We hereby present the Annual Report together with the Audited Accounts of our businessand operations for the financial year ended 31st March 2018.
(Rs. in Lakhs)
|Particulars ||For the year ended 31st March 2018 ||For the year ended 31st March 2017 |
|Gross sales (including excise duty) ||195512 ||205330 |
|Profit before interest depreciation and tax ||11827 ||19116 |
|Interest and finance charges ||25185 ||23800 |
|Profit/Loss before depreciation and tax ||(13358) ||(4684) |
|Depreciation ||16093 ||17487 |
|Exceptional Profit ||- ||9459 |
|Profit/Loss before tax & after exceptional profit ||(29451) ||(12712) |
|Profit/Loss for the year (Before Other Comprehensive Income) ||(29451) ||(12712) |
|Balance brought forward from previous year ||(47603) ||(34890) |
|Amount available for appropriation ||(77054) ||(476 0 3) |
|Balance carried forward to the next year ||(77054) ||(47603) |
RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS
During the financial year at standalone level your Company reported total income ofRs.198935 Lakhs in 2017-18 compared to Rs.207128 Lakhs in 2016-17. Your Companyrecorded an EBITDA of Rs.11827 Lakhs and a net loss of Rs.29451 Lakhs during the yearunder review. During the year direct export turnover was Rs.11065 Lakhs compared toRs.12006 Lakhs during the preceeding year.
The financial position of the Company continues to be under severe stress. Thesituation further deteriorates due to increase in Power & Fuel and Raw Material costs.Due to paucity of funds your company could not be able to do any maintenance capex andalso fails to meet its debt obligation. Your company is in discussion with the Lenders andis working on various resolution plan and hope to find out a solution acceptable to allstakeholders.
DIVIDEND & RESERVE
Your Directors do not recommend any dividend for the year ended 2017-18. Furtherduring the year under review no amount was transferred to General Reserve.
ISSUE OF SHARES
During the year under review the Company pursuant to Special Resolution approved bythe Shareholders at the Annual General Meeting held on 18th September 2017 had issued2215000 Equity Shares of Rs.2 each at an issue price of Rs.207 per equity shareaggregating to Rs.458505000 to persons falling under promoter group on preferentialallotment basis.
Pursuant to the Regulation 78 of the Securities and Exchange Board of India (Issue ofCapital and Disclosure Requirements) Regulations 2009 Equity Shares allotted to Promoterswill be locked in for a period of three years.
As on 31st March 2018 your Company does not have any subsidiary company.
The Company has joint venture agreement with Trakya Cam Sanayi II AS in HNG Float GlassLimited.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated audited financial statements and the relatedinformation of the Company are available on the website of the company i.e. www.hngil.com.These documents are also available for inspection during business hours by theshareholders of the Company at the Registered Office.
Pursuant to the amalgamation of Ace Glass Containers Limited with the Company2141448* shares and 1368872* shares having face value of Rs.10 each (corresponding to10707240 shares and 6844360 shares having face value of Rs.2 each) were issued to HNGTrust and Ace Trust respectively.
During the year under review the company failed to repay Principal and Interest amountdue to L & T Finance Ltd and subsequently 3794360 shares of Ace Trust and 155640shares of HNG Trust shares respectively pledged in favour of L & T Finance Ltd wereinvoked by them. At present HNG Trust & Ace Trust are holding 7641600 &3050000 shares respectively. In terms of an undertaking given to the BSE Limited theCompany is required to make disclosures pertaining to utilisation of proceeds of sharesallotted to the said Trusts until they are extinguished. Entire Shareholding of Ace Trustand 7506850 Shares of HNG Trust has been pledged in compliance of Corrective Action Plan(CAP) approved by the Joint Lender Forum.
*The Company's shares were sub-divided from Rs.10 per share to Rs.2 per share w.e.f.13th November 2009.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Pursuant to the sad demise of Shri Chandra Kumar Somany the Board of Directors of theCompany in its meeting held on 12th August 2017 appointed Shri Sanjay Somany as theChairman of the Board of Directors.
