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Ess Dee Aluminium Ltd.

BSE: 532787 Sector: Metals & Mining
NSE: ESSDEE ISIN Code: INE825H01017
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VOLUME 22360
52-Week high 93.00
52-Week low 27.15
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Mkt Cap.(Rs cr) 112
Buy Price 0.00
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OPEN 33.00
CLOSE 33.70
VOLUME 22360
52-Week high 93.00
52-Week low 27.15
P/E
Mkt Cap.(Rs cr) 112
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ess Dee Aluminium Ltd. (ESSDEE) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Thirteenth Annual Report of the Companytogether with the Audited Statement of Accounts for the financial year ended 31stMarch 2017.

1. FINANCIAL RESULTS:

The financial highlights of the year are:

(Rs. in Lacs)

Particulars Consolidated Standalone
March 2017 March 2016 March 2017 March 2016
Total Income 822.93 50172.17 815.56 46917.53
Total Expenditure 56550.18 70804.04 50903.25 64821.23
Profit/(Loss) before Tax 55727.25 20631.87 50087.69 17903.70
Less Provision for Taxation 1009.68 5198.75 1009.68 4892.74
Net Profit/(Loss) after Tax 56736.93 15433.12 51097.37 13010.96
Add Balance brought forward 11080.33 26513.45 7404.13 20415.09
Profit /(Loss)available for Appropriation 45656.60 11080.33 43693.24 7404.13
Appropriation:
Transfer to General Reserve - - - -
Transfer to Debenture Redemption Reserve - - - -
Proposed Dividend - - - -
Dividend Distribution Tax - - - -
Balance carried Forward to the next year 45656.60 11080.33 43693.24 7404.13
Earning Per Share (Rs.) Basic 177.04 48.16 159.44 40.60
Earning Per Share (Rs.) Diluted 177.04 48.16 159.44 40.60

2. PERFORMANCE REVIEW:

The Standalone Overall Income for the year under review decreased to Rs. 815.56 lacs ascompared to last year's total income of Rs. 46917.53 lacs. The standalone totalExpenditure for the financial year ended March 31 2017 decreased to Rs. 50903.25 ascompared to Rs. 64821.23 in the last financial year. The overall losses incurred by theCompany in the current financial year increased to Rs. 51097.37 lacs as compared to theLoss of Rs. 13010.96 lacs in the previous year.

The Consolidated Overall Income for the year under review has also decreased to Rs.822.93 lacs as compared to last year's total income of Rs. 50172.17 lacs. Theconsolidated total Expenditure for the financial year ended March 31 2017 decreased toRs. 56550.18 as compared to Rs. 70804.04 in the last financial year The overall lossincurred by the Company in the current financial year increased to Rs. 56736.93 lacs ascompared to the Loss of Rs. 15433.12 lacs in the previous year

3. DIVIDEND:

Since the Company has suffered losses in the current financial year your directors donot recommend any dividend for the financial year 2016 2017. During the year theunclaimed dividend pertaining to the dividend for the year ended 31st March 2010 wastransferred to the Investor Education and Protection Fund.

4. SHARE CAPITAL:

The Authorised and Paid Up Share capital of the Company as on 31st March 2017 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 which was July 30 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 DEPOSIT:

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 2016 17 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 Companyare set out in (Annexure A) of this report in the format prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. The policy is available onthe website (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 organization from various risks through timely and adequate actions. It isdesigned to anticipate evaluate and mitigate risk in order to minimize 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 ofDirectors/ employees of your Company are set out in (Annexure D).

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice and corporate office of the Company during working hours and any member interestedin obtaining such information may write to the Company Secretary and the same will befurnished on request. The Annual Report including the aforesaid information is being sentelectronically to all those members who have registered their email addresses and isavailable on the Company's website. (www.essdee.in)

14. DIRECTORS

As per the provisions of Section 164(2) of the Companies Act 2013 any person who isor has been a director of the Company which have failed to file the financial statementsor annual returns for any continuous period of three financial years or has failed torepay the deposits accepted by it or pay interest thereon or to redeem any debentures onthe due date or pay interest due thereon or pay any dividend declared and such failure topay or redeem continues for one year or more shall 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 required by law this position is also reflected in the 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:

Board:

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 was 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.

Individual Directors

a) Independent Directors: in accordance with the criteria suggested by theNomination and Remuneration Committee the performance of the each Independent Directorswas evaluated by the entire board of Directors on various parameter like engagementleadership communication governance and interest of stakeholders. The Board was of theunanimous view that each Independent Director was a reputed professional and brought hisreach experience to the deliberation of the Board. The Board also appreciated thecontribution made by all the Independent Directors in guiding the management in achievinggrowth and concluded that continuance of each independent director in the Board will be inthe Interest of the Company.

b) Non Independent Director: The performance of each of the non independentDirector (including Chairman) was evaluated by the Independent Directors in their separatemeeting. The various criteria considered for the purpose of evaluation includedleadership engagement transparency analysis decision making functional knowledge. TheIndependent Directors and Board were of the unanimous view that each of the nonindependent directors was 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 thisReport.

14.3 Board Meeting

During the 5(Five) Board Meetings and 4 (Four) Audit Committee meetings were held thedetails of which are given under Corporate Governance report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act and ListingAgreement.

