Your Directors are pleased to present their Eighty-first Annual Report on the businessand operations of the Company along with the Audited Financial Statements bothStand-alone and Consolidated for the financial year ended 31 March 2018.
THE YEAR IN RETROSPECT
The stand-alone and consolidated financial statements of the Company represent thecontinuing operations for the year ended 31 March 2018. The discontinued operations havebeen presented under a separate head.
The Company achieved a stand-alone net turnover from continued operations of 14981crore during the year under review compared to 14356 crore during the previous yearrecording a growth of 14.3%. The consolidated net turnover of the Company during FY2018from continued operations grew by 12.1% and stood at 16189 crore compared with 15517crore in the previous year.
Details of net Sales and Profit before Interest and Tax of the respective BusinessUnits in comparison with the previous financial year are given in Table 1. Furtherthe Financial Performance of the Company for the continuing operations for the year ended31 March 2018 is given in Table 2.
A detailed review of the operations and financial performance of the Company and eachof the Businesses is contained in the section titled Management Discussion andAnalysis' of this Annual Report.
DIVESTMENTS AND OTHER DEVELOPMENTS
The Company's overall strategy is to focus its synergies to core operations and marketsincluding India and Indonesia which provides a significant growth opportunity. In linewith this during the year the Company successfully completed divestment of its powerbusiness in USA comprising its overseas step down subsidiaryCG Power USA Inc. on 31July 2017 to WEG Electric Corp for an enterprise value of US$31 million. WEG Electric Corpis a nominee of WEG S.A. a Brazilian publicly listed company. Consequently CG Power USAInc. ceased to be a wholly owned step-down subsidiary of the Company and has been renamedas WEG Transformers USA Inc.
net sales and profit before interest 0 1 and tax ( PBIT )
|BUSINESS UNIT || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Power Systems || || || || |
|Stand-alone ||2700 ||2505 ||185 ||208 |
|Consolidated ||3633 ||3417 ||312 ||344 |
|Industrial Systems || || || || |
|Stand-alone ||2282 ||1852 ||187 ||190 |
|Consolidated ||2541 ||2082 ||166 ||175 |
Further with respect to the Company's business in Hungary CG Electric Systems HungaryZrt. (ESHU) the Company's step-down subsidiary and CG International BV the Company'ssubsidiary have inter-alia entered into a Business Transfer Agreement and Share Sale andPurchase Agreement with Ganz Villamossagi Zrt. and Alester Holdings Limited (thePurchasers') for sale of Assets (excluding switchgear business) and Shares of ESHUrespectively for an enterprise value of Euro 38 Million with expected completion by 31March 2018 subject to requisite approvals. Upon request of the Purchasers the completiondate has been extended pending the receipt of the requisite approvals. Thereafter thenecessary documents for effecting transfer of all the shares of ESHU to the Purchasershave been executed. Considering certain conditions subsequent to be performed between theparties the shares have been held in escrow and will be handed over to the Purchasersupon completion of such conditions. Consequent to this ESHU will cease to be a step-downsubsidiary of the Company.
During the year CG Power Systems Belgium NV (PSBE) divested its 49% stake in its JointVenture in Saudi Arabia Saudi Power Transformer Co. Limited. CG Power Solutions SaudiArabia Co. in which CG Holdings Belgium NV a step down overseas subsidiary of theCompany holds 51% equity shareholding shall be liquidated upon completion of its openorders. During the year the Solutions businesses in US and UK and the Switchgear businessin Hungary have been phased out.
The above divestments are in line with the Company's strategy to exit from identifiedgeographies/products of its international businesses and focus its synergies on theretained ones including India and Indonesia with the objective of improving the overalloperational efficiency reducing debt and for enhancing shareholders' value.
