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Emmbi Industries Ltd.

BSE: 533161 Sector: Industrials
NSE: EMMBI ISIN Code: INE753K01015
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OPEN 98.75
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VOLUME 11
52-Week high 175.00
52-Week low 94.95
P/E 11.09
Mkt Cap.(Rs cr) 174
Buy Price 98.35
Buy Qty 248.00
Sell Price 103.00
Sell Qty 1.00
OPEN 98.75
CLOSE 98.90
VOLUME 11
52-Week high 175.00
52-Week low 94.95
P/E 11.09
Mkt Cap.(Rs cr) 174
Buy Price 98.35
Buy Qty 248.00
Sell Price 103.00
Sell Qty 1.00

Emmbi Industries Ltd. (EMMBI) - Director Report

Company director report

[(Disclosure Under Section 134(3) Of The Companies Act 2013) {Read With Companies(Accounts) Rules 2014}]

The Members

Emmbi Industries Limited

FINANCIAL RESULTS (INR MILLION)
Particulars Year ended on 31 March 2019 Year ended on 31 March 2018
Gross Sales 3148.45 2789 83
Less: Goods & Service Tax (258.37) (207.21)
Net Sales 2890.08 2582.62
Other income 1.37 1.08
Total revenue 2891.45 2583.69
Expenditure 2652.41 2378.55
Profit before tax 239.04 205.14
Tax expenses 61.14 52.52
Profit after Tax 177.90 152.62
Expenses of earlier year 0.00 0.00
Balance 177.90 152 62
Opening Balance of retained earnings 532.82 394.96
Profit available for appropriation
Excess provision of dividend tax credited 0.00 0.00
Add : Excess Provision of Taxes of earlier year 0.00 0.00
Less : Mat Credit Utilised in earlier years 0.00 0.00
Balance available for appropriation
Appropriations:
Adjustment relating to fixed assets 0.00 0.00
Adjustments with other Equity 0.02 (4.11)
Proposed Dividend / Paid (8.85) (8.85)
Distribution tax on Dividend (1.82) (1.80)
Closing Balance of retained earnings 700.07 532.82

Your Directors have pleasure in presenting the 25th Annual Report of your Company andthe Audited Accounts for the year ended 31st March 2019.

Your Company has recorded yet another year of good performance in its operations. Thehighlights of the results are set out below:

OPERATIONS

During the year under review your Company has achieved Revenue from Operations and theIncome aggregating to Rs. 2890.08 million as against Rs. 2544.74 million during theprevious year registering an increase of about 13.57% over the previous year. Profitafter providing for taxes is Rs. 177.90 million as against Rs.152.62 million during theprevious year registering an increase of about 16.57% over the previous year. There is nochange in the nature of business of the Company.

DIVIDEND

Your Directors are pleased to recommend a dividend of Re. 0.50 per share of the facevalue of Rs. 10/- each for the year ended on 31st March 2019 (Re. 0.50 per share for theprevious year) subject to the Members' approval. The dividend payment amounts to Rs. 8.85Million. In addition Rs. 1.82 Million is payable towards distribution tax on dividend.

EXPORTS

Values of Exports during the year under review were Rs. 1469.88 million as against Rs.1192.87 million. Exports in the current financial year contributed to 47% in the grosssales. Company has expanded its presence in 57 countries which has resulted healthy growthin the territory of operation.

HUMAN RESOURCE DEVELOPMENT

Companies management team is focused on creating the best environment for theenthusiastic and dedicated workforce of Emmbi Many New Programs and Work patterns wereintroduced during the quarter to enhance the "experience of work " of theemployees For Example a "Suvidha Work from Home" policy was introduced for thewomen workforce which will offer them a privilege work from home situation on thedifficult days of mensuration cycle. This will help the to take care of their work fromthe comfort of their home.

