Your Directors are pleased to present the Company's 61st Annual Report andthe audited accounts for the year ended 31 December 2017.
Financial Results & Performance Review
| || ||(All Figures in Rs. Lakhs) |
|Particulars ||Accounting year ended 31-Dec-2017 ||Accounting year ended 31-Dec-2016 |
|Total Revenue from Operations ||36012.51 ||34159.94 |
|Operating Expenses ||(30665.08) ||(28480.95) |
|Earnings before interest tax depreciation and amortisation (EBITDA) ||5347.43 ||5678.99 |
|Finance Cost ||(35.26) ||(41.52) |
|Depreciation and amortisation expense ||(534.13) ||(505.20) |
|Profit Before Tax (PBT) ||4778.04 ||5132.27 |
|Tax Expense ||(1646.13) ||(1824.10) |
|Profit for the Period (PAT) ||3131.91 ||3308.17 |
|Balance brought forward from previous year ||6521.95 ||5312.70 |
|Amount available for appropriation ||9653.86 ||8620.87 |
|Appropriations: || || |
|Interim Dividends ||830.24 ||1021.83 |
|Final Dividend (Proposed) ||766.37 ||447.05 |
|Tax on Dividends (Interim and Final) ||325.04 ||299.04 |
|Transferred to General Reserves ||313.19 ||331.00 |
|Surplus carried to the Balance Sheet ||7419.02 ||6521.95 |
|Total Appropriations ||9653.86 ||8620.87 |
Your Directors are pleased to inform that during the year under review your Companyregistered a growth of 5.4% in Revenue and a drop in Profit After Tax by 5.3% over theyear 2016. The growth in revenue was achieved through Solutions Projects at Customers andStrategic Share Gain in Feeding Coatings and Non-Ferrous Solutions Groups. Marginsdropped due to volatility in raw material prices. There was a lag in recovery of prices ofthe principal raw materials from the market due to fiercely competitive environment. Theprices were under pressure due to stiff competition arising out of limited marketopportunities.
During the year your Directors declared two Interim Dividends as detailed below:
|Particulars of Dividend ||Date of declaration ||Record Date ||Dividend % ||Dividend per share |
|1st Interim Dividend ||27 July 2017 ||5 August 2017 ||60 ||Rs. 6 |
|2nd Interim Dividend ||11 November 2017 ||25 November 2017 ||70 ||Rs. 7 |
Your Directors are pleased to recommend for approval of the Shareholders' a FinalDividend of Rs. 12/- per share (i.e. 120%) on an Equity Share of Rs. 10/- each for thefinancial year ended 31 December 2017 taking the total dividend to Rs. 25/- per share(i.e. 250%) (previous year Rs. 23 per share i.e. 230%).
The total pay-out of the two Interim Dividends and Proposed Final Dividend for thefinancial year ended 31 December 2017 inclusive of dividend distribution tax willaggregate to Rs. 1921.65 Lakhs as compared to Rs. 1767.92 Lakhs in the previous year.
Transfer to Reserves
Your Company has transferred Rs. 313.19 Lakhs without taking into consideration theamount of proposed outgo on account of the final dividend (previous year: Rs. 331 Lakhs)to the General Reserves out of the current year profit.
Financial Year of the Company
Your Company has adopted the Calendar Year from 1st January to 31st December as itsFinancial Year.
Report on Corporate Governance & Management Discussion & Analysis
Pursuant to Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations AndDisclosure Requirements) Regulations 2015 a separate section titled Report on CorporateGovernance together with a Certificate from the Practicing Company Secretary forms part ofthis Annual Report.
A detailed Management Discussion and Analysis is included as a part of this AnnualReport.
Your Company does not have any subsidiary/subsidiaries within the meaning of Section 2of the Companies Act 2013 ("Act"). Therefore a statement under the provisionsof Section 129(3) of the Act containing salient features of the financial statements ofthe Company's subsidiaries in Form AOC-1 is not attached.
The Company has not accepted any deposits from the public and accordingly no amount wasoutstanding as on the date of the Balance Sheet.
