The Board of Directors has pleasure in presenting the 65th Annual Report on theBusiness & Operations of your Company and Annual Accounts of the Company for the year2017-18 along with the Auditors Report. The Comments of the Comptroller &Auditor General of India are attached to this Report.
Financial summary or highlights / Performance of the Company (Standalone)
Rs. in Lakhs
|Particulars ||2017-18 ||2016-17 |
|Gross Revenue from continuing Operations ||1480 ||1043 |
|Profit Before Depreciation and Finance Costs ||603 ||(4227) |
|Depreciation ||25 ||32 |
|Gross Profit/(Loss) ||578 ||(4259) |
|Finance Cost ||212 ||288 |
|Net profit before exceptional Items and PPA ||366 ||(4547) |
|Add : Exceptional Items ||- ||531 |
|Less : Prior Period Adjustments || || |
|Net Profit before Tax ||366 ||(4016) |
|Provision for Tax ||- ||(1861) |
|Net Profit After Tax ||366 ||(2155) |
|Profit/Loss from discontinued operations ||(1083) ||(21794) |
|Net Profit/(Loss) for the year ||(717) ||(23949) |
|Other Comprehensive Income ||512 ||349 |
|Total Comprehensive Income ||(205) ||(23600) |
As per the provisional estimates of national income released by Central StatisticsOffice on 31st May 2018 the growth rate of Gross Domestic Product (GDP) at constant(2011-12) prices for the year 2017-18 is estimated at 6.7 per cent as compared to thegrowth of 7.1 per cent in 2016-17.
The growth in Gross Value Added (GVA) at constant basic prices for the year 2017-18 isestimated at 6.5 per cent as compared to 6.6 per cent in 2016-17. At the sectoral levelagriculture industry and services sectors grew at the rate of 3.4 per cent 5.5 per centand 7.9 per cent respectively in 2017-18.
The growth in overall IIP (with base 2011-12) was 4.9 per cent in April 2018 ascompared to a growth of 3.2 per cent recorded in April 2017. The IIP growth during2017-18 was 4.3 per cent as compared to growth of 4.6 per cent during 2016-17.Production of eight core infrastructure industries grew by 4.7 per cent in April 2018 ascompared to 2.6 per cent in April 2017.
The manufacturing sector grew by 5.2 per cent in April 2018 as compared to the growthof 2.9 per cent in April 2017. The manufacturing sectors growth during 2017-18 was4.5 per cent as compared to growth of 4.4 per cent during 2016-17.
Production of eight core infrastructure industries grew by 4.7 per cent in April 2018as compared to 2.6 per cent in April 2017. During 2017-18 the production in eight coreindustries grew by 4.3 per cent as compared to the growth of 4.8 per cent incorresponding period of previous year.
The value of merchandise exports and imports increased by 20.2 per cent and 14.9 percent respectively in US dollar terms in May 2018. During May 2018 oil imports increasedby 49.5 per cent and non-oil imports increased by 6.0 per cent over May 2017.
Companys main business portfolios included product range of Food ProcessingMachines. The Company recorded a Production of Rs.12.53 Crore (121 Nos of Food ProcessingMachines) as against Rs. 9.58 Crore (437 Nos of Food Processing Machines) in the previousyear and Sales of Rs 11.32 Crore (107 Nos of Food Processing Machines) compared to Rs10.14 Crore (excluding Excise Duty) (475 Nos of Food Processing Machines) in the previousyear.
Rs. In Cr.
|Year ||2017-18 ||2016-17 |
| ||Nos. ||Value ||Nos. ||Value |
|Production ||121 ||12.53 ||437 ||9.58 |
|Sales ||107 ||11.32 ||475 ||10.14 |
Further consequent upon closure of business operations of HMT Watches Limited thestock of finished goods (Watches and Watch components) lying at Global Warehouse of HMTWatches Limited was transferred to the Common Service Division of Holding Company and theCompany has taken up sale of watches through two Company owned Showrooms as well asthrough online sales. The sales of watches generated revenues of Rs. 3.45 Crore during theyear 2017-18.
The total turnover of the Company for the year 2017-18 stands at Rs. 14.77 Crore asagainst Rs. 10.14 Crore (excluding Excise Duty) during 2016-17. The PBT for the year2017-18 is Rs. 3.66 Crore as against loss of Rs. (40.16) Crore in the previous year.
