Your Directors are pleased to present the Thirty Seventh Annual Report of the Companytogether with the Audited Financial Statements (Standalone & Consolidated) for theyear ended 31sl March 2018.
1. FINANCIAL RESULTS AND PERFORMANCE:
| || || || ||(Rs. In Lakhs) |
| || |
Ashapura Minechem Ltd.
| ||2017-2018 ||2016-2017 ||2017-2018 ||2016-2017 |
|Net Sales/Income from Operations ||23918.84 ||23573.12 ||79436.43 ||83289.84 |
|Less: Total Expenditure ||27872.10 ||28334.45 ||80920.07 ||81407.17 |
|Profit /(Loss) from Operations before Dep. Other Income and Exceptional Items ||(3953.26) ||(4761.33) ||(1483.64) ||1882.67 |
|Less: Depreciation ||2405.89 ||2435.91 ||3850.57 ||4841.45 |
|Profit /(Loss) from Operations before Other Income and Exceptional Items ||(6359.15) ||(7197.24) ||(5334.21) ||(2958.78) |
|Add: Other Income ||997.92 ||1295.46 ||738.91 ||1105.60 |
|Profit/(Loss) before Exceptional Items share of net profit of investments accounted for using the equity method and Tax ||(5361.23) ||(5901.78) ||(4595.29) ||(1853.18) |
|Share of net profit of Joint Ventures & associates accounted for using the equity method || |
|2788.30 ||1734.53 |
|Profit before exceptional items ||(5361.23) ||(5901.78) ||(1806.99) ||(118.65) |
|Less: Exceptional Items ||1512.20 ||- ||1512.21 ||- |
|Profit /(Loss) before tax || || || || |
|Tax Expenses ||(6873.43) || ||(3319.20) ||(118.65) |
|Current Tax ||- ||- ||1660.50 ||1740.00 |
|Earlier Year's Tax ||- ||- ||(78.48) ||(13.06) |
|Deferred Tax ||- ||- ||(384.64) ||44.57 |
|Profit/(Loss) after tax ||(6873.43) ||(5901.78) ||(4516.58) ||(1890.16) |
|Profit attributable to non-controlling interest ||- || ||0.18 ||1.80 |
|Profit for the year ||(6873.43) ||(5901.78) ||(4516.39) ||(1888.36) |
The financial year 2017-2018 was encouraging in terms of the Company's Bentonite andvalue-added solutions portfolio however a below par performance in the export of Bauxiteduring the year under review has affected the revenues and margins of the Company both onstandalone and on a consolidated basis. The total revenue (standalone) for the year ended31st March 2018 stood at Rs. 24916.76 Lakhs whereas the net loss after extraordinaryitems and tax was Rs. 6873.43 Lakhs.
At consolidated level the total revenue for year ended 31st March 2018 stood at Rs.80175.34 Lakhs and the net loss after extraordinary items and tax was Rs. 4516.39 Lakhs.
During the year the Company also provided for exceptional items amounting to Rs.1512.20 Lakhs which represented unprovided additional liability on account of exchangerate differences on disputed shipping claims; differences and gain on account of fairvaluation of long term liability towards settlement of two shipping claims which isagainst pledge of shares in certain subsidiaries and a joint venture of the Company; andliability upon settlement with a shipping Company.
The Company is in the process of setting up overseas export hubs to regaincompetitiveness in the global ores market. Furthermore it continues to petition to theGovernment of India to abolish export duties on Bauxite which are weighing down on theentire industry's performance in India.
The Company is also exploring avenues in export of other bulk minerals from the MiddleEast such as Gypsum which have stable global demand patterns.
Considering the net loss for the year and financial position of the Company yourDirectors have not recommended any Dividend for the year ended 31st March2018.
3. TRANSFER TO RESERVES:
The Company has not proposed to transfer any amount to the General Reserves.
Your Company has not accepted any amount as deposits within the meaning of provisionsof Chapter V-Acceptance of Deposits by Companies of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014.
5. SUBSIDIARIES AND JOINT VENTURES:
I. Business performance and overview of the principal subsidiaries and joint venturecompanies:
A. Wholly-Owned Subsidiaries
Ashapura International Limited (AIL)
The Company's Bentonite business was encouraging during the year and reported increasein its revenue by above 20% and it is expected that there will be increasing trend inbentonite business having reference to increased demand from industries like Foundry IOP(Iron Ore Pellets) Civil & Oil Drilling and Other Segments like specialty productsmeant for meant for Paper Paint Constructions Industries etc. as also considering thedevelopment in various sectors such as infrastructure automobiles steel industry andincreasing demand of specialty products.