During the year under review Shri Sanjay Somany was re-appointed as the Chairman &Managing Director of the Board of Directors of the Company and Shri Mukul Somany wasre-appointed as the Vice Chairman & Managing Director of the Company on a honararybasis for a period of 3 years w.e.f. 1st April 2018.
In accordance with the provisions of Section 152 of the Companies Act 2013 ShriSanjay Somany (DIN: 00124538) Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible have offered himself for re-appointment. YourDirector recommends his re-appointment.
Shri Narayanaswami Sitaraman an Independent Director left for heavenly abode on 24thApril 2018.The Board places on record its sincere appreciation for the guidance andvaluable services rendered by him during his association with the Company.
Shri Ratna Kumar Daga (DIN: 0 0 2 27746) Shri Dipankar Chatterji (DIN: 00031256)& Smt. Rita Bhimani (DIN: 07106069) are the Independent Directors of the Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as prescribed under Section 149(6)of the Companies Act 2013. Role responsibilities and duties of Independent Director arebeing uploaded in the Company's website at the linkhttp://www.hngil.com/report/TermsofAppointmentofIndependent Director.pdf.
Pursuant to the applicable provisions of the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a structured questionnaire wasprepared after taking into consideration the various aspects of the Board's functioningcomposition of the Board its Committees culture execution and performance of specificduties obligations and governance. The Company has devised a Policy for performanceevaluation of Independent Directors and Board which include criteria for performanceevaluation of the non-executive directors and executive directors.
The performance evaluation of the Independent Directors Chairman and the NonIndependent Directors was carried out. The Board of Directors expressed their satisfactionwith the evaluation process.
The following policies of the Company are attached herewith and marked as "AnnexureI" :
A. Nomination & Remuneration Policy
B. Board Evaluation Policy.
The details of Key Managerial Personnel of the Company are as follows:-
|Sl No. ||Name of Key Managerial Personnel ||Designation |
|1 ||Shri Sanjay Somany ||Chairman & Managing Director |
|2 ||Shri Mukul Somany ||Vice Chairman & Managing Director |
|3 ||Shri Bimal Kumar Garodia ||Chief Financial Officer |
|4 ||Shri Ajay Kumar Rai ||Company Secretary |
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Directors hereby confirm that -
a) In the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards had been followed along with proper explanation relatingto material departures.
b) The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2018 and of the loss ofthe Company for the year ended on that date.
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
d) The Directors have prepared the annual accounts on a 'going concern basis'.
e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to Rule 3 of the Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company onthe Ministry of Corporate Affairs website.
Equity shares in respect of which the dividend for the year 2008-2009 and 2009-2010remained unclaimed for seven consecutive years has been transferred to the IEPF Authorityin compliance with Section 124 of the Companies Act 2013 read with rule 6 of the InvestorEducation and Protection Fund (Accounting Audit Transfer and Refund) Rules 2017 aftergiving individual notices to concerned Shareholders and advertisements in newspapers.
The Company has been practising the principles of good corporate governance with a viewto achieve transparent accountable and fair management. The report on CorporateGovernance along with the Certificate of the Auditors M/s M. Rathi & Co. confirmingthe compliance of Corporate Governance as stipulated in Regulation 34(3) read withSchedule V of the SEBI (Listing Obligations & Disclosures Requirement) Regulations2015 forms an integral part of the Annual Report.
Our Corporate governance report for the financial year 2018 forms part of this AnnualReport.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
The contracts/arrangements/transactions entered by the Company during the financialyear with the related parties were in the ordinary course of business and on an arm'slength basis. All the related party transactions are with the approval of the AuditCommittee and are periodically placed before the Board for review. During the year underreview the Company has not entered into any contract/arrangement/transactions with relatedparties which could be considered material in accordance with the policy of the Company onmateriality of related party transactions.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://www.hngil.com/report/policyonrelatedpartytransactions.pdf.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has been formulated and comprises of ShriSanjay Somany Shri Mukul Somany and Smt. Rita Bhimani as members. Since the Company hassuffered losses in the previous financial years as well as in the current financial yearno expenditure was incurred on CSR activities.
The CSR Policy may be accessed on the Company's website at the linkhttp://www.hngil.com/report/corporatesocialresponsibility policy.pdf.
