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Hindusthan Udyog Ltd.

BSE: 513039 Sector: Engineering
NSE: N.A. ISIN Code: INE582K01018
BSE 05:30 | 01 Jan Hindusthan Udyog Ltd
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Hindusthan Udyog Ltd. (HINDUDYOG) - Director Report

Company director report

TO THE MEMBERS OF HINDUSTHAN UDYOG LIMITED

Your Directors have pleasure in presenting their 71st Annual Report together with theAudited Accounts of the Company for the financial year ended 31st March 2018.

COMPANY PERFORMANCE: 2017-2018 2316-2017
FINANCIAL RESULTS IN LAKHS IN LAKHS
Total Revenue 301178 286253
EBITDA 37428 188.48
Less: Finance Costs 146.84 149.22
Depredation 123.73 129.73
Profit before Tax (PBT) 108.71 (90147)
Less: Tax Expense - -
Profit after Tax (PAT) 103.71 (90L47)

The Total Revenue of the Company increased by 5% from Rs. 2862.53 Lakhs to Rs.3011.78 during the year under review. Further there was an improvement in the EBITDAMargins of the Company which increased to 14% during the year compared to 7% in itspreceding year. Your Company has closed the year with a Profit after tax of Rs. 103.71Lakhs compared to a Loss of Rs. 90.47 Lakhs in the preceding year.

Your Company is continuously monitoring its operations to keep a check on its operatingcosts in order to improve and maintain its operating profits.

The Durgapur Unit continued to remain closed during the year.

DIVIDEND

In view of the brought forward unabsorbed accumulated losses the Directors expresstheir inability to recommend any dividend for the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review is appended below:-

A. BUSINESS

The Company is engaged in the manufacturing of Alloy and Stainless Steel Castings withstringent quality requirements required in Turbines Metal Shredding Earth Moving andMining Equipment Power Plants Pumps Valves Compressors and other Heavy EngineeringIndustries. The Company has manufacturing units located in Kolkata and Nagpur.

B. REVIEW OF OPERATIONS & FUTURE PROSPECTS

The key operational highlights at both the Units have been:-

• Development of Pump Casings in Super Duplex Stainless Steel grade.

• Impellers Bowl and bell in CD4MCuN Grade developed.

• Development of 9.5 M/T single piece Discharge Bowl in Grey Cast Iron.

• Operation of new VTL Machine.

• Increase in Line molding capacities by modification of existing line.

• Successful development of Creep Steel Castings.

• Development of Duplex Stainless Steel Grade 5A Castings.

• Removal of Low Alloy and plain Carbon Steel Items so as to concentrate on makingof only High Alloy Steel Castings (H.A.S.} with good margins.

C. OPPORTUNITIES ANDTHREATS RISKS AND CONCERNS

Opportunities for these Industries exist (a) in the development and supply of highcontribution items and (b) catering to the requirements of export markets.

The risks and areas of concern for your Company are:-

(i) Demand for Company's products in few critical segments only.

(ii) Stagnancy in the Market Demand due to General Economic conditions.

(iii) Heavy Dependence on Few Customers in the Export Market.

(iv) Currency Fluctuations in adverse direction.

(v) Fluctuations in raw material prices that can affect orders with no price variationclause.

(vi) Pressure on Pricing*

D. INTERNAL CONTROL SYSTEM

The Company has internal control procedures commensurate with the nature of itsbusiness and size of its operations. The objective of these procedures are to ensureefficient use and protection of the Company's resources accuracy in financial reports anddue compliance of statutes and Company policies and procedures.

The Internal Audit function is conducted by a Senior Management Team of the Company.The reports of such audit the progress in implementation of recommendations contained insuch reports and the adequacy of internal control systems are reviewed by the AuditCommittee of the Board in its periodical meetings.

E. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Industrial Relations were cordial during the year under review. At all levelsemployees of the Company are fully committed to the growth of the Company and there was noindustrial relation related problem during the year.

CORPORATE GOVERNANCE

The principles of good Corporate Governance through professionalism accountabilitytransparency trusteeship and control have always been followed by your Company and it hascomplied with all the applicable provisions of Corporate Governance as per the ListingRegulations. A separate Report on Corporate Governance forms part of the Annual Report2017-18 along with the Auditors' Certificate on its compliance in Annexure B.

