To the Members of
Commercial Engineers & Body Builders Co. Ltd
Your Directors present the 37th Annual Report of the Company together with the AuditedAccounts for the year ended 31st March 2017.
|Financial Highlights || ||Rupees In Lakh |
|Particulars ||2016-17 ||2015-16 |
|Gross Sales ||15115.52 ||14887.06 |
|Net Sales (net of excise duty) ||10597.43 ||10816.00 |
|Other Income ||44.38 ||112.72 |
|Total Expenditure ||13946.93 ||15648.06 |
|Profit/(Loss) Before Tax ||(3305.12) ||(4719.34) |
|Exceptional Item (impairment of asset) ||- ||5367.00 |
|Provision for Tax ||- ||389.87 |
|Profit/(Loss) After Tax ||(3305.12) ||(10476.21) |
|Balance Brought Forward From Previous Year - Profit/(Loss) ||(18464.21) ||(7988.00) |
|Balance C/F to Balance Sheet - Profit/(Loss) ||(21769.33) ||(18464.21) |
Performance at glance
The Company continued under severe liquidity pressure during the year. Further one ofthe lender curtailed the working capital facility from September 2016 impacting therotation of funds required for purchase of material for fulfillment of customer orders.This severely affected the orders from one of the major OEM customer of the Company. Thesales (net of excise duty) for the first half were Rs. 6673.88 lakh as compared to Rs.3923.55 lakh for second half of the year under review. This reflects the impact ofcurtailment of credit facility by the lending bank. During the year the company hasachieved sales (net of excise duty) of Rs. 10816.00 Lakh as compared to Rs. 11844.8 Lakhfor the preceding financial year.
Consequently the Company has recorded a loss before tax & exceptional item of Rs.3305.12 Lakh (Previous year: Loss Rs. 4719.34 Lakhs)
The loss after tax is Rs. 3305.12 lakh for the current year. (Previous year: lossRs.10476.21 Lakh).
Your management is striving hard to rationalize the operations and focus on customerdeliveries by working with key OEM customers and suppliers.
Erosion of Net Worth and Report to BIFR
The accumulated losses as at March 31 2017 were more than 50% peak net worth duringthe four financial years preceding the financial year 2016-17.
Accordingly as required by the then applicable the Sick Industrial Companies (SpecialProvisions) Act 1985 (SICA) the Company had called an extraordinary general meeting onSeptember 24 2016 to consider the erosion and authorize the Board of Directors to complywith SICA. Post approval by the members in the aforesaid meeting the Report of Erosionunder Section 23(1)(a)(i) of SICA had been filed on 10/11/2016 with the Board forIndustrial and Financial Reconstruction.
With effect from December 1 2016 the Sick Industrial Companies (Special Provisions)Act 1985 has been repealed.
Strategic Debt Restructuring
During the year the lenders formed a Joint Lenders Forum (JLF) to consider revivalmeasures considering the performance of the Company and its financial position. Thelenders have invoked Strategic Debt Restructuring (SDR) as per the guidelines of RBI witha view to evaluate and implement debt restructuring and other measures with a view torevive the operations of the Company.
The SDR process is currently in progress.
On account of severe cash flow constraints the Company is currently unable to meetcustomer demands. This has also compelled certain OEM customers to lower the orders on theCompany. The Company is working with certain customers who give assistance for fulfillmentof their orders. The Company is also working with available working capital for completingcertain orders. Further in order to improve the performance the Company has undertakensteps to rationalize the manpower and operations.
However current state of cash flow and working capital significantly limits theability of the Company to target higher sales.
The Company is hopeful of positive outcome of the SDR process which is currentlyunderway.
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.
Extract of the Annual Return
The extract of Annual Return in Form MGT -9 for the Financial Year 2016-17 has beenenclosed with this report as Annexure III.
Meetings of the Board of Directors
The Board met Seven times during the year 2016-17 i.e. on 20th May 2016 30th May 201621st June 2016 10th August 2016 28th September 2016 14th November 2016 and 13thFebruary 2017. For further details please refer Report on Corporate Governance of thisAnnual Report.
Directors Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31 2017 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 31 2017 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 Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
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.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance Requirements set out by SEBI. Pursuant to Regulation 27of the Listing of Debt Regulation 2015 a separate Report on Corporate Governance and acertificate from the Auditors of the Company regarding compliance of the conditions ofCorporate Governance forms part of the Annual 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 2016-17were 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 thelinkhttp://www.cebbco.com/docs/profile_for_investors.html.
Members are requested to draw their attention to Note No. 32 of the financial statementwhich sets out related party disclosures.
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) Rules2014 forming part of the Director report for the year endedMarch 31st 2017.
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 of Rs 425.62 Lakhs.
