To the Members
Your Directors have pleasure in submitting their 39th Annual Report of theCompany together with the Audited Statements of Accounts for the year ended 31st March2017.
The Company's financial performance for the year ended March 31 2017 along withprevious year figure is summarized as here under :
|STAND ALONE || ||(Rs. In Lakhs) |
| ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Gross profit before Interest Depreciation and Tax ||(113.96) ||85.42 |
|Less: Interest and Depreciation ||213.88 ||224.17 |
|Profit / (Loss) before Tax ||(327.84) ||(138.75) |
|Less: Provision for Taxation ||- ||- |
|Deferred Tax Assets ||(53.92) ||(18.06) |
|Profit / ( Loss) after Tax ||(273.91) ||(120.69) |
|Add: Balance brought forward from last year ||3721.26 ||3841.95 |
|Profit available for appropriations ||3447.35 ||3721.26 |
|Appropriations: ||- ||- |
|Adjustment Relating to fixed Asset ||- ||- |
|Proposed Dividend ||- ||- |
|Provision for Tax on Proposed Dividend ||- ||- |
|Transfer to General Reserve ||- ||- |
|Balance carried forwarded to next year ||3447.35 ||3721.26 |
REVIEW OF BUSINESS OPERATION AND FUTURE PROSPECTS :
The performance of the Company during the year under review is almost stagnant ascompared to the last year. The Company has negligible increase in revenue from operationbut there is a sharp decline in non-operational revenue. This has ultimately led to higherloss to the Company during the period under review. The total other income during the yearunder review was Rs. 41.71 Lakhs as against Rs. 169.77 Lakhs in the last year. The totalrevenue from operations during the year under review was Rs. 7121.05 Lakhs as against Rs.7003.95 Lakhs in the previous year. The Company had made a net loss of Rs 327.84 Lakhs asagainst Rs. 138.75 Lakhs in the previous year.
The Company continued to launch a number of new and higher value added products andundertook various cost effective measures to strengthen the Company's competitiveness andprofitability in the future.
In view of loss your Directors regrets to recommend any dividend for financial yearended 31st March 2017.
FIXED DEPOSITS :
The Company has not accepted any fixed deposits from the public falling within theambit of section 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits)Rules 2014. There are no unclaimed deposits as on March 31 2017.
SHARE CAPITAL :
The paid up Equity Share Capital of the Company as on March 31 2017 was Rs 34778000/-During the year under review the Company has not issued any shares with differentialvoting rights nor granted any stock options or sweat equity. The shareholding of Directorsin the Company as on March 31 2017 is given in Extract of Annual Return.
DIRECTORS AND KEY MANAGERIAL PERSONNEL :
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. R. R. Bambhania a Director retires by rotation at theforthcoming Annual General Meeting of the Company and being eligible offers himself forre-appointment. The Board recommends his appointment for your approval.
The following are the Key Managerial Personnel as defined under Section 2(51) of theCompanies Act 2013:
Mr. Narottam C Vadgama (Whole-time Director)
Mr. Rajan R Bambhania (Managing Director and CEO)
Mr. Jeshanker R Bhogayta (Whole-time Director)
Mr. Siddik A Kotal (Chief Financial Officer)
Ms. Poonam L. Vijayvargiya (Company Secretary up to 20-06-2017)
NOTING OF APPRECIATION OF SERVICES :
The Board places on record its appreciation for guidance and valuable services providedby Mr. Krishnakant J. Mehta during his tenure as Independent Director of the Company. Hehas resigned from Board with effect from 25th October 2016.
BOARD EVALUATION :
Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Committees. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report
COMPOSITION OF VARIOUS COMMITTEES :
The details of various committees constituted by the Board as per the Regulation 18 19and 20 of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 andCompanies Act 2013 are given in the Corporate Governance Report which forms part of thisreport.
During the year Six Board Meetings Four Audit Committee Meetings One Nomination andRemuneration Committee Meeting One Stakeholders Relationship Committee Meeting and Oneseparate Meeting of Independent Directors were held. The details of the same are given inthe Corporate Governance Report. The intervening gaps between the Board meetings werewithin the period prescribed under the Companies Act 2013 in compliance to secretarialstandards SS-1 issued by ICSI.
