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Forbes & Company Ltd.

BSE: 502865 Sector: Engineering
NSE: FORBESGOK ISIN Code: INE518A01013
BSE 00:00 | 20 Mar 2331.10 -47.60
(-2.00%)
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2377.95

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2390.00

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NSE 05:30 | 01 Jan Forbes & Company Ltd
OPEN 2377.95
PREVIOUS CLOSE 2378.70
VOLUME 1039
52-Week high 4150.00
52-Week low 1801.05
P/E 81.51
Mkt Cap.(Rs cr) 3,007
Buy Price 2320.00
Buy Qty 3.00
Sell Price 2330.00
Sell Qty 20.00
OPEN 2377.95
CLOSE 2378.70
VOLUME 1039
52-Week high 4150.00
52-Week low 1801.05
P/E 81.51
Mkt Cap.(Rs cr) 3,007
Buy Price 2320.00
Buy Qty 3.00
Sell Price 2330.00
Sell Qty 20.00

Forbes & Company Ltd. (FORBESGOK) - Director Report

Company director report

Dear Members

The Board of Directors (hereinafter referred to as "the Board") hereby submitthe report of the business and operations of the Company (hereinafter referred to as"the Report") along with the Audited Financial Statements of the Company for theFinancial Year (FY) ended March 31 2018. The consolidated performance of the Company andits subsidiaries has been referred to wherever required.

Financial Results and Highlights of Performance

The Company's performance as per Indian Accounting Standards (IND AS) during theFinancial Year under review is summarized as follows:

Rs in Million

Particulars

Standalone

Consolidated

FY 17-18 FY 16-17 FY 17-18 FY 16-17
Revenue and Other Income (Total Income) from Continuing Operations 3049.79 2971.78 28577.52 30750.04
Earnings before Finance Cost Depreciation Exceptional Item & Tax 657.56 517.62 1590.80 1580.00
Profit / (Loss) after Finance Depreciation and before Exceptional Items & Tax 460.70 334.35 (135.25) 129.36
Exceptional Items - Income/(Expense) - 112.04 - 822.07
Profit before Tax (PBT) from Continuing Operations 460.70 446.39 (135.25) 951.45
Profit after Tax (PAT) from Continuing Operations 409.00 496.58 (416.16) 706.97
Profit after Tax (PAT) from Discontinuing Operations - 469.53 - -
Share of Net Profit of joint ventures - - 94.07 186.48
Profit/(loss) for the year 409.00 966.11 (322.09) 893.45
Other Comprehensive Income/(Loss) 0.27 (4.37) 271.90 100.18
Total Comprehensive Income 409.27 961.74 (50.19) 993.63
Earnings Per Share - Basic and Diluted (`) 31.71 74.90 (25.30) 70.17

Note: The above figures are extracted from Standalone and Consolidated FinancialStatements as per Indian Accounting Standard (‘IND AS") and are prepared inaccordance with the principles stated therein as prescribed by the Ministry of CorporateAffairs under Section 133 of the Companies Act 2013 ("the Act") read withrelevant Rules framed therein.

Management Discussion & Analysis of Financial Condition Results of Operations andState of Company Affairs

General Outlook

Globally the global economic upswing that began around mid-2016 has become broader andstronger. Economic activity has gathered momentum both in advanced and emerging marketeconomies though financial market volatility and potential trade wars pose a threat tothe outlook. Economic activity remained robust in emerging market economies. Surge incrude prices remain an area of concern. At 3.8 percent global growth in year 2017 was thefastest since year 2011. With financial conditions still supportive global growth isexpected to pick up to a 3.9 percent rate in both year 2018 and 2019.

It has been an eventful year for your Company with many events playing its part andimpacting the organisation substantially. Across businesses we have renewed leadership atsome levels built a highly supportive customers and motivated team with a solid actionplan to improve financial returns. In short we are continuing a journey that began alittle less than three years ago when markets were weak business was declining and ouroverall performance was not upto our own expectations. Today markets are improvingbusiness is growing and the opportunities for better financial performance aresubstantial.