Bombay Minerals Limited (BML)
The year under review was challenging for the Company on account of muted exports ofBauxite ore. High Government levies such as export duties have eroded the competitivenessof Indian Bauxite versus other global suppliers. As a result of which BML's revenue fromoperation dropped by approx. 45% and reported a net loss.
The Management continues to petition to the authorities to rationalise levies onBauxite and is in the process of exploring avenues to cut logistic costs in order toregain competitiveness.
B. Joint Venture
Ashapura Perfoclay Limited (APL)
During the financial year 2017-2018 despite witnessing the lingering effect ofdemonetisation and introduction of GST APL registered a growth of 5% in its revenue whichstood at Rs. 28066.37 Lakhs. In contrast APL's profit after tax reduced by approx. 6% to2828.84 Lakhs mainly because of increases in key inputs such as sulphuric acid and energycost. However APL continues to implement innovative process to cut down the consumptionof acid with improving yields and product quality.
APL retains its position by far as the Industry leader in domestic segment; as for theoverseas market APL's products are exported to more than 50 countries around the worldcontributing around 47% of total sales. Apart from dominating the premium Bleaching Claymarket APL is building capabilities to cater to the mid-tier oils such as Palm Oil in inSouth East Asia with a special emphasis on Indonesia and Malaysia.
APL's clay catalyst business registered the strong volume growth of 28% due to theincreased orders from domestic refineries and improved sales in South East Asia & FarEast and accordingly remains one of the top 3 globally registered companies tomanufacture the clay catalyst for the petrochemical companies worldwide.
APL's capacity utilisation stands at 82% and with the present demand it is expected tooutpace its current manufacturing capacity by F.Y. 2019. Keeping the demand situation inmind APL is further expanding the manufacturing capacity by 50000 MT per annum for whichit is awaiting the clearance from the Government agencies to begin work on the same.
C. International Business
The other overseas subsidiaries and joint ventures of the Company in UAE AntwerpMalaysia and Oman exhibited marginal increases in revenues and profits concomitant to thegrowth in their respective regions.
II. Companies which has became or ceased to be subsidiary associates and jointventure:
During the year under review the following changes were reported:
a. The Company acquired the entire stake of Mineralco International Private Limitednow known as M/s. Ashapura Resources Private Limited thereby defining as its wholly-ownedsubsidiary.
b. The Company's step-down subsidiary M/s. Ashapura Holdings (UAE) FZE United ArabEmirates incorporated a wholly-owned subsidiary in Indonesia named PT Ashapura BentoclayFareast.
c. The Company in venture with M/s. Dhofar Minerals LLC Oman incorporated a Company inOman named M/s. Ashapura Dhofar Resources LLC (Ashapura Dhofar). The Company owned 70% ofthe share capital of Ashapura Dhofar.
III. Material Subsidiaries:
As required under Regulations 16(1)(c) and 46 of the SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 (Listing Regulations) the Board of Directorshave approved the Policy for determining Material Subsidiaries. The details of the Policyare available on the Company's website at: www.ashapura.com/investor-comer.php
6. CONSOLIDATED FINANCIAL STATEMENTS:
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 theConsolidated Financial Statements of the Company and its subsidiaries & associateshave been prepared in accordance with the Indian Accounting Standards which forms part ofthis Annual Report. Further pursuant to the provisions of the said section a statementcontaining salient features of the financial statements of the Company's subsidiaries andassociate companies (in Form AOC-1) is given in this Annual Report.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including consolidated financial statements financial statements ofsubsidiaries and all other documents required to be attached to this Report have beenuploaded on the website of the Company at www.ashapura.com/investor-corner.php
7. STATUS OF THE PENDING LITIGATIONS:
A. SHIPPING MATTERS:
The Contracts of Affreightment ('COA') were entered into by the Company with ShippingCompanies-viz.  Pacific Basin I.H.X. (UK) Ltd. (Pacific Basin)  Eitzen Bulk A/S [nowknown as Ultrabulk A/S] (Ultrabulk) and  Armada Singapore Pte Ltd. (Armada)(collectively referred to as 'COAs')
In pursuance to dispute with regards to termination of COAs the above said shippingcompanies obtained favourable foreign arbitration awards which was subsequently declaredenforceable by the Hon'ble Bombay High Court.
