The Members of Garg Furnace Limited
The Directors of your company have pleasure in presenting the 45th Annual Report on theaffair of the company together with the Audited Accounts for the year ending 31st March2018.
(Rupees in Lacs)
| ||2017-18 ||2016-17 |
|Operating Income ||6721.21 ||5961.00 |
|Profit before depreciation Interest & tax ||60.73 ||(1104.63) |
|Interest & Financial Expenses ||67.96 ||105.80 |
|Profit before depreciation & tax ||(7.23) ||(1210.43) |
|Depreciation ||131.09 ||135.91 |
|Profit before tax ||(138.32) ||(1346.34) |
|Provision for tax -Current Tax ||0.00 ||0.00 |
|-Deferred Tax Asset ||126.75 ||0.00 |
|Less : Mat Credit Entitlement ||0.00 ||0.00 |
|Profit after Tax ||(11.57) ||(1346.34) |
|Prior year Tax adjustments / Depreciation to Reverse as per Schedule - 11 || || |
|Balance brought forward ||(2450.93) ||(1095.78) |
|APPROPRIATIONS || || |
|Transfer to General Reserve ||0 ||0 |
|Balance carried over to Balance Sheet ||(11.57) ||(1355.14) |
The Board of Directors do not recommend payment of dividend for the year under review.
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. OPERATIONS
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 5 meetings of the Board held during the year 30/05/2017 14/08/201701/09/2017 15/11/2017 and
15/02/2018; detailed information is given in the Corporate Governance Report annexedhereto 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;
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 provisionsof all 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 2016-17 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 2013 read with Rule 5of Companies (Accounts) Rules 2014 is annexed and forms part of this report.
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 KEYMANAGERIAL PERSONNEL
a. In light of the provisions of the Companies Act 2013 Sh. Devinder Garg executivedirector of the Company retires from the Board by rotation this year and being eligibleoffers himself for re-appointment. The information as required to be disclosed a perregulation as applicable of SEBI (LO&DR) Regulations 2016 in case of re-appointment ofthe director is provided in the Notice of the ensuing annual general meeting. SIGNIFICANTAND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS During the year under review therewere no significant and material orders passed by the regulators or courts or tribunalswhich may impact the going concern status of the Company and its operations in futurehowever the accounts of the company were declared by the banks as Non-Performing Assets(NPA) and thereafter the bank has taken symbolic possession of assets of the company u/s13(4) of THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OFSECURITY INTEREST ACT 2002 in 2017 the action of the bank has been challenged by thecompany before the Concerned Debt Recovery Tribunal (DRT). Further the management wasunder negotiation with the bank for one time settlement (OTS) of account. The bank hasapproved the One Time Settlement (OTS) proposal of the company vide its letter dated13/08/2018 which has taken on record by board of directions in its meeting held on14/08/2018 and authorised Managing Director to negotiate further and give acceptance ofsaid OTS proposal on behalf of company. The company has accepted the said OTS proposal andFirst Instalment in this regard has been deposited with Bank.
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 2018 have beendisclosed as per Schedule III to the Companies Act 2013. The same are placed on theCompany's website.
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 2017-18 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 the said Policy.
The company has put in place a system of Corporate Governance. A Separate report onCorporate Governance forming part of the Annual Report is annexed hereto. A Certificatefrom the Auditors of the company regarding compliance of conditions of CorporateGover-nance as stipulated under The Corporate Governance clause of the Listing Agreementis annexed to the report on Corporate Governance.
Particulars of Employees
Information as per Section 197 of the Companies Act 2013 (the 'Act') read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part ofthis Report is NIL .However salary being paid to whole time directors is mentioned inCorporate Governance Report.
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 manner in which the evaluation was carried out has beenexplained in the Corporate Governance Report.
The Board of Directors of your Company has on recommendation of the Risk ManagementCommittee framed and adopted a policy on Risk Management of the Company. The broad termsof reference of the Committee are stated in the Corporate Governance Report.
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.
Pursuant to the provisions of section 139 of the Companies Act 2013 and the Rules madethereunder the current auditors of the Company M/s R.K. Chadha & Company. CharteredAccountants Ludhiana (ICAI Registration No. 003513N) was appointed by the shareholders atthe 45th Annual General Meeting until the conclusion of the 49th Annual General Meetingsubject to ratification by shareholders at each annual general meeting.
The members are requested to ratify the appointment of M/s R.K. Chadha & Company.Chartered Accountants Ludhiana (ICAI Registration No. 003513N) as statutory auditors ofthe Company and to fix their remuneration for the year 2018-19.
Reply to remarks in Statutory Audit Report
The does not contain any qualification reservation or adverse or disclaimer made bystatutory auditor except as mentioned in Para Emphasis of Matter
(a) Interested not provided for on borrowings and has not paid to the bank due to theoperational losses suffered by the company because that operating assets are notgenerating revenue on account of various factor beyond the control of company such asslump in steel industry and delayed payment from customers is posting challenges to meetthe cash flow needs. The Company is taking adequate steps to resolve the liquidity issues.Further the sale of the company significantly reduced due to slump & cut throatcompetition with china market etc. As in last quarter of Financial Year bank has declaredthe account of company as Non Performing asset (NPA). The bank has approved the One TimeSettlement (OTS) proposal of the company vide its letter dated 13/08/2018 which hastaken on record by board of directions in its meeting held on 14/08/2018 and authorisedManaging Director to negotiate further and give acceptance of said OTS proposal on behalfof company. The company has accepted the said OTS proposal and First Instalment in thisregard has been deposited with Bank.
(b) Remark is self explanatory.
(c) Remark is self explanatory.
(d) Explained in related note.
(e) Management is in process to confirm/reconcile balances with the concerned parties.
(f) Explained in related para.
Basis for Qualified Opinion
(I) Because of huge losses suffered during last two financial years as explained abovein Para(a) the organization structure is also forced to become unshaped but Managementis looking for a competent person to appoint him as Company Secretary and Key ManagerialPersonal of the Company
(ii) Provision in respect of impairment /loss on assets is not require as managementhas view that due to slump & cut throat competition in iron industries / market istemporally and hope will recover soon.
Pursuant to the provisions of section 204 of the Companies Act 2013 and Rules madethereunder the Company has appointed Baldev Arora & Associates (membership number:4283) Company Secretaries in Practice to undertake the secretarial audit of the Company.Secretarial Audit Report for the year 2017-18 given by Baldev Arora
& Associates in the prescribed form MR-3 is annexed to this Report. The SecretarialAudit Report for the year under review does not contain any qualification reservation oradverse remark or disclaimer made by the secretarial auditor except some observations.
Para wise replay of said observation are given hereunder
(a) Because of huge losses suffered during last two financial years as explained abovein Para(a) the organization structure is also forced to become unshaped but Managementis looking for a competent person to appoint him as Company Secretary and Key ManagerialPersonal of the Company.
(b) Company has an active website which is being modified as per the requirement ofLaw.
(c) Company has taken all approvals of members of the company/Audit Committee/board ofDirectors in respect of related parties transaction made during the year.
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 2018-19 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 to cost auditor is included in the Noticeconvening 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 & CentralGovern-ment Agencies Suppliers and Customers for their continued support andco-operation.
The Directors also wish to place on record their deep appreciation for the servicesrendered by the workers & staff at all levels.
For and on behalf of the Board
Place: LUDHIANA Chairman
DIN : 01665456