Your Directors have great pleasure in presenting the 59th Annual Report together withthe Audited Annual Accounts of the Company for the financial year ending 31st March 2017.
The performance of the Company for the financial year ended 31st March 2017 issummarized below:
| ||(Rupees in Lacs) |
| ||2016-2017 ||2015-2016 |
|Profit before Interest Depreciation & Tax ||2739.80 ||3619.85 |
|Less: || || |
|Financial Costs ||896.47 ||948.26 |
|Depreciation and Amortization expense ||796.33 ||785.56 |
|Provision for Tax ||328.50 ||427.50 |
|Deferred Tax ||6.00 ||56.27 |
|Profit after Tax ||712.50 ||1402.26 |
|Add: Balance brought forward ||7214.34 ||6037.24 |
|Balance available for appropriation ||7926.84 ||7439.50 |
|Less: Appropriations: || || |
|Dividend (Incl. Div. Tax) ||125.17 ||125.17 |
|Transfer to General Reserve ||100.00 ||100.00 |
|Balance carried forward ||7701.67 ||7214.33 |
Your Directors are pleased to recommend a dividend @ Rs. 1.00 per Equity Share (10%) onthe paid up capital of the Company for the year 2016-17 which if approved at theforthcoming AGM will be paid to all those Equity Shareholders whose names appear (i) AsBeneficial Owners as at the end of the business hours on 20th September 2017 as per thelist to be furnished by the depository in respect of the shares held in electronic formand (ii) As member in the Register of Members of the Company after giving effect to allvalid shares transfers in physical form lodged with the Company on or before 20thSeptember 2017. Your Directors also proposed to carry Rs. 1 crores to its GeneralReserve.
Your Company could achieve turnover of Rs.26735.38 lacs as against the previous year'sturnover of Rs. 29795.00 lacs i.e. Decrease of Rs. 3059.62 lacs (10.27%). The export saleof the Company has been decreased from Rs. 7273.93 lacs in previous year to Rs. 5297.81lacs in current year i.e. Decrease of Rs. 1976.12 lacs (27.17%).
Your Company has achieved PAT of Rs. 712.50 lacs as against the previous year of Rs.1402.26 lacs i.e. Decrease of Rs. 689.76 lacs (49.19%).
Previous year figure of PAT includes Rs. 917.30 Lacs as Income from Exceptional Items.
In terms of the provisions of Section 152 of the Companies Act 2013 and Articles ofAssociation of the Company Mr. P.P. Singh retires at the ensuing Annual General Meetingand being eligible has offered himself for re-appointment.
The Board of Directors of the Company has a healthy blend of executive and nonexecutive Directors which ensures the desired level of independence in functioning anddecision making.
All the non executive Directors are eminent professional and bring in wealth ofexpertise and experience for directing the management of the Company.
All the Independent Directors hold office for a fixed term of five years and are notliable to retire by rotation. In accordance with Section 149(7) of the Companies Act2013 each Independent Director has given a written declaration to the Company that he/shemeets the criteria of Independence as mentioned under Section 149(6) of the Companies Act2013 and SEBI Regulations.
Key Managerial Personnel
The following persons have been designated as Key Managerial Personnel (KMP) of theCompany pursuant to Section 2(51) and Section 203 of the Act read with the Rules framedthere under.
1. Mr. Vijay Kumar Bhatia Chairman
2. Mr. Sanjay Bhatia Managing Director
3. Mr. Ashok Kumar Bhatia Whole-Time Director
4. Mr. P.P. Singh Whole-Time Director
5. Mr. Rajat Pathak Company Secretary
6. Mr. M.K. Mittal Chief Financial Officer
None of the Key Managerial Personnel have resigned during the year under review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 (3) (c) of the Companies Act 2013 withrespect to directors' responsibility statement it is hereby confirmed that: -
(a) In the preparation of the Annual Accounts the applicable accounting standards havebeen followed alongwith proper explanation relating to material departures if any.
(b) The Directors have 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 as at 31st March 2017 and of the profitof the Company for that period.
(c) We had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
(d) We had prepared the Annual Accounts on a going concern basis.