During the year under review due to liquidity crunch your Company has failed to complywith all the terms and conditions stipulated in the Corrective Action Plan (CAP) and couldnot be able to meet the debt obligation. The Company has been categorised as NonPerforming Asset (NPA) w.e.f. 31st March 2018.
The Company is in discussion with the lenders and your Directors are confident that aResolution Plan will be derived which will be acceptable by all the stakeholders.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis under Schedule V read along with the Regulation34(3) of the SEBI (Listing Obligations & Disclosures Requirement) Regulations ispresented in a separate section forming part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements have been prepared in accordance with the provisionsof the Companies Act 2013 and with Indian Accounting Standard 110 read with IndianAccounting Standard 28 notified by the Ministry of Corporate Affairs and forms part ofthis Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 a statement containing salient features of the FinancialStatements of Subsidiaries/ Associate Companies/Joint Ventures is given in Form AOC-1.
Risk management is embedded in your Company's operating framework. The Company managesand monitors various risks and uncertainties that can have some adverse impact on theCompany's business. Your company believes that managing risks helps in maximising returns.Your Company is giving major thrust in developing and strengthening its internal audit sothat risk threat can be mitigated. The Company's approach to addressing business risks iscomprehensive and includes periodic review of such risks and a framework for mitigatingcontrols and reporting mechanism of such risks.
The Company has a formal Risk Management Policy. The Board of Directors from time totime review the same.
INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY
Your Company has a comprehensive and effective internal control and risk-mitigationsystem including internal financial control for all the major processes to ensurereliability of financial reporting timely feedback on operational and strategic goalscompliance with policies procedures law and regulations safeguarding of assets andeconomical and efficient use of resources. The Company's internal control system iscommensurate with its size scale and complexities of its operations. The main thrust ofinternal audit is to test and review controls appraisal of risks and business processesbesides benchmarking controls with best practices in the industry.
The Audit Committee of the Board of Directors of the Company actively reviews theadequacy and effectiveness of the Internal Control Systems and suggests improvements tothem. The Company has a robust Management Information System (MIS) which is an integralpart of the control mechanism.
AUDITORS AND AUDITORS' REPORT Statutory Auditors
The Shareholders of the Company at the Annual General Meeting (AGM) held on 18thSeptember 2017 appointed M/s Doshi Chatterjee Bagri & Co LLP Chartered Accountants(Firm Registration Number 325197E/E300020) as Statutory Auditor of the Company from theconclusion of 71st AGM till the conclusion of 76th AGM of the Company subject toratification by members at every AGM.
Pursuant to the amendment in the Companies Act 2017 and notification dated 7thMay2018 by the Ministry of Corporate Affairs (MCA) ratification of the Statutory Auditoris no longer required to be passed by shareholders at the ensuing AGM and thereforeapproval of the shareholders for the same is not sought.
Pursuant to the provisions of Section 139 142 and other applicable provisions if anyof the Companies Act 2013 M/s. Jitendra K. Agarwal & Associates CharteredAccountants (Firm Registration No.318086E) is appointed as the Joint Statutory Auditor ofthe Company to hold office from the conclusion of this 72nd Annual General Meeting untilthe conclusion of the 77th Annual General Meeting along with the existing StatutoryAuditors M/s. Doshi Chatterjee Bagri & Co LLP Chartered Accountants. The StatutoryAuditors have not reported any incidence of fraud to the Audit Committee of the Companyduring the year under review.
The para-wise management response to the qualifications/observations made in theIndependent Auditors Report is stated as under:
a) Attention is drawn to para 9 a of the Independent Auditors Report regarding Basisfor Qualified Opinion. The clarification of the same is provided in Note No. 2.38.1 of theAccounts of the Standalone Accounts.
b) Attention is drawn to para 9 b of the Independent Auditors Report regarding Basisfor Qualified Opinion. The clarification of the same is provided in Note No. 2.43 of theAccounts of the Standalone Accounts.
c) Attention is drawn to para 9 c of the Independent Auditors Report regarding Basisfor Qualified Opinion. The clarification of the same is provid ed in Note No. 2.40 of theAccounts of the Standalone Accounts.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethereunder the Company has appointed Shri Babu Lal Patni Practising Company Secretary toconduct the Secretarial Audit for the financial year 2017-18. The Secretarial Audit forthe financial year ended 31st March 2018 does not contain any qualification reservationor adverse remark and is annexed herewith and marked as "Annexure II" tothis report.
