Your Directors present their Fifty Eighth Annual Report and Audited Accounts of theCompany for the year ended 31.03.2018 The operating results of the company for the yearare as follows:
| || |
(Rs. in Thousand)
|Particulars ||2017-18 ||2016-17 |
|The profit for the year after meeting all expenses but before providing for Gratuity || || |
|Depreciation Taxation and exceptional items is: from which have to be deducted: ||135518 ||159062 |
|Gratuity according to statutory requirement ||7871 ||10725 |
|Depreciation for the current year ||160826 ||153703 |
|Exceptional Items (Income) ||(23102) ||- |
|Provision for Taxation ||(29367) ||(31942) |
|Provision for Dividend ||1443 ||1443 |
|Tax on Dividend ||294 ||294 |
|Leaving a balance of ||17553 ||24839 |
|To which have to be added: || || |
|The balance brought forward from the previous year ||65952 ||16113 |
|Making a total of ||83506 ||40952 |
|Out of which transferred to/(from) General Reserve ||- ||(25000) |
|Leaving a balance to be carried forward to next year's account ||83506 ||65952 |
State of Affairs & Operations
During the year under review the gross revenue of the company has decreased toRs.714.99 Crores as compared to Rs. 735.72 Crores in 2016-17. The profit beforedepreciation has decreased from Rs. 1507.49 Lakhs to Rs. 1483.37 Lakhs.
In the financial year 2017-18 income from operations was Rs. 727.92 Crores ascompared to Rs.749.18 Crores in the previous year 2016-17. The profit before depreciationhas decreased from Rs. 1398.12 Lakhs to Rs.1266.81 Lakhs.
During the year under review the gross revenue of the wholly owned subsidiary hasincreased to Rs.1300.90 Lakhs as compared to Rs.1192.03 Lakhs in financial year2017-217.00 Lakhs.
Your Directors are pleased to inform that the Company booked new orders worth Rs.530.04 crores in 2017-18. However due to deferment of order execution by some customersthe production for aluminium Conductors could not be taken during the year for some ofthese orders. The availability of our prime raw material for conductor division i.e.aluminum remained satisfactory. However due to upward swing of LME from USD 1912 in June2017 to USD 2330 in February 2018 there were increase of prices of aluminium forcingdeferment of supply. The availability of power was comfortable except Mandideep Works. TheCompany has been able to keep the factories running with the help of captive powergenerating capacity where ever it was required.
There has been slow down in the issue of new tenders by major Power utility Power gridof India during the year but efforts are being made to secure more orders from privatesector as well as state utilities.
During the year the company's export in conductor division fallen due to increasedaluminium prices in international market post US sanctions on Rusal. However Exports ininsulators posted an increase of 17.21%.
The Gwalior plant(Conductor) of the Company was discontinued for commercial operationdue to unviable economic / logistic reasons. However it did not had major impact on theoverall operations of the company.
Your Directors have recommended a dividend of Re. 1.00 per equity share(10%) for thefinancialyear ended March 31 2018 amounting to Rs. 1736622/- (inclusive of tax ofRs.293737/-). The dividend payout is subject to approval of members at the ensuingAnnual General Meeting.
The dividend will be paid to members whose names appear in the Register of Members ason 14th September 2018 in respect of shares held in dematerialised and physical form. Itwill be paid to members whose names are furnished by
National Securities Depository Limited and Central Depository Services (India) Limitedas beneficial owners as on that
Wholly Owned Subsidiary Companies
The Company has three non-material wholly owned subsidiary companies i.e HindusthanSpeciality Chemicals Limited Hindusthan Vidyut Products Limited and Hindusthan ProjectsLimited.