(e) We had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively. and
(f) We had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A report in the form of Management Discussion and Analysis as per Part B of Schedule Vof Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations 2015) as a part of this report is annexed hereto as Annexure -I.
The Company has in place a Risk Management Policy which was reviewed by the AuditCommittee and approved by the Board of Directors of the Company. The Policy provides for arobust risk management framework to identify and assess risks such as operationalstrategic financial security property regulatory reputational and other risks and putin place an adequate risk management infrastructure capable of addressing these risks. TheAudit Committee of the Company also evaluates Internal financial controls and riskmanagement systems.
LOANS AND INVESTMENTS BY THE COMPANY
Details of loans and investments if any made by the Company are given in notes to thefinancial statements.
During the year under review the company has not accepted any deposit under Section 76of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014.
A report on Corporate Governance along with a certificate from the Statutory Auditorsof the Company detailing the compliance of Corporate Governance norms as enumerated inPart C of Schedule V of Regulation 34(3) of Listing Regulations 2015 with the StockExchanges is annexed as Annexure - II.
CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGERIAL PERSONNEL
The Company has laid down a code of conduct for the Board Members and Senior ManagerialPersonnel of the Company. All Board Members and Senior Managerial Personnel have affirmedcompliance with the Code of Conduct for the year 2016-2017. A declaration signed by Mr.Sanjay Bhatia Managing Director as to the compliance of the Code of Conduct by the BoardMembers and Senior Managerial personnel has been placed before the Board at its meetingheld on 11 August 2017 is enclosed as Annexure-III.
The Company has in place a whistle blower policy to support the Code of BusinessEthics. This policy documents the Company's commitment to maintain an open workenvironment in which employees consultants and contractors are able to report instancesof unethical or undesirable conduct actual or suspected fraud or any violation ofCompany's Code of Business Ethics at a significantly senior level without any fear ofrejection. Individuals can raise their concerns by an e-mail or telephone or directinteraction or by a letter to the Chairman of the Audit Committee of the Company. ThePolicy on vigil mechanism and whistler blower policy may be accessed on the Company'swebsite at the link: http://hindustantin.biz/Uploads/ Invester/165Invr_new-1.pdf and itduly forms a part of corporate governance.
The CEO and Chief Financial Officer (CFO) have furnished to the Board in its meetingheld on 27th May 2017 a certificate with regard to the financial statements and othermatters of the Company as on 31st March 2017 as required under Part B of Schedule II ofRegulation 17 (8) of Listing Regulations 2015.
No material penalty or stricture was imposed on the Company by any statutory authorityfor non-compliance on matter related to capital markets during the last three years.
The Company is complying with all the mandatory requirements of the Listing Regulationsof Stock Exchanges on 'Corporate Governance'.
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.
In terms of the provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 M/s. M.L. Puri & Co. CharteredAccountants (Firm Registration No. 002312N) the Auditors of your Company shall holdoffice till the conclusion of the ensuing AGM and they shall not be eligible forre-appointment due to expiry of the maximum permissible tenure as the Auditors of yourCompany. Your Board places on record its deep appreciation for the valuable contributionsof the Auditors during their long association with the Company and wishes them all thesuccess in future.
Based on the recommendation of the Audit Committee your Board at its meeting held onAugust 11 2017 appointed M/s. Mukesh Raj & Co. Chartered Accountants (FirmRegistration No. 016693N) as the Auditors of the Company in place of the retiringauditors M/s. M.L. Puri & Co. Chartered Accountants to hold office from theconclusion of the ensuing 59th AGM until conclusion of the 64th AGM of your Company to beheld in the year 2022 subject to approval of the Members of the Company at the ensuingAGM and ratification by the Members of the Company every year thereafter if required.
The Company has received a certificate from M/s. Mukesh Raj & Co. CharteredAccountants Chartered Accountants confirming their eligibility to be appointed as Auditorsof the Company in terms of the provisions of Section 141 of the Companies Act 2013 andRules framed thereunder. They have also confirmed that they hold a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI)as required under the provisions of Regulation 33 of the Listing Regulations. The proposalfor their appointment has been included in the Notice convening the 59th AGM for obtainingapproval of the Members of the Company.
