[Pursuant to Section 134(3) of the Companies Act 2013]
HINDUSTAN HARDY LIMITED (formerly Hindustan Hardy Spicer Limited)
The Directors have pleasure in presenting the Thirty Seventh Annual Report togetherwith the Statement of Accounts for the year ended on March 312019.
|Particulars ||For the year ended 31st March 2019 ||For the year ended 31st March 2018 |
|Revenue from Operations ||4659.69 ||3833.54 |
|Other Income ||5.03 ||105.06 |
|Total Income ||4664.72 ||3938.60 |
|Profit before Interest Depreciation and Tax ||262.29 ||208.06 |
|Finance Cost ||35.54 ||48.57 |
|Depreciation ||56.27 ||67.04 |
|Profit / Loss before tax ||170.48 ||92.45 |
|Tax Expenses ||131.35 ||0.96 |
|Profit / Loss after Tax ||39.14 ||91.49 |
|Other Comprehensive Income / (loss) for the year ||10.38 ||-10.55 |
|Profit / Loss for the year attributable to owners of the company ||49.52 ||80.94 |
|Surplus brought forward from Previous Year ||246.49 ||165.56 |
|Profit available for appropriation ||296.01 ||246.49 |
|Proposed Dividend ||17.98 ||- |
|Tax on Proposed Dividend ||3.70 ||- |
|Surplus Carried Forward ||274.33 ||246.49 |
OPERATIONS/STATE OF COMPANY'S AFFAIRS
Profit before tax was Rs 170.48 lakhs as compared to Rs 92.45 lakhs in the prior year.This was largely on account of a 22% increase in sales. Quarterly sales steadily increasedover the course of the year. The growth was due to the Company's heightened marketingefforts in prior periods coupled with a broadening of the Company's product offerings.Sales across all market segments witnessed significant increases.
The Company's cost reduction initiatives also boosted the bottom line. The Company hadstarted a Companywide cost reduction initiative and savings were seen across alldepartments. Additionally supplier rationalization and value engineering efforts alsohelped to augment the bottom line.
TRANSFER TO GENERAL RESERVES
There was no transfer made to General Reserve.
The Board of directors is pleased to recommend a dividend of Rs. 1.20 per share (12%)on the Equity shares of the Company for the financial year 2018-2019.
The outlook for the domestic market was highly uncertain prior to the election with aslowdown witnessed across all segments. The outlook is expected to improve in the secondhalf of the current financial year. The outlook for export markets appears reasonable asthe Company has taken considerable efforts to diversify across geographies therebyreducing its dependence on any one region or currency.
The Company has stepped up its sales and marketing efforts and is expanding its productoffering and targeting new customers. The Company is already beginning to see the resultsof its efforts across all customer segments.
The Company had launched a new brand in the Indian aftermarket two years ago and iscontinually expanding its product range for the Indian aftermarket. Brand recognition andacceptance has grown steadily which is evident from the sales growth in this segment.
High steel and fuel prices remain a negative headwind on profitability. The company iscontinuing its value engineering and continuous improvement efforts to reducemanufacturing costs in an attempt to neutralize this effect. The company had alsoundertaken a huge cost reduction initiative to reduce costs across the board. Most costshave been reduced to the bare minimum; however this initiative continues.
MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR:
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year and the date ofthe report.
NUMBER OF MEETINGS OF BOARD OF DIRECTORS
6 (Six) meetings of the Board of Directors of the Company were held during the year. DIRECTORSAND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Act and Articles ofAssociation Ms. Devaki Saran (DIN: 06504653) Director of the Company retires at theensuing Annual General Meeting and being eligible offers herself for re-appointment.
In terms of Section 203 of the Act the following are the Key Managerial Personnel(KMP) of the Company:
Mr. Vijay Pathak Executive Director & COO Ms. Devaki Saran Executive Director& CFO Ms. Sunita Nisal Company Secretary
On April 17 2018 Mr. Sharad Jain (DIN 06988659) resigned as Director of the Company.
During the year Mr. Shiamak Marshall (DIN 00085682) Independent Director resigned asDirector of the Company w.e.f. February 14 2019. Your directors place on record theirappreciation to the knowledge and guidance extended by them to the Company and itsmanagement during their tenure as Director of the Company.
On May 21 2019 the Board of Directors considered and appointed Mr. Navroze Marshallas an Additional Director of the Company as recommended by the Nomination and RemunerationCommittee who holds office upto the date of the ensuing annual general meeting. The Boardalso appointed Mr. Navroze Marshall as an Independent Director of the Company for a termof five years from May 212019 to May 20 2024 subject to the approval of theshareholders. The Company has received notice under Section 160 of the Act proposing hisappointment.
