The Members of Garg Furnace Limited
The Directors of your company have pleasure in presenting the 47th AnnualReport on the affair of the company together with the Audited Accounts for the year ending31st March 2020.
| || ||(Rupees in Lacs) |
| ||2019-20 ||2018-19 |
|Operating Income ||9852.22 ||11183.05 |
|Profit before depreciation Interest & tax ||(489.48) ||(431.00) |
|Interest & Financial Expenses ||112.19 ||67.74 |
|Profit before depreciation & tax ||(601.67) ||(498.74) |
|Depreciation ||131.66 ||126.73 |
|Profit before tax & Exceptional items ||(733.33) ||(625.47) |
|Exceptional Items ||1091.61 ||1137.67 |
|Profit before tax ||358.28 ||512.20 |
|Provision for tax -Current Tax ||0.00 ||0.00 |
|-tax related to earlier years || ||(1.65) |
|-Deferred Tax Asset ||0.00 ||0.00 |
|Less : Mat Credit Entitlement ||0.00 ||0.00 |
|Profit after Tax ||358.28 ||510.55 |
|Prior year Tax adjustments / Depreciation to Reverse as per || || |
| ||0.00 ||0.00 |
|Schedule II || || |
|Re-measurement of define benefit liability ||27.59 ||(1.06) |
|Balance brought forward ||-1953.01 ||-2462.50 |
|APPROPRIATIONS || || |
|Transfer to General Reserve ||0.00 ||0.00 |
|Balance carried over to Balance Sheet ||385.87 ||509.49 |
The Board of Directors does not recommend payment of dividend for the year underreview.
There was no public issue rights issue bonus issue or preferential issue etc. duringthe year. The Company has not issued shares with differential voting rights sweat equityshares nor has it granted any stock options.
Detailed information on the operations of the different business lines of the Companyand details on the state of affairs of the Company are covered in the ManagementDiscussion and Analysis Report
EXTRACT OF ANNUAL RETURN
The extract of annual return as provided under sub-section (3) of section 92 of theCompanies Act 2013 in the prescribed Form MGT-9 is annexed to this Report.
NUMBER OF MEETINGS OF THE BOARD
There were 6 meetings of the Board held during the year 30/05/2019 14/08/201902/09/2019 15/11/2019 07/02/2020 and 14/02/2020 detailed information is given in theCorporate Governance Report annexed hereto as part of Board Report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under clause (c) of sub-section (3) of section 134 of Companies Act 2013directors to the best of their knowledge and belief state that -
a) in the preparation of the annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the directors had prepared the annual accounts on a going concern basis; and
e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
DECLARATION BY INDEPENDENT DIRECTORS
The independent directors have submitted the Declaration of Independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section (6).
DIRECTORS' REMUNERATION POLICY AND CRITERIA FOR MATTERS UNDER SECTION 178
Information regarding Directors' Remuneration Policy and criteria for determiningqualifications positive attributes independence of a director and other matters providedunder sub-section (3) of section 178 are provided in the Corporate Governance Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Information regarding loans guarantees and investments covered under the provisions ofsection 186 of the Companies Act 2013 are detailed in the Financial Statements.
RELATED PARTY TRANSACTIONS
There are related party transactions (RPTs) entered into by the Company during thefinancial year which attracted the provisions of section 188 of Companies Act 2013.There being material' related party transactions as defined under regulation asapplicable of SEBI (LO&DR) Regulations 2016 there are details to be disclosed in FormAOC-2 in that regard.
During the year 2019-20 pursuant to section 177 of the Companies Act 2013 regulationas applicable of SEBI (LO&DR) Regulations 2016 all RPTs were placed before AuditCommittee for its prior/omnibus approval as well as shareholders' approval has been takenin this regard.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to Conservation of Energy Technology Absorption and ForeignExchange Earning and Outgo as required under Section 134 (3)(m) of The Companies Act 2013read with Rule 5 of Companies (Accounts) Rules 2014 is annexed and forms part of thisreport.