We continue to align the skill sets and capabilities of our current workforce and thetalent available in the market with the organization's ongoing and future business plansto maximize return on investment and secure continual success. We also emphasize thisthrough the blue colour in the company's logo as it reflects the loyalty and trust thatwe bring to our blue collared workforce.

Our continued self-development initiatives include relevant training programmes andseminars that addresses the needs of the workforce as well as the senior management.

QUALITY INITIATIVES

"Man-Machine interphase will only produce the accuracy and skill required forbeing a successful company in the coming years. Specially Manufacturing sector is changingits shape using modern technology tools like IoT (Internet of things) and ML (MachineLearning). The whole new concept of industry 4.0 will be practiced and implemented inEmmbi during coming years of operation.

This will also augment the project of Lean manufacturing which was adopted during pastfew years to control and make best use of the Human Capital. We are successfullypracticing the same and the result can be seen in the in the increase of defect freeproduction in year after year. The efforts of Lean Enterprise Management have led tohigher productivity and increased profitability.

The above initiatives and our continuous adherence to strict quality standards hascreated tangible as well as intangible benefits to strengthen brand Emmbi.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT

Your Directors further state that there are no material changes and commitmentaffecting the financial position of the Company which have occured between the end of theFinancial year of the Company to which the Financial statements relate and the date of theReport

INSTANCES OF FRAUD IF ANY REPORTED BY THE AUDITORS

No fraud has been reported by the Auditors to the Audit Committee or the Board.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS

No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review as stipulatedunder the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") is presented in aseparate section forming part of the Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

(i) that in the preparation of the annual accounts for the year ended March 31 2019the applicable accounting standards had been followed along with proper explanationrelating to material departures if any;

(ii) 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 as at March 31 2019 and of the profit ofthe company for the year ended on that date;

(iii) the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the directors have prepared the annual accounts on a going concern basis;

(v) the directors further state that they have laid down internal financial controlsto be followed by the company and that such internal financial controls are adequate andare operating effectively and

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

SECRETARIAL STANDARDS

The Directors state that "the Board have devised proper systems to ensurecompliance with the provisions of all applicable Secretarial Standards and that suchsystems are adequate and operating effectively".

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by the Securities and ExchangeBoard of India (SEBI). The report on Corporate Governance as stipulated under the ListingRegulations forms an integral part of this Report. The requisite certificate from theSecretarial Auditors of the Company confirming compliance with the conditions of CorporateGovernance is attached to the report on Corporate Governance.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in its ordinary course of business and on an arms' lengthbasis.

During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.

The Policy on Materiality of Related Party Transactions and on dealing with RelatedParty Transactions as approved by the Board may be accessed on the Company's website at:www.emmbi.com.

There were no materially significant related party transactions which could havepotential conflict with interest of the Company at large.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Corporate Governance Policies guide the conduct of affairs of your Company andclearly delineates the roles responsibilities and authorities at each level of itsgovernance structure and key functionaries involved in governance. The Code of Conduct forSenior Management and Employees of your Company ("the Code of Conduct") commitsmanagement to financial and accounting policies systems and processes. The CorporateGovernance Policies and the Code of Conduct stand widely communicated across your Companyat all times. Yours Company's Financial Statements are prepared on the basis of theSignificant Accounting Policies that are carefully selected by the Management and approvedby the Audit Committee and the Board. These Accounting Policies are reviewed and updatedfrom time to time. The Systems Standard Operation Procedures and Controls are reviewed byManagement. These Systems and Controls are audited by Internal Audit and their findingsand recommendations are reviewed by the Audit Committee which ensures the implementation.Your Company has in place adequate internal financial controls with reference to theFinancial Statements commensurate with the size scale and complexity of its operations.Your Company recognizes that any internal control framework no matter how well designedhas inherent limitations and accordingly regular audits and review processes ensure thatsuch systems are re-enforced on an on-going basis. The internal control systems of theCompany are monitored and evaluated by internal auditors and their audit reports areperiodically reviewed by the Audit Committee of the Board of Directors and are placedbefore the Board.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act 2013 Mr. Krishnan I.Subramanian (DIN 06614842) Director of the Company retires by rotation at the ensuingAnnual General Meeting of the Company and being eligible offers himself forre-appointment.