The Company has appointed M/s K.S. Bhatnagar & Associates Cost Accountants forconducting cost audit of the Company for the financial year ending 31st March 2018. Forthe financial year 2015-16 the Cost Auditor has duly filed the Cost Audit Report as perdetails below:-
|Financial year ||Due date of filing ||Date of filing |
|2015-16 ||29.09.2016 ||27.09.2016 |
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Gupta Vinod & Company Practicing Company Secretaries as secretarialauditor of the Company for the financial year ended March 31 2017 to conduct theSecretarial Audit of the Company and their report is annexed herewith as Annexure - IV andthis report does not contain any qualification reservation or adverse remark.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors on recommendation of the CSR Committee already formulated theCSR policy of the Company. The CSR activities of the Company are implemented in accordancewith the core values viz. protecting stakeholder interests grow in a socially andenvironmentally responsible way and striving towards inclusive development.
The Company has identified some important areas of engagement which are as under:
Eradicating hunger poverty and malnutrition promoting preventive health careand sanitation including contribution to the swachh Bharat kosh set up by the CentralGovernment for the promotion of the sanitation and making available safe drinking water;
Promoting education including special education and employment enhancingvocational skills especially among children women elderly and the differently abled andlivelihood enhancement projects;
Promoting gender equality empowering women setting up homes and hostels forwomen and orphans setting up old age homes day care centre and such other facilities forsenior citizen and measures for reducing inequalities faced by socially and economicallybackward groups;
Ensuring environment sustainability ecological balance protection of flora andfauna animal welfare agro forestry conservation of natural resources and maintainquality of soil air and water including contribution to the clean Ganga fund set up bythe Central Government for rejuvenation of river Ganga;
Protection of national heritage art and culture including restoration ofbuildings and sites of historical importance and works of art; setting up publiclibraries; promotion and development of traditional arts and handicrafts;
Measures for the benefits of armed forces veterans war widows and theirdependents;
Training to promote rural sports nationally recognized sports Paralympicssports and Olympic sports;
Contribution to the Prime Minister's National Relief Fund or any other fund setup by the Central Government for socio-economic development and relief and welfare of theScheduled Casts the Scheduled Tribes other backward classes minorities and women;
Contributions or funds provided to technology incubators located within academicinstitutions which are approved by the Central Government;
Rural development projects.
Details of CSR expenditure is forming part of annual report and annexed as Annexure - V
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your company believes in formulating adequate and effective internal control system andimplementing the same to ensure that assets and interests of the Company are safeguardedand reliability of accounting data and accuracy are ensured with proper checks andbalances. The internal control system is improved continuously to meet the changes inbusiness conditions and statutory and accounting requirements as required from time totime.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of internal control system and suggests improvements for strengthening them.The Company has a robust Management information system which is an integral part of thecontrol mechanism.
The Audit Committee of Board of Directors Statutory Auditors and the Business Headsare periodically appraised of the internal audit findings and corrective actions taken.
In the previous year 2016-17 Company had obtained credit rating from ICRA which was"A-" for long term and "A2+" for short term. The credit rating for2017-18 is under review.
The rating derives strength from the Company's significant presence in India's CanManufacturing sector technologically advanced operations proven management capability.
Disclosure pursuant to Section 197(12) of Companies Act 2013 and Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided below: (i)The ratio of the remuneration of each Director to the median remuneration of the employeesof the Company for the year 2016-17:
|Directors ||Nature of Directorship ||Ratio |
|Mr. Vijay Kumar Bhatia ||Whole Time Director ||18.7:1 |
|Mr. Sanjay Bhatia ||Managing Director ||63.1:1 |
|Mr. Ashok Kumar Bhatia ||Whole Time Director ||25.2:1 |
|Mr. Ramesh Kumar Jain ||Non-executive Independent Director ||0.6:1 |
|Mr. Bihari Lal Khurana ||Non-executive Independent Director ||0.7:1 |
|Mr. M. K. Zutshi ||Non-executive Independent Director ||0.3:1 |
|Mr. Nand Prakash Sahni ||Non-executive Independent Director ||0.6:1 |
|Mrs. Aarti Sawhney ||Non-executive Independent Director ||0.3:1 |
|Mr. Prit Pal Singh ||Whole Time Director ||8.2:1 |
*computed based on annualized remuneration.