RISK MANAGEMENT POLICY
Information on the development and implementation of a Risk Management Policy for theCompany including identification therein of elements of risk which in the opinion of theBoard may threaten the existence of the Company is given in the Corporate GovernanceReport.
CORPORATE SOCIAL RESPONSIBILITY
Provisions of section 135 of the Companies Act 2013 are not applicable to Company.
FORMAL ANNUAL EVALUATION OF THE RFORMANCE OF BOARD ITS COMMITTEES AND DIRECTORS
Information on the manner in which formal annual evaluation has been made by the Boardof its own performance and that of its Committees and individual directors is given in theCorporate Governance Report.
SUBSIDIARIES AND JOINT VENTURE
Company has no subsidiary associate and Company in Joint Venture
DIRECTORS AND KEY MANAGERIAL PERSONNEL
a. In light of the provisions of the Companies Act 2013 Mr. DEVINDER GARG(DIN: 01665456 ) Managing Director of the Company retires from the Board byrotation this year and being eligible offers himself for re-appointment.
b.The information as required to be disclosed a per regulation as applicable of SEBI(LO&DR) Regulations 2016 in case of reappointment of the director is provided in theNotice of the ensuing annual general meeting.
c. Mr. Manjeet Singh (DIN: 08592748) was appointed as an Additional IndependentDirector of the Company by the Board on the recommendation of Nomination &Remuneration Committee in their meeting held on 15th November 2019 with effectfrom 15th November 2019. In accordance with provisions of section 161 of theCompanies Act 2013 and applicable SEBI (LODR) Regulation 2015 he will hold office uptothe date of the Annual General Meeting of the Company.
Mr. Manjeet Singh is not disqualified from being appointed as Directors in terms ofSection 164 of the Act. As per the recommendation of Nomination and Remuneration Committeeand based on the performance evaluation the Board is considering the regularization ofappointment of Mr. Manjeet Singh (DIN: 08592748) from Additional Independent Director toIndependent Director of the Company for a period of five years w.e.f 30thSeptember 2020.
The Company has also received a declaration from Mr. Manjeet Singh declaring that hemeets the criteria of independence as provided under Section 146(9) of the Companies Act2013.
In the opinion of the Board Mr. Manjeet Singh fulfills the conditions required to befulfilled for being appointed as an Independent Director of the Company as per theprovisions of Companies Act 2013 and SEBI (Listing Obligations and DisclosuresRequirements) Regulation 2015.
d. Mr. Dharam Chand (DIN: 08592773) was appointed as an Additional IndependentDirector of the Company by the Board on the recommendation of Nomination &Remuneration Committee in their meeting held on 15th November 2019 with effectfrom 15th November 2019. In accordance with provisions of section 161 of theCompanies Act 2013 and applicable SEBI (LODR) Regulation 2015 he will hold office uptothe date of the Annual General Meeting of the Company.
Mr. Dharam Chand is not disqualified from being appointed as Directors in terms ofSection 164 of the Act. As per the recommendation of Nomination and Remuneration Committeeand based on the performance evaluation the Board is considering the regularization ofappointment of Mr. Dharam Chand (DIN: 08592773) from Additional Independent Director toIndependent Director of the Company for a period of five years w.e.f 30thSeptember 2020.
The Company has also received a declaration from Mr. Dharam Chand declaring that hemeets the criteria of independence as provided under Section 146(9) of the Companies Act2013
In the opinion of the Board Mr. Dharam Chand fulfills the conditions required to befulfilled for being appointed as an Independent Director of the Company as per theprovisions of Companies Act 2013 and SEBI (Listing Obligations and DisclosuresRequirements) Regulation 2015.
e. During the year under review Mr. Pawan Kumar tendered his resignation as theIndependent Director of the Company with effect from the close of business hours onNovember 15 2019. The Board places on record its appreciation for his invaluablecontribution and guidance.