Hindusthan Speciality Chemicals Limited
(HSCL or the Company) made concrete progress towards establishment of the state of theart Green-Field manufacturing facility of "Epoxy Resin and formulated products"at Jhagadia Distt Bharuch Gujarat. The construction work is in progress and the plant isexpected to be commissioned by October 2018. HSCL is marketing various grades of EpoxyResins & Specialty formulations in HSCL's own brand name this is creating brandrecognition in the market. Technology Transfer Agreement has been finalized with leadingforeign partner for specialty formulations catering to the Electrical and Electronicapplications this will help to augment HSCL presence in this sector. Marketing networkhas been expanded across different regions of the country and distribution agreements havebeen concluded with channel partners to augment business penetration. For penetrating inthe Export markets various sales channels are being reviewed and expected to be finalizedin the course of the next few months. During the year 2018-19 the company is targetingincreased sales of Formulated Products Hardeners and maximizing LER sales as a system(i.e. supplied as Resin plus Hardener). The Company has paid Rs. 7859.14 Lakhs till 31stMarch 2018 by way of equity capital to subsidiary Company Hindusthan Speciality ChemicalsLimited.
Hindusthan Vidyut Products Limited and Hindusthan Projects Limited wholly ownednon material subsidiaries have not commenced any commercial activity during the year.
There has been no change in relationship of any subsidiary company during the year.
A report on the performance and financial position of each of the subsidiaries as perthe Companies Act 2013 is provided in the consolidated financial statement and hence notrepeated here for the sake of brevity. The Policy for determining material subsidiaries asapproved may be accessed on the Company's website at the link i.ehttp://hindusthanurban.com/ investorrelation.aspx?mpgid=151&pgidtrail=151&catid=14
Consolidated Financial Statement
The consolidated financial statements prepared in accordance with the Companies Act2013 and Accounting Standard (AS)- 21 are attached with the Annual Report.
Management Discussion and Analysis Report
As required under regulation 34 of the Listing Regulations with Stock Exchange theManagement Discussion and Analysis Report is enclosed as a part of this report.
As a responsible corporate citizen the Company is committed to maintain the higheststandards of Corporate Governance and believes in adhering to the best corporate practicesprevalent globally. The report on Corporate Governance as stipulated under the ListingRegulations forms an integral part of this Report. The the Statutory requisitecertificateAuditors of the Company confirming compliance with the conditions of Corporate Governanceis attached to the report on Corporate Governance.
The Board Members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year ended March312018.Acertificatefrom the Vice Chairman &Managing Director confirming the same is attached to the Corporate Governance Report.
CEO and CFO confirming correctness of the financial statements adequacy of Acertificate measures etc. is also attached to the Corporate Governance Report.
Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed;
b) The selected accounting policies have been applied consistently and the judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the company at the end of the financial year and of the profit of thecompany for that period;
c) Proper and sufficientcare has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities;
d) The annual accounts have been prepared on a going concern basis;
e) Internal Financial Controls laid down in the company are adequate and were operatingeffectively;
f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.
Directors and Key Managerial Personnel
Changes in Board of Directors and other Key Managerial Personnel
During the year under review Mr. Rajendra Prasad Mody and Mr. Vikram Aditya Modyresigned from their Directorship w.e.f. August 31 2017.
Mr Vivek Dayaram Kohli resigned as Whole Time Director w.e.f. close of business hoursof March 31 2018. He continues as Non-Executive Director.
Mr. Ramawatar Joshi Independent Director resigned from the office of the director andother committee positions w.e.f 30.07.2018. The Board places on record its sincereappreciation for his guidance and expert advices.
On the recommendation of the Nomination and Remuneration Committee Mr. Sadhu RamBansal was appointed as additional director in the category of Independent director w.e.f.13.08.2018. He holds the office upto the ensuing Annual General meeting. The Boardrecommend to appoint him as Independent director in the ensuing Annual General meeting fora period of three years.
During the year on the recommendation of the Nomination and Remuneration Committeethe Board appointed Mr. Raghavendra Anant Mody as additional Director w.e.f.31.08.2017 and Whole time director of the Company with effect from October 03 2017 for aterm of three years subject to the approval of the shareholders. The shareholders in theirExtra Ordinary General Meeting held on November 22 2017 approved the appointment of Mr.Raghavendra Anant Mody as Whole time Director. He was appointed as the Chairman of theBoard.