HMT Group along with its Subsidiaries achieved an aggregate Production of Rs.175.20Crore. Revenue from the operations reported as Rs 202.41 Crore for the year 2017-18against Rs. 215.36 Crore of previous year. HMT Group incurred loss of Rs.142.13 Croreagainst previous year loss of Rs. 540.97 Crore.
Food Processing Machinery
The contribution of the food processing sector to Gross Value Added (GVA) employmentand investments is significant. It is estimated that the gross value of plant andmachinery deployed in food processing sector by the year 2024-25 will be Rs. 344867 Cr.
The sub sector manufacturing dairy products over seven years from 2008-09 to 2014-15had a compounded annual growth rate of 13 per cent in fixed capital and 16 per cent intotal output. This reflects huge capital deployment in the segment as well as growth inthe output for the segment. Projecting the growth of the segment for the next 10 years atthe current growth rate of 13 per cent the investment in fixed capital is estimated to beRs. 66124 Cr. by the year 2024-25.
The growth of food processing industry is fuelling the demand for equipment for thesector. The Indian food processing market has the presence of most of the global equipmentmanufacturing companies. Factoring the growth for gross value of dairy plant and machineryat 81 per cent of fixed capital the expected size of the segment is estimated to be Rs.53566 Cr. by the year 2024-25.
According to the database of the Department of Commerce Government of India Indiaimported Rs. 1092 Cr. worth of food processing plant and machinery in the year 2016-17out of which the import for dairy sector equipment was Rs. 113 Cr.
Machine Tools Market in India:
The continued investment by the government in public infrastructure is helping theeconomy to grow. The automotive sector is also steadily picking up which is expected togive boost to MSMEs in the country. The development of MSMEs is also one ofthe principle objectives of the Government. All this in turn is expected to boost thedemand for machine tools during 2018-19.
India stands 12th in production and 8th in the consumption of machine tools in theworld as per the 2017 Gardner Business Media survey. Demand for machine tools accrues fromthe manufacturers of primary goods and intermediate goods. The primary user industriesinclude the automotive sector capital goods sector and consumer durables sector.Prominent users of machine tools in the intermediate goods sector include the autocomponents the ball and roller bearings and electronic components. Sectors like defenseand industrial intermediates recorded a good growth in turnover during 2017-18.
The increasing domestic demand which is not currently met by domestic productionindicates the vast business potential available within the country for machine tools.Further as per IMTMA during the year 2017-18 there is growth of around 25% in IndianMachine Tools Industry and indications show a good order book going into 2018-19 whichaugurs well for the industry. IMTMA projected good growth of Automobiles and autocomponents sectors as well as investments in infrastructure section hence machine toolindustry can expect a healthy growth in the near terms from customer segments such asDefence Aerospace
Railways etc in addition to particularly strengthening Machine Tool Industry to meetchallenges of disruptions such as additive Manufacturing EVs etc. This growth in varioussectors presents a positive outlook for improving the companys business during2018-19.
DIVIDEND & PROVISIONS
Owing to the losses incurred during the year the Directors are unable to recommend anydividend on the paid up equity share capital of the Company.
The Authorized Share Capital of the Company is Rs. 2100 Crore and Paid up equity ShareCapital is Rs. 1204.09 Crore (1204091640 equity shares of Rs. 10/- each fully paid up).
The Company has not accepted any deposits from the public and hence there is noviolation of Chapter V of Companies Act 2013 and the corresponding rules made there under
Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 ofCompanies Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended
The statement showing the details of top ten employees in terms of remuneration drawnas per rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rule 2014 is in the Annexure.
Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has adopted a policy on prevention prohibition and redressal of SexualHarassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.During the Financial year 2017-18 the Company has not received any complaints of SexualHarassment.
There was no incident of fraud reported during the year under review.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Every Company having Networth of Rs. 500 Crore or more or turnover of Rs. 1000 Croreor a net profit of Rs. 5 Crore or more during the immediately preceding financial yearshall constitute the CSR Committee of the Board. The Company does not meet any of thesecriteria during immediately preceding financial year. Hence CSR Committee has not beenconstituted.
ENTERPRISE RISK MANAGEMENT
In order to have a better reporting system on various risk faced by the Company and toassess such risk for taking appropriate action in a timely manner the Company has inplace Guidelines on Risk Management. In terms of section 134 (3) (n) of the Companies Act2013 & the SEBI (LODR) Regulations 2015 the Company has formulated "RiskManagement Policy" on 19.06.2018 and the policy is placed on the Companyswebsite www.hmtindia.com.
