To the Members of
Commercial Engineers & Body Builders Co. Ltd
The Directors are presenting here below the 39th Annual Report of theCompany together with the Audited Accounts for the year ended 31st March2019.
(Rs. in Lakhs)
|Particulars ||For the year ended 31 March 2019 ||For the year ended 31 March 2018 |
|Revenue From Operations ||21579.96 ||9963.96 |
|Less- Excise Duty ||- ||247.46 |
|Net Sales ||21579.96 ||9716.50 |
|Other Income ||75.91 ||116.43 |
|Total Income ||21655.87 ||9832.93 |
|Operating Expenses ||20389.60 ||9711.01 |
|Depreciation and Amortisation ||1037.91 ||1035.23 |
|Finance Cost ||2214.45 ||2777.96 |
|Profit/(Loss) before tax and exceptional items ||(1986.08) ||(3691.27) |
|Exceptional Items- (Gain) / Loss net ||(10853.47) ||- |
|Profit/(Loss) for the Year ||8867.38 ||(3691.28) |
|Other Comprehensive Income / (Loss) ||(1.20) ||5.32 |
|Total Comprehensive Income / (Loss) for the year ||8866.18 ||(3685.96) |
Performance at glance
The company could achieve a break though in terms of Revenue (net of excise duty) fromoperations (increase of 122% over last year) mainly attributable to increased demand fortippers mainly from its principal OEM Tata Motors Limited and also from certain dealerswho also cater to the end user demand.
The operating profit (profit before depreciation interest and other income hasincreased from Rs. 5.5 Lakhs (0.1% of sales) in FY 2017-18 to Rs. 1212 Lakhs (5.6% ofsales) in FY 2018-19. This improvement mainly related to the volume increase.
Despite positive development on revenue front the Company reported a Loss beforeExceptional items of Rs. 1986 Lakhs mainly attributable to lower % of operating marginsignificant finance cost and depreciation.
Please refer to Management Discussion and Analysis for comments on financialperformance.
Restructuring of debt and ownership change
During the past years the Company has been incurring cash losses affecting its abilityto service its borrowings creditors other liabilities and similar obligations. On 11thJanuary 2017 the Joint Lenders' Forum initiated Strategic Debt Restructuring("SDR") in compliance with the guidelines issued by the Reserve Bank of India("RBI") which could not be completed within the timeframe prescribed.Subsequently the loans given by the lenders to the Company were classified asNon-Performing Assets in the books of lenders.
Since then the lenders were in the process of identifying revival measures includingdebt restructuring and other structural changes.
During the year the Resolution Plan involving debt restructuring and ownership changewas completed. The Company the lenders the erstwhile promoters and the incominginvestors entered into an agreement on 1 December 2018. The Resolution plan receivedshareholders' approval on 7 January 2019.
There has been change in ownership and management of the Company. Jupiter WagonsLimited Mr. Murari Lal Lohia Murari Lal Lohia HUF Jupiter Forgings & Steel PrivateLimited Tatravagonka A.S. ("Tatravagonka") (collectively referred to asinvestors have collectively acquired 60.65 % of the expanded equity capital of theCompany.
The highlights of the Resolution Plan are as follows
a) The lenders have given waiver towards principal amounting to Rs. 2618.13 Lakhs.
b) The lenders have given waiver towards interest amounting to Rs. 3792.95 Lakhs forthe period 1 July 2017 till the date of Resolution
c) Out of total principal amount due to lenders an amount of Rs. 6748.23 Lakhs hasbeen converted to unlisted Non Convertible Cumulative Redeemable Preference Share (NCPRS)of amounting to INR 6748.23 Lakhs. These will carry coupon rate of 0.001% and will beredeemable by the Company upon expiry of 5887 days.
d) The lenders have exercised the pledge on 30217528 equity shares at price of INR15.44 per share resulting in a debt settlement of Rs. 3983.11 Lakhs.
One of the lenders has refinanced the existing loan into a new term loan amounting toINR 2377 Lakhs.
(Refer note 48 to the Financial Statements)
The Resolution Plan improves the financial position significantly in terms of equityand reduction in debt obligation. The Board of Directors are confident that the improvedfinancial position and business drive by the incoming investors will enable the companyto enhance its performance in the years to come.