We are far from peak performance but we are beginning to get our competitivecapabilities positioned to address the challenges and realize the potential that is infront of us.

Today we have a team that has the operational experience as well as the energy andpassion required to ensure continuing success in executing the business plan our team hasdeveloped and is implementing.

Manufacturing has emerged as one of the high growth sectors in India. Prime Minister ofIndia Mr Narendra Modi had launched the ‘Make in India' program to place India onthe world map as a manufacturing hub and give global recognition to the Indian economy.India is expected to become the fifth largest manufacturing country in the world by theend of year 2020. With the forward push by the Government the sectors in which weoperate provide us great opportunity in each of our businesses viz. EngineeringIndustrial Automation Consumer Durables (Water and Air Products) Chemical Tankers andReal Estate.

The manufacturing sector of India has the potential to reach US$ 1 trillion by year2025 and India is expected to rank amongst the top three growth economies andmanufacturing destination of the world by the year 2020. Companies engaged in theengineering sector are virtually on a roll. Capacity creation in sectors likeinfrastructure power mining oil & gas refinery steel automotive and consumerdurables has been driving demand in the engineering sector.

Separately theapprovalofsignificantnumber of Special Economic Zones (SEZs) across thecountry and the development of the Delhi Mumbai Industrial Corridor (DMIC) across sevenstates is expected to further bolster the engineering sector.

Further the Financial Year 2017-18 has been a year of reforms for India. Thetransformational Goods and Services Tax ("GST") a landmark reform which willhave a lasting positive impact on the economy and on the businesses the Real Estate(Regulation and Development) Act 2016 ("RERA") the new Indian Bankruptcy Code("IBC") with its latest amendment and the decision to strengthen the balancesheets of the Public Sector Banks (PSBs) encountered challenges of policy law andtechnology. In the first half of the financial year growth was affected as the economyslowed down due to the learning curve of adapting to the changes due to the new reforms.Towards the end of the second half the economic growth improved due to the correctiveactions taken and the global economic recovery.

The Reserve Bank of India (RBI) expects India's economic growth rate to strengthen to7.4 per cent in the current fiscal from 6.6 per cent in 2017-18 on account of revival ininvestment activity with risks evenly balanced. Several factors are expected toaccelerate the pace of economic activities in the current year. There are now clearersigns of revival in investment activity as reflected in the sustained expansion in capitalgoods production and still rising imports albeit at a slower pace. Global demand has beenimproving which should encourage exports and boost fresh investment.

Business Review

Precision Tools Group (PTG)

Marching ahead on journey to provide innovative solutions to customers and PTG'sefforts of positioning Totem brand as high performance tools solution provider has startedpaying off & created impact in domestic & overseas market.

PTG is on an aggressive growth path and has delivered profitable 20% Year on Year (YoY)growth. High Performance Tool portfolio is showing decent growth and continues to be thefuture main revenue stream. This portfolio has opened many gates in the internationalmarket.

PTG introduced long drills in carbide for automotive application which has 100% Growthwith specific success in applications of Crankshaft oil hole drilling drilling ofAutomotive special parts & Mining drills.

Geographic expansion along with portfolio expansion has been the main theme. PTG hasmade inroads into new high potential export customers in Solid Carbide tools in AustraliaIsrael & Japan. Expansion in domestic distribution coverage has helped PTG's growth

PAN India. Engineering Division participated in many Domestic as well as Internationaltrade exhibitions viz. EMO (European Machine Tools Exhibition) IMTEX (Indian MetalCutting Machine Tools Exhibitions) AeroDef & some other regional events to showcaseour capabilities.

PTG continues to invest in design and technology to further strengthen our positionagainst competition in domestic and overseas market. Investment in technology is done toenhance processes like Surface treatment Edge preparation Tool 3D scanning &application based tool design simulations.

Globally carbide cutting tool manufacturers are facing shortage & price hike inCarbide raw material from October' 2017 due to increase in Cobalt & Tungsten Price.