In the matter of Pacific Basin and Ultrabulk ASQ Connect Limited (ASQ) a Companyincorporated under the laws of England and Wales purchased the enforceable rights torecover the decreed amount by way of assignment deeds. Pursuant to these deed ofassignment ASQ entered into a settlement agreement with the Company wherein it willrecover USD 45 million over a period of 25 years on terms and conditions as prescribed inthe said settlement agreement.
In the matter of Armada the said shipping company has filed a decree executionpetition in Hon'ble Bombay High Court for recovery of its claims granted by the awarddated 16th February 2010. The Company is suitably dealing with said executionpetition and parallely is also trying to suitably negotiate the said claim.
B. FOREX DERIVATIVES
In case of Forex Derivatives Contract the Company based on legal opinion obtained isof the opinion that these contracts are void and are not legally enforceable. It has beenfurther advised by the counsels that the Company can take legal actions for challengingthe validity of the said contracts.
The Company has approached the Bankers and has successfully settled the claims amicablywith most of the bankers.
Proceedings filed by HDFC Bank Limited and J P Morgan are pending at various stage inthe Tribunals and Court of Law.
8. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYWHICH HAVE OCCURRED BETWEEN 31st MARCH 2018 AND 13th AUGUST 2018(DATE OF THE REPORT):
Other than as stated elsewhere in this report there are no material changes andcommitments affecting the financial position of the Company between the end of the currentfinancial year and the date of this report.
9. SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATIONS:
During the year under review the Company has not received any significant or materialorder passed by any regulatory authority court or tribunals which shall affect the goingconcern status of the Company.
10. MEETINGS OF THE BOARD:
During the year under review five (5) meetings of the Board of Directors were held.The dates of the meetings are provided in the Report on Corporate Governance which forms apart of this Annual Report.
11. DIRECTOR'S RESPONSIBILITY STATEMENT:
In pursuance of Section 134(5) of the Companies Act 2013 read with the rules madethere under including any enactment or re-enactment thereon (the Companies Act 2013)the Directors hereby confirm that:
a. in the preparation of the annual accounts the applicable Indian AccountingStandards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe Loss of the Company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
A. Retire by Rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Association of your Company Shri Rajnikant Pajwani Whole-time Director &CEO retires by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment.
The details as required under the provisions of the Companies Act and ListingRegulations are provided in the Notice convening the ensuing Annual General Meeting.
B. Vacation of office of an Independent Director:
During the year under review Shri Ashok Kadakia Independent Director on the Board ofDirectors of the Company incurred disqualification and as such under the provisions ofSection 164(2) read with Section 167 of the Companies Act 2013 vacated his office as anIndependent Director w.e.f 11th October 2017.
The Board of Directors of the Company at their meeting held on 12th December 2017 hadtaken the same on record and necessary formalities as required under the Companies Act2013 & Listing Regulations have been duly complied with.
C. Re-appointment of Shri Rajnikant Pajwani as Whole-time Director & ChiefExecutive Office of the Company:
Shri Rajnikant Pajwani was re-appointed as the Whole Time Director & ChiefExecutive Officer of the Company for a period of 1 year w.e.f. 1st October 2017 onagreed terms & conditions as stated in the original agreement & re-appointmentletter accordingly Shri Rajnikant Pajwani's present term of office expires on 30thSeptember 2018.
However considering the current state of affairs of the Company and given his exposure& expertise in the field of mining mineral processing projects logistics resourceand business development the Board of Directors on the recommendation of Nomination andRemuneration Committee decided to re-appoint Shri Rajnikant Pajwani as a Whole-TimeDirector & Chief Executive Officer for a further period of 1 year from the expiry ofhis current term i.e. 30th September 2018 on the same terms & conditionsthat forms part of the original agreement & re-appointment letter which is subject tothe approval of the Members of the Company.
Accordingly pursuant to provisions of Section 196 of the Companies Act 2013resolution seeking approval of the shareholders for his re-appointment as a Whole TimeDirector & Chief Executive Officer of the Company forms part of Notice conveningAnnual General Meeting.