02 highlights in i crore
|PARTICULARS || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Gross Revenue from Operations ||5079 ||4761 ||6288 ||5924 |
|Less: Excise Duty ||98 ||405 ||99 ||407 |
|Net Revenue from Operations ||4981 ||4356 ||6189 ||5517 |
|EBIDTA ||543 ||512 ||494 ||510 |
|Less: Finance Cost ||214 ||164 ||219 ||186 |
|Less: Depreciation ||102 ||91 ||149 ||143 |
|Profit Before Exceptional Items &Tax ||227 ||257 ||126 ||181 |
|Exceptional Items ||(453) ||(100) ||(443) ||(73) |
|Profit/(loss) Before Tax ||(226) ||157 ||(317) ||108 |
|Less: Tax expense/(Credit) ||47 ||11 ||75 ||28 |
|Profit/(loss) from continuing operations ||(273) ||146 ||(392) ||80 |
|Less: Minority Interest ||- ||- ||2 ||- |
|Share of profit/(loss) in Associates/Joint Ventures ||- ||- ||(2) ||(1) |
|Profit/(loss) after minority interest and share of Associates and Joint Venture ||(273) ||146 ||(392) ||79 |
|Profit/(loss) before tax from discontinued operations ||(79) ||(33) ||(799) ||(592) |
|Tax expense/(Credit) from discontinued operations ||(27) ||(12) ||(27) ||(22) |
|Net profit/(loss) on discontinued operations ||(52) ||(21) ||(772) ||(570) |
|Total profit/(loss) forthe year ||(325) ||125 ||(1164) ||(491) |
DIRECTORS AND KEY MANAGERIAL PERSONNEL BOARD OF DIRECTORS COMPOSITION
As on the date of this report the Company's Board of Directors consists of nineDirectors comprising of one Executive Director and eight Non-Executive Directors of whichfive are Independent Directors. The Chairman Mr Gautam Thapar is a NonExecutive Directorand represents the Promoter Group. Mr K N Neelkant is the CEO and Managing Director. Fiveother Non-Executive Directors MrSanjay Labroo DrValentin von Massow
Ms Ramni Nirula MrJitender Balakrishnan and MrAshish Kumar Guha are Independent interms of Regulation 16 of the Listing Regulations and Section 149 of the Act. Two otherDirectors
Mr B Hariharan and Dr Omkar Goswami are NonExecutive Directors. The Board consists ofreputed professionals with diverse functional expertise industry experience educationalqualifications ethnicity and gender mix relevant to fulfilling the Company's objectivesand strategic goals.
CHANGE IN COMPOSITION OF THE BOARD
On recommendation of the Nomination and Remuneration Committee of the Company MrAshish Kumar Guha was appointed as an Additional Director (Non-Executive Independent) onthe Board of Directors of the Company with effect from 9 November 2017. In accordance withSection 161 of the Act Mr Guha holds office up to the date of the ensuing Annual GeneralMeeting. The Company has received a notice from a member proposing candidature of Mr Guhafor appointment as Director. Accordingly your Directors recommend his appointment asNonExecutive Independent Director in the ensuing Annual General Meeting. Attention ofMembers is invited to relevant disclosures made in the Notice of the ensuing AnnualGeneral Meeting and explanatory statement thereto with respect to his appointment.
Mr Madhav Acharya Executive Director Finance and Chief Financial Officer of theCompany was re-designated as Non-Executive Director w.e.f. close of business hours on 11August 2017. Thereafter he ceased to be a Director of the Company w.e.f. close ofbusiness hours on 30 September 2017.
The Board places on record its gratitude and appreciation for the valuablecontributions made by Mr Acharya during his tenure.
RETIREMENT BY ROTATION
In terms of the provisions of Section 152 of the Act and the Rules made thereunder andArticle 114 of the Articles of Association of the Company Mr K N Neelkant and Mr BHariharan retire by rotation at the ensuing Annual General Meeting of the Company andbeing eligible seek reappointment. As per Regulation 36 of the Listing Regulations andSecretarial Standard-2 on General Meetings issued by the Institute of Company Secretariesof India (SS-2) the brief profile and other relevant details regarding re-appointment ofMr K N Neelkant and Mr B Hariharan are contained in the Annexure accompanying theexplanatory statement to the Notice of the ensuing Annual General Meeting.