The Board of Directors of the Company has pursuant to the provisions of Section 149 andother applicable provisions of the Act and based on Mr. Jehangir H. C. Jehangir and Mr.Richard Koszareks skill expertise and performance evaluation proposed there-appointment of Mr. Jehangir H. C. Jehangir and Mr. Richard Koszarek as IndependentDirectors of the Company for a second term of five years. Their reappointment for secondterm of five years is being placed before the shareholders for their approval at theensuing annual general meeting.
The necessary ordinary resolution seeking approval of the Members for the appointmentof Mr. Navroze Marshall as an Independent Director and the special resolutions forreappointment of Mr. Jehangir H. C. Jehangir and Mr. Richard Koszarek as IndependentDirectors of the Company for a second term of five years have been incorporated in thenotice of the forthcoming annual general meeting of the Company along with brief detailsabout them.
DECLARATION FROM INDEPENDENT DIRECTORS
Directors who are independent directors have submitted a declaration as required undersection 149(7) of the Act that each of them meets the criteria of independence as providedin sub Section (6) of Section 149 of the Act and under regulation 16 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to timeand there has been no change in the circumstances which may affect their status asindependent director during the year. In the opinion of the Board the independentdirectors possess appropriate balance of skills experience and knowledge as required.
AUDIT COMMITTEE OF BOARD OF DIRECTORS
The Audit committee of the Board of directors of the Company consists of the followingmembers
1. Mr. S. C. Saran
2. Mr. Jehangir H. C. Jehangir
3. Mr. Richard Koszarek
4. Mr. Navroze S Marshall
Four meetings of the Audit committee were held during the financial year.
The Company has formulated and published a Whistle Blower Policy to provide a mechanism("Vigil Mechanism") for employees including directors of the Company to reportgenuine concerns. The provisions of this policy are in line with the provisions of theSection 177 (9) of the Act. The Whistle Blower Policy (Vigil Mechanism) is uploaded on theCompany's website www.hhardys. com.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND CRITERIA FOR INDEPENDENTDIRECTORS
The Remuneration Policy for directors and senior management and the Criteria forselection of candidates for appointment as directors independent directors seniormanagement as adopted by the Board of Directors are placed on the website of the Company(www.hhardys.com). There has been no change in the policies since the last fiscal year.
We affirm that the remuneration paid to the directors is as per the terms laid out inthe remuneration policy of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;
(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
(iii) they 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;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures.
The internal auditor also regularly reviews the adequacy of internal financial controlsystem.
DETAILS OF SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES
The Company does not have any subsidiary/ joint ventures/ associates.
During the year XLO India Limited a promoter of the Company on 17.04.2018 acquired390000 equity shares of the Company by way of inter se transfer and now holds 66.07 % ofthe total shareholding of the Company. Accordingly the Company has now become asubsidiary of XLO India Limited.
EXTRACT OF ANNUAL RETURN
As provided under sub Section (3) of Section 92 of the Act the extract of annualreturn is enclosed which forms part of the directors' report as Annexure I.
The Members of the company had at its Annual General Meeting (AGM) held on 18thAugust 2017 appointed M/s. Daga & Chaturmutha Chartered Accountants Nashik (ICAIRegistration No- 101987W) as the Statutory Auditors for a period of 5 (five) consecutiveyears from the conclusion of the Thirty Fifth AGM till the conclusion of the fortieth AGM.M/s. Daga & Chaturmutha Chartered Accountants have submitted a certificateconfirming that their appointment is in accordance with Section 139 read with Section 141of the Act.
Pursuant to the provisions of Section 204 and other applicable provisions if any ofthe Companies Act 2013 M/s. Parikh & Associates Practicing Company Secretaries wereappointed as the Secretarial Auditors for auditing the secretarial records of the Companyfor the financial year 2018-19.
The Secretarial Auditors' Report is annexed as Annexure II.
AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT
The auditor's' report does not contain any qualifications reservations or adverseremarks.
As regards observations of Secretarial Auditors in their report your directors have tostate that constant efforts were being made to identify and appoint a competent andsuitable candidate as the Company Secretary of the Company. In the Meanwhile to ensuretimely compliance of the provisions of the Act the company has been taking theprofessional services of the reputed Practicing Company Secretaries. The Company hasappointed a Company Secretary and Compliance Officer with effect from February 14 2019.
