURN
In accordance with section 134(3) (a) of the
Companies Act 2013 an extract of the annual return in the prescribedformat is enclosed herewith as Annexure "E" to the Board's report.
CODE OF CONDUCT:
The Code lays down the standard procedure of business conduct which isexpected to be followed by the Directors and the designated employees in their businessdealings and in particular on matters relating to integrity in the work place in businesspractices and in dealing with stakeholders. The Code gives guidance through examples onthe expected behavior from an employee in a given situation and the reporting structure.
All the Board Members and the Senior Management personnel haveconfirmed compliance with the Code.
In pursuance to the provisions of section 177(9) & (10) of theCompanies Act 2013the Vigil Mechanism of the Company which also incorporates a whistleblower policy in terms of the Listing Regulations includes an Ethics & Compliance TaskForce comprising senior executives of the Company. Protected disclosures can be made by awhistle blower through an e-mail or dedicated telephone line or a letter to the TaskForce or to the Chairman of the Audit Committee. The vigil mechanism and whistle blowerpolicy is put on the Company's website and can be accessed at: http://www. archidply.com.
At the Annual General Meeting held on 12th September 2017 M/s PritiJhawar & Co. Chartered Accountants (ICAI Firm Reg. No. 328818E ) were appointed asthe Statutory Auditorsofthe Company for a period of 5 years up to the conclusion of 27thAnnual General Meeting to be held in 2022. In terms of the provisions of Section 139 (1)of the Companies Act 2013 the appointment of Statutory Auditors for the above tenure issubject to ratification by members at every AGM. Accordingly ratification of the membersis sought for the business as set out in item 3 of the Notice. They have confirmed thatthey are not disqualified from continuing as Auditors of the Company.
STATUTORY AUDITOR'S REPORT
The Auditors Report to the Shareholder does not contain anyreservation Qualification or adverse remark. The observation made in the Auditors Reportread together with relevant notes thereon are self-explanatory and hence do not call forany further comments under Section 134 of the Companies Act 2013.
SECRETARIAL AUDIT REPORT
The Board appointed Mr. Deepak Sadhu Practicing Company Secretary toconduct Secretarial Audit for the FY 2017-18. The Secretarial Audit Report for thefinancial year ended March 31 2018 is annexed herewith marked as Annexure D to thisReport. The Secretarial Audit Report does not contain any qualification reservationadverse remark or disclaimer.
BUSINESS RISK MANAGEMENT
Your Company has an elaborate Risk Management Framework which isdesigned to enable risks to be identified assessed and mitigated appropriately. On thebasis of risk assessment criteria of the Company has been entrusted with theresponsibility to assist the Board in
(a) Overseeing and approving the Company's enterprise wide riskmanagement framework; and
(b) Overseeing that all the risks that the organization faces such asfinancial credit market liquidity security property IT legal regulatoryreputational and other risks have been identified and assessed and there is an adequaterisk management infrastructure in place capable of addressing those risks.The AuditCommittee of the Board evaluating risks management policy of the Company on quarterlybasis. A risk management policy is available on our website http://www. archidply.com
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under reviewas stipulated under the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") is presentedin a separate section forming part of the Annual Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014. Particulars ofemployees remuneration as required under section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms a part of this report. Considering first proviso to Section136(1) of the Companies Act 2013 the Annual Report excluding the said information wassent to the members of the Company and others entitled thereto. The said information isavailable for inspection at the registered office of the Company during working hours upto the date of ensuing annual general meeting. Any member interested in obtaining suchinformation may write to the Company Secretary in this regard.
EQUAL OPPORTUNITY & PREVENTION OF SEXUAL HARRASMENT
The Company has always provided a congenial atmosphere for work to allemployees that is free from discrimination of any kind. It has provided equalopportunities of employment to all without regard to the nationality religion castecolour language marital status and sex.
The Company has also framed policy on 'Prevention of Sexual Harassment'at the workplace. We follow a gender-neutral approach in handling complaints of sexualharassment and we are compliant with the law of the land wherever we operate. There was nocomplaint related to sexual harassment during the Year 2018
COMMITTEES OF THE BOARD
Currently the board has four Committees: the Audit Committee theNomination and Remuneration Committee the Corporate Social Responsibility Committee andthe StakeholdersRelationship Committee. The majority of the members of these committeesare Independent and non-executives.
A detailed note on the composition of the board and other committees isprovided in the corporate governance report section of this annual report.
CEO AND CFO CERTIFICATION
Pursuant to the Listing Regulations the CEO and CFO certification isattached with the Annual Report. The Managing Director &CEO and the Chief FinancialOfficer also provide quarterly certification on financial results while placing thefinancial results before the Board in terms of the Listing Regulations.
The Equity shares of the Company are listed with Bombay Stock ExchangeLtd. (BSE) & National Stock exchange of India Limited (NSE). The annual listing feefor the year 2018-19 was paid within the scheduled time to BSE & NSE.
The Board of Directors would like to express their sincere appreciationfor the assistance and co-operation received from the financial institutions banksGovernment authorities customers vendors and members during the year under review. TheBoards of Directors also wish to place on record its deep sense of appreciation for thecommitted services by the Company's executives staff and workers.
For and on behalf of theBoard of Directors
Deen Dayal Daga
(Chairman) Place: Bengaluru
Date:30 May 2018