Pressures are on costs due to escalation of prices of raw materials in internationalmarkets making cost prudence drive a compulsion. General price increase has beenannounced in January'2018 for all products to cover such increase which have beenaccepted by the market.

PTG will continue to invest in capacity augmentation to meet increased market demand.Initiatives during the year included investment & capacity enhancement inmanufacturing HSS drills at Waluj Aurangabad for improved product margins &availability. Spring washer facility in Waluj Aurangabad got approved by one of the majorinternational fastener giants.

Industrial Automation and Coding Business Group (CBG)

Coding business group is at consolidation stage with 12% Year on Year (YoY) growth butthe future growth story for CBG is industrial automation and CBG's own manufactured Lasermarking systems.

Industrial Automation business under CBG has proved its mettle in line automationprojects done for a leading four wheeler manufacturer in India. Clutch Assembly & GearBox Assembly lines were successfully installed & commissioned. The sales funnel isattractive in this area.

Large-value CBG automation orders from big automotive OEM companies are one ofsignificant achievements in FY'18 for the projects business.

Inroads into name plate marking Laser Special Purpose Machines non-marking automationsuch as Billet feeding Billet weighing & CAM sprocket auto tightening special purposemachines are new introduction in CBG. Further our efforts to make inroads in major twowheeler manufacturers Bearing Industries Auto Ancillaries resulted in opening up ofTier-1 vendor's doors for Telesis DOT pin marking applications.

CBG has ambitious growth plan in scaling up existing solution & introducing Roboticsolutions. CBG is building sales network at regional level to strengthen businessdevelopment & critical talent development in new technology areas to support growthinitiative.

The Engineering Division continued to be committed towards Employee Safety &wellbeing through its various employee engagement initiatives operations by complying allenvironmental & safety regulations.

ACE (Adapt Change Excel) change management program will continue to set directions toachieve our vision of being market leader by providing innovative solution.

During the year some product lines were moved from Chikalthana to Waluj. Continuingthe journey of synergising and consolidation of products portfolio the Company is now inthe process of reestablishing the supply chain effectively.

Project Vicinia Chandivali

The real estate development Project Vicinia at Chandivali is registered underMaharashtra Real Estate Regulatory Authority and is expected to be completed by June'2021. The Company has sold 129 flats pertaining to its share in Project Vicinia as atMarch' 2018.

Investment in Subsidiaries/Joint Ventures

During the year under review the Company invested Rs 10 crores in Preference Shares ofForbes Technosys Limited a wholly owned subsidiary of the Company.

Subsidiaries/ Associates /Joint Ventures

The following companies have become or ceased to be subsidiaries joint ventures orassociates:-

Name of Company Nature of Relationship
Aquamall Water A wholly owned subsidiary of Eureka
Solutions Limited Forbes Limited merged with Eureka Forbes Limited vide Court Order dated March 31 2018 with effect from April 1 2016.
Brightyclean (Spain) S.L A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) ceased to a subsidiary with effect from December 31 2017.
Lux CZ s.r.o A wholly owned subsidiary of Lux Professional International Gmbh (a step down subsidiary of Eureka Forbes Limited) ceased to a subsidiary with effect from December 31 2017.
Lux Oesterreich Professional GmbH Austria A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) was merged with Lux Oesterreich Gmbh with effect from October 31 2017.
Lux Professional GmbH Germany A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) was merged with Lux (Deutschland) Gmbh with effect from December 31 2017.
Lux/SK/s.r.o A wholly owned subsidiary of Forbes International AG (Earlier known as Forbes Lux Group AG a step down subsidiary of Eureka Forbes Limited) ceased to be a subsidiary with effect from December 31 2017.
Lux Waterline GmbH A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) was merged with Lux (Deutschland) Gmbh effect from December 31 2017.
Lux International Service KFT Incorporated as a wholly owned Subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) with effect from January 6 2017
Forbes International AG A wholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) ceased to be subsidiary with effect from April 1 2018
Lux Professional International Gmbh A wholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) merged with Lux International AG with effect from April 1 2018
Lux Aqua Hungaria KFT A wholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) ceased to be subsidiary with effect from April 30 2018
Lux Aqua Czech s.r.o A wholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) ceased to be subsidiary with effect from April 30 2018