The Board recommends their re-appointment as Directors of the Company liable to retireby rotation.
INDEPENDENT DIRECTORS' DECLARATION
The Company has received declarations from all its Independent Directors confirmingthat they meet the criteria of independence as laid down under Section 149 of the Act andRegulation 16 of the Listing Regulations.
During FY2018 the Board of Directors met five times to discuss and decide the businessstrategies and performance in addition to the items reported to the Board in accordancewith the provisions of the Act Listing Regulations and other statutory provisions. Theintervening gap between the meetings was within the period prescribed under the ActListing Regulations and Secretarial Standard-1 on Board Meetings issued by the Instituteof Company Secretaries of India (SS-1). Details of the Board Meetings held and theattendance of the Directors are given in the section titled Report on CorporateGovernance' which forms part of this Annual Report.
The Board has established statutory and nonstatutory Committees in compliance with therequirements of the Act and Listing Regulations. These are Risk and Audit CommitteeNomination and Remuneration Committee Corporate Social Responsibility CommitteeStakeholders' Relationship Committee and Securities Transfer Committee. Details ofcomposition of the statutory Committees their terms of reference number of meetings heldand attendance of the Committee Members thereof during the financial year is given in thesection titled Report on Corporate Governance' forming part of this Annual Report.
All recommendations made by the Risk and Audit Committee were accepted by the Board ofDirectors.
During the year under review the Board constituted a US Business Divestment Committeea Hungary Business Divestment Committee and a Business Divestment Committee to evaluatedetermine and review the proposals for divestment of identified business ofthe Company.
The US Business Divestment Committee consists of Mr Jitender Balakrishnan
Ms Ramni Nirula and Mr K N Neelkant held one meeting during the year under review on20 June 2017. On completion of divestment of power business in USA this Committee wasdissolved.
The Hungary Business Divestment Committee consists of Mr Sanjay Labroo Ms RamniNirula
Mr B Hariharan and Mr K N Neelkant. The Committee held two meetings during the yearunder review on13 July 2017 and 6 February 2018.
The Business Divestment Committee consists of Mr Gautam Thapar Mr K N Neelkant and MrB Hariharan. No meetings were held during the year for this Committee.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Act the Key Managerial Personnel of the Company as onthe date of this report are:
Mr K N Neelkant CEO and Managing Director
MrVR Venkatesh Chief Financial Officer
Ms Shikha Kapadia Company Secretary
During the year under review Mr Madhav Acharya resigned as Chief Financial Officer ofthe Company w.e.f. close of business hours on 11 August 2017 and MrVR Venkatesh wasappointed as Chief Financial Officer ofthe Company w.e.f.
12 August 2017. Mr Manoj Koul resigned as Company Secretary w.e.f. the close ofbusiness hours on 23 August 2017 and Ms Shikha Kapadia was appointed as Company Secretaryw.e.f.
12 February 2018.
REMUNERATION POLICY AND CRITERIA FOR DETERMINING ATTRIBUTES QUALIFICATIONINDEPENDENCE AND APPOINTMENT OF DIRECTORS
The Company has formulated a Remuneration Policy governing the appointment andremuneration of Directors Key Managerial Personnel Senior Management and other employeesof the Company. This Policy also contains criteria for determining qualificationspositive attributes independence of Directors provisions relating to loans and advancesto the employees of the Company. It also aims to attract and retain high caliber personnelfrom diverse educational fields and varied experience to serve on the Board of theCompany. The Remuneration Policy of the Company is provided as Annexure 6 to thisReport.