INDEPENDENT DIRECTORS :
The Independent Directors met on 30th April 2016 without the attendance ofNon-Independent Directors and members of the management. The Independent Directorsreviewed the performance of Non-Independent Directors and Board as a whole and assessedthe quality quantity and timeliness of flow of information between the Company Managementand the Board that is necessary for the Board to effectively and reasonably perform theirduties.
The Company has received necessary declarations from each Independent Director underSection 149 (7) of the Companies Act 2013 that he/she meets the criteria of independenceas laid down in Section 149 (6) of the Companies Act 2013 and Regulation 16(1)(b) ofSEBI(Listing Obligation and Disclosure Requirements) Regulations 2015.
DIRECTOR DISCLOSURE :
None of the Directors of your Company is disqualified as per provisions of Section 164(2) of the companies Act 2013. Your Directors have made necessary disclosures asrequired under Companies Act 2013.
DIRECTORS RESPONSIBILITY STATEMENT :
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submits its responsibility Statement as enumerated here under:
In the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
The directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive 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;
The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud 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 and were operatingeffectively; and
The directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
AUDITORS AND AUDITORS' REPORT : STATUTORY AUDITORS :
M/s. Dhirubhai Dand & Co. Chartered Accountants Junagadh were appointed fora period of three years as Statutory Auditors pursuant to the provision of section 139 ofthe Companies Act 2013 at the Annual General Meeting held on 9th September 2014 andtheir terms as Statutory Auditors shall expire upon conclusion of this ensuing 39th AnnualGeneral Meeting.
Your Directors on recommendation of Audit Committee has proposed to appoint M/SB.H. Advani & Associates Chartered Accountants Junagadh (Firm Regn NO. 117127W)as Statutory Auditors of the Company to hold office from the conclusion of the ensuing39th Annual General Meeting till the conclusion of 44th Annual General Meeting i.e. for aperiod of 5 years (subject to ratification of the appointment by the Members at every AGMheld after this AGM).
The Company has received a letter from M/S B. H. Advani & Associates CharteredAccountants Junagadh (Firm Regn NO. 117127W) to the effect that their appointment ifmade would be within the prescribed limit under section 141 of the Companies Act 2013read with Rule 4(1) of the Companies (Audit & Auditors) Rules 2014 and that they arenot disqualified for reappointment.
SECRETARIAL AUDITOR :
The Board had appointed Mr. K J SHAH of K J Shah & Company Practicing CompanySecretary to conduct the Secretarial Audit for the financial year 2016-17. TheSecretarial Audit Report for the financial year ended on March 31 2017 is annexedherewith marked as Annexure "C" to this Report.
The Board of Directors at the recommendations of the Audit Committee appointed Mr. K JSHAH of K J Shah & Company Practicing Company Secretary to conduct the SecretarialAudit of the Company for the financial year 2017-18.
INTERNAL FINANCIAL CONTROLS :
The Company has a proper and adequate system of Internal Control commensurate with itssize and the nature of its operations to ensure that all assets are safeguarded andprotected against loss from un-authorized use or disposition and those transactions areauthorized recorded and reported correctly The Board of Directors at the recommendationsof the Audit Committee appointed M/s G K MODI & COMPANY Chartered AccountantsAhmadabad as Internal Auditors of the Company for the Financial Year 2017-18.
Internal Auditors monitors and evaluates the efficacy and adequacy of Internal ControlSystem in the Company its compliance with operating systems accounting procedurespolicies.
The Company has adequate internal financial controls with reference to financialstatements. During the year such controls were tested and no reportable material weaknessin the design or operation was observed
INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARD :
In pursuance to the Companies (Indian Accounting Standard) Rules 2015 which waseffective from 01st April 2015 on phase wise your Company has to adopt the same witheffect from 1st April 2017. The implementation of Ind AS is a major change process forwhich the Company has established a project team and is dedicating considerable resources.