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of thelisting of Debt Regulation provision of this regulation shall be applicable to top 100listed entities determined on the basis of market capitalisation as at the end ofimmediate previous financial year. Risk management committee therefore has been abolishedby the company.
The Company is facing severe issues on liquidity and working capital front. The Companycontinue to monitor the cash flows and working capital situation and suitable actions areinitiated. A reference may be made to discussion on strategic debt restructuring in thisreport.
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 activities has been annexed herewith as ANNEXURE - I
Internal Financial Controls
The Company has adequate internal financial controls with reference to financialstatements. During the year such controls were tested and no reportable substantialweaknesses were observed.
Directors and KMP
The Board of Directors comprises
|Sr. No. ||Particulars ||Designation |
|1. ||Dr. Kailash Gupta ||Non-Executive Promoter Director |
|2. ||Mr. Prakash Y Gurav ||Independent Director |
|3. ||Mr. Prabhakar Dalal ||Independent Director |
|4. ||Mr. M Venkat Rajarao ||Independent Director |
During the year following changes have been in board of directors due toresignation/cessation:
Mrs. Nandini Malpani Non Executive Director resigned from Directorship with effectfrom 20th May 2016.The Company had initiated steps to induct 'woman director'. However onaccount of deteriorating performance of the Company it has been difficult to attractsuitable candidate. The Company continues its effort to look out for suitable candidate.
Furthermore we confirm that the Company has received declarations from all theIndependent Directors confirming that they meet the criteria of independence as prescribedunder Section 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.
On the basis of recommendations of the Policy for performance evaluation of IndependentDirectors Board Committees and other individual Directors an evaluation process wasfollowed by the Board for its own performance and that of its Committees and individualDirectors. During the year a meeting of independent directors was held on 10/03/2017 toundertake performance evaluation of independent directors Board of director as a wholeand Committees of Board.
The details of Programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are put upon the website of the Company at the link:http://www.cebbco.com/docs/profile_for_investors.html
In the 34th Annual General Meeting held on September 29 2014 M/s. Deloitte Haskins& Sells LLP (DHS) Chartered Accountants (ICAI Firm Registration No.117366W/W-100018) was re-appointed as Statutory Auditors of the Company for a tenure of 3year subject to ratification of their appointment by Members at every subsequent AnnualGeneral Meeting. DHS tenure of 3 year as Statutory Auditors concludes at this ensuingAnnual General Meeting.
The report of the Statutory Auditors is enclosed to this Report and contains noqualification reservation or adverse remark. The observations made in the Auditors'Report are self-explanatory and therefore do not call for any further comments.
The Board of Director of the Company has on the recommendation of the Audit Committeeand a per Section 139 of the Act it is proposed to appoint M/s B S R & Co. LLPChartered Accountants (B S R LLP) (ICAI Firm No. 101248W/W 100022) for a tenure of5 year to hold office from the conclusion of the ensuing Annual General Meeting till theconclusion of the 42nd Annual General Meeting of the Company to be held in the year 2022subject to ratification of their appointment at every subsequent Annual General Meetingat such remuneration as approved by the Members at this Annual General Meeting.
The Board commend to seek consent of its Members on appointment of BSR LLP as StatutoryAuditors for tenure of 5 year to examine and audit the accounts of the Company during thesaid period.
The Board has appointed Mr. S.K. Gupta Practicing Company Secretary to conductSecretarial Audit for the financial year 2016-17. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed herewith marked as ANNEXURE II to thisReport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.
The CSR Committee comprises Mr. Kailash Chand Gupta Mr. Manchi Venkat Raja Rao and Mr.Prabhakar Dalal as other members.
The Audit Committee comprises Mr. Prakash Yashwant Gurav (Chairman) Mr. Manchi VenkatRaja Rao and Mr. Prabhakar Ramchandra Dalal as other members. All the recommendations madeby 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 2014and amendmentthereto.
1) Public Deposit - Your Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
2) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operation in future.
3) Material changes affecting the financial position of the Company which have occurredbetween the end of the financial year of the Company to which the financial statementrelate and the date of this report -
4) Share Capital - The paid up equity capital as on March 31 2017 was Rs.549429640.00.
The Company has issued in FY 2014-15 2000000 unlisted non-convertibles cumulativeredeemable preference shares of the Company of the face value of Rs. 100/- each for anaggregate value of Rs. 20 Crores at par on a private placement basis jointly to thepromoters i.e. Mr. Kailash Chand Gupta and Mrs. Rekha Gupta. Up to March 31 2017 Rs.13.00 Crores has been paid up.
The company has not issued shares with differential voting rights nor granted stockoptions nor sweat equity.
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.
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: Jabalpur ||P.Y. Gurav ||M.V. Raja Rao |
|Date: 22nd Aug. 2017 ||DIN: 02004317 ||DIN: 00110363 |