The company recognised the following items as 'Exceptional items' in the profit &loss account.
a) Gain of Rs. 3792.95 lakhs by way of waiver towards interest for the period 1 July2017 till the date of Resolution plan being interest not payable as per the Resolutionplan (Refer note 48 to the financial statements)
b) Credit of Rs. 6046.37 lakhs being gain on fair valuation of unlisted NonConvertible Cumulative Redeemable Preference Share (NCPRS) of INR 100 each amounting toINR 6748.23 Lakhs allotted to the lenders in settlement of part of the principal amountdue to them. (Refer note 48 to the financial statements)
c] Loss of of Rs 1603.98 lakhs arising out review of certain activities and assetsheld for the same being the difference of between written down value and estimated netrealizable value of these assets. These assets are classified as 'Assets held for sale' attheir estimated net realisable value. (Refer note 36 to the financial statements)
The Company's fortune mainly depends on the tipper segment in the M&HCV segment. Itis continuously putting efforts to enhance performance by engaging with the OEMs forhigher share of business and dealers toward for capturing the end-user requirements. Alsoit is exploring development of new applications for existing OEMs and targeting new OEMs.
Railway wagon business -
The company reviewed its Railway wagon business strategy on the background positivedevelopments of debt restructuring and funding by the incoming investors. The companycould successfully pursue for an order for manufacture and supply of 500 BOXNHL wagonsfrom the Ministry of Railways of India.
Change in the Nature of Business If any
The Company has not undergone any change in the nature of the business during theFinancial Year.
Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred during the end of the Financial Year of the Company towhich the financial statements relate and the date of the report
In view of the losses incurred before the exceptional item no dividend has beendeclared for the FY 2018-19..
Transfer to Reserves
During the year the Company has created a Restructuring Reserve of Rs. 3983.11 Lakhsrepresenting the exercise of pledge on 30217528 equity shares at price of INR 15.44 pershare by the lenders resulting in a debt settlement of Rs 3983.11 Lakhs. The said amounthas been treated as 'deemed contribution' by the shareholders.
Changes in Share Capital
During the year the company has issued 34539693 fresh equity shares of Rs. 10 eachwhich resulted in infusion of fresh capital and 162229 Non-convertible RedeemablePreference shares of Rs. 100 each.
The authorized capital of the company increased from INR 770500000 Rupees SeventySeven Crore and Five Lakh) divided into (a) 57050000 (Five Crore Seventy Lakh and FiftyThousand) equity shares of INR 10 (Rupees Ten) each ("Equity Shares")aggregating to INR 570500000 (Fifty Seven Crore Five Lakh); and (b) 2000000 (TwentyLakh) preference shares of INR 100 (Rupees One Hundred) each aggregating to INR200000000 (Rupees Twenty Crore) to INR 1800500000/- (Rupees One Hundred Eighty Croreand Five Lakh) divided into: (a) 92050000 (Nine Crore Twenty Lakh and Fifty Thousand)Equity Shares of INR 10 (Rupees Ten) each aggregating to INR 920500000/- (Rupees NinetyTwo Crore Five Lakh); and (b) 8800000 (Eighty Eight Lakh) preference shares of INR 100(Rupees One Hundred) each aggregating to INR 880000000/- (Rupees Eighty Eight Crore).
During the year company issued 34539693 fresh equity shares of Rs. 10 eachamounting to INR 345396930and 6748229 NonConvertible Redeemable Preference shares(NCRPS) of Rs. 100 each amounting to INR 674822900
During the year under review the Company has not issued convertible securities orshares with differential voting rights nor has granted any stock options or sweat equityor warrants. As on March 31 2019 none of the Directors of the Company hold instrumentsconvertible into Equity Shares of the Company
Members are requested to refer to note no. 16 forming part of the Audited FinancialStatements which sets out for share capital.