DISCLOSURES : AUDIT COMMITTEE :
Pursuant to Section 177 of the Companies Act 2013 read with Rule 6 and 7 of theCompanies (Meetings of the Board and its Powers) Rules 2013 the Audit committee consistsof the following directors: Mr. B. D. Joshi [Chairman of committee] Mr. J. B. Jagani[Member of committee w.e.f. 25th October 2016] Mr. K.J. Mehta [Member of committee up to25th October 2016] Mr. D. B. Nakum [Member of committee] All the members of AuditCommittee are independent directors.
WHISTLE BLOWER POLICY :
The Company has a WHISTLE BLOWER POLICY to deal with instances of unethical behaviouractual or suspected fraud or violation of the company's code of conduct if any. Thedetails of the whistle blower policy is explained in the Corporate Governance Report andalso posted on the website of the Company.
DIRECTORS APPOINTMENT AND REMUNERATIONS POLICY :
The Company's policy relating to appointment of directors payment of managerialremuneration directors' qualifications positive attributes independence of directorsand other related matters as provided under Section 178 (3) of the Companies Act 2013 isfurnished in Corporate Governance Report and the same is also posted on website.
RELATED PARTY TRANSACTIONS :
All transactions entered into by the company with "Related Parties" duringthe period under review were in the ordinary course of business at prevailing marketrates. All related party transactions were placed before the Audit Committee andrecommended to the Board for their approval. The particulars of contracts or arrangementsmade with related party pursuant to Section 188 of the Companies Act 2013 is furnishedvide Annexure "A" in form AOC-2 as per Companies Act 2013 and it forms the partof this report. The policy on Related Party Transactions as approved by the Board isuploaded on the Company's website at www.aec.com.
RISK MANAGEMENT POLICY :
The Board of Directors is overall responsible for identifying evaluating and managingall significant risks faced by the Company. The Board approved Risk Management policywhich acts as an overarching statement of intent and establishes the guiding principles bywhich key risks are managed across the organization.
The Company follows well established and detailed risk assessment and minimizationprocedures which are periodically reviewed by the top management. The Company has inplace a business risk management framework for identifying risks and opportunities thatmay have a bearing on the organization's objectives assessing them in terms of likelihoodand magnitude of impact and determining a response strategy. In the opinion of the Boardnone of the risks faced by the Company threaten its existence. The Company has also postedthe policy in respect of transactions with "Related Parties" on its website.
In view of non-applicability of formation of Risk Management Committee the Company hasnot formed the said committee.
MATERIAL CHANGES AND COMMITMENTS :
No material changes and commitments affecting the financial position of the Company hasoccurred between the end of financial year to which this financial statement relate andthe date of this report.
ANNUAL RETURN :
The Extract of Annual Return pursuant to the provisions of Section 92 (3) of theCompanies Act 2013 read with Rule 12 (1) of the Company (Management and Administration)Rules 2014 is furnished in Annexure "B" in form MGT-9 as per Companies Act2013 and it forms the part of this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :
The particulars of Loans guarantees or investments made under Section 186 and itsapplicability have been furnished in notes annexed to our financial statements.
QUALIFICATIONS AND RESERVATIONS ON AUDIT REPORT :
The Auditor's Report and Secretarial Auditor's Report are self explanatory andtherefore do not require further comments and explanations.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in Annexure"D" attached to this report and it forms the part of this report.
PARTICULARS OF EMPLOYEES AND REMUNERATIONS :
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014in respect of employees of the Company is annexed to this Report as Annexure"E" forming part of this Report.
As per Section 136 (1) of the Companies Act 2013 the report and accounts are beingsent to the shareholders of the Company excluding the statement of particulars ofemployees under the said proviso. Any shareholder interested in obtaining a copy of thesaid statement may write to the Secretarial department at the Registered Office of theCompany.
SUBSIDIARY COMPANY :
The Company has changed the name of its Subsidiary Company from Accurate EngineeringInc. to Austin Engineering Company. In accordance with the General Circular issued by theMinistry of Corporate Affairs Government of India the Balance Sheet Profit and Lossaccount and other documents of Austin Engineering Company (Formerly known as AccurateEngineering Inc.) the subsidiary company are not being attached with the Balance Sheetof the Company. The Company will make available the Annual Accounts of the said subsidiarycompany and its related detailed information to any member of the Company who may beinterested in obtaining the same and also on Company's website.