D. Re-appointment of Non-Executive Independent Director:
In terms of the provisions under section 164(2) read with section 167 of the CompaniesAct 2013 Shri Ashok Kadakia vacated his office as an Independent Director w.e.f. 11thOctober 2017. Subsequently he informed the Board of Directors of the Company that he hadcomplied with all the relevant formalities including payment of stipulated penalty(ies)and on having approached to National Company Law Tribunal (NCLT) his DIN was restored andas such he had expressed his desire to re-join the Board of Directors of the Company.
Considering his submissions and based on the legal opinion solicited by the Companythe Board of Directors on the recommendation of Nomination and Remuneration Committeeco-opted Shri Ashok Kadakia as an Additional Director (Non-Executive IndependentDirector) w.e.f. 13th August 2018 for a period of 3 (three) years subject to theapproval of Shareholders at the ensuing Annual General Meeting.
Further Regulation 17(1A) of the Listing Regulations effective 1st April 2019requires companies to obtain approval of shareholders by passing a special resolution forappointment or continuation of any Non-Executive Director who has attained the age ofseventy-five (75) years.
The Company has received a declaration from him confirming that he meets the criteriaof independence as prescribed under Section 149 (6) of the Companies Act 2013.
Accordingly in accordance with the provisions of Sections 149 152 read with ScheduleIV and any other applicable provisions if any of the Companies Act 2013 and provisionsof Listing Regulations resolution seeking approval of the shareholders for hisre-appointment as Non-Executive Independent Director on the Board of Director of theCompany forms part of Notice convening Annual General Meeting.
The relevant details of Shri Ashok Kadakia as required pursuant to the provisions ofthe Act and the Listing Regulations are furnished in the Notice of the ensuing AnnualGeneral Meeting.
E. Declaration by Independent Directors:
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under the provisionsof section 149(6) of the Companies Act 2013 read with schedules & rules issuedthereunder as well as regulation 16 of the Listing Regulations (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force).
F. Appointment of Key Managerial Personnel:
In accordance with the provisions of Sections 2(51) and 203 of the Companies Act 2013Shri Rajnikant Pajwani Whole Time Director & Chief Executive Officer and Shri SachinPolke Company Secretary & Vice President are recognized as the Key ManagerialPersonnel of the Company.
In addition the following Executives of your Company have been recognized as awhole-time Key Managerial Personnel to perform such duties/ functions as may be assignedto them under their prescribed designation and/or generally and specifically assigned tothem by the Board of Directors and/or its Committee from time to time:
|1. ||Smt. Surekha Sathe ||- Vice President-IT |
|2. ||Shri Akhilesh Sinha ||- Vice President-HR |
|3. ||Shri Ashish Desai ||- Sr. General Manager-Accounts |
|4. ||Shri Ajay Phalod ||- Sr. General Manager-Corporate Finance |
(Smt. Harsha Joshi General Manager-Taxation & Internal Control retired from theservice of the Company w.e.f 31st December 2017 & Shri Akhilesh SinhaVice President-HR has been recognised as KMP by the Board of Directors w.e.f 10thAugust 2017).
13. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The information required under Section 197(12) of the Companies Act 2013 read withrule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is set out in "Annexure-A" to this Report.
Further the statement containing particulars of employees in terms of section 197(12)of the Companies Act 2013 read with rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in a separate statement andthat forms part of the annual report.
Considering the provisions to section 136 of the Companies Act 2013 the annualreport excluding the aforesaid statement is being sent to the shareholders of thecompany and others entitled thereto. The said statement is available for inspection ofmembers at the Registered Office of the Company during working hours upto the date of theAnnual General Meeting and shall be made available to any shareholder on request.
14. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIESPROVIDED:
Particulars of loans given investments made guarantees given and securities providedin accordance with the provisions of Section 186 of the Companies Act 2013 are given inthe Notes to Financial Statements (Please refer to Note no. 5633).
15. DISCLOSURES ON POLICIES ADOPTED BY THE COMPANY:
A. Nomination & Remuneration Policy:
The Nomination and Remuneration Policy adopted by the Company lays down the frameworkfor selection and appointment of Directors Key Managerial Personnel & SeniorManagement and for determining qualifications positive attributes and independence of aDirectors. The policy also elucidates the various components of remuneration to be paid toDirectors/Senior Management in order to retain experienced & proficient individualsfor achieving the strategic and operational objectives of the Company.