Directors and KMP
The Board of Directors comprises
|Sr. No. ||Particulars ||Designation |
|1. ||Mr. Prakash Y Gurav ||Independent Director |
|2. ||Mr. M Venkat Rajarao ||Independent Director |
|3. ||Ms. Vineeta Shriwani ||Independent Director |
|4. ||Mr. Abhishek Jaiswal ||Whole time Director |
|5. ||Mr. Asim Ranjan Das Gupta ||Non-Executive Director (w.e.f. 22 January 2019) |
During the year following changes have taken place in Board of Directors due toresignation/cessation:
Pursuant to the Resolution Plan the Lenders proposed to effect a change in control ofthe Company and in accordance with the Framework Agreement subject to compliance withapplicable laws.
Mr. Asim Ranjan Das Gupta was appointed as Non-Executive Director on the Board ofDirectors of the Company in accordance with Section 152 161 of the Act with effect fromJanuary 22 2019
Mr. Asim Ranjan Dasgupta is B. Tech (Hons) in mechanical engineering from the IndianInstitute of Technology Kharagpur. At present Mr. Dasgupta is a director on the board ofdirectors of Jupiter Wagons Limited JWL Dako-CZ (India) Limited Karisma Goods PrivateLimited. Previously Mr. Dasgupta has served in senior positions in organizations such asHindustan Engineering Burn Standard Burnpur and Braithware & Co. Ltd. and has a workexperience of over 45 years
None of the directors/ key managerial personnel of the Company or their relatives isrelated to Mr. Asim Ranjan Das Gupta nor he hold any shares in the company.
Mr. Asim Ranjan Das Gupta tendered his resignation vide letter Dated May 22 2019 fromthe Board of CEBBCO due to personal reasons.
Dr. Mrs. Madhu Chhandha Chhatterjee has been appointed as Non- Executive Director onthe Board with effect from May 22 2019.
Dr. Chatterjee is acting as Executive Director of Anamika Kala Sangam a premiercultural organization of Kolkata. She has been a Lecturer in English in the Department ofEnglish Rabindra Bharati University and has been into academics
Dr. Chatterjee has worked as a Consultant in the Ministry of Culture Govt. Of Indiaduring the 150 years Birth Celebrations of Rabindranath Tagore steering the plans made bythe Ministry. She has also been the Nodal Officer of a Digitization Project under theIndira National Centre for the Arts Govt. of India
We confirm that the Company has received declarations from all the IndependentDirectors confirming that they meet the criteria of independence as prescribed underSection 149(6) of the Companies Act 2013 as well as SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI LODR"). The Company hasdevised a Policy for performance evaluation of Independent Directors Board Committeesand other individual Directors which include criteria for performance evaluation of thenon-executive directors and executive directors.
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2019 are: Mr. Abhishek Jaiswal Whole Time Director and ChiefExecutive Officer and Mr. Amit Kumar Jain Chief Financial Officer and Company Secretary.
The details of programs for familiarization of Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at the link: http://www.cebbco.com/docs/profile_for_investors.html
Pursuant to the provisions of the Act and the Listing Regulations the evaluation wasdone on the basis of criteria to cover underlying objective for evaluation.
The performance evaluation of the Directors was completed during the year under review.The performance evaluation of the Chairman and the Non-Independent Directors was carriedout by the Independent Directors and Non-Executive Director. The Board of Directorsexpressed their satisfaction with the evaluation process.
In compliance with the requirements of Section 197(12) of the Act read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement containing the remuneration details of Directors and employees is annexed as AnnexureIV.
Meetings of the Board of Directors
During the FY 2018-19 seven meetings of the Board of Directors were held. For detailsof meetings of the Board please refer to the Corporate Governance Report forming part ofthis report.
There are various Board constituted Committees as stipulated under the Act and ListingRegulations namely Audit Committee Nomination and Remuneration Committee StakeholdersRelationship Committee and Corporate Social Responsibility (CSR) Committee. Brief detailspertaining to composition terms of reference meetings held and attendance thereat ofthese Committees during the year has been enumerated in Corporate Governance report.
Audit Committee Recommendations
During the year all recommendations of Audit Committee were approved by the Board ofDirectors.