Extract of the Annual Return
As required under Section 92(3) read with Section 134(3)(a) of the Companies Act 2013an extract of the Annual Return in Form No. MGT 9 at the financial year ended 31 December2017 is given in Annexure A which forms part of this Board Report.
Number of Meetings of the Board
The Board of Directors met four times during the year 2017 on the following dates: 8February 2017 26 April 2017 27 July 2017 and 11 November 2017. The information on theMeetings is given in the Report on Corporate Governance that forms part of this AnnualReport. The intervening gap between any two meetings was within the period of 120 daysprescribed by the Companies Act 2013.
Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of your Company Ms. Merryl France Durrenbach (DIN: 06920690) aNon-Executive and Non-Independent Director on the Board of the Company who is a nomineeof the Promoter Company - Foseco Overseas Limited retires by rotation at the ensuingAnnual General Meeting and being eligible offers herself for re-appointment.
The Board recommends her re-appointment. A brief resume and other relevant details ofher re-appointment are provided in the Corporate Governance Report which forms part ofthis Annual Report.
Pursuant to the provisions of Section 149 of the Companies Act 2013 Mr. PradeepMallick (DIN: 00061256) Mr. Ajit Shah (DIN: 02396765) and Mrs. Indira Parikh (DIN:00143801) were appointed as Independent Directors at the Annual General Meeting of theCompany held on 27 March 2015. The terms and conditions of appointment of IndependentDirectors are as per Schedule IV of the Act. They have submitted a declaration confirmingthat each of them meets the criteria of independence as provided in Section 149(6) of theAct and there has been no change in the circumstances which may affect their status asIndependent Director during the year.
In compliance with the Company Policy Pradeep Mallick a Non-Executive IndependentDirector will retire at the conclusion of the forthcoming Annual General Meeting as he hasattained the age of 75 years.
During the year no Non-Executive Director except the nominee Director appointed by thePromoter Company has had any pecuniary relationship or transactions with the Company.
The following persons are designated as Key Managerial Personnel of the Company:
1. Mr. Sanjay Mathur Managing Director
2. Mr. R Umesh Chief Financial Officer
3. Mr. Mahendra Kumar Dutia Controller of Accounts and Company Secretary.
There was no change in the Key Managerial Personnel during the year 2017.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 your Directors confirm that:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed with no material departures;
b) 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 profitof the Company for the same period;
c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls in the Company that are adequate andare operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that these are adequate and are operating effectively;
Policy on Directors' Appointment and Remuneration
The policy of the Company on Directors' Appointment and Remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided in Section 178(3) of the Companies Act 2013 adopted by theBoard is covered in the Report on Corporate Governance which forms part of this AnnualReport.
Performance Evaluation of the Directors etc.
The Nomination and Remuneration Committee has laid down the criteria for performanceevaluation by the Board of its own performance and that of the various Committees of theBoard and the individual Directors including the Chairperson. The framework of performanceevaluation of the Directors captures the following points:
- Key attributes of the Independent Directors that justify his/herextension/continuation on the Board of the Company;
- Participation of the Directors in the Board proceedings and his/her effectiveness;
More details on this subject is provided in the Report on Corporate Governance.
Composition of the Audit Committee
The Audit Committee comprises Mr. Ajit Shah as its Chairperson Mr. Pradeep Mallick andMrs. Indira Parikh all of whom are Independent Directors and Mrs. Merryl Durrenbach as aNon-Executive Non-Independent Member. More details on the Committee are given in theReport on Corporate Governance.
Adequacy of Internal Financial Controls (IFC)
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The internal financial controls are adequate and areoperating effectively so as to ensure orderly and efficient conduct of businessoperations. The internal controls are designed in a manner that facilitates achievement ofthree-pronged objectives viz. i) support the achievement of the Company's businessobjectives ii) mitigate risks to acceptable level and iii) support sound decision makingand good governance.
The adequacy and effectiveness of the internal financial controls are demonstrated byfollowing the procedures as set out below: -
i. The internal controls have been designed to provide reasonable assurance with regardto recording and producing reliable financial and operational information complying withapplicable statutes safeguarding assets from unauthorised use executing transactionswith proper authorisation and ensuring compliance with corporate policies.