The Annual Accounts of the subsidiary company will also be kept open for inspection atthe registered office of the Company and the subsidiary company.
A statement as required in the prescribed form AOC-1 pursuant to section 129 (3) of theCompanies Act 2013 is given in the Annexure "F" and it forms the part of thisreport.
CONSOLIDATED FINANCIAL STATEMENTS :
In accordance with the Accounting Standard AS-21 the audited consolidated financialstatements are annexed to this Annual Report.
CORPORTAE GOVERNANCE :
As per Chapter IV of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 separate reports on Corporate Governance Management Discussion andAnalysis and a certificate from the Company's Auditors form part of this Report. YourCompany is committed to maintain the highest standards of Corporate Governancereinforcing the valuable relationship between the Company and its Stakeholders.
The Company takes a very pragmatic approach towards insurance. Adequate cover has beentaken for all movable and immovable assets for various types of risks.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant material orders passed by the Regulators /Courts/ Tribunalswhich would impact the going concern status of the Company and its future operations.
FRAUDS REPORTING :
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee Board and /or Central Governmentunder Section 143 (12) of the Companies Act 2013 and Rules framed there under.
INDUSTRIAL RELATIONS :
The industrial relation with workmen and staff continued to be extremely cordial duringthe year under review.
Your Directors wish to place on record their gratitude for the continued co-operationand patronage extended by their esteemed customers both in OEM and aftermarket segments.The Directors would also like to place on record their sincere appreciation for thecontinued cooperation guidance support and assistance during the year under report byour Bankers all the customers suppliers of the Company including Government agencies.The Board of Directors also wishes to express its appreciation for the efforts andcontribution made by the employees at all levels during the year under report.
By order of the Board of Director
Sd/-R.R. Bambhania Managing Director
|Place : ||Patla Dist. Junagadh |
|Date ||: ||27th May 2017 |
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule8(2) of the Companies (Accounts) Rules 2014) Form for disclosure of particulars ofcontracts/arrangements entered into by the Company with related parties referred to insubsection (1) of Section 188 of the Companies Act 2013 including certain arms lengthtransactions under third proviso thereto:
1. Details of contracts or arrangements or transactions not at arm's lengthbasis :
(a) Name(s) of the related party and nature of relationship: N.A. (b) Nature ofcontracts/arrangements/transactions: N.A. (c) Duration of the contracts /arrangements/transactions: N.A.
(d) Salient terms of the contracts or arrangements or transactions including the valueif any: N.A. (e) Justification for entering into such contracts or arrangements ortransactions: N.A.
(f) Date(s) of approval by the Board: N.A. (g) Amount paid as advances if any: N.A.
(h) Date on which the special resolution was passed in general meeting as requiredunder first proviso to section 188: N.A.
2. Details of material contracts or arrangement or transactions at arm's lengthbasis :
|Name of the Party ||Nature of relation/ interest ||Nature of transacti on ||Duration of Contracts ||Date of approval by Board ||Value of transaction entered into during the year |
|Max precision Bearings Pvt. Ltd ||Related Party ||Sales ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||1071311 |
|Max precision Bearings Pvt. Ltd ||Related Party ||Job Work ||1st April2016 to ||Since these RPTs are in the ||403336 |
| || || ||31st March 2017 ||ordinary course of business and are at arm's length basis approval of Board is not applicable || |
|Max precision Bearings Pvt. Ltd ||Related Party ||Purchase ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||4083084 |
|Austin Engineering Company-USA ||Related Party ||Sales ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||33189497 |
|Austin Engineering Company-USA ||Related Party ||Sales ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||20448198 |
|Accumax Engineering Company ||Related Party ||Sales ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||332483 |
|Optimum Services Inc ||Related Party ||Sales ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||4004 |
|Optimum Services Inc ||Related Party ||Purchase ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||11785746 |
|Austin Engineering Company-USA ||Related Party ||Purchase ||1st April2016 to 31st March 2017 ||Since these RPTs are in the ordinary course of business and are at arm's length basis approval of Board is not applicable ||67550 |
Note: The Company has not entered into any material contract with "RelatedParties" during financial year 31st March 2017
By order of the Board of Director
|Place : Patla Dist. Junagadh |
|Date : 27th May 2017 |