The Company believes that diversity at Board level is a critical ingredient to maintaincompetitive advantage to understand customers and stakeholders from differentperspectives and to reap the benefits of a broader experience in decision making. Withthese in mind the Company has adopted the Board Diversity Policy which sets out theapproach for diversity on the Board of Directors of the Company.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In line with the requirements of the Act and the Listing Regulations the annualevaluation of performance of the Board as well as the evaluation of the working of itsCommittees and individual Directors including Chairman of the Board was carried out duringthe year under review. A detailed questionnaire on various facets such as role andcomposition of the Board effectiveness of Board processes relationships with externalstakeholders strategy and risk management ethics and compliance of the Board Committeesand individual Directors including self assessment forms were circulated to all theDirectors of the Company. Evaluation of Committees was carried out based on itscomposition adequacy of information/material for effective discussion mandate of theCommittees adequate time allocation forfulfilling its mandate and recommendations to theBoard.
The individual and peer assessment of Directors contains facets such as relationshipwith Board and Senior Management knowledge competency and contribution to the Board. TheChairman provides feedback on the individual and peer assessment of Directors.
Based on the feedback received from each Director including the Chairman theNomination and Remuneration Committee and the Board of Directors of the Company discussedthe outcome ofthe annual evaluation and indentified Board competencies compliancesethics the Company's Risk policies the Board's interaction with management and theChairman's leadership as the key strengths. Pursuant to the provisions of Schedule IV ofthe Act and Regulation 25 of the Listing Regulations the Independent Directors of theCompany at their meeting held on 12 February 2018 carried out evaluation of theperformance of Non-Independent Directors and the Board as a whole performance of theChairman and also assessed the quality quantity and timeline of flow of informationbetween the Management and the Board.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the Listing Regulations the Company familiarizes itsIndependent Directors with their roles rights responsibilities as well as the Company'sbusiness and operations. Moreover the Directors are regularly updated on the businessstrategies and performance management structure and key initiatives of businesses atevery Board Meeting. The details of the programme can be viewed under the following linkavailable on the Company's website http://www.cgglobal.com/frontend/finalnonproduct.aspxRs.cnl2=yrnPqECUvhk=
The Company is a part of the Avantha Group one of India's leading businessconglomerates. The Group has business interests in diverse areas including pulp andpaper power transmission and distribution equipment and services food processing farmforestry chemicals energy infrastructure information technology (IT) and IT- enabledservices. It is led by the Group's Founder & Chairman Mr Gautam Thapar.
SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
As on 31 March 2018 the Company has 3 Indian subsidiaries 23 foreign subsidiaries 1joint venture and 2 associate companies. Details are provided in Annexure 5 to thisReport in Form MGT-9 (Extract of Annual Return).
Pursuant to the Companies (Indian Accounting Standards) Rules 2015 and Regulation 33of Listing Regulations the financial statements ofthe Company reflect the consolidationof accounts of the Company its subsidiaries associates and joint venture companies.
Pursuant to Section 136 of the Act the audited annual accounts of each of theCompany's subsidiaries associates and joint venture entities are placed on the website ofthe Company and not enclosed in this Annual Report. If any Member of the Company sodesires the Company will make available the said audited annual accounts on writtenrequest. Physical copies of these documents are also available at the Company's RegisteredOffice for inspection during normal business hours on all working days excludingSaturdays up to the date of the ensuing Annual General Meeting and at the venue of theAnnual General Meeting.
In terms of Section 129 ofthe Act statement containing salient features of thefinancial statements of the Company's subsidiaries/associates/joint venture companies inForm AOC-1 is given in the notes to the financial statements in this Annual Report.
Pursuant to Regulation 16 of the Listing Regulations a Policy for determining Material
Subsidiary of the Company as approved by the Board of Directors of the Company isavailable on the website of the Company under http://www.cgglobal.com/frontend/finalnonproduct . aspxRs.cnl2=yrnPqECUvhk=
RELATED PARTY TRANSACTIONS
During the year all related party transactions entered into by the Company were at anarm's length basis and in the ordinary course of business. In terms ofthe India RelatedParty Transactions Policy of the Company there are no material related party contractsarrangements or transactions undertaken by the Company during the year under review.Hence disclosure of particulars of contracts/arrangements entered into by the Companywith related parties referred to in sub-section (1) of Section 188 of the Act is notapplicable to the Company for the year under review.
