The Board of Directors (hereinafter referred to as "the Board") hereby submitthe report of the business and operations of the Company along with the Audited FinancialStatements of the Company for the Financial Year (FY) ended March 31 2019. Theconsolidated performance of the Company and its subsidiaries has been referred to whereverrequired.
Financial Results and Highlights of Performance
The Company's performance as per Indian Accounting Standards (IND AS) during the FYunder review is summarized as follows:
Rs in Lakhs
|Particulars || |
|FY 18-19* ||FY 17-18# ||FY 18-19* ||FY 17-18 |
|Revenue and Other Income (Total Income) ||24538.81 ||30497.89 ||289107.92 ||285775.18 |
|Earnings before Finance Cost Depreciation Share of Net Profit of Joint ventures Exceptional Item & Tax ||4157.46 ||6575.63 ||18041.65 ||15908.04 |
|Share of Net Profit of joint venture ||- ||- ||721.30 ||940.66 |
|Profit / (Loss) after Finance Cost Depreciation Share of Net profit of Joint ventures and before Exceptional Items & Tax ||2009.73 ||4606.97 ||2120.70 ||(411.83) |
|Exceptional Items - Income/(Expense) ||(970.92) ||- ||(970.92) ||- |
|Profit before Tax (PBT) ||1038.81 ||4606.97 ||1149.78 ||(411.83) |
|Profit/(loss) for the year ||1027.19 ||4090.01 ||(298.48) ||(3220.88) |
|Other Comprehensive Income/(Loss) ||0.64 ||2.74 ||297.40 ||2719.00 |
|Total Comprehensive Income ||1027.83 ||4092.75 ||(1.08) ||(501.88) |
|Earnings Per Share - Basic and Diluted (?) ||7.96 ||31.71 ||5.47 ||(15.27) |
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 ("Act") read with relevantrules issued therein.
*These figures have to be read along with the rules of Ind AS 115 "Revenue fromContracts with Customers" which is an accounting standard notified by the Ministry ofCorporate Affairs (MCA) effective from April 1 2018. The application of Ind AS 115 has asubstantial bearing on the Company's accounting for recognition of revenue from realestate development projects. This revised standard has no significant impact on theengineering business of the Company.
The Company has applied the modified retrospective approach as on April 12018 and hasrecorded an opening impact in retained earnings towards the reversal of profitsaggregating Rs 5083.12 Lakhs (net of tax) in Standalone Financial Statements and Rs5161.67 Lakhs (net of tax) in Consolidated Financial Statements mainly due to real estateproject under development. The comparatives have not been restated and hence the currentperiod figures are not comparable with the previous period figures.
Had the company continued application of earlier standards instead of Ind AS 115 thefollowing line items for FY 2018-19 would have been higher as follows:
(Rs in Lakhs)
|Particulars ||Standalone ||Consolidated |
|March 31 2019 ||March 31 2019 |
|Revenue ||8880.18 ||9880.84 |
|Changes in inventories of finished goods work-in progress and stock in trade ||(5195.81) ||(5716.69) |
|Other Expenses ||- ||(447.81) |
|Profit before Tax ||(3684.37) ||(3716.30) |
|Net Profit after Tax ||(2370.55) ||(2402.49) |
Certain indirect costs (e.g. Selling expenses commission and brokerage Advertisementand sales promotion depreciation and other administrative expenses) pertaining to realestate development project for the year ended March 31 2019 aggregating Rs 1200.54 Lakhshas been recognized as an expense in the Statement of Profit and Loss.
The EPS for Standalone pre Ind AS 115 impact would have been Rs 26.34 per share and forConsolidated would have been Rs 24.34 per share.
# As per IND AS 18/115 on Revenue and the Schedule III of the Companies Act 2013revenues from operations for the period July 1 2017 to March 31 2018 does not includeGoods and Service Tax ("GST"). However revenues from operations till June302018 included GST. In view of aforesaid restructuring of indirect taxes revenues fromoperations for year ended March 31 2018 are not comparable.
Management Discussion & Analysis of Financial Conditions Results of Operations andState of Company Affairs
Forbes is into precision tooling and an engineering services with a wide productportfolio supported by strong brands like TOTEM and BRADMA. We have an attractive customerbase who are few of the world's large businesses in their transformational journeys forthe last many decades. We are now developing our global presence deep domain expertise innew industry verticals and a complete portfolio of offerings in the products and serviceswe offer.
The Company leverages all these and its deep contextual knowledge of its customers'businesses to craft unique high quality high impact solutions. We are alsosimultaneously expanding our global footprint further in Eastern and West Europe fewcountries in North America and South East Asia.