PARTICULAR OF EMPLOYEES
No employees of the Company received remuneration in excess of the limits prescribedunder Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
HMT Machine Tools Limited
The Subsidiary achieved Sales of Rs.168.83 Crore against Rs. 176.90 Crore (excludingexcise duty) in the previous year and Production attained is of Rs. 163.15 Crore asagainst Rs. 183.30 Crore in the previous year. Net loss reported is Rs. 125.42 Croreduring the year 2017-18 against reported loss of Rs 127.95 Crore in previous year.
HMT (International) Limited
The Subsidiary achieved a turnover of Rs. 24.95 Crore during the year 2017-18 asagainst Rs. 23.98 Crore recorded in the previous year 2016-17. New Order procurementduring the year is Rs. 36.73 Crore as against Rs. 20.19 Crore achieved in the previousyear. Continuing the trend of achieving profits Subsidiary reported Profit before Tax(PBT) of Rs. 0.01 Crore against Rs. 0.26 Crore reported in previous year.
SUBSIDIARIES UNDER CLOSURE:
As per the CCEA decision the operations of the subsidiaries namely HMT Watches LtdHMT Chinar Watches Ltd and HMT Bearings Ltd have been closed. There has been no productionduring the year. Revenue achieved has been on account of sales/transfer of movable assetsof these Subsidiaries. During the year net loss incurred by HMT Watches Limited isRs.13.67 Crore and by HMT Bearings Limited is Rs.1.27 Crore. HMT Chinar Watches Limitedhas achieved profit of Rs. 0.01 Crore.
ASSOCIATE /JOINT VENTURE COMPANY
SUDMO-HMT Process Engineers (India) Limited
This Joint Venture Company could not transact any business during the year underreview. For the financial year 2017-18 this Company showed a Profit after tax of Rs 0.65Lakhs only on account of the interest income of Rs 3.31 Lakhs on the fixed deposits keptwith the Banks.
Gujarat State Machine Tools Corporation Ltd
This Joint Venture Company between HMT and GIIC Ltd has discontinued its operationssince long. It is therefore proposed to divest from this Associate Company jointly withthe JV Partner. The process of disinvestment from this Company is under consideration bythe Company in consultation with the JV Partner.
Salient features of the financial statement of subsidiaries/ associate companies/jointventures are provided in Form AOC-1 as annexure.
INDIAN ACCOUNTING STANDARDS
As required under Companies (Indian Accounting Standard) Rules 2015 (Notification No.111(E) dated 16.02.2015 issued by Ministry of corporate affairs) the Company has preparedthe financial statements in accordance with Indian Accounting Standards(Ind AS) witheffect from Financial year 2016-17 along with comparatives for the previous year 2015-16.
CONSOLIDATED FINANCIAL STATEMENTS
As required under the Companies Act 2013 and SEBI (LODR) Regulation 2015 ConsolidatedFinancial Statements of the Company along with that of the
Subsidiaries for the financial year 2017-18 conforming to the applicable AccountingStandards are attached to this Report along with the Auditors Report on the same.
The financial information of each of the subsidiary companies has been furnished aspart of the Consolidated Balance Sheet of the Company. Separate audited accounts of thesubsidiary Companies will be made available upon request by any member of the Companyinterested in obtaining the same. The annual accounts and other information of each of thesubsidiary companies will be available for inspection by any member at the registeredoffice of the Company & also available at companys website www.hmtindia.com.
Information in accordance with the Companies Act 2013 read with the Companies(Particulars of Employees) Rules 1975 as amended is NIL for the year 2017-18.
The employee strength of the Company as on March 31 2018 stood at 103 Nos comprisingof various categories of employees in manufacturing plants and other offices in technicaland other professional areas.
The number of employees on the rolls of the Company as on March 31 2018 in SC/STEx-servicemen Physically Handicapped and Women Employee Categories etc. is detailedbelow:
|Scheduled Castes ||17 |
|Scheduled Tribes ||02 |
|Other Backward Classes ||15 |
|Ex-Servicemen ||01 |
|Persons with Disabilities ||04 |
|Women employees ||13 |
|Minorities ||06 |
The overall Industrial Relations situation in the Company during the year remainedcordial.
IMPLEMENTATION OF OFFICIAL LANGUAGE
Continuous efforts are being made by the Company towards implementation of OfficialLanguage Act Rules & Policy as per the directives of the Government to enhance thelevels of usage. The Official Language Implementation Committee have been constituted inall the Units of the Company and its Subsidiaries including the Corporate Office atBangalore to monitor implementation of Official Language Act Rules Policy etc. whichmeets at regular intervals in every quarter.