Mr. Anil Kumar Chandani resigned from the position of Chief Financial Officer of thecompany w.e.f August 04 2017 and on the recommendation of the Nomination and RemunerationCommittee Mr. Deepak Kejriwal was appointed as Chief Financial Officer w.e.f. August 312017.
Your company is in full compliance of Listing regulations and the Companies Act 2013with regard to the composition of Board of Directors.
Retirement by rotation
Mr. Vivek Dayaram Kohli will retire by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment. The Board recommends hisre-appointment as director.
Seven meetings of the Board of Directors were held during the year. For furtherdetails please refer report on Corporate Governance of this Annual Report.
As on date the Audit committee comprises of Mr Mool Chand Gauba Chairman Mr.Raghavendra Anant Mody Mr. Shyam Sunder Bhuwania Mr Sadhu Ram Bansal Mr. Ratan LalNangalia and Ms. Suman Lata Saraswat. The Board has accepted all the recommendations madeby the Audit Committee.
Declaration of Independent Directors
The Company has four independent directors namely Mr. Sadhu Ram Bansal Mr. Ratan LalNangalia Mr. Mool Chand Gauba and Ms. Suman Lata Saraswat. All the directors areprofessionally qualified and possess appropriate balance of skills expertise andknowledge and are qualified for appointment as Independent Director.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and the Listingregulations.
Auditors i) Statutory Auditor
At the AGM of the Company held last year pursuant to the provisions of the act andrules made thereunder M/s. K.N. Gutgutia & Co. Chartered accountants (firmregistration no. 304153E) were appointed as Statutory Auditor of the company from theconclusion of 57th AGM held on September 29 2017 till the conclusion of 62nd AGM to beheld in the year 2022 subject to ratification of their appointment at every AGM. M/s.K.N. Gutgutia have submitted a certificate confirming that their appointment is inaccordance with Section 139 read with Section 141 of theAct.
Further pursuant to the Companies (Audit and Auditors)Amendment Rules 2018requirement for ratification of the Statutory Auditors in every AGM have been dispensedwith.
The Audit Report of M/s. K.N. Gutgutia Chartered Accountants on the FinancialStatements of the company for the
Financial Year 2017-18 is a part of the Annual Report. The report does not contain anyqualification reservation adverse remark or disclaimer.
ii) Cost Auditors
M/s. J.K Kabra & Co. Cost Accountants were appointed as Cost Auditors for auditingthe cost accounting records of our Company for the year ended March 31 2018 by the Boardof Directors the report will be filed in due course. The Cost Audit Report for the year2016-17 has been filed under XBRL mode within the due date of filing.
Further The Company is required to maintain the cost accounting records in terms ofsection 148(1) of the Companies Act 2013 read with rules made thereunder. The Company isregularly maintaining the required cost accounting records.
iii) Secretarial Auditor
The Board has appointed Mr. Kapoor Chand Garg of M/s KCG & Associates CompanySecretaries to conduct the Secretarial Audit for the financial year 2018-19.
The Secretarial Audit Report for the financial year ended 31.03.2018 is annexedherewith marked as Annexure-A to this report. The observation(s) in secretarialaudit report are self-explanatory and need no comments.
The Secretarial Standards on Meetings of the Board of Directors (SS-1) and SecretarialStandards on General Meetings (SS-2) and Secretarial Standards on Dividend (SS-3)(together referred to as the Secretarial Standards) as approved by the CentralGovernment have been issued by the Institute of Company Secretaries of India (ICSI) underthe provisions of Section 118(10) of the Companies Act 2013 (the Act) vide ICSINotification No. 1 (SS) of 2015 dated 23rd April 2015 and published in the Gazette ofIndia Extraordinary Part III-Section 4. These Secretarial
Standards came into force w.e.f. 1st July 2015. The Company is adhering the abovestandards. iv) Internal Auditors M/s. M.L Garg & Co. Chartered Accountantsperforms the duties of Internal Auditors of the Company and their report are reviewed bythe Audit committee from time to time. As per the recommendations of Audit committee M/s.M.L Garg & Co. Chartered Accountants were re-appointed as internal auditors forconductor division for the financial year 2018-19. An officer of the company wasappointment as internal auditor for Insulator division of the company.