We are into building our expertise across industries beyond our existing areas ofexpertise through multiple high quality tooling products and our Industrial Automationservice offerings in the areas of assembly lines incorporating technologies for pick andplace lasers sensors camera and robotics build on relevant new capabilities throughorganic talent development. We believe in the philosophy of engaging with customercontinually by deeper engagements and we continuously strive to improve our agility andadaptability to change in line with customer expectations. We have been fairly successfulin expansion of customer relationships in terms of the products delivered and servicesconsumed.
Our focus on the customers with a clear execution strategy have resulted in highsatisfaction levels and long enduring customer relationships. This has been thecornerstone of our ability and hence we have been able to participate in our customers'growth and transformation initiatives in recent years.
As per various research reports Global growth is expected to remain at around 3 percent in the years 2019 and 2020 however the steady pace of expansion in the globaleconomy masks an increase in downside risks that could potentially exacerbate developmentchallenges in many parts of the world according to the UN World Economic Situation andProspects 2019. The global economy is facing a confluence of risks which could severelydisrupt economic activity and inflict significant damage on long-term developmentprospects. These risks include an escalation of trade disputes an abrupt tightening ofglobal financial conditions and intensifying climate risks. In many developed countriesgrowth rates have risen close to their potential while unemployment rates have dropped tohistorical lows. Among the developing economies the East and South Asia regions remain ona relatively strong growth trajectory amid robust domestic demand conditions. Beneath thestrong global headline figures however economic progress has been highly uneven acrossregions.
Even among the economies that are experiencing strong per capita income growtheconomic activity is often driven by core industrial and urban regions leaving peripheraland rural areas behind.
India has emerged as the fastest growing major economy in the world and is expected tobe one of the top three economic powers of the world over the next 10-15 years backed byits strong democracy and partnerships. India's GDP is estimated to be in the range of 7 to7.5 % over the next few years.
India is expected to be the third largest consumer economy as its consumption maytriple to US$ 4 trillion by 2025 owing to shift in consumer behavior and expenditurepattern according to a Boston Consulting Group (BCG) report; is estimated to surpass USAto become the second largest economy in terms of purchasing power parity (PPP) by the year2050 according to a report by Pricewaterhouse Coopers.
India presently is going through a very interesting phase in the political and economicscenario. The political stability now established since May 23 2019 and given the statedintent we believe that the Government will now strongly focus on economic developmentstarting with Infrastructure development and India manufacturing focus thereby creatingemployment and excellent business opportunities.
As regards Realty division we expect the Realty sector to grow at faster rate over thenext decade. The robust demand due to increasing incomes urbanization and economic growthare driving residential and commercial realty demand in India. Government of India's aimfor "Housing for all by 2022" is driving residential activity while Real Estate(Regulation and Development) Act 2016 (RERA) has altered the realty sector that wasopaque and oblivious to customer interest and is making this sector more transparent.While RERA has done commendable work in the area of consumer rights protection it stillhas a long way to go.
The global water purifier market is estimated to register 9.50% CAGR during theforecast period (2018-2025) owing to the escalating issues of contamination according toMarket Research Future. Water purifiers are majorly used in the developed regions whilerural areas and semi urban areas still remain untapped. Water purifiers have become aprimary necessity for the urban consumers in the developing economies owing to theincreased level of water pollution. Moreover with the increasing level of water pollutionalong with rapid urbanization & industrialization the segment is likely to flourish.
As per TechSci Research report "India Water Purifiers Market Forecast andOpportunities 2020" underground water in India contains high quantity of dissolvedsolids and various bacteria and viruses which render the water unfit for drinking thussteering demand for water purifiers in the country. Growth in India water purifiers marketis anticipated on account of continuous deterioration in water quality rising healthconcerns increasing discretionary income and growing adoption of different waterpurification technologies.
The report reveals that majority of the demand for water purifiers in India emanatesfrom northern and western regions of the country owing to high penetration of waterpurifiers in urban as well as rural parts of these regions. In terms of the technologyused majority of the households in India use gravity based water purifiers. However dueto the rising amount of dissolved solids in the water supply and expanding middle classpopulation consumers are graduating to other purification technologies. As a result thepreference for RO purifiers and combination systems which include more than onetechnology for water purification is growing.
Company Outlook and Performance
The Company has a tradition of excellence and total customer delight as its singularaim. The main businesses of the Company is Engineering and Realty and through itssubsidiaries Transaction Management Solutions Water Purification Transportation ofChemical through its owned Ships etc.