Details of subsidiaries associate companies and joint venture companies are set out inthe statement in Form AOC-1 pursuant to Section 129 of the Act and is attachedherewith as Annexure "I". Financial Statements of these subsidiaries areavailable for inspection at the registered office of the Company and that of thesubsidiary company concerned and the same would be also available on the website of theCompany www.forbes.co.in

Eureka Forbes Limited & its Subsidiaries (Collectively "EFL")

In a year that has been interesting for businesses and economy yet recovering from theimpact of demonetisation and transition to GST where both the consumer and tradesentiments took a beating in the early half of the year slowly getting back to track inthe later part of the financial year.

EFL believed in the power of PLUS ‘positivity leads to ultimate success'. In ayear that otherwise was stretched EFL continued to play within its categories acrosschannels remaining positive about the mid-term outlook of the industry and continue toinvest strongly in our core categories and brands developing them for the future. Thecompetitive intensity will continue to increase and as leaders EFL continued toanticipate and moved swifter. Key Priorities:

• Drive Growth across all Businesses

• Bring in cost efficiencies to Optimise Efficiency

• Build an organisation of Customer Fanatics and build relationships

• Incubate New Categories and Segments

• Sustained efforts in Digitisation

• Continued focus on innovations and activations

• Bring about Cultural Change

Armed with consumer insights EFL continued to drive innovation across brandscategories operations and adapted the go-to-market strategies taking into account thediversity market needs and the evolving channels of distribution. EFL is harnessingtechnology mobile connectivity to build leading edge operational and marketingcapabilities. It is indeed helping EFL to engage and understand its customers and itspeople better through different mediums such as ‘Eureka TV'. EFL continued to leadthe digital transformation within and leveraged its Direct Sales capabilities to drivecompetitive advantage. EFL grew in the fast emerging e-commerce channel supported byEurochamps and its Retail and Institutional efforts to assist the customers across thelength and breadth of India continued. Most importantly EFLs brands and operationscontinued to be held together by its firm belief / purpose to be ‘Friend for Life'.EFL has under ‘Jal Daan' movement installed 26 Community Drinking Water Plants andproducts to support communities and School children – touching lives of over 50000fellow citizens.

Forbes Technosys Limited (FTL)

During the year under review FTL continued its growth across multiple sectors anddimensions albeit with pressures on revenue growth. During the year GST thoughbeneficial in long term in the year under review posed several issues related tore-classification of goods and services as well as reconfiguration of GST by the company'scustomers impacted the velocity and scale of business. In these circumstances FTL choseto consolidate across its business verticals and product range in a challenging businessenvironment and increase in service and solution revenue which has resulted in anEarnings Before Interest Depreciation Taxation and Amortization (EBIDTA) growth from Rs0.60 Crores in FY 2016-17 to Rs 6.82 Crores in FY 2017-18.

Business from key verticals such as banking telecom and Government slowed down asthese segments faced challenges of their own.

The year under review proved to be a difficult one for the banking segment as banks puton hold procurement plans due to their preoccupation with dealing with large NPAs andtheir focus on digitization initiatives.

The telecom segment saw pricing and profitability challenges posed by new entrantReliance Jio which stalled further roll-out plans for bill payment machines.

Key Government programs like Digital India and Smart cities also did not reach theenvisaged roll-out stage during the year.

All the above factors not only impacted performance of FTL but also of our competitorsin the same industry in addition to causing a sudden reduction in overall demand.

However over the year it has been seen that post demonetization cash has come backto pre-demonetization levels and our customer segments have again felt the need to frameprograms to handle cash cheques and other instruments alongside their digitizationinitiatives. As a result of this and the pent-up demand it is expected that largeroll-outs self-service kiosks by banks telcos and Govt. will happen in the coming year.