The Authorised share Capital of the Company is Rs. 25000000/- divided into 2500000equity shares of Rs.10/- each. The paid up Equity Share Capital as on 31.03.2018 stood Rs.14428850/-.
During the year under review the company has not issued any share capital withdifferential voting rights sweat equity or ESOP nor provided any money to the employeesor trusts for purchase of its own shares.
Stock Exchange and Depositories
The listing fees for 2018-2019 has been paid to BSE Ltd.
Annual Custody / Issuer fee has been paid to NSDL and CDSL the depositories where theshares of the company are dematerialized.
Material changes and commitments
No material changes or commitments have occurred between the end of the financial yearto which the financial relate and the date of this report affecting the financialposition of the Company.
Annual Evaluation of Board and Directors
As required under the Companies Act 2013 and the Listing Regulations an evaluation ofthe performance of the Independent Directors was carried out by the Board of Directorsduring the year based on the criteria laid down by the Nomination and RemunerationCommittee. On an overall assessment it was found that all the Independent Directors havegiven a good account of themselves. The Board concluded that the Independent Directorsindividually and collectively were well qualified and their contributions were in theinterest of the Company. The Independent Directors in a separate meeting held on31.01.2018 reviewed and evaluated the performance of Non-Independent Directors and Boardas a whole.
Keeping the requirements under the Act and the Listing Regulations the IndependentDirectors laid down broad areas for evaluation. After detailed discussion it wasconcluded that the performance of the Board collectively and the Directors individually onall counts of evaluation were appreciable.
The performance of the Executive Directors was evaluated by Independent Directors forleadership and direction to the Company judging as per the parameters of the evaluationcriteria and it was noted that their performance was satisfactory The Board carried outthe performance evaluation of its committees.
Directors Appointment and Remuneration
Appointment of Directors on the Board of the Company is based on the recommendations ofthe Nomination and Remuneration Committee. The committee identifies and recommends to theBoard persons for appointment on the Board after considering the necessary and desirablecompetencies. The committee takes into account positive attributes like integritymaturity judgement leadership position time and willingness financial acumenmanagement experience and knowledge in one or more fields of finance law managementmarketing administration research etc. In case of Independent Directors (IDs) theyshould fulfill the criteria of independence as Listing Regulations in addition to thegeneral criteria stated above. It is ensured that a person to be appointed as director hasnot suffered any disqualification under the Act or any other law to hold such an office.
The Directors of the Company are paid remuneration as per the Remuneration Policy ofthe Company. The details of remuneration paid to the directors during the year 2017-18 aregiven in Form MGT-9 annexed hereto.
The Company has a Remuneration Policy relating to remuneration of the Directors seniormanagement including its Key Managerial Personnel (KMP) and other employees of theCompany. The Remuneration Policy is in accordance with Section 178 of the Act and theRules made thereunder and annexed as Annexure-B.
The Remuneration Policy of the Company is available on its website.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
Information required under section 134(3) (m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is given in the Annexure-C to thisreport.
Compliance certificate of the Auditors
Certificate Auditor M/s. K.N. Gutgutia & Co. Chartered Accountants confirmingcompliance with conditions of Corporate Governance as stipulated in para D of Schedule Vto the Listing Regulations is attached to this Report.