An omnibus approval has been granted by the Risk and Audit Committee of the Boardbased on the criteria determined and approved by the Board of Directors of the Company aswell as by the Risk and Audit Committee for transactions which are of repetitive naturewith related parties. Such omnibus approvals are subjected to renewal by the Risk andAudit Committee every year and are monitored by the Risk and Audit Committee on aquarterly basis. All related party transactions entered into by the Company are presentedand reviewed by the Risk and Audit Committee every quarter.
The Company's India Related Party Transactions Policy can be downloaded from thewebsite of the Company under http://www.cgglobal.com/pdfs/policies/India%20Related%20Party%20 Transactions%20Policy.pdf
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of loans guarantees given and investments made by the Company duringFY2018 pursuant to the provisions of Section 186 of the Act and Schedule V of the ListingRegulations are given in the notes to the financial statements in this Annual Report.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the Listing Regulations the Business ResponsibilityReport highlighting the initiatives taken by the Company in the areas of environmentsocial economic and governance is available on the website of the Company under http://www.cgglobal.com/frontend/finalnonproduct.aspxRs.cnl2=Nu/tTrrPlMI=
ENTERPRISE RISK MANAGEMENT FRAMEWORK
Integrating the process for managing risks across the Company's business and operationsis the Company's philosophy for Enterprise Risk Management (ERM). In this regard theCompany has developed a comprehensive ERM framework to identify risk conduct riskassessment and suggest mitigation procedure to the Board of Directors of the Company toensure that management controls the risks through a properly defined framework.
ERM framework aims to imbibe a risk culture' throughout the organizationfacilitate risk based decision making improve governance and accountability protect andenhance stakeholders' value.
The Company's ERM framework helps to identify elements of risk based on the riskidentification techniques analyze and comprehend the nature of risk escalate andconsolidate risks at Unit level to the overall Business Unit monitor and review risks andimplement action plans to mitigate risk. These risks cover business strategy technologyfinancial operations systems IT legal regulatory and human resources. The Risk andAudit Committee reviews the key risks associated with the businesses of the Company andtheir mitigation measures.
During the year under review none of the risks identified threaten the existence ofthe Company.
INTERNAL FINANCIAL CONTROLS
The Company has in place an effective and efficient internal controls testing andmonitoring system which enables the Company to ensure that these controls are operatingeffectively.
Such systems have been designed to provide reasonable assurance with regard tomaintaining of proper internal controls monitoring of
CG's R&D efforts : enables the Company to manufacture cost competitive productsoffer improved and integrated product portfolio increase its market share shorten leadtime import substitution and offer high specification products as per requirements ofinternational markets operations protecting assets from unauthorised use or lossescompliances with regulations and the reliability of financial reporting.
RESEARCH AND DEVELOPMENT ( R&D )
During the year under review the Company's R&D activities continued to focus ondevelopment of indigenous and energy efficient products.
One of the significant achievements was the indigenous development and manufacture of 6MW 6.6 kV vertical motor for Nuclear Power Corporation of India Limited (NPCIL) for use inits nuclear reactor. At present the Company is the sole Indian manufacturer to developthis motor for NPCIL. It has undergone and passed inspection by NPCIL at every stage ofdevelopment.
The Company's Transformers Division has developed ester oil filled transformers. TheDivision also developed 2 MVA 33 kV transformers with synthetic ester oil and 8 MVA 33 kVtransformers with natural ester oil. The Division also designed traction transformers of30.24 MVA 132/27.5 kV for the Nagpur Metro.
The Switchgear Division indigenously designed and developed resin impregnated paper(RIP) bushings. RIP bushings are of a dry type without oil encapsulated with compositeinsulators. In RIP bushings the major insulation consists of a core wound from paperwhich is subsequently impregnated with epoxy resin. RIP bushings are becoming popularworldwide because of its advantages regarding safety. For this indigenous development wereceived the runner-up Award at Elecrama 2018 for the Best Product Category by aniridiap Exhibitor'.