In order to propagate the usage of Hindi as Official Language "HINDI DIWAS/HINDIFORTNIGHT" was observed during the month of September. Various competitions in Hindisuch as Hindi Story narration Hindi News Paper Reading Hindi Quiz Hindi ConversationHindi Antakshari etc. were organized and participants were awarded prizes. A workshopwas organised during the above period. The Hindi Magazines/ Newspapers are being procuredto propagate the usage of Hindi among employees. The concerned Officers of the Companyregularly take part in the meetings of the Town Official Language ImplementationCommittee.
Reporting on progress of Hindi proliferation in the Company is being done periodicallyon Rajabhasha Vibhag portal.
Chief Vigilance Officer (CVO) appointed by the Government of India heads the CorporateVigilance Department of the Company. Presently CVO Engineering Projects India Limited(EPIL) has been assigned with the additional charge of CVO HMT Limited.
The Corporate Vigilance Department carries out vigilance function in the HoldingCompany as well as Subsidiary Companies. Vigilance function in the manufacturing Units andMarketing Offices are looked after by Vigilance Officers under the guidance of ChiefVigilance Officer.
All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports andSurprise Inspection reports to CVO. Reports so received are scrutinized at CVO Office forfurther action. Unit Vigilance Officers also verify Annual Property Returns submitted bythe employees of the Unit.
Apart from regular inspections by Unit Vigilance Officers CVO conducts CTE (ChiefTechnical Examiner at CVC) type surprise and regular inspections of high value purchase/contracts and systems by visiting various subsidiaries and Units.
Violations of rules and procedures observed during the inspection of files by CVO/Dy.CVO/Unit VOs were recorded and depending upon the seriousness of the deviations furtheractions are taken. Unit Vigilance Officers are advised to discuss deviations noticed bythem during their inspection in the quarterly Vigilance Workshop and advice the concernedofficers that the violations of rules and procedures pointed out by the VigilanceDepartment should not be repeated and all the concerned officers should comply with CVCand Company Purchase Manual guidelines.
Emphasis was laid on preventive vigilance by striving towards strict adherence to allrules and procedure and all norms of transparency in tendering process. Based onCVCs guidelines for Improving Vigilance administration by leveragingtechnology and increasing transparency through effective use of website necessarydirections were given by CVO for implementation of the same. Some of the systems put inplace by the Company are:
1 . Uploading of all open tenders and high value Limited Tenders on www.tenders.gov.in(Website of GOI).
2 . Publishing details regarding all purchase orders / contracts concluded during themonth of and above the threshold value (presently Rs 5.00 lakhs). This is generallyfollowed by all manufacturing Units.
3 . Application form for vendor registration along with list of items required by Unitsof HMT Limited and Subsidiaries are made available on Company Website so as to enable theinterested vendors to download the application form and submit the same to the Unit oftheir choice.
4 . Management is in a process of adopting E-procurement process.
5 . Management is in a process of adopting Integrity Pact.
6 . In many of the units / Subsidiary E-payment mode to suppliers is adopted andcompliance level is 30 to 85%.
7 . Quarterly vigilance workshops were organized at all manufacturing units to enhancethe level of vigilance awareness among the employees.
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There are no Material changes and commitments affecting the financial position of thecompany which have occurred between 31st March 2018 and date of signing of this Report.
RELATED PARTY TRANSACTIONS
The details of related party transactions are given in the notes to the FinancialStatements.
All Related Party Transactions entered during the year were in Ordinary Course of theBusiness and at Arms Length basis. No Material Related Party Transactions i.e.transactions exceeding 10% of the annual consolidated turnover as per the last auditedfinancial statement were entered during the year by your Company. Accordingly thedisclosure of Related Party Transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.
PARTICULARS OF LOANS GUARANTEES & 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
Your Directors are thankful to the various Departments and Ministries in the Governmentof India particularly the Department of Heavy Industry Ministry of Corporate AffairsComptroller and Auditor General of India Principal Director-Commercial Audit Statutoryand Branch Auditors various State Governments Foreign Collaborators the SubsidiaryCompanies Suppliers Reserve Bank of India the Consortium of Banks lead by UCO Bank andthe valued Customers of the Company both in India and abroad for their continuedco-operation and patronage.
Your Directors would also like to take this opportunity to express their appreciationfor the contributions made by the Companys employees and look forward to theircontinued services in pursuit of building a world class Indian Company.
For and on behalf of the Board of Directors
Chairman & Managing Director
Place: New Delhi