DISCLOSURES Audit Committee
The Audit Committee comprises of two Independent Directors namely Shri Ratna Kumar Daga(Chairman) Shri Dipankar Chatterji and Shri Mukul Somany Non-Independent Director asmembers. All the recommendations made by the Audit Committee were accepted by the Boardduring the financial year 2017-18.
Presently the composition of the Audit Committee is as follows:
|Sl. No ||Name ||Designation |
|1 ||Shri Ratna Kumar Daga ||Chairman |
|2 ||Shri Dipankar Chatterji ||Member |
|3 ||Shri Narayanaswami Sitaraman (upto 24th April 2018) ||Member |
|4 ||Shri Mukul Somany (w.e.f 4th May2018) ||Member |
Vigil Mechanism/Whistle Blower Policy
The Company has a Vigil Mechanism which also incorporates a Whistle Blower Policy forDirectors and Employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct. Disclosures can be made bya Whistle Blower through an email to the Chairman of the Audit Committee.
The Policy may be accessed on the Company's website at the link http://www.hngil.com/report/whistleblowerpolicy.pdf
Meetings of the Board
During the year under review 5(five) meetings of the Board of Directors were held. Themaximum interval between any two meetings did not exceed 120 days as prescribed in theCompanies Act 2013. Details of compositions and other information are provided in theCorporate Governance Report.
Extract of Annual Return
Extract of Annual Report in Form MGT-9 is provided separately as "AnnexureIII" and forms the part of Board's Report.
Particulars of Loans Guarantees or Investment made guarantee given and securitiesprovided
Particulars of Loans given Investments made Guarantee given and securities providedalong with the purpose for which the Loan or Guarantee or Security is proposed to beutilized by the recipient are provided in the Standalone Financial Statements.
Change in nature of business
During the year under review there has been no change in the nature of business of theCompany.
Remuneration from subsidiary
None of the Executive Directors of the Company has received any remuneration orcommission from its subsidiary.
Significant or Material order
No significant or material order was passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
Material changes and commitments
Due to severe liquidity crunch the Company is not able to meet its debt obligation.
During the year under review no case was reported pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013
Business Responsibility Reporting
The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI(Listing Obligations & Disclosure Requirement) Regulations 2015 is not applicable toyour company for the financial year ending 31st March 2018.
ANNUAL LISTING FEES
The Company's shares continue to be listed at the National Stock Exchange of IndiaLimited BSE Limited and The Calcutta Stock Exchange Limited.
The annual listing fee for the year 2018-19 has been paid to all these Exchanges.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of Section 197(12) of the Act read with Rule 5(1) (2) & (3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014 a Statementshowing the names and other particulars of the employees drawing remuneration in excess ofthe limits set-out and other details as required in the said rule are provided as "AnnexureIV".
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The statements containing the required particulars under the Act are provided as "AnnexureV" and forms a part of this report.
PERSONNEL AND INDUSTRIAL RELATIONS
Your Company takes pride in the commitment competence and dedication shown by itsemployees in all the areas of business. People are the Company's key assets. The focus in2017-18 was on enhancing employee engagement and driving performance excellence to achievethe Company's long term vision. Your Company is consolidating the human resourceoperations and the internal systems to enhance the operations of the Company. The Companycontinued to actively drive the Ethics and Compliance agenda via trainings programmes andemployee engagements focussing on non-retaliation and zero tolerance to non-compliance. HRfunction is a critical pillar to support the organization's growth and its sustainabilityin the long run.
Your Directors would like to place on record their appreciation to the employees at alllevels for their contribution to the Company's performance but for whose hard work andsupport your Company's achievements would not have been possible. Your Directors alsowish to thank its customers dealers agents suppliers investors and bankers for theircontinued support and faith reposed in the Company.
| ||For and on behalf of the Board |
| ||Sanjay Somany |
|Place : Kolkata ||Chairman & Managing Director |
|Date : 28th June 2018 ||(DIN: 00124538) |