CG has b&en.front runner in offering customized solutions and custofrier...orientedapproach. In line with this legacy the Company has developed a 420 kV polymeric lightningarrestoffwith a cantilever load of 350 kgFthe highest ever" load in the historyof this product segment. Designed according to customer requirements the developmentincluded designing and manufacturing of hollow core composite insulators and othercritical components. The highlight of this product is that it weighs less compared toporcelain has an explosion-proof design and enhanced reliability in extreme climates andpolluted environments.
In line with CG's objective of offering customer centric and smart products theCompany developed a Digital Surge Counter to monitor the health of zinc oxide surgearresters. The product shakes hand with digital technology to measure vital parameterssuch as total leakage current and total surge counts. Overcoming the use of conventionalanalog circuits this product offers real time data acquisition with reliable accuracy andperformance.
There was also the development of 170 kV and 362 kV Externally Gapped Line Arresterswhich protect transmission lines from lightning and thus improve performance andreliability. The design is such that it can deal with insulation coordination in worstconditions.
The Company's Switchgear division has also developed sectionalisers auto-recloserscompact frame vacuum interrupters and a cost efficient range of instrument transformers.
The Low Tension Motors division of the Company developed the entire range of IE3 motors(80-355 frame 0.37 kW to 250 kW) with an enclosure capable of withstanding the pressureof explosive gas and prevent transfer of flames. This division also developed under slungmounted 500 kVA DG sets for Indian Railways in order to utilize the coach onboard spacefor transporting goods as additional space.
CG Traction Electronics division designs and develops Electric Multiple Unit/MainlineElectric Multiple Unit in collaboration with partners. Further CG has also tied up withCentre for Design & Advanced Computing (CDAC) for the project of Control &Monitoring System for locomotives. Recently CG has tied up with Indian Railways to supplyUnder Slung Electrics for Diesel Electric Tower Car (DETC). Large quantities of DETCs arerequired for massive track electrification drive taken up by Indian Railways across thecountry.
: CG's R&D efforts enables the Company to manufacture cost competitive productsoffer improved and integrated product portfolio increase its market share shorten leadtime import substitution and offer high specification products as per requirements ofinternational markets.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details as required under Section 134 of the Act read with the Companies (Accounts)Rules 2014 are given in the prescribed format as Annexure 1 to this Report.
ENVIRONMENT HEALTH & SAFETY ( EHS )
CG is committed in conducting its business in a responsible manner that creates asustained positive impact on society improves the quality of life of the underservedcommunities and preserve the ecosystem that supports the communities and the Company.
The Company propagates Zero Harm Culture' towards employees environment andother stakeholders as reflected in our Corporate EHS policy and Cardinal Rules. Throughour Corporate EHS Policy we aim at not only complying with legal requisites ofsafeguarding our employees environment and the society at large but also to set highinternal standards for compliance.
All CG units in India are certified for quality systems with ISO 9001:2015Certification/ISO 14001:2015 Environmental Management System Certification and OHSAS18001:2007 Certification. We are in process of upgrading to ISO 45001.
The Company business at Indonesia was certified for Integration Management System (IMS)for ISO 9001:2015 ISO 14001:2015 and OHSAS 18001:2007. All Units in India have clearanceto operate from State Pollution Control Board Authorities and are complying over and abovethe conditions laid down in consent to operate.
Regular trainings on EHS awareness and sustainable growth are conducted at allmanufacturing locations. National Safety Week and World Environment Day campaign isconducted under guidance of Directorate of Industrial Safety and Health and StatePollution Control Board. Fire safety week are also observed in India under the guidance ofthe Fire Adviser Ministry of Home Affairs Government of India.
EHS Key Performance Indicators (KPIs) are linked with SMART goals of all units andindividuals for their Annual Performance Management process. Quarterly audits areconducted to review the EHS implementation and process compliances across all locations ofthe Company. Corrective actions generated from these audits and various EHS events arecaptured and tracked for closure in an online Event Reporting System portal.
As a part of our continued efforts and commitment towards the environment the Companyhas also initiated roof top solar system installations across all locations of theCompany.