The following are the Key Managerial Personnel of the Company pursuant to Section 203of the Companies Act 2013:

Sr. No. Name of the Person Designation
1 Mr. Makrand Appalwar Chairman & Managing Director
2 Mrs. Rinku Appalwar Chief Financial Officer
3 Mr. Kaushal Patvi Company Secretary

CHANGES IN DIRECTORS

There has been no change in the constitution of Board of Directors of the Companyduring the financial year 2018-2019. However During the year under review the Companyhas passed a Special Resolution through postal ballot dated 30th March 2019 as per theprovisions of the Companies Act 2013 and the rules framed thereunder for consent forcontinuation of Mr. Rama Krishnan as an Independent Director of the Company from 1stApril 2019 till the completion of his present term (i.e. up to 30th March 2023).

PERFORMANCE EVALUATION

The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent Directors) which include criteriafor performance evaluation of Non-executive Directors and Executive Directors. Theevaluation process inter alia considers the attendance of Directors at Board and committeemeetings contribution of the member at the board/committee meetings. The process alsoconsiders acquaintance with business expertise personnel characteristic and specificresponsibility of the concerned Director communicating inter se board members effectiveparticipation compliance with code of conduct vision and strategy.

The performance evaluation of the non- executive directors is done by the Boardannually. The performance evaluation of the Chairman & Managing Director ChiefFinancial Officer and the Executive Director is carried out by the Independent Directorsannually. The Board of Directors expressed their satisfaction with the entire evaluationprocedure.

DECLARATION BY AN INDEPENDENT DIRECTOR(S)

All the Independent Directors have provided the declaration of Independence asrequired pursuant to Section 149(7) of the Companies Act 2013 stating that they meet thecriteria of independence as provided in sub-section (6).

STATUTORY AUDITOR

R. Daliya & Associates Chartered Accountants (Firm Registration No. 102060W)statutory auditor of the Company were appointed for a period of five years at the 23rdAnnual General Meeting as Statutory Auditors till the conclusion of 28th Annual GeneralMeeting subject to ratification at every Annual General Meeting and as per Notificationissued by MCA the Company need not place the resolution for ratification at the AGM andhence no resolution is placed before the AGM.

SECRETARIAL AUDITOR

The Board had appointed Mr. Sanjay R. Dholakia Practising Company Secretary toconduct Secretarial Audit for the FY 2018-19. The Secretarial Audit Report for thefinancial year ended March 31 2019 is attached and forms part of the Board Report asAnnexure 3.

OBSERVATIONS - STATUTORY AUDITOR & SECRETARIAL AUDITOR

There are no qualifications reservations observations or adverse remarks contained inthe Auditors Report or the Secretarial Audit Report.

DEPOSITS FROM PUBLIC

During the financial year under review the Company has not accepted any deposits frompublic and as such no amount on account of principal or interest on deposits from Publicwas outstanding as on the date of the Balance Sheet.

BOARD MEETINGS

During the year under review Four (4) Board Meetings were convened and held. Detailedinformation on the meetings of the Board and all its Committees are included in the reporton Corporate Governance which forms part of this Annual Report. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013 andthe listing regulations.

AUDIT COMMITTEE

The Board has re-constituted the Audit Committee as under:-

Mr. Prashant Lohiya Independent Director as Chairman Dr. Venkatesh Joshi IndependentDirector as a member Mr. Rama Krishnan Independent Director as a member Mrs. RinkuAppalwar Executive Director as a member

The Terms of reference of the Audit Committee number and dates of meetings heldattendance of the members of the Committee and more details on the Committee are given inthe Corporate Governance Report which forms part of this Annual Report.

