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ECE Industries Ltd.

BSE: 532491 Sector: Engineering
NSE: ECEIND ISIN Code: INE588B01014
BSE 00:00 | 04 Mar ECE Industries Ltd
NSE 05:30 | 01 Jan ECE Industries Ltd
OPEN 115.00
PREVIOUS CLOSE 125.00
VOLUME 700
52-Week high 125.00
52-Week low 0.00
P/E 12.16
Mkt Cap.(Rs cr) 97
Buy Price 117.00
Buy Qty 100.00
Sell Price 123.40
Sell Qty 10.00
OPEN 115.00
CLOSE 125.00
VOLUME 700
52-Week high 125.00
52-Week low 0.00
P/E 12.16
Mkt Cap.(Rs cr) 97
Buy Price 117.00
Buy Qty 100.00
Sell Price 123.40
Sell Qty 10.00

ECE Industries Ltd. (ECEIND) - Director Report

Company director report

TO THE SHAREHOLDERS

Dear Shareholders

We have pleasure in presenting the Seventy Third Annual Report with Audited Accounts ofthe Company for the year ended 31st March 2019.

FINANCIAL RESULTS

(Rs. in Lakh)

Particulars 31.03.2019 31.03.2018
Turnover (Gross) 25271.39 26579.13
Profit/(Loss) before Depreciation Exceptional Items & Tax 512.01 5267.92
Gain/(Loss) from Exceptional items (880.95) 1169.44
(368.94) 6437.36
Less: Depreciation 169.38 177.29
Profit/(Loss) before Tax (538.32) 6260.07
Provision for:
(i) Current Income Tax (1.45) 365.08
(ii) Tax / MAT Charge / (Credit) for earlier years - (73.92)
(iii) Deferred Tax Charge/(Credit) (450.27) 340.77
Profit for the year (86.60) 5628.14

IND AS - IFRS CONVERGED STANDARDS

Your Company has already adopted Indian Accounting Standards ("IND-AS") witheffect from 1st April 2017. Your Company has accordingly prepared IND-AS financials forthe year ended 31st March 2019 along with comparable figures as on 31st March 2018.

REVIEW OF PERFORMANCE

The sales turnover for the current year is Rs.25271.39 Lakh against Rs.26579.13 Lakhin the previous year. The total gross profit / (loss) for the year ended 31st March 2019comes to Rs.(86.60) Lakh (Previous Year Rs.5628.14 lakh).

In view of the current order booking position in hand the Company is expectingincreased revenue as well as the improved profitability in current fiscal.

DIVIDEND

We recommend payment of Dividend for the year 2018-19 @ Rs. 2.50 per share (25%) whichwill be paid after obtaining your approval in the Annual General Meeting.

SHARE CAPITAL

During the year ended 31st March 2019 there is no change in the issued and subscribedshare capital of your Company. The number of equity shares outstanding as on 31st March2019 are 7288645 of Rs.10/- each.

VOLUNTARY DELISTING

Your Company has applied earlier to National Stock Exchange of India Limited (NSE) forvoluntary delisting of its equity shares in terms of SEBI (Delisting of Equity Shares)Regulations 2009 after providing an exit opportunity to the public shareholders and filedthe final application for delisting which was pending with NSE for disposal. The NSE videits letter dated April 24 2019 has approved the delisting and the equity shares of theCompany has been successfully delisted from NSE w.e.f. May 172019.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act2013 read with Companies (Accounts) Rules 2014 are set out in a separate statementattached hereto and forming part of the report. (Annexure-I)

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to applicable provisions of the Companies Act 2013 ("the Act") readwith the Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 ("The Rules") all unpaid or unclaimed dividends arerequired to be transferred by the Company to the Investor Education and Protection Fund(IEPF) established by the Central Government after completion of seven years. Furtheraccording to the Rules the shares in respect of which dividend has not been paid orclaimed by the Members for seven consecutive years or more shall also be transferred tothe demat account created by the IEPF Authority. The Company had sent individual noticesand also advertised in the newspapers seeking action from the Members who have not claimedtheir dividends for seven consecutive years or more. Accordingly the Company hastransferred such unpaid or unclaimed dividends and corresponding shares upto the financialyear 2010-11.