Corporate Social Responsibility (CSR)
The Company has a Corporate Social Responsibility Policy (CSR Policy) indicating theactivities to be undertaken by the Company which was duly approved by the Board. CSRCommittee of the Board has developed a CSR Policy. Additionally The CSR Policy may beaccessed on the Company's website at the link:http://www.hindusthanurban.com/pdf/policy/HUIL_ CSR%20Policy.pdf
In view of losses in preceding three years the Company was not eligible to spendtowards CSR activities for the financial year 2017-18.
Internal Control System and their Adequacy
The Company has adequate system of internal controls to safeguard and protect fromloss unauthorized use or disposition of its assets. All the transactions are properlyauthorized recorded and reported to the Management. The Company is following all theapplicable Accounting Standards for properly maintaining the books of accounts andreporting financial statements. The internal auditor of the company checks and verifiesthe internal control and monitors them in accordance with policy adopted by the company.The Company continues to ensure proper and adequate systems and procedures commensuratewith its size and nature of its business.
The Company values its investors immensely. With a view to keep its investors wellinformed of its activities the Company has taken the following initiatives:
- Maintaining user friendly investor section on the website of the Company i.ewww.hindusthanurban.com
- A dedicated email id viz firstname.lastname@example.org for interacting on variousmatters with respect to share transfer transmission dividends and other related issueswith the Company Secretary and Compliance officer.
In pursuance of the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Policy on vigil mechanism and whistle blower policy may be accessed onthe Company's website at the link: http://hindusthanurban.com/investorrelation.aspx?mpgid=151&pgidtrail=151&catid=14
Related Party Transactions
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. Such Related PartyTransactions which are proposed to be entered during the financial year are placed beforethe Audit Committee and the Board for approval. Prior omnibus approval of the AuditCommittee is obtained on annual basis for the transactions which are of a foreseen andrepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted are placed before the Audit Committee for its review on a quarterly basis. ThePolicy 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.hindusthanurban.com/pdf/policy/HUIL_RPT%20Policy. pdf
Significant Material Orders Passed by Regulators or Courts or Tribunals beenNosignificant passed by any Regulators Courts or Tribunals impacting the going concernstatus and Company's operations in future.
Particulars of Loans Guarantees or Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
Particulars of Contracts or arrangement with related parties
During the year the company had not entered in to any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transaction. The relevantinformation regarding related party transactions has been set out in note no. 4 of thestandalone financial statement year ended 31.03.2018.
The Company has formulated a policy for transacting with Related Parties which isuploaded on the website of the Company(http://hindusthanurban.com/investorrelation.aspx?mpgid=151&pgidtrail=151&catid=14).Transactions with the related parties are disclosed in Notes to the financial statementsin the Annual Report. The disclosure in Form AOC-2 is attached as Annexure-D.
Development and Implementation of a Risk Management Policy
The Company has a Risk Management Committee consisting Vice Chairman & ManagingDirector and Independent Directors and which has been entrusted with the responsibility toassist the Board in (a) Overseeing and approving the Company's enterprise wide riskmanagement framework; and (b) Overseeing that all the risks that the organization faces.
The Company addresses the potential risks impacting the Company.
The Company has not accepted any deposits covered under Chapter V of the Companies Act2013 from public and as such no amount on account of principal or interest on depositsfrom public was outstanding as on the date of the balance sheet.
Anti-Sexual Harassment Policy
Pursuant to the "Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 the Company constituted Internal Complaints Committee. There hasnot been any instance of complaint reported in this regard to Audit Committee. The Companyhas internal complaints committee as prescribed under the Sexual Harassment of Women atworkplace (Prevention Prohibition and Redressal) Act 2013 and is in compliance ofprovisions of the said act.
Extract of Annual Return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules2014 the extract of Annual Return in Form MGT-9 is attached as Annexure-E.
Particulars of Directors and Employees as required under Section 197(12) of the Actread with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are given in Annexure-F and form part of this Report.
| ||For and on behalf of the Board of Directors |
| ||Raghavendra Anant Mody |
|Place: New Delhi ||Chairman |
|Date: August 13 2018 ||(DIN: 03158072) |