Director's Responsibility Statement Your Director's state that:
a) in the preparation of the annual accounts for the year ended March 31 2019 theapplicable accounting standards have been followed along with proper explanation relatingto material departures.;
b) The Directors have 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 as at March 312019 and of the profit orloss of the Company for the year ended on that date;
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) The Directors have prepared the annual accounts on a 'going concern' basis;
e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Internal Financial Control Systems and their Adequacy
The Company has maintained adequate internal financial controls over financialreporting. These includes policies and procedures - (a) pertaining to the maintenance ofrecords that are reasonably detailed accurately and fairly reflects the transactions anddispositions of the assets of the Company (b) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with Indian Accounting Standards notified under the Companies (IndianAccounting Standards) Rules 2015 as amended from time to time and that receipts andexpenditures of the Company are being made only in accordance with authorization ofmanagement and directors of the Company and (c) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material impact on the financial statements. Suchinternal financial controls over financial reporting were operating effectively as ofMarch 31 2019
Details in respect of frauds reported by auditors under sub section (12) of section 143other than those which reportable to the Central Government
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and / or Board under Section 143(12)of Act and Rules framed thereunder.
No fraud has been reported by the Auditors to the Audit Committee or the Board.
Details of Subsidiary Joint Venture or Associates
The Company does not have any subsidiary company associates company or joint venture.Accordingly a statement of the subsidiary Companies/ Associate Companies/Joint Venturesas per Form AOC-1 is not required to be filed with MCA/ROC.
The Company has not accepted any public deposits during the Financial Year ended March31 2019 and as such no amount of principal or interest on public deposits wasoutstanding as on the date of the balance sheet.
Details of deposits not in compliance with the requirements of the Act
Since the Company has not accepted any deposits during the Financial Year ended March31 2019 there has been no noncompliance with the requirements of the Act.
Extract of the Annual Return
The extract of Annual Return in Form MGT -9 for the Financial Year 2018-19 has beenenclosed with this report as Annexure III.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance Requirements set out by SEBI. As per Regulation 34(3)read with Schedule V of the Listing Regulations a separate section on corporategovernance practices followed by the Company together with a certificate from theCompany's Auditors confirming compliance forms an integral part of this Report.
Particulars of Loans given Investments made guarantees given
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the financial statements.
Contracts and Arrangements with Related Parties
All related party transactions that were entered into during the financial year 2018-19were on an arm's length basis and were in the ordinary course of the business. Nomaterially significant related party transactions were entered into by the company withPromoters Key Managerial Personnel or other designated persons which may have potentialconflict with interest of the company at large.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at the linkhttp://www.cebbco.com/docs/profile_for_investors.html.
The Policy intends to ensure that proper reporting approval and disclosure processesare in place for all transactions between the Company and Related Parties. This Policyspecifically deals with the review and approval of Material Related Party Transactionskeeping in mind the potential or actual conflicts of interest that may arise because ofentering into these transactions. All the Related Party Transactions entered in theOrdinary Course of Business and at Arm's Length were reviewed and approved by the AuditCommittee. All Related Party Transactions are placed before the Audit Committee for itsreview on a quarterly basis. All Related Party Transactions are subjected to independentreview by a reputed accounting firm to establish compliance with the requirements ofRelated Party Transactions under the Act and Listing Regulations.
Members are requested to refer to Note No. 43 forming part of the AuditedFinancial Statements which sets out related party disclosures.
A detailed disclosure of these transactions with the Related Parties is annexed withthis Report in Form AOC-2 as Annexure V Significant and Material orders passed by theRegulators and Courts
No significant and material order has been passed by the regulators courts tribunalsimpacting the Company's operations in future.
Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Out Go in terms of section 134 (3)(m) of the act read with rule 8 of theCompanies (Accounts) Rules 2014 forming part of the Director Report for the year endedMarch 31st 2019.
Conservation of Energy:
1. Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.
2. No specific investment has been made in reduction in energy consumption.
3. As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.
Since the Company does not fall under the list of industries which are required tofurnish this information in Form A annexed to the aforesaid Rules the information has notbeen given.
The Company's products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required. The Company persistently endeavors towards improvement in quality of itsproducts.
Foreign exchange outgo and earning
During the year under the review the Company had Foreign Exchange Earnings Nil andForeign Exchange Outgo Nil.
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of thelisting of Debt Regulation a Risk Management committee is to be constituted by thecompany who is amongst top 500 listed entities hence not applicable.
The Company continues to face constraints of liquidity and working capital which arebeing monitored on a daily basis and appropriate actions are being taken to tide over theproblem.