NOMINATION AND REMUNERATION COMMITTEE

The Board has re-constituted a Nomination and Remuneration Committee pursuant toSection 178(1) of the Companies Act 2013 which comprises Mr. Prashant Lohiya IndependentDirector as Chairman

Dr. Venkatesh Joshi Independent Director as a member Mr. Rama Krishnan IndependentDirector as a member

The Company has defined the policy on Director's appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Director.The nomination & remuneration policy adopted by the Company has been posted on theCompany's website www.emmbi.com.

The Terms of reference of the Nomination and Remuneration Committee number and datesof meetings held attendance of the members of the Committee and more details on theCommittee are given in the Corporate Governance Report which forms part of this AnnualReport.

STAKEHOLDERS' RELATIONSHIP COMMITTEE

The Board has re-constituted the Stakeholders' Relationship Committee as under:-

Mr. Prashant Lohiya Independent Director as Chairman
Dr. Venkatesh Joshi Independent Director as a member
Mr. Rama Krishnan Independent Director as a member
Mrs. Rinku Appalwar Executive Director as a member.

The Terms of reference of the Stakeholders' Relationship Committee number and dates ofmeetings held attendance of the members of the Committee and more details on theCommittee are given in the Corporate Governance Report which forms part of this AnnualReport.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board has re-constituted the Corporate Social Responsibility Committee as under:-

Dr. Venkatesh Joshi Independent Director as Chairman
Mr. Rama Krishnan Independent Director as a member
Mr. Prashant Lohiya Independent Director as a member
Mrs. Rinku Appalwar Executive Director as a member.

The Corporate Social Responsibility Policy is available on the Company's websitewww.emmbi.com. The Terms of reference of the Corporate Social Responsibility Committeenumber and dates of meetings held and attendance of the members of the Committee aregiven separately in the attached Corporate Governance Report. Details of amount spent onCSR activities during the financial year 2018-19 is attached and forms part of the BoardReport as Annexure 4.

More details on the Committee are given in the Corporate Governance Report which formspart of this Annual Report.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED

The Company has not given any loan guarantees or made any investments exceeding sixtyper cent of its paid-up share capital free reserves and securities premium account or onehundred per cent of its free reserves and securities premium account whichever is moreas prescribed in Section 186 of the Companies Act 2013.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS ANDOUTGOINGS:

The information as required under Section 134(3)(m) of The Companies Act 2013 readwith Rule 8(3) of The Companies (Accounts) Rules 2014 with respect to conservation ofenergy technology absorption and foreign exchange earnings is given below:

1. CONSERVATION OF ENERGY:

a. The Company is making continuous efforts on ongoing basis for energy conservation byadopting innovative measures to reduce wastage and optimise consumption. Energy continuesto be a material aspect from climate change as well as operational perspective. Emmbi'scommitment to decouple energy and carbon footprint from business growth reflects in thereduction in specific consumption that Emmbi has achieved. FY 2019 saw optimization ofpower usage as well as higher operational efficiency augmented through machine learningbased IoT platform.

b. Steps are taken to institutionalized process of identifying and understandingincrease and decrease in energy use by monitoring energy consumption trends to determinefuture energy use when planning future changes in the business and diagnose specific areasof wasted energy.

c. Significant reductions in energy consumption and cost of production of goods havebeen observed by the implementation of above referred measures.

d. Implementation of referred measures have resulted in increased facility reliabilityas well as improved equipment performance.

2. TECHNOLOGY ABSORPTION:

The Company continues to adopt and use the latest technologies to improve theproductivity and quality of its products. The Company's operations do not requiresignificant import of technology.

(A) Research and Development:

The Silvassa unit of the company located at 99/2/1&9 Madhuban Industrial EstateMadhuban Dam Road Rakholi Village U. T. of Dadra & Nagar Haveli Silvassa 396 230 isaccorded In-house R&D recognition up to 31/03/2021 from Department of Scientific AndIndustrial Research Ministry of Science & Technology Govt. of India New Delhi.