f. During the year under review Mrs. Chandni Jain was appointed as Whole Time CompanySecretary of the company w.e.f. August 02 2019
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals which may impact the going concern status of theCompany and its operations in future however the accounts of the company were declared bythe banks as Non-Performing Assets (NPA) and thereafter the bank has taken symbolicpossession of assets of the company u/s 13(4) of THE SECURITISATION AND RECONSTRUCTION OFFINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002 in 2018 the action ofthe bank has been challenged by the company before the Concerned Debt Recovery Tribunal(DRT). Further the management was under negotiation with the bank for one time settlement(OTS) of account. The bank has approved the One Time Settlement (OTS) proposal of thecompany vide its letter dated 13/08/2019 which has taken on record by board ofdirections in its meeting held on 14/08/2019 and authorised Managing Director tonegotiate further and give acceptance of said OTS proposal on behalf of company. Thecompany has accepted the said OTS proposal and Instalments in this regard are beingdeposited with Bank regularly.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Internal financial controls with reference to the financial statements were adequateand Operating effectively.
PRESENTATION OF FINANCIAL RESULTS
The financial results of the Company for the year ended 31 March 2020 have beendisclosed as per Schedule III to the Companies Act 2013. The same are placed on the Company'swebsite.
As Company has no subsidiaries and joint ventures Company the summary of the keyfinancials of the Company's (Form AOC-1) is not applicable to comply.
Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theprescribed particulars are set out in an annexure to the Directors' Report. As perprovisions of section 136(1) of the said Act these particulars will be made available toshareholder on request.
A Cash Flow Statement for the year 2019-20 is attached to the Balance Sheet.
Pursuant to the legislation 'Prevention Prohibition and Redressal of Sexual Harassmentof Women at Workplace Act 2013' introduced by the Government of India which came intoeffect from 9 December 2013 the Company has framed a Policy on Prevention of SexualHarassment at Workplace. There was no case reported during the year under review under thesaid Policy.
However the company is exempted under regulation 15 (2) (a) of Securities and ExchangeBoard of India (listing obligations and Disclosure Requirements) Regulations 2015 tocomply with Regulation 17 18 19 20 2122 23 24 25 26 27 and clauses (b) to (i) ofsub-regulation (2) of regulation 46 and para C D and E of Schedule V as the listedentity having paid up equity share capital not exceeding rupees ten crore and net worthnot exceeding rupees twenty five crore as on the last day of the previous financial yearThe company has put in place a system of Corporate Governance. A Separate report onCorporate Governance forming part of the Annual Report is annexed hereto.
Particulars of Employees
Information as per Section 197 of the Companies Act 2013 (the Act') read withthe Companies (Appointment and
Remuneration of Managerial Personnel) Rules 2014 forms part of this Report is NIL.However salary being paid to whole time directors is mentioned in Corporate GovernanceReport.
Annual Performance Evaluation by Board
Pursuant to the provisions of the Companies Act 2013 and regulation as applicable ofSEBI (LO&DR) Regulations 2016 the Board has carried out an Annual PerformanceEvaluation of its own performance the Directors individually as well as the evaluation ofthe working of the Committees.
The Board of Directors of your Company has adopted a policy on Risk Management of theCompany. The broad terms of same provided at website of the Company.
Your Company has an effective Vigil Mechanism system which is embedded in its Code ofConduct. The Code of Conduct of your Company serves as a guide for daily businessinteractions reflecting your Company's standard for appropriate behavior and livingCorporate Values. The Code of Conduct applies to all GFL People including DirectorsOfficers and all employees of the Company. Even your Company vendors and suppliers arealso subject to these requirements as adherence to the Code is a prerequisite forconducting business with your Company.
Nomination & Remuneration Policy
The Board of Directors of your Company has on recommendation of the Nomination &Remuneration Committee framed and adopted a policy for selection and appointment ofDirectors Senior Management and their remuneration. The contents of the policy are statedin the Corporate Governance Report.