(Refer to item 8 in the Management Discussion and Analysis)
Corporate Social Responsibility (CSR)
A Corporate Social Responsibility Policy (CSR Policy) demonstrating the activities tobe undertaken by the Company has been formulated by the Corporate Social ResponsibilityCommittee (CSR Committee)and recommended to the Board which has been approved by theBoard.
The CSR Policy may be accessed on the Company's website at the link:http://www.cebbco.com/docs/profile_for_investors.html. The Annual Report on CSR activitieshas been annexed herewith as ANNEXURE - I Human Resources
The company continued it's focus on attracting new talents while investing indevelopment to help employees acquire new skills explore new roles and realize theirpotential.
The Company takes pride in the commitment competence and dedication of its employeesin all areas of the business. The Company has a structured induction process at alllocations and management development programs to upgrade skills of manager. Objectiveappraisal systems based on key result areas (KRAs) are in place for senior managementstaff.
CEBBCO believes in the potential of people to go beyond and be the game-changing forcefor business transformation and success. This potential is harnessed by fostering an openand inclusive work culture that enables breakthrough performance and comprehensivedevelopment of employees through the three pillars of Leading Self Leading Teams andLeading Business.
M/s BSR and Co. LLP Chartered Accountants (Registration No. 101247 W / W - 100022)who are the Statutory Auditors of the Company had been appointed in the 37thAnnual General Meeting of the Company held on 27th Day of September 2017. TheCompany has received letter from them to the effect that their appointment is within theprescribed limits and that they are not
disqualified for reappointment and will hold the office from the conclusion of the 3 7thAnnual General Meeting until the conclusion of 42nd Annual General Meeting tobe held in the year 2022. The Auditors' Report for the financial year ended 31st March2019 does not contain any qualification reservation or adverse remark.
The Notes on financial statement referred to in the Auditor's Report are self-explanatory and do not require any further comments and explanations.
The Board has appointed Mr. S.K. Gupta Practicing Company Secretary to conductSecretarial Audit for the financial year 2018-19. The Secretarial Audit Report for thefinancial year ended March 31 2019 is annexed herewith marked as ANNEXURE II tothis Report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark. The Secretarial Audit Report is self-explanatory and do not call forany further clarification.
The Company complies with the applicable Secretarial Standards issued by the 'Instituteof Company Secretaries of India'. DISCLOSURES:
The CSR Committee comprises Mr. Manchi Venkat Raja Rao (Chairman) Mr. P Y Gurav(Member) and Mr. Abhishek Jaiswal (Member) as other members.
The Audit Committee comprises Mr. Prakash Yashwant Gurav (Chairman) Mr. Manchi VenkatRaja Rao (Member) Mr. Abhishek Jaiswal (Member) and Ms. Vineeta Shriwani as othermembers. All the recommendations made by the Audit Committee were accepted by the Board.
The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing Agreement includes an Ethics Officer and other Force comprisingsenior executives of the Company. Protected disclosures can be made by a whistle blowerthrough an e-mail or dedicated telephone line or a letter to the Ethics Officer and otherForce or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistleblower policy may be accessed on the Company's website at the linkhttp://www.cebbco.com/docs/profile_for_investors.html.
There is no employee in the company whose particulars are required to be disclosedunder the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of theCompanies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and amendmentthereto.
Prevention of Sexual Harassment at Workplace under Sexual Harassment of Women &Workplace (Prevention Prohibition & Redressal) Act 2013
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder. During theyear under review there were no complaints pertaining to sexual harassment.
Awards & Recognition
We are proud to inform you all that we CEBBCO Limited was in the month of April 2019conferred award by the Volvo Eicher Commercial vehicle (VECV Ltd.) for Best Performer inApplications Category.
Your Directors take this opportunity to express their gratitude to the customersemployees bankers /financial institutions and vendors for their continued support andguidance.
| || ||For on behalf of the Board |
| || ||COMMERCIAL ENGINEERS & BODY BUILDERS CO. LTD. |
|Place : Pune || || |
|Date : August 10 2019 ||P.Y. Gurav ||Abhishek Jaiswal |
| ||Director ||Whole Time Director & C.E.O. |
| ||(DIN:02004317) ||(DIN:07936627) |