Members/claimants whose shares unclaimed dividend have been transferred to the IEPFDemat Account or the Fund as the case may be may claim the shares or apply for refund bymaking an application to the IEPF Authority in Form IEPF-5 (available onhttp://www.iepf.gov.in) along with requisite fee as decided by the IEPF Authority fromtime to time. The Member/claimant can file only one consolidated claim in a Financial Yearas per the IEPF Rules.

Members are requested to ensure that they claim the dividends and shares referredabove before they are transferred to the said Fund. Due dates for Transfer of UnclaimedDividend to IEPF are provided in the Notes to the Notice.

Details of shares/shareholders in respect of which dividend has not been claimed areprovided on our website. The shareholders are therefore requested to verify their recordsand claim their dividends of all the last seven years if not claimed.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

(including criteria for determining qualification positive attributes independence ofa Director policy relating to remuneration for Directors Key Managerial Personnel andother employees)

• Policy on Directors' Appointment

Policy on Directors' appointment is to follow the criteria as laid down under theCompanies Act 2013 and good corporate practices. Emphasis is given to persons fromdiverse fields and professions.

• Policy on Remuneration

Guiding Policy on remuneration of Directors Key Managerial Personnel and employees ofthe Company is that -

> Remuneration to Key Managerial Personnel Senior Executives Managers Staff andWorkmen is industry driven in which it is operating taking into account the performanceleverage and factors such as to attract and retain quality talent.

> For Directors it is based on the shareholders resolutions provisions of theCompanies Act 2013 and Rules framed therein circulars and guidelines issued by CentralGovernment and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE ITS COMMITTEES AND INDIVIDUALDIRECTORS

The Board of Directors of the Company has initiated and put in place evaluation of itsown performance its committees and individual directors. The result of the evaluation issatisfactory and adequate and meets the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act 2013 Independent Directors of theCompany have made a declaration confirming the compliance of the conditions of theindependence stipulated in the aforesaid section.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013 the Boardof Directors of your company state that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS

During the year 2018-19 Mr. Sakate Khaitan Director of the Company is retiring byrotation and being eligible offer himself for re-appointment.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

There were six meetings of the Board of Directors and one meeting of the IndependentDirectors held during the year ended on 31st March 2019.

DETAILS OF COMMITTEE OF DIRECTORS

The Company has duly constituted the Audit Committee Nomination and RemunerationCommittee and Stakeholders Relationship/Grievance Committee of Directors in terms of theprovisions of Companies Act 2013. During the financial year 2018-19 the desired no. ofmeeting of the Committee(s) were held and attended by each member of the Committee asrequired under the Companies Act 2013 and rules made thereunder.

The recommendation by the Audit Committee as and when made to Board has been acceptedby it.

KEY MANAGERIAL PERSONNEL

Your Company has designated Mr. Prakash Kumar Mohta the Managing Director Mr. RajatSharma CFO and Mr. Piyush Agarwal Company Secretary as the Key Managerial Personnel.

PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTY

There is no transaction with Related Party which requires disclosure under Section134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules2014.

LOANS INVESTMENT AND GUARANTEES BY THE COMPANY

There is no loan given guarantee given or security provided by the Company to anyentity during the year ended 31st March 2019. Further the investments made by theCompany are within the limits and in conformity with the provisions as specified underSection 186 of the Companies Act 2013.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public as well as employeesduring the financial year ended 31st March 2019.

RISK MANAGEMENT

Your Directors periodically discuss and monitors the risk management plans as well asevaluated various risks and that there is no element of risk identified that may threatenthe existence of the Company. There is an adequate risk management infrastructure in placecapable of addressing those risks.

A detailed report on significant risks and mitigation is forming part of Management'sDiscussion and Analysis.

CONSTITUTION OF INTERNAL COMPLAINTS COMMITTEE

Your Company has constituted a Centralized Internal Complaints Committee in terms ofthe provisions of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year the Company does not fall in the ambit of the provisions of Section135 of Companies Act 2013 relating to applicability of Corporate Social Responsibility.

ANALYSIS OF REMUNERATION

Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration) Rules 2014 adisclosure on remuneration related information of employees Key Managerial Personnel andDirectors is annexed herewith and forming part of the report. (Annexure - II)

PARTICULARS OF EMPLOYEES

As per the provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1)of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended the details of employees are enclosed as Annexure- III

STATUTORY AUDITORS

The auditors M/s VSD & Associates Chartered Accountants (Firm Regn. No.008723N)was appointed earlier as the Statutory Auditors of the Company for a term of 5 (five)years to hold office upto the conclusion of 73rd Annual General Meeting (AGM) whose termof office will expire at the conclusion of ensuing AGM of the Company. M/s VSD &Associates Chartered Accountants is eligible and offer themselves for re-appointment forfurther term of (5) five years as in terms of the provisions of Companies Act 2013 andrules made thereunder.