In addition to this the policy ensure that the relationship of remuneration toperformance is clear so as to meet appropriate performance benchmark.
The Policy on Nomination & Remuneration is available on the website of the Companyviz. www.ashapura.com. The details about the Nomination & RemunerationCommittee and payment of remuneration to the Directors are provided in the Report onCorporate Governance which forms part of this Annual Report.
B. Performance Evaluation Policy and Annual Performance Evaluation:
The performance evaluation policy was adopted by the Board with an objective ofevaluating the performance of the each and every Director of the Board Committees of theBoard including the performance of the Board as a whole which would contributesignificantly to performance improvements at three levels: the organizational the boardand individual director level which in turn would help in increased accountabilitybetter decision making enhanced communication and more efficient Board operations.
Keeping the said objective in mind the annual performance evaluation was carried outbased on the structured questionnaire which inter-alia contained various attributes andparameters depending on the category of directors committees of the Board and the Boardas a whole.
Evaluation of the Board and its Committees was based on various aspects of theirfunctioning such as adequacy of the constitution and composition; matters addressed inthe meetings processes followed at the meeting Board's focus regulatory compliancesetc.
Further the performance of Chairman & Executive Director were evaluated on certainadditional parameters depending upon their roles and responsibilities such as leadershiprelationship with stakeholders execution of business plans risk Management developmentof plans and policies in alignment with the vision and mission of the Company etc.Similarly criteria for evaluation of Independent Directors include effective deploymentof knowledge and expertise willingness to devote time and efforts towards his/her rolehigh ethical standards adherence to applicable codes and policies effectiveparticipation etc.
The Independent Directors had met separately on 26th March 2018 anddiscussed inter-alia the performance of Non-Executive Chairman Whole-Time Director& Chief Executive Officer of the Company and the Board as a whole. The Nomination andRemuneration Committee has also carried out evaluation of every Director's performance.
A report on performance evaluation of each Individual Director & the Board as awhole was placed before the Board of Directors for appropriate analysis &confirmation. While analysing the performance the Director whose performance was analysed& evaluated did not participate in the evaluation process.
Based on the annual performance evaluation the Board expressed its satisfaction withthe performance evaluation process.
C. Corporate Social Responsibility Policy:
The Company has adopted the Corporate Social Responsibility (CSR) Policy in accordancewith the provisions of Section 135 and Schedule VII of the Companies Act 2013. The CSRPolicy lays down the guiding principles for social welfare programs/projects for thebenefit of different segments of the society especially the deprived underprivileged anddifferently abled persons. The Policy is available on the website of the Company viz. www.ashapura.com.The Composition of the CSR Committee is given in the Report on Corporate Governance.
During the year under review your Company taking into account the current state ofaffairs of the Company including financial performance for the financial year ended 31stMarch 2018 that recorded marginal increase in the sales volume with negative bottom lineand continued reflection of negative net worth has not specifically made provision forCSR activities for the Financial Year 2017-2018 as required under Section 135 of theCompanies Act 2013.
However the Company at Group Level continues to contribute towards CSR activities andhas always focused on its Corporate Social Responsibility obligation and is undertakingvarious initiatives to touch and improve lives of less fortunate and underprivilegedsections of the Society by conducting and contributing towards various social welfareprograms like Education Women Empowerment Health Culture & Rural Development etc.
D. Vigil Mechanism-Whistle Blower Policy:
The Company has adopted a Whistle Blower Policy in compliance with the provisions ofSection 177 of the Companies Act 2013 and Listing Regulations with a view to provideappropriate avenues to its directors and employees for responsible and secure reporting ofunethical behaviour and mismanagement if any .
In accordance with the Policy the Vigil Mechanism has been established to investigatethe complaints/concerns received from directors & employees of unethical behaviourmalpractices wrongful conduct fraud and violation of Company's code of conduct. The saidmechanism also provides for strict confidentiality adequate safeguards againstvictimization of persons who use such mechanism and makes provision for direct access tothe chairperson of the Audit Committee in appropriate cases. No personnel have been deniedaccess to the Audit Committee pertaining to the Whistle Blower Policy.
The said Policy is available on the website of the Company viz. www.ashapura.com.During the year under review no compliant has been received under the Whistle BlowerPolicy (Vigil Mechanism).