Forbes Xpress FTL's e-payments services platform continued to grow both in terms ofscale franchisee numbers and geographic presence. During the year development effort forlaunching the

Bharat Bill Payment System (BBPS) was undertaken and was launched on schedule. FTLreceived the following awards during the year:

- Forbes Xpress bagged the prestigious Drivers of Digital award for "BestDigital Payment Facilitator" in the country

- Our R&D won the ASSOCHAM- MSME runners-up award in the category-"Reduce dependence on non-renewable sources of energy"

FTL will continue to focus on improving financial strength while making investments innew services such as Bharat Bill Payment System Aadhaar enabled Payment System Insuranceetc. infrastructure creation franchisee network and new product development. Theseinvestments will help us in addressing emerging opportunities in domestic andinternational markets in the near future.

Shapoorji Pallonji Forbes Shipping Limited (SPFSL formerly SCI Forbes Limited)

In January'2018 SPFSL acquired one 2006 Japanese built vessel with stainless steeltanks of 20938 mt dwt ("MT Saranga") increasing the total dwt capacity of thecompany to 73424 mt. SPFSL is the only company in India that owns chemical tankers. SPFSLis committed to the safe and efficient transport of chemical cargoes for all its customersand partners. All the five vessels maintain approvals from Oil Majors including ShellExxon Chevron BP and Total for carrying their products.

Earnings in FY 2017-18 were affected adversely due to increase in supply of ships andincrease in fuel prices. A total of 83 new build ships joined the chemical tanker fleet inthe year 2017. The fuel oil prices increased from US$ 319 per mt in April' 2017 to US$ 390per mt in March' 2018 thereby resulting in reduction in the net voyage earnings.

The average earnings per day per ship for marineline coated tankers were down to USD8780 as compared to USD 9971 per day per ship during previous year. The earnings for MTSaranga averaged at US$ 12083 per day.

Seaborne chemicals trade grew by about 2% YoY in 2017 but the freight rates remainedsubdued due to increase in supply. As per an estimate about 136 vessels are expected tobe delivered in 2018. With a sharp decline in the new build deliveries in 2019 onwardsthe markets are expected to tighten up and give rise to the freight earnings.

Forbes Bumi Armada Limited (FBAL)

FBAL maintains exceptionally good manpower which continues to provide quality manningservices to Floating Production Storage and Offloading (FPSO) located in Mumbai High. Themanning team has brought laurels to the Company by maintaining both the FPSO with zeroLoss Time Injury (LTI) and 100% commercial uptime. Manpower resource of company aredelivering international standard services to client maintaining best Health Safety andEnvironment (HSE) records.

Assets of The Svadeshi Mills Company Limited (Svadeshi)

The Assets of Svadeshi continue to be in the hands of the Official Liquidator HighCourt Bombay. The Company is exploring options available.

Dividend & Transfer to Reserves

Your Directors are pleased to recommend for the approval of the Members a dividend ofRs 2.50 per equity shares (previous year:` 2.50). The dividend if approved by the Memberswould involve a cash outflow of Rs 38.9 million including dividend tax (Previous Year Rs38.8 million). In accordance with SEBI (Listing Obligations and Disclosure Regulations)2015 ("SEBI LODR") the Board of Directors of the Company has adopted a DividendDistribution Policy which is annexed as Annexure "II". The policy is alsoavailable on the website of the Company www.forbes.co.in The Company proposes to retainthe entire balance amount of ` 787.7 million (Previous Year Rs 417.30 million) in theProfit & Loss Account.

Share Capital

The paid up Equity Share Capital of the Company as on March 31 2018 was `128.99million. During the year under review the Company has not issued any shares withdifferential voting rights or ‘sweat equity shares' and has not granted any stockoptions. As on March 31 2018 none of the Directors of the Company hold shares orconvertible instruments of the Company.

