Ess Dee Aluminium Ltd.
|BSE: 532787||Sector: Metals & Mining|
|NSE: ESSDEE||ISIN Code: INE825H01017|
|BSE 00:00 | 20 Jan||Ess Dee Aluminium Ltd|
|NSE 05:30 | 01 Jan||Ess Dee Aluminium Ltd|
|BSE: 532787||Sector: Metals & Mining|
|NSE: ESSDEE||ISIN Code: INE825H01017|
|BSE 00:00 | 20 Jan||Ess Dee Aluminium Ltd|
|NSE 05:30 | 01 Jan||Ess Dee Aluminium Ltd|
Your Directors are pleased to present the Fourteenth Annual Report of the Companytogether with the Audited Statement of Accounts for the financial year ended 31 March2018.
1. FINANCIAL RESULTS:
The financial highlights of the year are:
2. PERFORMANCE REVIEW:
Your Company has done negligible production activity during the financial year ended 31March 2018 owing to which there are no Income from Operations during the year underreview. Further the Overall Standalone Income has decreased to Rs. 56.66 lacs for thefinancial year ended 31 March 2018 as compared to last year's total income of Rs. 815.56lacs. The Total Standalone Expenditure incurred during the financial year ended 31 March2018 decreased to Rs. 50159.13 as compared to Rs. 50903.25 in the last financial year.The overall loss incurred by your Company in the current financial year has decreased toRs. 50102.47 lacs as compared to the Loss of Rs. 51097.37 lacs in the previous financialyear due to reduction in the expenditure of the Company.
The Overall Consolidated Income for the year under review has also decreased to Rs.68.67 lacs as compared to last year's total income of Rs. 815.56 lacs. The consolidatedtotal Expenditure for the financial year ended 31 March 2018 increased to Rs. 56954.30lacs as compared to Rs. 56550.18 lacs in the last financial year. The overall lossincurred by the Company in the current financial year increased to Rs. 56885.63 lacs ascompared to the Loss of Rs. 56736.93 lacs in the previous year.
Since the Company is suffering from severe financial crises and there are no operationsduring the financial year under review your directors do not recommend any dividend forthe financial year 2017-2018. During the year the unclaimed dividend pertaining to thedividend for the year ended 31 March 2010 was transferred to the Investor Education andProtection Fund.
4. SHARE CAPITAL:
The Authorised and Paid Up Share capital of the Company as on 31 March 2018 was Rs.3714000000/- and Rs. 320478110/- respectively and there is no change in capitalstructure of the Company during the year.
5. NON CONVERTIBLE DEBENTURES:
The Company has borrowed Rs. 80 Crore from Life Insurance Corporation of India throughissue of Non Convertible Debenture (NCDs) in two tranches of Rs.40 Crore each on July 302010 with maturity of three years and seven years respectively. The Company has dulyrepaid the first tranche of NCD of Rs. 40 Crore on its maturity. Out of the second trancheof NCDs of Rs. 40 Crore NCDs worth Rs. 30 Crore remain outstanding including theinstalment of Rs. 10 Crore the due date of which was 30 July 2017.
During the year under review the Company has not transferred any amount to DebentureRedemption Reserve as the Company has suffered from huge losses and financial distress.
6. PUBLIC DEPOST:
During the year under review your Company has not accepted any deposits in terms ofthe provisions of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014 as amended during the year under review.
7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
8. TRANSFER TO RESERVE:
During the year 2017-18 the Company has suffered losses and thus has not transferredany amount to reserves.
9. CORPORATE SOCIAL RESPONSIBILITY:
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company isset out in (Annexure-A) of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The policy is available on thewebsite (www.essdee.in) of the Company.
10. RISK MANAGEMENT :
Pursuant to the requirement of Regulation 27 of SEBI Listing Regulations the Companyhas a structured Risk Management Policy. The risk management process is designed tosafeguard the organisation from various risks through timely and adequate actions. It isdesigned to anticipate evaluate and mitigate risk in order to minimise its impact on thebusiness. The potential risks are inventoried and integrated with the management processsuch that they receive the necessary consideration during decision making. It is dealtwith in greater details in the Management Discussion and Analysis Section. As required byRegulation 27 of SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015the Company has framed the Risk Management Policy. The main objective of this policy is toensure sustainable business growth with stability and to promote proactive approach and toidentifying evaluating and resolving risks associated with the business. In order toachieve the key objective the policy establishes structured and disciplined approach torisk management in order to guide decisions on risk related issues. Under the currentchallenging and competitive environment the strategy for mitigating inherent risk inaccomplishing the growth plan of the Company is imperative. The common risk inter-alia areregulatory risk competition financial risk technology obsolescence human resourcesrisk political risks investments retention of talents expansion of facilities andproduct price risk. It is dealt with in greater details in the Management Discussion andAnalysis Section.
11. MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report forms a part of the Directors' Report andcontains all matters pertaining to the industry (Annexure-B).
12. REPORT ON CORPORATE GOVERNANCE:
A separate section on Corporate Governance forming part of the Directors' Report andthe certificate from the Auditors of the Company confirming compliance of CorporateGovernance norms as stipulated under Regulation 27 of SEBI (Listing Obligation andDisclosure Requirement) Regulation 2015 (SEBI Listing Regulations) is included in theAnnual Report. (Annexure-C)
13. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 (12) read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofremuneration paid to the Directors/ employees of your Company are set out as (Annexure-D)
As per the provisions of Section 164(2) of the Companies Act 2013 any person who isor has been a director of the Company who has failed to file the financial statements orannual returns for any continuous period of three financial years or has failed to repaythe deposits accepted by it or pay interest thereon or to redeem any debentures on the duedate or pay interest due thereon or pay any dividend declared and such failure to pay orredeem continues for one year or more shall not be eligible to be re-appointed as adirector of that company or appointed in other company for a period of five years from thedate on which the said company fails to do so.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both underSection 149(6) of the Companies Act 2013 and SEBI Listing Regulations 2015.
All the Directors of your Company are disqualified under Section 164 (2) of theCompanies Act 2013 as the Company has defaulted in re-payment of Non-ConvertibleDebentures issued by the Company. As required by law this position is also reflected inthe Auditors' Report.
14.1 Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theBoard has carried out an annual performance evaluation of its own performance theDirector's individually as well as the evaluation of its Audit and other committees. ThePerformance evaluation was carried out as under:
In accordance with the criteria suggested by the Nomination and Remuneration Committeethe Board of Directors evaluated the performance of Board having regard to variouscriteria such as Board Composition Board Process and Board Dynamics etc.
Committee of the Board
The Performance of the Audit Committee CSR Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee was evaluated by the Board havingregards to various criteria such as committee composition Committee process and Committeedynamics etc. The Board had unanimous view that all the committees were performing theirfunctions satisfactorily and according to the mandate prescribed by the Board under theregulatory requirements including provisions of the Act and Listing Agreement.
a) Independent Directors:- in accordance with the criteria suggested by the Nominationand Remuneration Committee the performance of each Independent Director was evaluated bythe entire Board of Directors on various parameters like engagement leadershipcommunication governance and interest of stakeholders. The Board was of the unanimousview that each Independent Director was a reputed professional and brought his reachexperience to the deliberation of the Board. The Board also appreciated the contributionmade by all the Independent Directors in guiding the management in achieving growth andconcluded that continuance of each Independent Director in the Board will be in theinterest of the Company.
b) Non Independent Director:- The performance of each non-independent Director(including Chairman) was evaluated by the Independent Directors in their separate meeting.The various criteria considered for the purpose of evaluation included leadershipengagement transparency analysis decision making functional knowledge. The IndependentDirectors and Board were of the unanimous view that each of the non-independent directorswas providing good business and people leadership.
14.2 Policy on Director Appointment and Remuneration
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy for selection and appointment of Directors and senior management and theirremuneration. The requisite details as required by Section 134(3) (e) of the CompaniesAct 2013 Section 178 (3) and (4) and Regulation 27 of SEBI (Listing Obligation andDisclosure Requirement) Regulation 2015 are annexed as (Annexure-E) of this Report.
14.3 Board Meeting
During the year under review 5 (Five) Board Meetings and 4 (Four) Audit Committeemeetings were held the details of which are given under Corporate Governance report. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct and Listing Agreement.
15. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3)(c) of the Companies Act 2013:
a) In the preparation of the annual accounts for the year ended March 31 2018 theapplicable accounting standards have been followed and there are no material departuresfrom the same;
b) The Directors have selected such accounting policies and applied them consistentlyand made judgements 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 the end of the financial year ending on March 31 2018 and of theprofit and loss 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 causes to prepare the annual accounts on a 'going concern' basis;
e) The Directors had 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 had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and are operating effectively.
16. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES:
In line with the requirements of the Companies Act 2013 and SEBI (Listing Obligationand Disclosure Requirement (Regulations) 2015 the Company has formulated a Policy onRelated Party Transactions which is also available on Company's website at www.essdee.in.The Policy intends to ensure that proper reporting approval and disclosure processes arein place for all transactions between the Company and Related Parties.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for the transactions which are of a foreseen and repetitive nature.
However there were no Related Party Transactions entered into by your Company duringthe year under review. Accordingly the disclosure of Related Party Transactions asrequired under Section 134(3) (h) of the Companies Act 2013 in Form AOC-2 is notapplicable and thus is not provided hereunder.