The Company's flagship brand TOTEM positioned as a High Quality Performance ToolManufacturer competes with multi-nationals and overseas market. Significant investmentsover the year in strengthening innovation design and development has started paying offand created impact in domestic and overseas market. Industrial Automation business hasambitious plans for introducing new technologies in line with digital manufacturing andIndustry 4.0 solutions
Precision Tools Group (PTG)
PTG is on aggressive growth path and have delivered profitable 18% Year on Year (YOY)growth. Custom tools & application specific High performance tool portfolio continueto show decent growth and been preferred by many Original Equipment Manufactures (OEMs).
PTG continued to invest in technology and design development with infusion of talentand advance fully automated precision machines. PTG strengthened its carbide toolsportfolio for non-automotive segment particularly in aerospace and mining. PTG introducedcarbide Taps solution for the first time by any Indian company. PTG introduced many newproduct lines to expand portfolio to meet international requirement and to be a completetooling solution company. Tool holders Nib Taps Hand tools HSS drills are newintroduction to the tooling portfolio. PTG product development in Solid carbide tools HSSTaps and Tungsten rotary burrs is focused on Aerospace Defence Medical & Oil and Gassegment so as to de-risk from Auto sector.
Export market has been identified as growth driver of PTG & initiated businessdevelopment in focused geographies which includes Europe Gulf Co-operation Council (GCC)South East Asia China Japan Israel and North America. Engineering Division participatedin international trade shows in USA Russia Thailand Vietnam Mexico as part of brandbuilding and business development efforts which has given us recognition as highperformance tooling company in Aerospace Power and Railways segments.
Domestic market coverage through distribution has helped PTG's growth across India.Engineering Division participated in many Domestic trade exhibitions IMTEX (Indian MetalCutting Tools Exhibitions) and some other regional events to showcase our capabilities.
Margins were under pressure but with kaizen implementation & cost reductioninitiative resulted in improved contribution margin. General price increase has beenannounced in January' 2019 for all products except Carbide tools to cover pricesescalation of raw materials in international markets increase which have been accepted bythe market.
PTG will continue to invest in capacity augmentation to meet increased market demand.Initiatives during the year included investment and capacity enhancement in manufacturingHSS drills HSS Taps & Solid Carbide tools which helped in building volume.Engineering Division initiated to strengthen Supply chain function to create bettercustomer experience and capacity augmentation for standard product portfolio.
Engineering business is now re-certified for ISO 9001-2015 & IATF certificationawarded for Spring washer business. TOTEM been recognized as preferred cutting tool BrandBy Times Group.
Industrial Automation and Coding Business Group (CBG)
Industrial Automation business has delivered 25% Year on Year (YOY) & could makeinroads to non-auto sector automation projects. Large-value automation orders from bignon-automotive OEM companies are one of the significant achievements in FY'19 for projectsbusiness. The sales funnel is attractive in this area.
Automation business has ambitious growth plan in scaling up existing solution andintroducing new technologies in line with digital manufacturing and Industry 4.0solutions. Engineering Division created design centre in Pune to augment design andtechnical proposal capabilities. Main focus for FY 19 was organization building in salesbusiness development design and project management to support aggressive growth plans forthis business.
CBG has built capability to deliver complete Robotic automation cell for machinetending and pick and place. It introduced High speed lasers for non-metal applicationwhich created inroads to FMCG sector. Talent attraction and on-boarding are key successfactors for automation business and all efforts are on to strengthen this area.
The Engineering division continued to be committed towards Employee development andengagement initiatives safety and well being through its various initiatives operationsby complying all environmental and 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. Two elementsto ACE initiative Speed and Lean were added which will provide growth and sustenance. Weadded agility for current year which will build organization capability to suit economicenvironment.
Consolidation of products portfolio will help company to achieve cost advantages andbetter customer service.
Project Vicinia Chandivali
The Company believes that the demand for Real Estate in our country would remainstrong. Project Vicinia being the first venture of the Company in Realty Segment hasreceived good response. The real estate development under "Project Vicinia" atChandivali Mumbai were carried as per the terms of the development agreement between theCompany and Videocon Realty and Infrastructure Limited ("VRIL") forming part ofthe consent terms filed with the Hon'ble Bombay High Court in 2011.
During the current year VRIL delayed payments to vendors for Project Vicinia and toprotect the interests of all stakeholders including the Company and purchasers ofindividual flats the Company terminated the aforesaid development agreement. Consequentlythe matter was referred to arbitration and vide the arbitration award dated February 252019 the Company was directed to pay an amount of Rs 15300 Lakhs to VRIL for restitutionand the aforesaid amount was paid on March 2 2019.