Finance

The Company continues to focus on judicious management of its working capital.Relentless focus on receivables inventories strict cost control and use of alternativeborrowing instruments has helped in keeping the borrowings and effective interest costunder control.

Redeemable Non-convertible Debentures

The Non- Convertible Redeemable Debentures (NCDs) aggregating to `1000 million wereoutstanding during the year ended March 31 2018.

Deposits

The Company has not accepted deposits from public falling within the ambit of Section73 of the Act and The Companies (Acceptance of Deposits) Rules 2014. Unclaimed matureddeposits were transferred to Investor Education and Protection Fund as per the provisionsof the Companies Act 1956 / 2013.

Particulars of loans guarantees and investments

Particulars of Loans Guarantees and Investments covered under provisions of section186 of the Act are given in the notes to the Financial Statements.

Related Party Transactions

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. There were no materialrelated party transactions made by the Company with Promoters Directors Key ManagerialPersonnel or other designated persons which may have a potential conflict with theinterest of the Company at large.

All related party transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for transactions which are of aforeseen and repetitive nature. The transactions entered pursuant to the omnibus approvalso granted are placed before the Audit Committee on a quarterly basis. Form AOC-2 isannexed as Annexure ‘III' to this report pursuant to Section 188 of the Act. Thepolicy on Related Party Transactions as approved by the Board is uploaded on the Company'swebsite.

Vigil Mechanism/Whistle Blower Policy

The Company has Whistle Blower Policy/Vigil Mechanism to deal with instances of fraudand mismanagement if any. The Policy is also available on the website of the Company.

Internal Controls and Systems

The Company has an internal control system which ensures that all transactions arerecorded satisfactorily and reported and that all assets are protected against loss fromunauthorized use or otherwise. The internal control systems are supplemented by aninternal audit system carried out by a team under the direct supervision of the Head ofInternal Audit. The findings of such internal audits are periodically reviewed by themanagement and suitable actions taken to address the gaps if any. The Audit Committee ofthe Board meets at regular intervals and addresses significant issues raised by both theInternal Auditors and the Statutory Auditors. The process of internal control and systemsstatutory compliance information technology risk analysis and risk management areinter-woven to provide a meaningful support to the management of the business.

Price Waterhouse Chartered Accountants LLP the statutory auditors of the Company hasaudited the financial statements included in this annual report and has issued a report onour internal financial controls over financial reporting as defined in Section 143 of theAct.

Statutory Compliances

The Company ensures compliance of applicable laws. The Company has zero tolerance forsexual harassment at workplace and has adopted a policy on prevention prohibition andredressal of sexual harassment at workplace in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Internal ComplaintsCommittee Redressal) Act 2013 and the rules thereunder for prevention and redressal ofcomplaints of sexual harassment at workplace. Internal Compliant Committee (ICC) has beensetup to redress complaints receive regarding sexual harrasment. All employees (permanentcontractual temporary trainees) are covered under this policy. During FY 2017-18 nocomplaint on sexual harassment was received.

Corporate Governance and Management Discussion and Analysis

The guiding principle of the Code of Corporate Governance is ‘harmony' i.e.balancing the need for transparency with the need to protect the interest of the Companyand balancing the need for empowerment at all levels with the need for accountability. Adetailed report on Corporate Governance forms part of Annual Report. The ‘ManagementDiscussion and Analysis' forms part of this report.

Corporate Social Responsibility (CSR)

The Company is committed to its stakeholders to conduct business in an economicallysocially and environmentally sustainable manner that is transparent and ethical. TheCompany is committed to inclusive sustainable development and contributing to buildingand sustaining economic social and environmental capital and to pursue CSR projects asand when required that are replicable scalable and sustainable with a significantmultiplier impact on sustainable livelihood creation and environmental replenishment.