DIRECTORS

Mr Binaya Kapoor ceased to be a Director of the Company with effect from 13.120.2017due to his demise Your Board has expressed its condolences towards his family.

Mr. Prakash Agarwal Director retires by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment. His Brief Resume is attached to theNotice of the ensuing Annual General Meeting.

NO. OF BOARD MEETINGS HELD

During the year 2017-18 Six (6) Board Meetings were held on 30th May 2017 14th July2017 13th September 201712th December 2017 5th January 2018 and 13th February 2018.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134{5) of The Companies Act 2013 the Directorsstate as follows that:-

(i) in the preparation of the Annual Accounts for the financial year ended 31st March2018 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(ii) the Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that were reasonable and prudent so as to give a trueand fair view of the state of affairs of your Company at the end of the financial year andof the profit or loss of your Company for that period;

(iii) the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of The Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) the Directors had prepared the accounts for the financial year ended 31st March2018 on a "going concern" basis;

(v) 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

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof ail applicable laws and that such were adequate and operating effectively

BOARD EVALUATION

The Board evaluated the effectiveness of its functioning and that of the Committees andof Individual Directors by seeking inputs on various aspects of Board/Committee Governanceand considered and discussed in details the inputs received from the Directors.

The aspects covered in the evaluation included the contribution to and monitoring ofcorporate governance practices participation in strategic planning and fulfillment oftheir obligations including but not limited to their participation in the Board/CommitteeMeetings.

INDEPENDENT DIRECTORS DECLARATION

The independent Directors meet the criteria of being Independent (as prescribed in TheCompanies Act 2013 and the Listing Regulations) and an Independency Certificate from themhave been obtained.

EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of The Companies Act 2013 the extract of AnnualReturn in Form MGT-9 pursuant to Rule 12 of The Companies (Management and Administration)Rules 2014 is annexed herewith as Annexure C as part of this Report.

STATUTORY AUDITORS

M/s Salarpuria & Partners Chartered Accountants (Firm Registration No. 302113E)continue to be the Statutory Auditors of the Company as they were appointed as such at thelast AGM of the Company for a term of 5 years commencing from the Financial Year 2017-18

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Rulesthere under the Board of Directors of the Company has appointed Ms. Vidhya BaidPracticing Company Secretary as the Secretarial Auditor of the Company to conduct theSecretarial Audit for the Financial year 2017-18. The Secretarial Audit Report for theFinancial year ended 31.03.2018 is annexed herewith as Annexure D as part of this Report.

RELATED PARTY TRANSACTIONS

Ail contracts/arrangements/transactions entered by the Company with its Related Partiesduring the financial year were on arm's length basis and in the ordinary course ofbusiness. The transactions with Related Parties are disclosed in the Notes to theFinancial Statements.

VIGIL MECHANISM

Pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 aVigil Mechanism of Directors and Employees has been established details of which aregiven in the Corporate Governance Report

PARTICULARS OF EMPLOYEES

Information required to be given pursuant to the provisions of section 197(12) of TheCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure E.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars relating to Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo as required under section 134(3){m) of The Companies Act 2013 readwith Companies (Accounts) Rules 2014 are given in the Annexure A.

CODE OF CONDUCT

Your Company has formulated a Code of Conduct which applies to Board Members and SeniorManagement Personnel of the Company. Confirmations towards adherence to the Code duringthe Financial Year 2017-18 have been obtained from all the Board Members and SeniorManagement Personnel in terms of the Listing Regulations and a declaration relating tocompliance of this code during the year by ail Board Members and Senior ManagementPersonnel has been given by the Managing Director of the Company which accompanies thisreport

MATERIAL CHANGE$ AND COMMITMENT

There were no material changes and commitments affecting the financial position of theCompany which has occurred between the financial year to which these Financial Statementsrelate and date of this report.

ACKNOWLEDGEMENTS

Your Directors would like to thank shareholders customers suppliers bankersemployees and all other business associates for the continuous support given by them tothe Company and their confidence in its management.

FOR AND ON BEHALF OF THE BO&RD

DIRECTORS

PLACE: KOLKATA

DATE: 30th MAY 2018