The Company entered into a Business Transfer Agreement ("BTA") with PaikarReal Estates Private Limited (a fellow subsidiary) dated February 27 2019 to transfer 50%interest in the aforesaid real estate development project (which the Company got throughrestitution) by way of slump sale on an as-is-where-is basis as a going concern for Rs15500 Lakhs. The aforesaid transaction was approved by the shareholders at Extra OrdinaryGeneral Meeting held on March 29 2019.
The real estate development of Project Vicinia at Chandivali is registered underMaharashtra Real Estate Regulatory Authority and is expected to be completed by June'2021.
Eureka Forbes Limited & its Subsidiaries (Collectively EFL')
EFL has been a trend setter and leader in all its businesses. In a year that witnessedits fair share of highs and lows EFL continued to lead within its categories acrosschannels. This competitive spirit will continue to increase and as leaders EFL willcontinue to anticipate innovate and stay ahead of its competition.
- Customer-centric Organization
- Omni-Channel presence mirroring customer journeys
- Agile Responsive fit for purpose organization
- Employer of Choice
- Step jump in capabilities: Digital Analytics GTM Sourcing
- Category leadership in large profitable spaces 2-3 bets in fast growing spaces
- Go-to-Market effectiveness
- Lean Organization Structure
- Higher share of sales from referrals with end to end tracking of leads and referrals
- Increased average value Realization with value based pay for performance
- Performance oriented organization with best in class span of control
- Partner channel engine for growth
- Execution rigour and data driven decisions coupled with right capabilities to drivegrowth
Armed with the state-of-the-art products for all brands EFL continued to steer itsactions to fall in line with its principles of competitiveness growth and profitability.EFL sustained to drive innovation across brands categories operations and adapted thego- to-market strategies taking into account the diversity market needs and theevolving channels of distribution.
EFL is harnessing technology mobile connectivity to build leading edge operational andmarketing capabilities. It is indeed helping EFL to engage and be in constant touch withits people on real time basis through mediums such as Eureka TV' and MicrosoftKaizala'. EFL continued to lead the digital transformation within and leveraged its DirectSales capabilities to drive competitive advantage. EFL grew in the fast emerginge-commerce channel supported by Eurochamps and its Retail and Institutional efforts toassist the customers across the length and breadth of India continued.
Most importantly EFLs brands and operations continued to be held together by its firmbelief/ purpose to be Friend for Life'. EFL takes pride in sharing few achievementsof its community fulfilment division which has been working relentlessly and hassuccessfully executed 101 projects which are serving communities with a beneficiary baseof over 90000 people across India.
Forbes Technosys Limited (FTL)
During the year under review FTL focused on consolidation and re-organisation and oncreating a foundation that will make FTL fit for scale and set the stage to embark on thepath of profitable and sustainable growth. There were pressures on revenue growth duringthe year due to stress and muted demand in some of the key sectors that FTL has beentraditionally dependent on such as banking and telecom. Heightened competition and entryof several local players in the e-payments space put pressures on margin as well.
The FY 2018-19 was a year of rationalization for FTL across its business verticals andproduct range in a challenging business environment. Business from key verticals such asBanking Telecom and Government slowed down as these segments faced challenges of theirown such as NPAs non-availability of capital and slow progress on key initiatives.
However there are other segments such as retail healthcare and hospitality that areunder penetrated and have significant potential for FTL product offerings.
Forbes Xpress FTLs e-payments services platform continued to grow both in terms ofscale franchisee numbers and geographic presence. During the year several measures wereinitiated on the technology and service basket fronts to make the platform even morerobust scalable and differentiated from competition.
FTL has also chosen to embrace design-led product innovation for entering new marketsegments in addition to realizing production and service efficiencies throughstandardization and modular designs. These investments will help FTL in addressingemerging opportunities in domestic and international markets in the near future.
The self-service automation market in India is expected to grow at a rapid pace in thenext 3-5 years across various verticals such as BFSI Retail Transport Hospitality andGovernment. Many of these segments are highly under penetrated and highly fragmented.
In the banking segment kiosk banking is being made an integral part of the banks'digital programs. Given the nation-wide push for providing insurance and financialservices to all citizens the insurance and mutual fund segments have already startedeither implementing or exploring kiosks as a means to expand presence and reaching thelast mile.
Self-service kiosks are also an integral part of several Government initiatives such assmart cities and delivery of Government to Citizen services under Digital India program.
The retail segment is increasingly looking at ways and means to attract customersthrough enhanced user experiences delivered via innovative technologies such as AugmentedReality and Virtual Reality enabled self-service platforms.
The transit segment also is showing a lot of potential for self-service ticketingsystems on the back of the new metro rail projects being implemented across the countryand the modernization program of traditional railways.