Since Inception of the company and in pursuit of R & D endeavors the company isregularly incurring expenditure on R & D on the following activities

- Design and Development of New Products;

- Continuous improvement of existing products for enhanced durability and performance;

- Product optimization using advanced technology;

- Testing and adaptation of New Materials ;

- New processes up gradation & production process improvement of existingprocesses;

- Redesigning of the manual processes in to Automation;

- Environment compliance by products and processes.

(B) Benefits:

Benefits derived as a result of R & D: It has resulted in the improvement ofquality of the products and reduced operation cost. Up gradation of products to the newrequirements has been possible because of R & D done in the Company on a continuousbasis. This has resulted into enhanced customer satisfaction new business opportunitiesreduced costs higher quality and adapting the latest technologies.

(C) Future Plan of action:

Future R&D efforts will continue along similar lines as at present but with morefocus thrust and endeavors.

(D) Expenditure on R&D:

The expenditure on R&D activities incurred during the year is given hereunder:

Particulars (Rs. In Millions)
Capital Expenditure 18.20
Revenue Expenditure 45.23
Total R&D Expenditure 63.43
Total Turnover (Net Sales) 2890.08
Total R&D Expenditure as a percentage of Total turnover 2.19

3. Foreign exchange earnings and Outgo:

The Company has continued to maintain focus and avail of export opportunities based oneconomic considerations. During the year the Company has exports (FOB value) worth Rs.1377.55 millions.

(Rs. In Millions)

Particulars 2018-19 2017-18
Foreign Exchange Earnings 1377.55 1096.51
Foreign Exchange Outgo 40.02 42.91

WHISTLE BLOWER POLICY

The Company has established a Whistle-blower policy in accordance with provisions ofthe Companies Act 2013 and Listing Regulations. Protected disclosures can be made by awhistle-blower through an e-mail or telephone line or a letter to the Chairman of theAudit Committee. The whistle-blower policy is posted on the Company's website and can beaccessed at www.emmbi.com.

PREVENTION OF SEXUAL HARASSMENT POLICY

The Prevention of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 seeks to protect women colleagues against sexual harassment at theirwork place. The internal committee constituted under the said act has confirmed that nocomplaint/case has been filed/pending with the Company during the year.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return in Form No. MGT 9 as provided under sub-section (3) ofSection 92 of the Companies Act 2013 forms part of the Board's Report as Annexure 1.

RISK MANAGEMENT POLICY

A statement including development and implementation of a risk management policy forthe Company is attached and forms a part of the Board's Report as Annexure 2.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has wound up its wholly owned subsidiary in the name of Emmbi ScandinaviaAps through voluntary winding up procedure w.e.f. 31st August 2018.

MANAGERIAL REMUNERATION

The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended March 31 2019 is given in a separateAnnexure to this Report.

The above Annexure is not being sent along with this Report to the Members of theCompany in line with the provision of Section 136 of the Companies Act 2013. Members whoare interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The aforesaid Annexure is also available for inspectionby Members at the Registered Office of the Company before the 25th Annual General Meetingand upto the date of the ensuing Annual General Meeting during the business hours onworking days.

The Company doesn't have any employee within the purview of Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 hence no such details to be provided.

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for the assistance andco-operation received from the investors customers distributors dealers suppliersstock exchanges banks financial institutions Export Promotion Councils Trade BodiesRegulators such as SEBI BSE NSE ROC RBI etc Central and State Governmentauthorities other Semi Government & local authorities Administration of UnionTerritory of Dadra & Nagar Haveli and business associates at all levels during theyear under review.

The Directors also wish to place on record their deep appreciation for the committedservices and excellent work done by the employees of the Emmbi family at all levels duringthe year.

For and on behalf of the Board of Directors
Place: Mumbai Makrand Appalwar
Date: 13th August 2019 Chairman & Managing Director
DIN:00171950