The Company during the FY 2017-18 undertook infrastructure funding project andcommitted and earmarked funds for partial reconstruction of school building. The saidprojects undertaken by the Company are in accordance with Schedule VII of the CompaniesAct 2013. Rs 9.61 lakhs pertaining to FY 2017-18 has been spent on Safe drinking waterEnvironment Preservation and Supporting Schools. The Company has entered into a Memorandumof Understanding (MoU) with Aurangabad Municipal Corporation for balance unspent balanceof Rs 11.39 Lakhs pertaining to FY 2017-18 towards partial reconstruction of a municipalschool building in Aurangabad. The construction work would start after receipt ofrequisite approvals.

The Annual Report on CSR activities in terms of Section 135 of the Act is annexed tothis report as Annexure IV.

Risk Management

Risk management process includes identification of risk its underlying dynamicsmitigation mechanism prioritization of risk measurement of key indicators andestablishing a monitoring system. A Company-wide awareness of risk management policies andpractices are being inculcated to minimize the adverse effect of risks on the operatingresults and the subject of management of risks is being approached in a planned and co-ordinated manner. Elucidation of role clarity understanding of level of authority andreporting system is expected to help this process significantly. It is realized that thisis a continuous process requiring continued updating based on changing businessconditions and that risk management and performance improvement will go hand in hand.

Significant and Material Orders Passed By the Regulators or Courts

There are no significant material orders passed by the Regulators /Courts which wouldimpact the going concern status of the Company and its future operations.

Directors and Key Managerial Personnel

As per provisions of Section 152(6) of the Act Mr. Jai Mavani is due to retire byrotation at the ensuing Annual General Meeting and being eligible seeks re-appointment.The Board of Directors recommend his re-appointment as Director of the Company.

The Company has received declarations from all the Independent Directors of the Companycon fi rming that they meet with the criteria of Independence as prescribed both under theAct and SEBI (LODR) 2015 and there has been no change in the circumstances which mayaffect their status as Independent Directors during the year.

Independent Directors are familiarized with their roles rights and responsibilities inthe Company through induction programmes at the time of their appointment as Directors andthrough presentations made to them from time to time. The details of familiarizationprogrammes conducted have been hosted on the website of the Company and can be accessed atwww.forbes.co.in

Audit Committee of the Board of Directors

The details pertaining to the composition of the Audit Committee of the Board ofDirectors are included in the Corporate Governance Report which forms part of this report.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Obligations andDisclosure Requirements) Regulation 2015 (SEBI LODR) the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Nomination and Remuneration Stakeholders'Relationship Committees.

The performance of the Board was evaluated by the Board after seeking feedback from allthe Directors on the basis of the parameters/ criteria of key responsibility by theBoard such as degree of fulfillment Board Structures and Composition establishment anddelineation of responsibilities to the Committees effectiveness of Board processesinformation and functioning Board culture and dynamics and Quality of relationshipbetween the Board and the Management. The performance of the committees viz. AuditCommittee Nomination and Remuneration Committee Corporate Social Responsibility andStakeholders Relationship Committee was evaluated by the Board after seeking feedback fromCommittee members on the basis of parameters/criteria such as degree of fulfillment of keyresponsibilities adequacy of committee composition effectiveness of meetings committeedynamics and quality of relationship of the committee with the Board and the Management.

The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Directors on the basis of self- assessment questionnaire and feedback/inputsfrom other Directors (without the concerned director being present).

In a separate meeting of Independent Directors performance of Non-IndependentDirectors of the Board as a whole and the performance of the Chairman were evaluated.

Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors senior management personneland their remuneration. Remuneration Policy of the Company acts as a guideline fordetermining inter alia qualification positive attributes and independence of aDirector matters relating to the remuneration appointment removal and evaluation of theperformance of the Director Key Managerial Personnel and senior managerial personnel.Nomination and Remuneration Policy is annexed as Annexure "V" to this report.

Disclosure as required under Section 197 (12) of Act read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed as Annexure‘VI' to this Report.