In the e-Payments business FTL is already in the process of adding several additionalservices such as Aadhaar enabled payment system (AEPS) micro-insurance micro-creditticketing for state road transport etc.
There is also a pressing need for cash collection points for segments such as BFSI ande-Commerce where the company's franchisee network can serve as the extended arm oforganizations especially in remote areas. Not only will these additional services give asignificant boost to transaction volumes but will also enhance franchisee stickiness. Thefranchisee network has also grown rapidly and FTL plans to expand the networksignificantly in the tier 2 cities and beyond in the coming year.
With the combination of positive market developments and initiatives that FTL hastaken the business is poised for profitable growth across all segments in the comingyears.
Shapoorji Pallonji Forbes Shipping Limited (SPFSL formerly SCI Forbes Limited)
SPFSL currently owns 5 specialized chemical tankers with a total dwt capacity of 73424mt. These 5 vessels are foreign going Indian flag ships making SPFSL the only company inIndia that owns chemical tankers. SPFSL is committed to the safe and efficienttransportation of chemical cargoes for all its customers and partners. All the fivevessels maintain approvals from Oil Majors including Shell Exxon Chevron BP and Totalfor carrying their products.
Earnings in FY 2018-19 were affected adversely due to increase in supply of shipsincrease in fuel prices and uncertainty in geopolitical scenario. The fleet grew by about3% in 2018 whereas the seaborne trade continued to grow at 4% y-o-y. Poor market of biggervessels also had a cascading effect on smaller tonnage however the volatility in thechemical trade remained low.
With a sharp decline in the new build deliveries in 2019 onwards and continued growthin seaborne chemicals trade the markets are expected to tighten up and give potentialrise to the freight earnings.
Forbes Bumi Armada Limited (FBAL)
FBAL maintains qualified and experienced manpower which continues to provide qualitymanning services to Floating Production Storage and Offloading (FPSO) Business located inMumbai High. The manning team has brought laurels to the Company by maintaining both theFPSO with zero loss time injury (LTI) and 100% commercial uptime. Manpower resource ofcompany are delivering international standard services to client maintaining top notchHealth Safety and Environment (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.
The Consolidated Financial Statements of the Company and its subsidiaries its jointventures and associate companies are prepared in accordance with Indian AccountingStandards (Ind AS) notified under Section 133 of the Companies Act 2013 read withCompanies (Indian Accounting Standards) Rules 2015 as amended from time to time and otherrelevant provisions of the Companies Act 2013. The Notes to Consolidated FinancialStatements are disclosed and forms part of the Consolidated Financial Statements.
Segment wise performance
The summarized performance of segment revenues and segment results is as under:
Rs in Lakhs
|Particulars || |
|FY 18-19 ||FY 17-18 ||FY 18-19 ||FY 17-18 |
|Health Hygiene Safety Products and its services ||238843 ||231771 ||5754 ||2940 |
|Engineering ||20913 ||18597 ||2673 ||2357 |
|Real Estate ||1919 ||11247 ||333 ||4557 |
|IT Enabled Services and Products ||12385 ||13161 ||4838 ||101 |
|Shipping and Logistics Services ||11414 ||8103 ||207 ||24 |
|Others ||33 ||102 ||(31) ||(95) |
Key Financial performance Operational Information and Ratio Analysis
|Key Ratios/ Indicators || |
|Explanation for change of 25% or more |
|FY 2018 -19 ||FY 2017-18 |
|Debtors Turnover (in days) ||66 ||47 ||The increase in days is mainly due to inclusion of revenues of Project Vicinia and its early collection in the FY 2017-18. For the current year this represents the debtors other than Project Vicinia. This change was required due to implementation of IND AS 115. |
|Inventory Turnover * (times) ||5 ||3 || |
|Current Ratio ||0.78 ||1.27 ||Increase in Current Liabilities on account of Current Maturities of Long term borrowings |
|Debt Equity Ratio ||0.50 ||0.36 ||Reduction in equity of ' 5083.10 Lakhs from opening reserves due to implementation of IND AS 115. |
|Interest Coverage Ratio ||2.82 ||4.51 ||The change is due to inclusion of profit of Project Vicinia in the FY 2017-18. For the current year this represents the profit other than Project Vicinia. This change was required due to implementation of IND AS 115. |
|Operating Profit Margin % ||6% ||17% |
|Net Profit Margin % ||5% ||14% |
| ||AO/ ||1 GO A |
* Inventory excludes Real Estate Inventory as corresponding revenue is accounted asper IND AS 115 in the FY 2018-19.