M/s R.K. Chadha & Co. Chartered Accountants (Firm Registration No: 003513N) whowere appointed as the Auditors of the company for a term of five years subject toratification at Annual General Meeting every year has given a resignation dated 17thJuly 2020. And in order to fill the casual vacancy the based on recommendation of AuditCommittee Board has appointed M/s Ashwani & Associates Chartered AccountantsLudhiana (Registration No. 000497N) to hold office till the ensuing Annual GeneralMeeting.
Based on the eligibility under Section 141 of the Companies Act 2013 as recommendedby Audit Committee the Board of Directors recommend to Appoint M/s Ashwani &Associates Chartered Accountants Ludhiana (Registration No. 000497N) as the StatutoryAuditors of the company for five to hold the office from the conclusion of this AnnualGeneral Meeting till the conclusion of 22nd Annual General Meeting at suchremuneration as may be fixed by the Board of Directors of the company in consultation withM/s Ashwani & Associates Chartered Accountants Ludhiana (Registration No. 000497N)
Reply to remarks in Statutory Audit Report
Emphasis of Matter
As mentioned in Emphasis of Matter in para a which are Self-explanatory however incontext with related parties transaction company was constrained to do such transactionsbecause due to weak financial position in previous years the suppliers and buyers notshown interest to deal with the company directly but company has taken all approvals inthis regards as per applicable laws.
Basis for Qualified Opinion
i. Because of huge losses suffered during last two financial years the organizationstructure is also forced to become unshaped but Management is looking for a competentperson to appoint him as Internal auditor even the candidates interviewed for suchoffices have not shown their interest to join the company due to weak financial positionof the company after offering good remunerations.
ii. Provision in respect of impairment /loss on assets is not require as management hasview that due to slump & cut throat competition in iron industries / market istemporally and hope will recover soon.
iii. Management is in process to confirm/reconcile balances with the concerned parties.
Pursuant to the provisions of section 204 of the Companies Act 2013 and Rules madethereunder the Company has appointed Divyam Parbhakar & Associates (membershipnumber: 52667) Company Secretaries in Practice to undertake the secretarial audit of theCompany. Secretarial Audit Report for the year 2019-20 given by Divyam Parbhakar &Associates in the prescribed form MR-3 is annexed to this Report. The Secretarial AuditReport for the year under review given some observations.
Para wise replay of said observations are given hereunder
1. Because of huge losses suffered during last two financial years the organizationstructure is also forced to become unshaped but Management is looking for a competentperson to appoint him as Internal auditor and Company Secretary even the candidatesinterviewed for such offices have not shown their interest to join the company due to weakfinancial position of the company even after offering good remunerations.
2. The Company is in process of updating the same.
3. The Company has not received information from vendors/service providers regardingtheir status under Micro small and Medium Enterprises Development Act2006 and hencedisclosure relating to amounts unpaid as at the year end together with interest paid/payable under this act has not been given.
4. Company has taken all approvals of members of the company/Audit Committee/board ofDirectors in respect of related parties transaction made during the year.
5. The company is in process of updating the same.
6. Self - Explanatory
Pursuant to section 148 of the Companies Act 2013 and Rules made thereunder Board ofDirectors had on the recommendation of the Audit Committee appointed M/s Meenu &Associates (firm registration number: FRN: 100729) Cost Accountants to audit the costaccounts of the Company for the financial year 2020-21 at a remuneration of 20000.00 plusservice tax out-of pocket and travel and living expenses subject to ratification by theshareholders at annual general meeting.
Accordingly a resolution seeking members' ratification for the remuneration payable tocost auditor is included in the Notice convening the annual general meeting.
The Industrial relations remained cordial through out the year and have resulted insustained growth of the company.
The Directors wish to extend their sincere thanks to the Punjab & Sind Bank PunjabState Power Corporation Limited Container Corporation of India other State & CentralGovernment Agencies Suppliers and Customers for their continued support and cooperation.
The Directors also wish to place on record their deep appreciation for the servicesrendered by the workers & staff at all levels.