CONSERVATION OF ENERGY TECHNOLOGY ABSORBTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information in accordance with Clause (m) of Sub-section (3) of Section 134 of the Actread with Companies (Accounts) Rules 2014 is annexed to this report as Annexure III.
PARTICULARS OF EMPLOYEES
Pursuant to Section 197 of the Act read with rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the particulars of employees areannexed as Annexure IV.
DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORY/ JUDICIAL AUTHORITY
No significant or material orders were passed by any regulator or court that wouldimpact the going concern status of the Company and its future operations.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company has not given any loans or guarantees or made investments during the yearended March 312019.
RISK MANAGEMENT POLICY
The Board of Directors of the Company has framed a risk management policy and isresponsible for reviewing the risk management plan and ensuring its effectiveness. Theaudit committee has additional oversight in the area of financial risks and controls.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The company conducts a monthly review ofmajor risks and actions to minimize these in its Monthly Management Meeting. Efficacy ofrisk management is also one of the criterion evaluated in the IATF certification process.
RELATED PARTY TRANSACTIONS
Particulars of transactions with related parties pursuant to Section 134(3) (h) of theAct read with rule 8(2) of the Companies (Accounts) Rules 2014 are given in Form AOC-2and the same forms part of this report as Annexure V.
EVALUATION OF BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
An annual evaluation of the Board's own performance Board committees and individualdirectors was carried out pursuant to the provisions of the Act in the following manner:
|Sr. No. ||Performance evaluation of :- ||Performance evaluation performed by :- ||Criteria |
|1. ||Each Individual director ||Nomination and Remuneration Committee ||Attendance Contribution to the Board and committee meetings like preparedness on the issues to be discussed meaningful and constructive contribution and guidance provided key performance aspects in case of executive directors etc. |
|2. ||Independent directors ||Entire Board of Directors excluding the director who is being evaluated ||Attendance Contribution to the Board and committee meetings like preparedness on the issues to be discussed meaningful and constructive contribution and guidance provided etc. |
|3. ||Board its committees and individual directors ||All directors ||Board composition and structure; effectiveness of Board processes information and functioning fulfillment of key responsibilities performance of specific duties and obligations timely flow of information etc. The assessment of committees based on the terms of reference of the committees and effectiveness of the meetings. |
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of women at Workplace (Prevention Prohibition and Redressal)Act 2013 (POSH Act) and rules made thereunder. All employees (permanent contractualtemporary trainees) are covered under this policy.
The Company has not received any complaint of sexual harassment during the financialyear 2018-19.
The Company has complied with the provisions relating to constitution of InternalComplaints Committee under POSH Act.
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively.
LISTING AGREEMENT AND LISTING FEES
The Company entered into Listing Agreement with BSE Limited in terms of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 issued on September 22015 effective from December 12015.
The Company has paid the listing fees to BSE Limited for the year 2019-20.
INSIDER TRADING REGULATIONS AND CODE OF DISCLOSURE
The Board of Directors has adopted the Code of Practices and Procedures for FairDisclosure of Unpublished Price Sensitive Information and Code of Internal Procedures andConduct for Regulating Monitoring and reporting of Trading by Insiders in accordance withthe requirements of the SEBI (Prohibition of Insider Trading) Regulation 2015 and isavailable on our website (www.hhardys.com)
As a part of Green initiative Electronic copies of the Annual Report 2018-19 andNotice of the 37th Annual General Meeting of the Company are sent to all members whoseemail addresses are registered with the Company / Depository Participant(s).
For members who have not registered their email addresses physical copies are sent inthe permitted mode.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The provisions of Section 135 of the Companies Act 2013 ("the Act") readwith Companies (Corporate Social Responsibility Policy) Rules 2014 are not applicable tothe Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 theManagement's discussion and analysis is set out in this Annual Report.
CORPORATE GOVERNANCE REPORT
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Corporate Governance is not mandatory to the Company.
MAINTAINENCE OF COST ACCOUNTING RECORDS
The company is not required to maintain cost records as specified under section 148(1)of the Companies Act 2013.
The directors thank the Company's employees customers vendors investors and academicinstitutions for their continuous support.
The directors also thank the government of various countries government of India thegovernments of various states in India and concerned government departments/agencies fortheir co-operation.
The directors appreciate and value the contributions made by every member of theHindustan Hardy family.
| ||For and on behalf of the Board |
|Date : May 212019 ||S. C. Saran |
|Place: Mumbai ||Chairman |