|Key Ratios/ Indicators || |
|Explanation for change of 25% or more |
|FY 2018 -19 ||FY 2017-18 |
|Operating Profit Margin % ||2% ||2% ||Increase in profit of Health Hygiene and Safety Segment. |
|Net Profit Margin % ||0% ||-1% |
|Return on Net Worth ||-1% ||-7% |
During the year standalone revenues decreased to Rs 22727.58 Lakhs (previous year Rs29743.91 Lakhs) mainly due to reduction in Real Estate segment revenue due to adoption ofIND AS 115. Consolidated revenues increased to Rs 285341.89 Lakhs (previous year Rs282770.94 Lakhs) mainly due to increase in revenue from Health Hygiene Safety segment.
Earnings Before Interest Depreciation Taxation and Amortization ("EBIDTA")
During the year standalone EBIDTA decreased to Rs 3186.54 Lakhs (previous year Rs6575.63 Lakhs) mainly due to reduction in Real Estate segment earnings due to adoption ofIND AS 115. Consolidated EBIDTA increased to Rs 17792.03 Lakhs (previous year Rs16848.70Lakhs) mainly due to increase in earnings of Health Hygiene Safety segment.
Profit Before Tax ("PBT")
During the year standalone PBT decreased to Rs 1038.81 Lakhs (previous year Rs4606.97 Lakhs) mainly due to reduction in Real Estate segment profit due to adoption ofIND AS 115. Consolidated PBT increased to Rs 1149.78 Lakhs (previousyear '(411.83) Lakhs)mainly due to increase in profit of Health Hygiene Safety segment.
The standalone year-end Gross Block increased to Rs 11409.50 Lakhs (previous year Rs10010.93 Lakhs) mainly due to additions to property plant and equipments. Theconsolidated year-end Gross Block increased to Rs 96278.32 Lakhs (previousyear '92710.55 Lakhs) mainly due to additions to intangible assets computer softwares for ITEnabled Segment.
During the year standalone profit decreased to Rs 1027.19 Lakhs (previous year Rs4090.01 Lakhs) mainly due to reduction in Real Estate segment profit due to adoption ofIND AS 115. Consolidated loss decreased to Rs (298.47) Lakhs (previousyear ' (3220.88)Lakhs) mainly due to increase in Health Hygiene Safety segment profit.
The standalone current liabilities increased to Rs 44190.39 Lakhs (previous year Rs15973.00 Lakhs) primarily due to Advance from Customer of Real Estate - IND AS 115impact. The consolidated current liabilities increased to Rs 174541.85 Lakhs (previousyear Rs 140539.59 Lakhs) primarily due to Advance from Customer of Real Estate - IND AS115 impact.
During the year standalone loan funds increased to Rs 17002.19 Lakhs (previous yearRs 16869.91 Lakhs) registering marginal increase in long term borrowings and consolidatedloan funds decreased to Rs 106949.46 Lakhs (previous year Rs 118944.36 Lakhs)primarily on account of repayment of borrowings by EFL.
Opportunities and Risks
Our success as an organization depends on our ability to identify opportunities andleverage them while mitigating the risks that arise while conducting our business. Majorrisks identified by the businesses and functions are systematically addressed throughmitigating actions on a continuing basis. Some of the key risks anticipated impact on theCompany and mitigation strategy is as follows:
Your Company monitors external market trends and collates consumer insights to developcategory and brand strategies.
The Company actively searches for ways to translate the trends in consumer preferencesand tastes into new technologies for incorporation into future products. We developproduct ideas both in-house and with selected partners to enable us to respond to rapidlychanging consumer trends with speed.
Political and Global Uncertainty
Political uncertainty or volatile economic uncertainty may adversely affect the reduceddemand and could restrict revenue growth opportunities.
The Company has broad based diversified businesses catering to various industrysegments and diverse markets and hence may not get affected by these uncertainties.
Legal and Regulatory
Compliance with laws and regulations is an essential part of your Company's businessoperations. We are subject to laws and regulations in diverse areas as product safetyproduct claims trademarks copyright patents competition employee health and safetythe environment corporate governance listing and disclosure employment and taxes.
Frequent changes in legal and regulatory regime and introduction of newer regulationswith multiple authorities regulating same areas lead to complexity in compliance.
We closely monitor and review our practices to ensure that we remain complaint withrelevant laws and legal obligations.
Systems and Information
Your Company's operations are increasingly dependent on IT systems and the managementof information.
Increasing digital interactions with customers suppliers and consumers place evengreater emphasis on the need for secure and reliable IT systems and infrastructure andcareful management of the information that is in our possession.