CORPORATE SOCIAL RESPONSIBILITY ( CSR )
The Company believes in inclusive growth diversity and equitable development ofsociety. That being so it has undertaken various CSR projects during the year underreview in the areas of education skill development and upliftment of underservedcommunities.
The details of the composition of CSR Committee CSR Policy and projects undertaken bythe Company during FY2018 are given in the section titled Annual Report on CSRinitiatives' in Annexure 2 of this Report.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position oftheCompany which have occurred between the end of the financial year of the Company i.e. 31March 2018 and the date of this Report.
MATERIAL ORDERS OF REGULATORS/COURTS/TRIBUNALS
During the year under review no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.
REGISTRAR & SHARE TRANSFER AGENT
The Company has appointed Datamatics Business Solutions Limited (Formerly DatamaticsFinancial Services Ltd) (DBSL) as its Registrar & Share Transfer Agent who isregistered with SEBI. The contact details of DBSL are mentioned in section titledReport on Corporate Governance' of this Annual Report.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the Listing Regulations the Company has formulated aDividend Distribution Policy as provided in Annexure 7 of this Report and is alsoavailable on the website of the Company under http://www.cgglobal.com/frontend/finalnonproduct . aspxRs.cnl2=yrnPqECUvhk=
The Company has not accepted any deposits from public or its members during the yearunder review as per Sections 73 and 76 of the Act and no deposits exists as on date.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are given in Annexure 3 of this Report.
In accordance with the provisions of Section 197(12) of the Act read with Rule 5(2) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the namesand other particulars of the employees covered under the said rule are available at theRegistered Office of the Company for inspection during working hours up to the date of theensuing Annual General Meeting and any member interested in obtaining a copy thereof maywrite to the Company Secretary of the Company.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
In terms of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 the Company has adopted a Prevention of Sexual Harassment Policy forprotection against sexual harassment and have also constituted Internal ComplaintCommittee presided by woman employee comprising offive to seven Company employees with anexternal member to which employees can address their complaints.
During the year under review no incident of sexual harassment was reported.
The Company has set up a vigil mechanism viz. Whistle Blower Policy as per theprovisions of Section 177 of the Act and Regulation 18 of the Listing Regulations toenable its employees to report violations genuine concerns unethical behavior andirregularities if any noticed by them which could adversely affect the Company'soperations.
The Head of Internal Audit submits a report to the Chairman of the Risk and AuditCommittee on a quarterly basis on all complaints referred to the Management Committeenominated by the CEO and Managing Director of the Company with the status ofinvestigations and actions taken by the Management Committee.
No material concerns or irregularities have been reported during the year under reviewand none of the Whistle Blowers were denied access to the Risk and Audit Committee of theBoard.
AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS
The Board of Directors of the Company have at its meeting held on 26 April 2018approved the proposal for availing borrowings up to an amount of approximately US$250million from a consortium of international lenders (the Arrangers') at CGInternational BV (CGIBV) the wholly-owned subsidiary of the Company for restructuringcurrent debts of the Company and to avail the benefit of lower interest rate and deferredtenor. These funds will be used to retire the existing debt ofthe Company both in Indiaand overseas. A condition prescribed by the Arrangers requires the Company to get itsfinancial statements audited by one of the Big Four international auditors for the auditfrom the period ending September 2018 onwards.
Given the importance of this financial restructuring exercise to the Company andconsequent to its discussions on this matter with M/s. Chaturvedi &Shah CharteredAccountants the then Statutory Auditors of the Company they have submitted theirresignation with immediate effect vide their letter dated 27 April 2018.
In order to fill the casual vacancy caused by the resignation of M/s. Chaturvedi &Shah Chartered Accountants based on the recommendation of
the Risk and Audit Committee and the Board of Directors the shareholders of theCompany had on 29 May 2018 in terms of the requirement of the Companies Act 2013appointed M/s. K.K. Mankeshwar & Co. Chartered Accountants (with Firm RegistrationNo.106009W) as the Statutory Auditors of the Company to hold office till the conclusionof the ensuing 81st Annual General Meeting of the Company.