E. Risk Management Policy:
The Board of Directors of your Company has laid down a Risk Management Policy thatidentifies elements of risks involved in all the activities of the Company and the sameare systematically addressed through mitigating actions on a continuing basis. The policyis reviewed by the Audit Committee on regular basis considering the industry & globalrisk associated with the business of the Company.
F. Prevention of Sexual Harassment at Workplace:
Pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013 ('Act') and Rules made thereunder the Company has in place Policy onPrevention of Sexual Harassment at workplace and constituted Internal Complaint Committee(ICC) for safe working environment where all employees treat each other with courtesydignity and respect irrespective of their gender race caste creed religion place oforigin sexual orientation disability economic status or position in the hierarchy.
An ICC has been constituted under the policy which provides a forum to employees tolodge Complaints if any therewith for redressal.
During the year no complaint was lodged with the ICC formed under the policy. The saidPolicy is available on the website of the Company viz. www.ashapura.com.
G. Related Party Transactions Policy:
Pursuant to the applicable provisions of the Companies Act and Listing Regulations theCompany has in place the Policy on Related Party Transactions and the same is uploaded onCompany's website at www.ashapura.com. This policy deals with the review andapproval of related party transactions.
All transactions with related parties are approved by the Audit Committee prior to theentering into of any kind of transactions. The Audit Committee has after obtainingapproval of the Board of Directors laid down the criteria for granting omnibus approvalfor transactions which are repetitive in nature and entered in the ordinary course ofbusiness & at an arm's length basis which also forms part of the Policy. The saidomnibus approval is granted for one financial year at a time. Moreover to monitor duecompliance all related party transactions are placed before the Audit Committee & theBoard on a quarterly basis specifying the nature value and terms & conditions of thetransactions for their review and confirmation.
During the year under review all the transactions entered pursuant to the contractsand arrangements with related parties under Section 188 (1) of the Companies Act 2013were on arm's length basis and in the ordinary course of business. Further there were nomaterial related party transactions entered into by the Company during the financial yearunder review and hence the disclosure of related party transactions as required underSection 134(3)(h) of the Act in Form AOC-2 is not applicable to your Company.
The details of related party transaction are disclosed in the notes to FinancialStatements. (Note No. 37)
16. AUDIT COMMITTEE:
The Company has in place an Audit Committee in terms of the requirements of theCompanies Act 2013 read with the rules made thereunder and Regulation 18 of the ListingRegulations. Detailed information pertaining to the Audit Committee including itscomposition meeting etc. has been provided in the Corporate Governance Report whichforms part of this Annual Report.
17. AUDITORS AND AUDITORS' REPORT
A. Statutory Auditors:
M/s. P A R K & Co. Chartered Accountants were appointed as the Statutory Auditorsof the Company to hold office till the conclusion of the 41st Annual GeneralMeeting to be held in the year 2022. M/s. P A R K & Co. have confirmed theireligibility and qualification required under Section 139 141 and other applicableprovisions of the Companies Act 2013 and rules made thereunder (including any statutorymodification(s) or re- enactment(s) thereof for the time being in force).
The Auditors' Report for the financial year ended 31st March 2018 on thefinancial statements (standalone & consolidated) of the Company forms part of thisAnnual Report.
In reference to the observation made by Auditors in their Report on page number 50& 95 the Management based on the legal opinion obtained by the Company is of theview that the said claims are continued to be disputed and the Company is pursuing variouslegal options available to challenge the said arbitration awards.
B. Branch Auditors:
In terms of provisions of Section 139 143(8) and other applicable provisions if anyof the Companies Act 2013 and rules framed thereunder M/s. Sri Sesha & RaviChartered Accountants Chennai appointed as the Branch Auditors holds their office tillthe conclusion of the ensuing Annual General Meeting.
Accordingly the Company has received consent from M/s. Sri Sesha & Ravi CharteredAccountants to act as Branch Auditors for carrying out the audit of the books of accountsof the Company's Branches at Chennai and Kodur and to hold office from the conclusion ofthis Annual General Meeting till the conclusion of the 41st Annual GeneralMeeting of the Company to be held in the year 2022 and that the resolution seekingapproval of the Members forms part of Notice convening Annual General Meeting.