Meetings of the Board

The Board met at least once in each quarter and 6 meetings of the Board were heldduring the year and the maximum time gap between two Board meetings did not exceed thetime limit prescribed in the Act. The details have been provided in the CorporateGovernance Report.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Act the Directors based on therepresentations received from the operating management confirm that:

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

(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitor loss of the Company for that period; (iii) they have taken proper and sufficient careto the best of their knowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and detecting fraud and other irregularities; (iv) they have prepared the annualaccounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

Auditors and Audit Report Statutory Auditors

Pursuant to the provisions of section 139 of the Act read with the Companies (Auditand Auditors) Rules 2014 Price Waterhouse Chartered Accountants LLP (PWC)(ICAI FirmRegistration No.012754N/N500016) were appointed as the Statutory Auditors of the Companyfor a term of 5 years till the conclusion of 103rd Annual General Meeting of the Company.

The Audit Report forms part of the Annual Report. The Auditors have referred to certainmatters in their report on Financial Statements to the shareholders which read withrelevant notes forming part of the accounts is self - explanatory.

Cost Auditors

As per the requirements of Section 148 of the Act read with The Companies (Cost Recordsand Audit) Rules 2014 the cost accounts of the Engineering Division and Project Viciniaof the Company are required to be audited by a Cost Accountant. The Board of Directors ofthe Company have on the recommendation of the Audit Committee appointed Kishore Bhatia& Associates Cost Accountants as Cost Auditors for the FY 2018-19 on a remunerationof Rs 0.44 million plus out of pocket expenses. As required under the Companies Act

2013 necessary resolution seeking members' ratification for the remuneration to theCost Auditor is included in the Notice convening the Ninety Ninth Annual General Meetingof the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Makarand M.

Joshi & Co a firm of Company Secretaries in Practice to undertake the SecretarialAudit of the Company. The Report of the Secretarial

Auditor is annexed herewith as Annexure ‘VII'. There was a delay in processing ofone of the transmission request where the legal heirs had requested for waiver ofspecified documents and the amount involved was substantial. The delay was due to timetaken by Registrar & Transfer Agents to reasonably satisfy itself about genuinenessbefore processing transmission.

Human Resources Development and Industrial Relations

The major focus for Human Resources (HR) partnered closely with Engineering businessfor several important initiatives and imperatives. Talent infusion and augmentation in therespective Business is a major focus are a and was managed effectively in a highlycompetitive talent acquisition scenario. Performance and potential assessment with focuson career and succession planning continue and middle level leadership transitions wereachieved successfully.

Continuing movement towards automation & digitisation eg. HR processes like thePerformance Management System (PMS) and Leave Management System (LMS) were completelyautomated. The migration to SAP Payroll has also commenced.

The employee relations continued to be cordial and productive with boosting capacityutilisation efficiency several significant and productivity in the plants

Particulars of Employees and Energy Conservation Technology Absorption and ForeignExchange Earnings and Outgo

(a) The information required pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided upon request. In terms of Section 136 of theAct the Report and Accounts are being sent to the Members excluding the information onemployees' particulars which is available for inspection by the Members at the RegisteredOffice of the Company during the business hours on working days of the Company. Any memberinterested in obtaining such particulars may write to the Company Secretary at theRegistered Office of the Company.

(b) Information relating to the Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Act readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure‘VIII'.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure ‘IX' and forms part of this Report.

Business Responsibility Report

A separate section on Business Responsibility Report forms part of this Annual Reportas required under Regulation 34(2)(f) of SEBI LODR.

Cautionary Statement

Statements in the Board's Report and the Management Discussion

& Analysis describing the Company's objectives expectations or forecasts may beforward-looking within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed in the statement. Important factorsthat could influence the Company's operations include global and domestic demand andsupply input costs availability changes in government regulations tax laws economicdevelopments within the country and other factors such as litigation and industrialrelations.

Acknowledgements

Your Directors acknowledge and thank all stakeholders of the Company viz. Governmentcustomers members employees dealers vendors banks and other business partners fortheir valuable sustained support and encouragement. Your Directors look forward topositive support and encouragement from all stakeholders in the years ahead.

For and on behalf of the Board

Shapoor P. Mistry

Chairman

Mumbai May 28 2018