The Company has a well-defined delegation of power with authority limits for approvingrevenue as-well-as expenditure. Processes for formulating and reviewing annual andlong-term business plans have been laid down.
ii. The Audit Committee periodically deliberates on the operations of the Company withthe Members of the Management. It also sought the views of B S R & Associates LLP whowere the Statutory Auditors during the period beginning 1 January 2017 till 27 April 2017and Price Waterhouse Chartered Accountants LLP who are the current Statutory Auditorssince 27 April 2017 on the internal financial control systems.
iii. The Company has appointed P G Bhagwat Chartered Accountants as Internal Auditorsof the Company. The Audit Committee in consultation with the Internal Auditors formulatesthe audit plan scope functioning and methodology which are reviewed every year in amanner that they cover all areas of operation. The Internal Audit covers inter aliamonitoring and evaluating the efficacy and adequacy of internal control systems in theCompany its compliance with operating systems accounting procedures and policies at alllocations and adequacy of insurance coverage of all assets. Periodical Internal AuditReports are submitted to the Audit Committee to ensure complete independence which arethen extensively deliberated at every Audit Committee Meeting in the presence of theInternal and External Auditors. Based on the review by the Audit Committee process ownersundertake corrective actions in their respective areas and consider suggestions forimprovement. The Internal Auditors have expressed that the internal control system in theCompany is robust and effective.
iv. The Board has also put in place requisite legal compliance framework to ensurecompliance of all the applicable laws and that such systems are adequate and operatingeffectively.
v. The Company's financial records are maintained on the ERP System which is effectiveand adequate in line with the size of its operations.
Particulars of Loans Investments Guarantees and Securities
Your Company has neither advanced any loans nor made any investments or given anyguarantees and/or provided any securities to anybody whether directly or indirectlywithin the meaning of Section 185 of the Companies Act 2013. Hence there are no detailsworth providing.
Particulars of Contracts or Arrangements with Related Parties
All contracts/arrangements/transactions entered into by the Company during thefinancial year ended 31 December 2017 with related parties were on an arm's length basisand were in the ordinary course of business. During the year the Company had not enteredinto any contract/arrangement/transaction with related parties which could be consideredmaterial and therefore Shareholders' approval was not required to be obtained inaccordance with the Policy of the Company on materiality of related party transactions.Thus provisions of Sections 134(3)(h) and 188(1) of the Companies Act 2013 and Rule 8(2)of the Companies (Accounts) Rules 2014 are not applicable to the Company and therefore FormNo. AOC-2 has not been attached.
In compliance with the requirements laid down in the SEBI (Listing Obligations AndDisclosure Requirements) Regulations 2015 all related party transactions were placedbefore the Audit Committee for approval. Prior omnibus approval of the Audit Committee hadbeen obtained for transactions which were foreseeable and of repetitive nature. Alltransactions entered into with the related parties are presented to the Audit Committee byway of a statement giving details of all transactions.
The Policy on materiality of Related Party Transactions and dealing with RelatedParties as approved by the Board has been uploaded on the Company's website at URL:FosecoIndia/View/policies.aspx. Your Directors draw attention of the Members to Note27 attached to the financial statement which sets out related party disclosures
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
Information under Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 is given in Annexure B to this Report.
Particulars of Employees and Related Disclosures
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and also the Statement containingparticulars of employees as required under Rules 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rule 2014 is provided in AnnexureC forming part of this Report.
Auditors and Auditors' Report Statutory Auditors
Price Waterhouse Chartered Accountants LLP (Firm registration no. - 012754N/N500016)Chartered Accountants 7th Floor Business Bay Tower A Wing - 1 Airport Road YerwadaPune - 411006 were appointed as the Statutory Auditors in the 60th Annual General Meetingheld on 27 April 2017.
They will hold office as the Statutory Auditors of the Company for a period of 5 yearsuntil the conclusion of the 65th Annual General Meeting to be held in the year 2022. Interms of the provision of Section 139 of the Companies Act 2013 the appointment of theStatutory Auditors shall be placed for ratification at every Annual General Meeting ifrequired under the Companies Act 2013 as amended from time to time.