The cyber-attack threat of unauthorised access and misuse of sensitive information ordisruption to operations continues to increase.
To reduce the impact of external cyber-attacks impacting our business we havefirewalls and threat monitoring systems in place complete with immediate responsecapabilities to mitigate identified threats. Our employees are trained to understand theserequirements.
Internal control systems and their adequacy
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 haveaudited the financial statements included in this annual report and have issued a reporton our internal financial controls over financial reporting as defined in Section 143 ofthe Act.
Material Development in Human Resources and Industrial Relations
The major thrust during the year was in Talent Acquisition Talent ManagementPerformance Management and helping the business drive performance Identifying andnurturing high potential talent from a Career Management Succession perspective andTraining Interventions - both in technical and behavioural domains. The talentacquisitions were to bolster Company's expansion plans in the Automation businessEngineering Capabilities like Design and new areas like Hand Tools. A major Trainingintervention was commenced for Value Selling' covering the entire Sales Marketingand Project Staff which will continue over different modules in the new year.
Employee Relations continued to be harmonious with the Long Term Settlement discussionsin progress with the union at Waluj the major focus of which is increase in productivityand efficient practices.
Investment in Subsidiaries
During the year under review the Company invested Rs 1000 Lakhs in Preference Sharesof Forbes Technosys Limited a wholly owned subsidiary of the Company. The Company hasalso invested ' 2505 Lakhs during the year in equity shares of Eureka Forbes Limited awholly owned Subsidiary of the Company.
Subsidiaries/ Associates /Joint Ventures
During FY 2018-19 the following companies have become or ceased to be subsidiariesjoint ventures or associates.
|Name of Company ||Nature of Relationship |
|Aquaignis Technologies Pvt. Ltd ||An Joint Venture of Eureka Forbes Limited has become a wholly owned subsidiary of Eureka Forbes Limited with effect from June 13 2018. |
|Aquadiagnostics Water Research & Technology Centre Ltd Forbes G4S Solutions Pvt Ltd ||A wholly owned subsidiary of Eureka Forbes Limited ceased to be a subsidiary with effect from June 25 2018. Ceased to be Joint Venture of Eureka Forbes Limited with effect from May 10 2018. |
|Forbes International AG ||A wholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) merged with Lux International AG with effect from March 23 2018. |
| || |
|Lux Professional International Gmbh ||Awholly owned subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) merged with Lux International AG with effect from March 23 2018. |
|Lux Aqua Czech s.r.o ||Ceased to be subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited ) with effect from April 30 2018. |
|Lux Aqua Hungary KFT ||Ceased to be subsidiary of Lux International AG (a step down subsidiary of Eureka Forbes Limited) 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 Companies Act 2013("Act") and is attached herewith as Annexure "I". FinancialStatements of these subsidiaries are available for inspection at the registered office ofthe Company and that of the subsidiary company concerned and the same would be alsoavailable on the website of the Company www.forbes.co.in
Dividend and 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: Rs 2.50) and an additional Special CentenaryYear Dividend of Rs 2.50 (25%) per equity share. The dividend if approved by the Memberswould involve a cash outflow of Rs 777.50 lakhs including dividend tax (Previous Year Rs388.75 lakhs). In accordance with SEBI (Listing Obligations and Disclosure Regulations)2015 the Board ofDirectors of the Company has adopted a Dividend Distribution Policywhich is annexed as Annexure "II". The policy is also available on the websiteof the Company www.forbes.co.in
The Company proposes to retain the entire balance amount of Rs 3433.25 Lakhs (PreviousYear Rs 7877.29 lakhs) in the Profit & Loss Account.
The paid up Equity Share Capital of the Company as on March 31 2019 was '1289.86Lakhs. 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 2019 none of the Directors of the Company hold shares orconvertible instruments of the Company.
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 '4000 Lakhs wereoutstanding during the year ended March 31 2019.
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 HI' 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 Complaints Committee
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace as perwith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the rules thereunder for prevention and redressalof complaints of sexual harassment at workplace. Internal Compliants & Committee (ICC)has been setup to redress complaints received regarding sexual harassment as per SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theICC includes external member. During FY 2018-19 no complaints on sexual harassment werereceived.
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.
The Company is committed to inclusive sustainable development and contributing tobuilding and sustaining economic social and environmental capital and to pursue CSRprojects as and when required that are replicable scalable and sustainable with asignificant multiplier impact on sustainable livelihood creation and environmentalreplenishment.
The Company during the FY 2018-19 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.
The Report on CSR activities in terms of Section 135 of the Companies Act 2013 isannexed as Annexure IV to this report.