C. Cost Auditors:
Pursuant to Section 148 of the Companies Act 2013 the Board of Directors propose toappoint M/s. S. K. Rajani & Co. Cost Accountants as the Cost Auditors of the Companyto conduct audit of the Company's Cost Accounting Records in respect of the products ofthe Company for the financial year 2018-2019 at the remuneration of Rs. 225000/- (RupeesTwo Lakhs Twenty Five Thousand only) per annum plus Goods & Service Tax.
Your Company has received consent from M/s. S. K. Rajani & Co. Cost Accountantsto act as the Cost Auditors of your Company for the financial year 2018-2019 along with acertificate confirming their independence. As per the provisions of the Companies Act2013 a resolution seeking approval of the Members for the remuneration payable to theCost Auditors forms part of the Notice convening Annual General Meeting.
The Cost Audit Report for the financial year 2016-2017 was filed with the Ministry ofCorporate Affairs on 9th September 2017.
D. Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Shri Virendra G. Bhatt Company Secretary in PracticeMumbai to undertake the Secretarial Audit of the Company for the financial year ended 31stMarch 2018.
The Secretarial Audit Report in Form No. MR-3 for the Financial Year ended 31stMarch 2018 is annexed with this report as "Annexure-B".
Secretarial Auditor's Observations:
Your Directors would like to bring to the notice of the Members that considering thefinancial condition the Company has been finding it difficult to induct able and willingcandidates who are suitable to hold fiduciary positions including that of the ChiefFinancial Officer i.e. Key Managerial Personnel as required under the provisions of theCompanies Act 2013.
Considering the current scenario the management has recognized Shri Ajay Phalod Sr.General Manager-Corporate Finance and Shri Ashish Desai Sr. General Manager-Accounts aswhole time Key Managerial Personnel to perform such duties/functions as may be generallyperformed by the Chief Financial Officer.
18. INTERNAL (FINANCIAL) CONTROL SYSTEM & THEIR ADEQUACY:
The Company has in place appropriate Internal (Financial) Control Systems for businessprocesses with regard to its financial & operational reporting safeguarding of assetsof the company prevention and detection of frauds & errors accuracy &completeness of accounting records ensuring of compliance of corporate policies andapplicable laws & regulations.
In order to strengthen the Internal (Financial) Control System the Company hasappointed M/s. Atul HMV & Associates LLP Chartered Accountants as its InternalAuditors for the financial year 2018-2019 to carry out the periodic audit of the functionsand activities of the Company as per the scope of work approved by the Audit Committee.
The Audit Committee is entrusted with the responsibility of reviewing & confirmingthe adequacy and effectiveness of Internal (Financial) Control System whereby significantinternal audit observations and management comments thereon are reported on a quarterlybasis as also the events of major concerns are reported to the Board of Directors. TheAudit Committee further reviews the status report on follow-up of proposed/ recommendedactions & their due implementation.
Besides this the Company has also implemented 'SAP' Systems an advanced IT businesssolution platform to achieve standardizing operations that ensures seamless data andinformation flow. This would further ensure ease in working environment & style andshall enable the Company to be in line with the best Global practices.
19. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO:
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013are provided in "Annexure-C" to this Report.
20. EXTRACT OF ANNUAL RETURN
The Extract of Annual Return of the Company in Form MGT-9 as provided under Section92(3) of the Companies Act 2013 is annexed herewith as "Annexure-D" tothis Report.
21. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A report on 'Corporate Governance' along with the Certificate from M/s. P A R K &Co. Chartered Accountants regarding its compliance and 'Management Discussion andAnalysis' Report as stipulated under Regulation 34 of Listing Regulations are set outseparately which forms part of this Report.
Your Directors wish to express their appreciation for the assistance and co-operationreceived from the financial institutions banks employees investors customers members& shareholders and all other business associates for the continuous support given bythem to the Company and their confidence in its management during the year under reviewand look forward for their contributed support in future.
| || |
For and on Behalf of the Board of Directors
| ||Sd/- ||Sd/- |
| ||CHETAN SHAH ||RAJNIKANT PAJAWANI |
| ||CHAIRMAN (NON-EXECUTIVE) ||WHOLE-TIME DIRECTOR & CEO |
| ||(DIN: 00018960) ||(DIN: 00086007) |
|Place : Mumbai || || |
|Date : 13th August 2018 || || |
|E. & O.E. are regretted || || |