Upon recommendations of Audit Committee your Directors has recommended reappointingM/s VSD & Associates Chartered Accountants for further term of 5 (five) to holdoffice from the conclusion of ensuing AGM upto the conclusion of 78th AGM of the Companyin the calendar year of 2024.

COST AUDITORS

Your Company has appointed M/s. K.L. Jaisingh & Co. Cost Accountants as the CostAuditors for conducting the audit of cost account records for the products PowerTransformers and Elevators for the financial year ended 31st March 2020.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report for the year ended 31st March 2019 in prescribed form dulyaudited by the Practicing Company Secretary M/s. PTM & Co. is annexed herewith andforming part of the report. (Annexure-IV)

INTERNAL AUDIT

The Company continued to engage reputed firms of Chartered Accountants as the internalauditors at its units. Their scope of work and plan for audit is discussed and reviewed bythe Audit Committee. The report submitted by them is regularly reviewed and suitablecorrective action taken on an ongoing basis to improve efficiency in operations.

INSURANCE

Adequate insurance cover has been taken for properties of the company includingbuildings plant and machineries and stocks against fire earthquake and other risks asconsidered necessary.

EJCTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of annual return isannexed herewith and forming part of the report. (Annexure - V)

ACKNOWLEDGEMENTS

Your Directors place on record their thanks for the dedicated services rendered by allthe employees of the company in its factories and offices and also acknowledge theco-operation assistance and support extended by the Company's bankers and stakeholders.

For and on Behalf of the Board of Directors
Place : Kolkata (Prakash Kumar Mohta) (Mahendra Kumar Jajoo)
Dated : 29th July 2019 Managing Director Director
DIN: 00191299 DIN: 00006504

ANNEXURE TO DIRECTORS' REPORT

(Annexure -1)

Information on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014.

A. Conservation of Energy

In Transformer manufacturing by using Vapour Phase Drying method with latesttechnology process the consumption of energy is being substantially brought down. Energyconservation has been further improved by refurbishing of existing vacuum pumps and cranemotors. Power factor of electricity supply also has been kept high by suitably rearrangingthe load which helps energy conservation.

The Company is continuously engaged in the process of energy conservation inmanufacturing process and promotion of energy efficient elevators. Gearless lifts whichsave considerable energy had been introduced in the market and show an increasing trend insales LED lights in our lifts is now standard and variable voltage variable frequencydrives that reduce starting currents and save energy are a constant across all ourofferings. Last year the Company has upgraded the welding machines both Spot & MIGwith the latest available technology. The factory lightning is now migrating to use energyefficient LED lights & fixtures for both internal & external usage.

B. Technology Absorption

Efforts made in technology absorption as per Form-B are furnished below:

Form-B

(Form for disclosure of Particulars with respect of Technology Absorption)

1. Research and Development (R&D)

In the case of High Voltage windings of Transformers with a view to get ideal impulsedistribution fully interleaved windings has been introduced enhancing the surge withstandcharacteristics. Moreover the windings are designed to mount the Fibre Optic sensorswhich indicate the Hot Spot temperature of the windings continuously protecting thetransformer from damage due to abnormal temperature rise. Further the design oftransformers has been made suitable for mounting the state of the art components likemaintenance free breather on line Dissolved Gas Analyser On line Drying equipment etc.

In elevator manufacturing the Company has developed usage of most energy efficientpermanent magnet synchronous motor for all its gearless lifts. Development of allpermutations of lifts upto 2.0mps speed is complete. Home lifts specially designed withoutpits have been deployed successfully and further enhancements on the same are ongoing.Value engineering on old designs is currently underway to look at optimization andstandardization to enhance value. Gl based pre-coated car panels were released to themarket successfully which replace MS based powder coating.

2. Technology Absorption Adaptation & Renovation

In transformer manufacturing the Company is installing Vapour Phase Drying systemwhich is the most advanced drying technology for Power Transformers. By this method aclean and dust free transformer with a high degree of dryness enhancing the reliabilityand service life of the transformers is manufactured. The substantial reduction in dryingtime in this method helps to increase rate of production of transformers.