17. MATERIAL EVENTS AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY:
The following material event and commitment occurred during the financial year ended 31March 2018 and before the date of this report that have significant bearing on thefinancial position of the Company:
1. Most of the production facilities have faced challenges due to severe financialstress and liquidity constraint resulting in all the manufacturing units becomingvirtually non-operational during the period under review.
2. There were no operations carried out by the Company and thus no operational incomewas generated during the financial year under review.
3. Suspension of work at one of the manufacturing units of the Company situated atKamarhati Kolkata w.e.f. 01 July 2016
4. The Company has defaulted in repayment of Non-Convertible Debentures obtained fromLife Insurance Corporation of India Limited which has resulted into disqualification ofDirectors of the Company
5. Most of the senior leadership team which was directly responsible for the Company'sbusiness affairs was responsible for overgrown debt burden and consequent financial stressand has left the company.
6. The Company has been looking for various options for its revival. A critical elementof the revival plan is settlement of the debt burden and infusion of fresh capital toprovide liquidity for re-starting the business. The Company is in discussions with alllenders for resolution of the problems including possible restructuring and one-timesettlement. The Company has also sought for and received support from Institutionalinvestors to help in the resolution plan.
7. The Company and the Prospective Investors (including the fund's manager and/or fundsadvised by SSG Capital Management and their associates) have continued to look for variousoptions for revival and are in active discussions with existing as well as prospectivelenders. Further SSG Capital Management has through its asset reconstruction entity inIndia taken over the loans given by one bank and is in advanced stage of negotiations forsimilar restructuring/settling loans of other banks and lenders. The wholly ownedsubsidiary in Singapore Ess Dee Aluminium PTE Ltd is the fulcrum and cornerstone of therevival activity and will continue to play a key and pivotal role in the revival process.
18. VIGIL MECHANISM:
In accordance with the requirement of the Companies Act 2013 read along withRegulation 27 of SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015the Company has formulated a vigil mechanism (Whistle Blower Policy) for its Directors andEmployees of the Company for reporting about unethical practice. The object of the policyis:
a. To provide a mechanism to the employees and Director of the Company and otherpersons dealing with the Company to report to the audit committee any incidence ofunethical behaviour actual or suspected fraud or in violation of the Company's ethicpolicy;
b. To safeguard the confidentially and interest of such employees/Directors/Personsdealing with the Company
19. ORDER BY REGULATOR COURT OR TRIBUNAL
National Company Law Board Tribunal (NCLT) Kolkata Bench passed an Order dated June18 2018 for initiation of Corporate Resolution Process against the Company pursuant tothe application filed by M/s. Cytech Coatings Private Limited under Section 8 and 9 ofInsolvency and Bankruptcy Code 2016 read with Rule 6 of Insolvency and Bankruptcy(Application to Adjudicating Authority) Rules 2016.However the Company has obtained thestay on the Order passed by the Hon'ble NCLT on June 18 2018 by an order passed byHon'ble Calcutta High Court on June 27 2018.
Further the Company has also obtained a stay order from the Hon'ble National CompanyLaw Board Tribunal (NCLT) Kolkata Bench on July 05 2018 in the said matter and thus noproceeding for Corporate Resolution was technically initiated or continued against theCompany.
Apart from the above case there was no material order passed by any court/regulatoryauthority or any Tribunal against the Company that may impact the going concern status ofthe Company.
20. STATUTORY AUDITORS
At the 13th Annual General Meeting held on 31 December 2017 the membersapproved the appointment of M/s. Shah & Taparia Chartered Accountants the StatutoryAuditors of the Company to hold office from the conclusion of 13th AnnualGeneral Meeting until conclusion of 18th Annual General Meeting (subject toratification of appointment by members at every AGM held after 13th AGM) onsuch remuneration as may be mutually agreed by the Board and the Auditor.
In accordance with the Section 139 of the Companies Act 2013 the Company is requiredto ratify the appointment of Statutory Auditor at every ensuing Annual General Meeting.The members of the Company have approved the appointment of M/s. Shah & TapariaChartered Accountant Mumbai as the Statutory Auditor of the Company for a period of 5(Five) consecutive year from the conclusion of the 13thAnnual General Meetingtill the conclusion of AGM to be held in the calendar year 2022 on such remuneration asmay be mutually agreed by the Board and the Auditor.
Members are requested to ratify the appointment of the Auditors from the conclusion ofthe 14th AGM till the conclusion of the next AGM.
The specific notes forming part of accounts referred to in the Auditors' Reportprovided by the Statutory Auditor of the Company are self-explanatory and give completeinformation.
21. COST AUDITORS
Section 148 of the Companies Act 2013 read with the Companies (Cost Records and Audit)Rules 2014 as amended from time to time laid down the requirement for appointment of CostAuditor. By virtue of having negligible turnover during the preceding financial year andsince the Company is not meeting the threshold laid down under the Act theCompany has notappointed any Cost Auditor in the Company.
22. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Amit R. Dadheech & Associates a firm of Company Secretaries inPractice (CP No. 8952) to undertake the Secretarial Audit of the Company for the year2017-18. The Secretarial Audit Report is annexed herewith as (Annexure-F).
Clarification in relation to the observation reported in Secretarial Audit Report isgiven below:
1. The Company is under severe financial stress have virtually negligible level ofproduction and operation being stalled at certain manufacturing units due to liquidityconstraints and shall take necessary steps for payment of all the statutory dues toregulatory authorities like Income Tax Service Tax Customs etc.
2. The Company has been looking for various options for its revival and shall ensure tomake the repayment of debts due to the secured as well as unsecured creditors of theCompany including the banks/financial institutions.
3. In order to reduce the overheads and overall managerial remuneration the Companyhas not appointed certain Key Managerial Personnel on the Board of the Company and shalltake necessary steps to appoint the same them achieving financial stability.
4. Due to irregularity/delay in payments to the depositories and intermediaries likeNDSL CDSL Registrar and Share Transfer Agent (R&T) certain reports have beenreleased by them after the prescribed due date for filing the returns which have causeddelay in filing of certain forms/disclosures to Registrar of Companies West Bengal andStock Exchanges where the securities of the Company are listed i.e. BSE and NSE.
5. The Company is foreseeing to re-commence the production at all the manufacturingunits in the coming financial year.
6. The Company shall take necessary steps for meeting its CSR Obligation in the comingfinancial year.
7. The Company shall take necessary steps for payment of Provident Funds and otherstatutory obligation on time in future.
8. The Company shall disclose all the material disclosures in terms of Regulation 30 ofSEBI (Listing Obligation and Disclosure Requirement) Regulation 2015 within thereasonable time.
9. The Company shall take necessary corrective steps to comply with the provisions ofSection 197 & 198 read with Schedule V of the Companies Act 2013
23. EXTRACT OF ANNUAL RETURN
Pursuant to section 134(3)(a) of the Companies Act 2013 the extract of the AnnualReturn in Form MGT 9 is annexed herewith as (Annexure-G).
24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is provided as (Annexure-H). Further wewould like to inform that since there were no operations carried out by the Company duringthe financial year under review there were no figures for energy and/or technologyconsumption or foreign exchange earnings and outgo to be reported.
25. SUBSIDIARY COMPANIES
Particulars of subsidiary Companies are as follows:
Flex Art Foil Limited (FAFL)
Flex Art Foil Limited is the material wholly owned Indian Subsidiary of the Companywhich provides facilities for printing of Aluminium blister and poly to pharmaceuticalcompanies for their packaging solutions at various locations across the country. Thepolicy on material subsidiary is available in the company's website. www.essdee.in .
Ess Dee Aluminium Pte. Limited
Ess Dee Aluminium Pte. Limited is a wholly owned subsidiary Company incorporated in theRepublic of Singapore on 15 December 2011 (hereinafter referred as Foreign Subsidiary).
Information regarding the subsidiaries Companies for the financial year 2017-18 isannexed as (Annexure-I).
The properties and Insurable assets and interest of the Company like Building Plantand Machinery and Stocks among others are not adequately insured.
27. ANTI SEXUAL HARASSMENT POLICY
The Company has in place an Anti -Sexual harassment policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 & the Rules made thereunder. Internal Complaints Committee (ICC)has been set up to redress Complainants received regarding sexual harassment. Allemployees permanent contractual temporary and trainees are covered under the policy.Your Directors further state that during the year under review there were no cases filedpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
28. CONSOLIDATED FINANCIAL STATEMENTS
As per the provision of Companies Act 2013 and SEBI (Listing Obligation and DisclosureRequirement) Regulations 2013 the attached consolidated financial statements have beenprepared in accordance with Accounting Standard AS-21 on Consolidated Financial Statementsread with Accounting Standard AS-23 on Accounting for Investments in Associates.
29. ENVIRONMENT AND SOCIAL OBLIGATION
The Company's plants comply with all norms set up for clean and better environment bythe competent authorities. The Company undertakes regular checks/inspections includingcertification for the maintenance of the environment. The Company values environmentalprotection and safety as the major considerations in its functioning. The Company hasadequate effluent Treatment Plants to prevent pollution. The Company is continuouslyendeavouring to improve the health and quality of life in the communities surrounding itsindustrial complexes.
The Directors record their grateful thanks for the co-operation support and assistancereceived from the customers shareholders the Government other statutory bodies BanksSolicitors Distributors Suppliers and other business associates during these mostturbulent times.
The Directors also express their sincere appreciation to the employees at all levelsfor having risen to meet the several challenges encountered and look forward to theirvaluable support and commitment in the times ahead.
For and on Behalf of the Board of Directors
Whole Time Director
August 14 2018.