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 2017 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 yearending on March 31 2017 and of the profit and Loss of the Company for the year ended onthat 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 Uniform Listing AgreementThe Company has formulated a Policy on Related Party Transactions which is also availableon Company's website at www.essdee.in. The Policy intends to ensure that proper reporting;approval and disclosure processes are in place for all transactions between the Companyand 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.

All Related Party Transactions entered into during the year were in Ordinary Course ofthe Business and on Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements were entered into during the year by your Company.Accordingly the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act 2013 in Form AOC 2 is not applicable. The Details of the relatedparty transactions are given under notes on accounts of the financial Statements.

17. MATERIAL EVENTS AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY:

The following material event and commitment occurred during the financial year endedMarch 31 2017 and before the date of this report that have significant bearing over 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. Suspension of Work at one of the manufacturing unit of the Company situated atKamarhatti Kolkata w.e.f. July 01 2016.

3. 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.

4. 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.

5. The Company has been looking for various options for revival of the Company. Acritical element of the revival plan is settlement of the debt burden and infusion offresh capital to provide liquidity for re starting the business. The company is indiscussions with all lenders for resolution of the problems including possiblerestructuring and one time settlement. The company has also sought and got support fromInstitutional investors to help in the resolution plan.

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 2015.The 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 behavior 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

No significant and/or material order was passed by any regulator or court or tribunalimpacting the going concern status and Company's operations in future.

20. STATUTORY AUDITORS

At the 10th Annual General Meeting held on 27th September 2014the members approved the appointment of M/s. M.P. Chitale & Co Chartered Accountantsthe Statutory Auditors of the Company to hold office from the conclusion of 10thAnnual General Meeting until conclusion of 13th Annual General Meeting (subjectto ratification of appointment by members at every AGM held after 10th 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 appoint a new Statutory Auditor in place of retiring Auditor. The Board of Directors ofthe Company at their meeting held on December 8 2017 have approved the appointment ofM/s. Shah & Taparia Chartered Accountant Mumbai as the Statutory Auditor of theCompany for a period of 5 (Five) consecutive year from the conclusion of this AnnualGeneral Meeting till the conclusion of AGM held in the calendar year 2022 subject to theratification of member at the intermittent AGM on such remuneration as may be mutuallyagreed by the Board and the Auditor.

Members are requested to confirm the appointment of the Auditors from the conclusion ofthe 13th AGM till the conclusion of 18th AGM.

M/s. Shah & Taparia have shown their willingness to be appointed as the StatutoryAuditor of the Company and have also confirmed their eligibility to the effect that theirre appointment if made would be within the prescribed limits under the Act and that theyare not disqualified for re appointment.

The specific notes forming part of accounts referred to in the Auditors' Reportprovided by the present Statutory Auditor of the Company are self explanatory and givecomplete information.

21. COST AUDITORS

As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time the Company has been carrying out audit of cost recordsrelating to Product of the Company every year.

The Board of Directors on the recommendation of Audit Committee had appointed Mr.Prasad Sawant Cost Accountants as Cost Auditor to audit the cost accounts of the Companyfor the financial year 2017 18 at a remuneration of Rs.135000/ per annum andreimbursement of out of pocket expenses if any. As required under the Companies Act 2013a resolution seeking members approval for ratification of the remuneration payable to theCost Auditors forms part of the Notice convening the Annual General Meeting. The costaudit report for the financial year 2016 17 was filed with the Ministry of CorporateAffairs.

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 year2016 17. The Secretarial Audit Report is annexed herewith as (Annexure F).

1. Clarification in relation to the observation reported in Secretarial Audit Report isgiven below:

2. 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 step for payment of all the statutory dues toregulatory authorities like Income Tax Service Tax Customs etc.

3. The Company has been looking for various options for revival of the Company andshall ensure to make the repayment of debts due to the secured as well as unsecuredcreditors of the Company including the banks / financial institutions.

4. In order to reduce the overheads and overall managerial remuneration the Companyhas not appointed Chief Financial Officer and Women Director of the Company and shall takenecessary steps for the same.

5. Due to irregular / 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 has 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 & NSE.

6. The Company is foreseeing to re commence the production at all the manufacturingunits in the coming financial year.

7. The Company shall take necessary steps for meeting its CSR Obligation in the comingfinancial year.

8. The Company shall take necessary steps for payment of Provident Funds and otherstatutory obligation on time in future.

9. The Company shall disclose all the material disclosures in terms of 30 of SEBI(Listing Obligation and Disclosure Requirement) Regulation 2015 within the reasonabletime.

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 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as (AnnexureH).

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 15th December 2011 (hereinafter referred as "ForeignSubsidiary"). Information regarding the subsidiaries Companies for the financialyear 2016 17 are annexed as

(Annexure –I).

26. INSURANCE

The properties and Insurable assets and interest of the Company like Building Plantand Machinery and Stocks among others are adequately insured.

27. ANTI SEXUAL HARASSMENT POLICY

The Company has in place an Anti Sexual harassment policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 & the Rules made thereunder. Internal Complaints Committee (ICC) has beenset up to redress Complainants received regarding sexual harassment. All employeespermanent contractual temporary and trainees are covered under the policy. YourDirectors 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 stipulated by Clause 32 of the Listing Agreement with the Stock Exchanges theattached consolidated financial statements have been prepared in accordance withAccounting Standard AS 21 on Consolidated Financial Statements read with AccountingStandard 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.

30. ACKNOWLEDGEMENTS

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 of 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

Debdeep Bhattacharya

Whole Time Director

DIN: 00464686

December 8 2017