In elevators Integrated Drive Technology is extended for Geared Segment therebyhaving advantage in field for troubleshooting and ease of maintenance. Plug and Playharness for field introduced for parallel communication controllers that will give addedadvantages in terms of productivity for laying the wiring and commissioning of elevatorslower no of breakdowns reducing chances of errors in field. Controller harness willbenefit in factory for productivity. In house design for displays has been completed whichwill reduce dependency on imports better control on inventory. Lean methodology is beingimplemented on the shop floor to improve our productivity and all ensure all wastes arereduced across processes. ERP has been successfully deployed across the sales andoperations and is currently under development for MRP production and finance that willenable complete integration across the division and bring in efficiency and real time datacontrols.

C. Foreign Exchange Earnings & Outgo

During the year under review foreign exchange earnings was Nil and foreign exchangeoutgo was Rs.398.61 lakh.

ANNEXURETO DIRECTORS' REPORT

(Annexure - II)

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014.

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2018-19 and the ratio of the remunerationof each Director to the median remuneration of the employees of the Company for thefinancial year 2018-19 are as under:

Sr. No. Name of Director/KMP and Designation Remuneration of Director/KMP for Financial Year 2018-19 (Rs. in Lakh) % increase in Remuneration in the Financial Year 2018-19 Ratio of remuneration of each Director/KMP to median remuneration of employee
1 Mr. Prakash Kumar Mohta (Managing Director) 262.16 17.95 84.30:1
2 Mr. Mahendra Kumar Jajoo (Director) 0.55 " 0.18:1
3 Mr. Sakate Khaitan (Director) 0.05 - 0.02:1
4 Mrs. Moulishree Gani (Director) 0.10 100 0.03:1
5 Mr. Shiban Ganju (Director) 0.46 4.55 0.15:1
6 Mr. Yogesh D. Korani (Director) 0.20 100 0.06:1
7 Mr. Rajat Sharma (Chief Financial Officer) 44.84 10.47 14.42:1
8 Mr. Piyush Agarwal (Company Secretary) 10.57 9.76 3.40:1

(ii) The median remuneration of employees of the Company during the financial year wasRs.3.11 lacs.

(iii) In the financial year there was an increase of 11.47% in the median remunerationof employees calculated after induction of new appointments also.

(iv) There were 526 permanent employees on the rolls of Company as on March 31 2019.

(v) Average percentage increase made in the salaries of employees other than the keymanagerial personnel in the financial year i.e. 2018-19 was 9.69% (calculated afterinduction of new appointments also) whereas the increase in the key managerialremuneration for the same financial year was 16.54%.

(vi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year - Not Applicable; and

(vii) It is hereby affirmed that the remuneration to Directors Key ManagerialPersonnel and other Employees is paid as per Remuneration Policy of the Company.

ANNEXURE TO DIRECTORS' REPORT

(Annexure - III)

STATEMENT CONTAINING INFORMATION AS PER SECTION 197(12) READ WITH RULES 5(2) AND 5(3)OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.

Name Designation Remuneration Received (Rs. In lakh) Nature of EmploymentQualification Experience (Years) Date of Commencement of Employment Age (Years) LastEmployment held Equity Share held in the Company (Percentage).

(a) Employed throughout the financial year and was in receipt of remuneration for theyear in aggregate of not less than Rs.10200000.

1. Mr. Manish Sikka President (Elevator Division) Rs.132.91 lakh Non-ContractualB.E. (Electronics) & PGDBM 26 years 01^)7/201548 years Matrix ManagementConsultants Pvt. Ltd. Nil.

(b) Employed for a part of the financial year and was in receipt of remuneration at arate in aggregate not less than Rs. 850000/- per month.

NIL

(c) Employed throughout the financial year or part thereof was in receipt ofremuneration in the year which in the aggregate or at a rate which in the aggregate wasin excess of that drawn by the Whole-time Director / Managing Director and holds byhimself or alongwith his spouse and dependent children not less than 2% of the equityshares of the company.

NIL

NOTES:

1. Remuneration includes salaries house rent allowance personal allowance ex-gratiaperformance allowance leave travel assistance encashment of leave medical expenses /allowances accident insurance premium Company's Contribution to Provident &Superannuation Funds and the monetary value of perquisites calculated in accordance withthe provisions of the Income-tax Act1961 and the Rules made there under and excludesprovision for retiring gratuity for which separate figure is not available.

2. The above employee is not relative of any Director of the Company.