(ii) the percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary in the financial year: The annual increase inthe salary of Managing Director Whole Time Director Company Secretary and CFO is asbelow:
|Name ||Designation ||Annual Increase ||Percentage |
|Mr. Sanjay Bhatia ||Managing Director ||From Rs. 6546726/- to Rs. 9409170/- ||43.7% |
|Mr. Vijay Kumar Bhatia ||Whole Time Director ||Rs. 2782080/- No increase ||0% |
|Mr. Ashok Kumar Bhatia ||Whole Time Director ||From Rs. 3242080/- to Rs. 3763200/- ||16.1% |
|Mr. P.P. Singh ||Whole Time Director ||From Rs. 1154400/-to Rs. 1227984/- ||6.4% |
|Mr. Rajat Pathak ||VP (Finance) & Company Secretary ||From Rs. 2200080/- to Rs. 2367954/- ||7.6% |
|Mr. M. K. Mittal ||AVP (Accounts) & CFO ||From Rs. 1443240/- to Rs. 1567539/- ||8.6% |
(iii) the percentage increase in the median remuneration of employees in the financialyear: 4.47 %
(iv) the number of permanent employees on the rolls of Company: 465 (Four hundred andSixty Five) as on 31 March 2017.
(v) average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average increase in the remuneration* of employees was 4.47% other than themanagerial personnel in the last financial year whereas the average increase in theremuneration of managerial personnel was 8.65% thus there was not any exceptionalcircumstances for increase in the managerial remuneration.
*It does not include incentive bonus leave encashment gratuity ex gratia beingonetime payment/ based on net profit/production performance/payments to LIC of India.
(vi) Affirmation that the remuneration is as per the Remuneration Policy of theCompany: The remuneration is as per the Remuneration Policy of the Company.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
Adhering to the provisions of Companies Act 2013 relevant amounts which remainedunpaid or unclaimed for periods of 7 years have been transferred by the Company from timeto time on or before due date to the Investor Education and Protection Fund.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION AND REDRESSAL)ACT 2013
The Company has been employing women employees in various cadres within its premises.The Company has in place a policy against Sexual Harassment in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. There was no complaint received from any employee during the financial year2016-17 and hence no complaint is outstanding as on 31st March 2017.
Particulars of employees as required under the provisions of Rule 5(2) & (3) of theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014 is notprovided as there are no employees covered under it.
PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY TECHNOLOGY AND FOREIGN EXCHANGEEARNINGS AND OUTGO.
The information in accordance with the provisions of Clause (m) of Sub-Section (3) ofSection 134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 areforming part of the Directors' Report for the year ended 31st March 2017 is given inAnnexure - VI.
RELATED PARTY TRANSACTIONS
All related party transactions entered into by the Company during the year were on anarm's length basis and were in the ordinary course of business. There are no materiallysignificant Related Party Transactions made by the Company with promoters directors keymanagerial personnel or other designated persons which may have potential conflict withthe interest of the Company at large .
All related party transactions that were entered into during the financial year were onan arm's length basis. Details of such transactions are given in the Annexure - VII tothis report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith in Annexure -VIII.
The District Collector Solan issued a Show Cause Notice to the Company under Section118 of the H.P. Tenancy and Land Reforms Act. It was alleged that the Company has violatedthe terms and conditions of the Section 118 of the H.P. Tenancy and Land Reforms Act. TheCollector held that the Company has violated the provisions of Section 118 of the H.P.Tenancy and Land Reforms Act therefore ordered the vestment of the property in favour ofthe State of H.P. Being aggrieved the Company has filed the appeal with DivisionalCommissioner Shimla and next date of hearing is in September 2017 for final arguments.
The Board wishes to place on record with deep sense of satisfaction their appreciationfor the high degree of professionalism commitment and dedication displayed by employeesat all levels and the guidance co-operation and assistance extended to the Company by itsBankers Shareholders Customers and Suppliers.
| ||For & on behalf of the Board |
|Place : New Delhi ||(SANJAY BHATIA) |
|Date : 11th August 2017 ||Chairman |