The proposal for appointment of Statutory Auditors of the Company from the conclusionof the ensuing 81 st Annual General Meeting pursuant to the recommendation ofthe Risk and Audit Committee and Board of Directors of the Company is contained in theaccompanying Notice of Annual General Meeting and the explanatory statement thereto.
During the year under review the Statutory Auditors have not reported any instances ofoffence or fraud committed by the officers or employees of the Company to the Risk andAudit Committee or the Board of Directors of the Company.
As per the requirement of Section 148(1) of the Act the Company is required tomaintain cost accounts and records. Accordingly the Company has maintained cost accountsand records for FY2018 as applicable for its product range.
The Company had appointed M/s. Ashwin Solanki &Associates CostAccountants Mumbai(Firm Registration No. 100392) to audit the cost records related to the Company's productsfor FY2018. The cost audit report for FY2017 has been filed with the Registrar ofCompanies Mumbai within the prescribed statutory deadline.
Upon recommendation ofthe Risk&Audit Committee the Board has re-appointed M/s.Ashwin Solanki & Associates as Cost Auditor of the Company for FY2019 at aremuneration of 1600000 p.a. plus out-of-pocket expenses and taxes as applicable. Theremuneration payable to M/s. Ashwin Solanki &Associates for FY2019 is recommended forratification by the Members at the ensuing Annual General Meeting.
The Company had appointed M/s. Parikh & Associates Practising Company SecretariesMumbai (Firm Registration No. P1988MH009800) to undertake the Secretarial Audit of theCompany for FY2018. Secretarial Audit Report for FY2018 in Form MR-3 is annexed as Annexure4 to this Report.
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditor or the Secretarial Auditor in their reports and hence do not call forany further comments.
No dividend has been recommended or paid for the year ended 31 March 2018.
The Reserves on standalone basis at the beginning of the year amounted to 14074crore and at the end of the year stood at 13715 crore.
As on 31 March 2018:
The authorised share capital of the Company was 14076000000 (Rupees fourhundred and seven crore and sixty lakh) divided into 2038000000 equity shares of 12(Rupees two) each.
The subscribed and paid-up share capital of the Company stood at 11253492284(Rupees one hundred and twenty five crore thirty four lakh ninety two thousand twohundred and eighty four) consisting of 626746142 equity shares of 12 (Rupees two) each.
The Company's equity shares are listed and traded on BSE Limited and National StockExchange of India Limited.
The Company has issued Global Depository Receipts (GDRs) in 1996 and the underlyingshares for each GDR were issued in the name of The Bank of New York the Depository. EachGDR of the Company is equivalent to five equity shares. As on 31 March 2018 164501 GDRswere outstanding which represent 822504 underlying equity shares of the Company.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 is annexed as Annexure 5 of thisReport.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the Financial Statements both onstand-alone and consolidated basis for the year under review conform in their entiretyto the requirements of the Act.
The Directors confirm that:
the Annual Accounts have been prepared in conformity with the applicableAccounting Standards alongwith proper explanations relating to material departures;
the Accounting Policies selected and applied on a consistent basis and judgmentsand estimates made are reasonable and prudent to give a true and fair view of the state ofaffairs of the Company at the end of the financial year and of the profit/loss of theCompany for the financial year;
proper and sufficient care has been taken to maintain adequate accountingrecords for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities;
the Annual Accounts have been prepared on a going concern basis;
the internal financial controls laid down in the Company were adequate andoperating effectively;
the systems devised to ensure compliance with the provisions of all applicablelaws were adequate and operating effectively.
The Board of Directors wish to convey their gratitude and appreciation to all theemployees of the Company for their tremendous efforts as well as their exemplarydedication and contribution to the Company's performance.
The Directors would also like to thank the employee unions shareholders customersdealers suppliers bankers government and all other business associates for theircontinued support extended to the Company and the Management.
On behalf of the Board of Directors
New Delhi 10 August 2018.