The Board of Directors of the Company has formed a Risk Management Committee foridentification evaluation and mitigation of external and internal material risks. TheCommittee shall establish a framework for the company's risk management process and toensure its implementation. The Committee shall periodically review the risk managementprocesses and practices of the Company and establish procedures to mitigate risks on acontinuing basis.
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. Shapoor P. Mistry is due to retireby rotation at the ensuing Annual General Meeting and being eligible seeksre-appointment. The Board of Directors recommend his re-appointment as Director of theCompany.
Ms. Aslesha A. Gowariker an Independent Director of the Company on account of herother professional commitments tendered her resignation with effect from June 12 2018.
Ms. Rani Ajit Jadhav was appointed as an Independent Director of the Company for aperiod of three years with effect from September 1 2019.
Mr. Kaiwan D. Kalyaniwalla an Independent Director ofthe Company on account of hisother professional commitments tendered his resignation with effect from the close ofbusiness hours of March 312019.
Mr. Nikhil Bhatia has been appointed as an Additional and Independent Director oftheCompany with effect from May 16 2019. The appointment is for a period of 5 years subjectto approval of Shareholders which is being sought through Postal Ballot.
Based on the recommendations of the Nomination and Remuneration Committee and subjectto approval of the shareholders the Board of Director approved the re-appointment of Mr.D Sivanandhan as an Independent Director for second term of 5 years commencing from August6 2019.
The Board places on record its appreciation for the invaluable services rendered by Ms.Gowariker and Mr. Kalyaniwalla to the Board and the Company during their tenure as Membersof the Board/Committees of the Board.
The Company has received declarations from all the Independent Directors of the Companyconfirming 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.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting fees forattending meetings of Board/ Committee of the Company.
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.
Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) 2015 the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Nomination andRemuneration Stakeholders' Relationship Committees.
The performance ofthe Board was evaluated by the Board after seeking feedback from allthe Directors on the basis of the parameters/criteria such as degree of fulfillment ofkey responsibility by the Board 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 ofthe committees viz. Audit Committee Nomination and RemunerationCommittee Corporate Social Responsibility and Stakeholders Relationship Committee wasevaluated by the Board after seeking feedback from Committee members on the basis ofparameters/criteria such as degree of fulfillment of key responsibilities adequacy ofcommittee composition effectiveness of meetings committee dynamics and quality ofrelationship 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 the performance of Non-IndependentDirectors of the Board as a whole and the performance of the Chairman were evaluated.
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 AnnexureVI' to this Report.
Meetings of the Board
The Board met at least once in each quarter and 8 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 FY and of the profit or loss ofthe Company for that period;
(iii) they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the Company and detecting fraud andother irregularities;
(iv) they have prepared the annual accounts 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
Pursuant to the provisions of section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 Price Waterhouse Chartered Accountants LLP(PWC) (ICAI Firm Registration No.012754N/N500016) were appointed as the Statutory Auditorsof the Company for a term of 5 years till the conclusion of 103rd Annual General Meetingof 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.
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 2019-20 on a remunerationof ' 4.50 Lakhs 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 Hundredth Annual General Meeting ofthe Company.
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 CompanySecretaries in Practice to undertake the Secretarial Audit of the Company. The Report ofthe Secretarial Auditor is annexed herewith as Annexure VII'.
The Secretarial Audit Report Does not Contain any qualification reservation oradversed remark or disclaimer.
The Secretarial Audit of Eureka Forbes Limited (Material Subsidiary) for the FY2018-19 was carried out pursuant to Section 204 of the Companies Act 2013 and Regulation24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015. TheReport of the Secretarial Auditor of Eureka Forbes Limited does not contain anyqualification reservation or adverse remark or disclaimer.
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 AnnexureVIII'.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9 as per theprovisions of the Companies Act 2013 and Rules thereto is annexed herewith as AnnexureIX' and forms part of this Report. The said extract is also available on the websiteof the Company viz. www.forbes.co.in .
Business Responsibility Report
A separate section on Business Responsibility Report forms part of this Annual Reportas required under Regulation 34(2)(f) of SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015.
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include global and domestic demand and supply inputcosts availability changes in government regulations tax laws economic developmentswithin the country and other factors such as litigation and industrial relations.
Your Directors acknowledge and thank all stakeholders of the Company viz. customersmembers employees dealers vendors banks and other business partners for their valuablesustained support and encouragement. Your Directors look forward to receiving similarsupport and encouragement from all stakeholders in the years ahead.
|For and on behalf of the Board |
|Shapoor P. Mistry |
|DIN: 00010114 |
|Mumbai May 30 2019 |