Your Company has received a written confirmation from Price Waterhouse CharteredAccountants LLP to the effect that their appointment as the Statutory Auditors of theCompany if ratified will be as per the requirements laid down under Section 139 and 141of the Companies Act 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules2014 and that they are not disqualified for re-appointment.
The observations of the Statutory Auditors on the financial statement for the yearended 31 December 2017 including the relevant notes to the financial statement areself-explanatory and therefore does not call for any further comments. The Auditors'Report does not contain any qualification reservation or adverse remark.
Report on Frauds if any
During the year under review no incidence of any fraud has occurred against theCompany by its officers or employees. Neither the Audit Committee of the Board nor theBoard of the Company has received any report involving any fraud from the StatutoryAuditors of the Company. As such there is nothing to report by the Board as requiredunder Section 134 (3) (ca) of the Companies Act 2013.
Joshi Apte & Associates Cost Accountants were appointed as the Cost Auditors ofthe Company to examine the Cost Records and submit the Cost Audit Report. The Company hasmaintained the required cost accounting records as per the Companies (Cost Records andAudit) Rules 2014 and is in compliance therewith. The Cost Audit Report in Form CRA-4relating to the year ended 31 December 2016 was filed with the Ministry of CorporateAffairs within the due date.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Rules madethereunder Rajesh Karunakaran & Co. Practicing Company Secretary (FCS 7441; CP No.6581) Pune was appointed to conduct a secretarial audit of the Company's Secretarial andrelated records for the year ended 31 December 2017. The Practicing Company Secretary hassubmitted the Report which is attached as Annexure D to this Report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators or Courts whichwould impact the going concern status of the Company and its future operations.
Vigil Mechanism/Whistle Blower Policy
The Company has established a vigil mechanism (which incorporates a whistle blowerpolicy) for Directors employees and business associates to report their genuineconcerns. The details of the same are provided in the Report on Corporate Governanceforming part of this Annual Report. The Policy is also available on the Company's websiteat URL: FosecoIndia/View/policies.aspx.
Policies of the Company
Your Company has posted the following documents on its website at URL:FosecoIndia/View/policies.aspx.
- Code of Conduct;
- Familiarisation Programme for the benefit of the Independent Directors;
- Archival Policy;
- Policy for Determination of Material Events or Information;
- Policy of Preservation of Documents.
Risk Management Framework
The Board regularly monitors and reviews the risk management strategy of the Companyand ensures the effectiveness of its implementation. Your Directors take all necessarysteps towards mitigation of any elements of risk which in their opinion can impact theCompany's survival.
All the identified risks are managed through review of business parameters by theManagement and the Board of Directors are informed of the risks and concerns.
Corporate Social Responsibility (CSR)
The Board of your Company has constituted a CSR Committee. As on 31 December 2017 theCommittee comprises four Directors. A brief outline of the CSR Policy of the Company andthe initiatives undertaken by the Company on CSR activities during the year are set out inAnnexure E of this Report in the prescribed format of the Companies (CorporateSocial Responsibility Policy) Rules 2014. The CSR Policy is available on the website ofthe Company at URL: FosecoIndia/View/policies.aspx.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
Your Company has in place a Policy in line with the requirements of The SexualHarassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013.
An Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.
Your Directors have to report that during the year under review one complaint ofsexual harassment was received by it from the ICC which was disposed of within thestipulated time. There are no pending complaints as at the end of the under review.
Employee relations throughout the Company were harmonious. Your Board of Directorswould like to place on record their sincere appreciation for the wholehearted support andcontributions made by all the employees of the Company as well as customers suppliersbankers and other authorities.
The Directors also thank the Central and State Governments/GovernmentDepartments/Agencies for their co-operation.
The Board of Directors thanks all the stakeholders of the Company and the parentCompany for their valuable support.
| ||For and on behalf of the Board of Directors |
|Place: Lonavala ||Pradeep Mallick |
|Date: 1 February 2018 ||Chairperson |
| ||DIN:00061256 |