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International Combustion (India) Ltd.

BSE: 505737 Sector: Engineering
NSE: N.A. ISIN Code: INE403C01014
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NSE 05:30 | 01 Jan International Combustion (India) Ltd
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VOLUME 1247
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Buy Price 204.05
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Sell Price 207.35
Sell Qty 10.00
OPEN 208.00
CLOSE 205.05
VOLUME 1247
52-Week high 265.00
52-Week low 120.00
P/E
Mkt Cap.(Rs cr) 49
Buy Price 204.05
Buy Qty 9.00
Sell Price 207.35
Sell Qty 10.00

International Combustion (India) Ltd. (INTLCOMBUSTION) - Director Report

Company director report

To the Members

Your Directors take pleasure in presenting the Eighty-Fourth AnnualReport including the Audited Annual Financial Statements of the Company for the FinancialYear ended 31st March 2020.

Financial Results (Standalone)

(`in lakhs)

2019-20 2018-19
Revenue from Operations 12395 13416
Profit before depreciation interest & tax 453 1242
Less: Interest 281 316
Depreciation 489 770 514 830
Profit/(Loss) before Tax (317) 412
Less: Provision for Income Tax -
Current Tax - 101
Deferred Tax (reversal)/charge (130) (130) (45) (56)
Profit/(Loss) after Tax (187) 356
Other Comprehensive Income/(Loss) for the year (net of tax) (61) (19)
Total Comprehensive Income/(Loss) (248) 337

Dividend

In view of the loss suffered by the Company during the Financial Yearunder review the Board does not recommend any dividend for the year.

Operations and State of the Company's Affairs

The year under review had been a difficult year for the industry ingeneral and also for your Company as the country experienced severe industrial recessionand the GDP growth dropped to 4.2%. The growth of the manufacturing sector for the yearwas less than 2% as against growth of 6.9% for the year 2018-2019. The business of yourCompany was further affected by a sharp decline of investment in various core sectorindustries such as steel industry & mining as well as the sugar industry.

Further the Company had to shut down all operations sometime aroundthe third week of March 2020 on account of lockdown imposed by the Government(s) becauseof the Covid 19 pandemic and this has also partly affected the performance of the Company.

In view of the above the sale for the year dropped to Rs. 12266 lakhsfrom Rs. 13195 lakhs for the previous year and the EBITDA dropped to Rs. 453 lakhs fromRs. 1242 lakhs of the previous year. The net loss of the Company for FY 2019-20 was Rs.317 lakhs.

Future Outlook

All of you are aware that the Company had to remain closed for thefirst two months of the current financial year on account of lockdown imposed by theGovernment(s) on account of Covid-19 global pandemic and even thereafter the Companycould start its operations with limited manpower as per the directives issued by theCentral and various State governments. The situation became even more critical as theCompany's supply chain has been severely disrupted and unless the normalcy isrestored across the country as a whole the supply chain will continue to remain a seriouschallenge affecting the performance of the Company.

Further as per the estimates of the Reserve Bank of India and otherauthorities including World Bank the country's GDP growth for the year is expectedto be less than 1.5% and the industrial growth is expected to be negative by over 5%. YourCompany therefore expects a challenging year ahead and is making all efforts to have anominal growth and profit.

Having said this the Company would also like to mention that as perthe estimate conveyed by Governor of RBI the GDP growth of 2021-2022 is expected to beover 7% which is a positive indicator and the Company sees a definite possibility ofcoming out of this difficult situation and achieving satisfactorily to be back to itsnormal position in a year's time.

Last year we had informed you about the license agreement with CAPASpain for manufacture of various building material products such as dry mortars withadvanced technology. The Company is pleased to inform you that these products have been inmarket since December 2019 and have received excellent market response and acceptance.The requirement of such high end products are expected to grow further as the traditionalmethod of construction is progressively getting substituted with advanced technology.

Joint Venture Company

Mozer Process Technology Pvt. Ltd. (MPTPL) a Joint Venture Company ofthe Company with Allgaier Werke GmbH Germany offers Mozer Dryers which is a highlyspecialized product with sophisticated technology. For the year under review the revenuefrom operations of MPTPL was Rs. 220.28 lakh as compared to Rs. 157.96 lakh during theprevious Financial Year ended 31st March 2019. MPTPL earned a Profit Before Tax of Rs.6.96 lakh during the Financial Year ended 31st March 2020 as compared to a Loss BeforeTax of Rs. 10.34 lakh during the previous Financial Year ended 31st March 2019.

Like other divisions of the Company the business of the Joint VentureCompany was also severely affected during the year under review by the industrialrecession. However your Company is delighted to inform you that Allgaier Werke GmbHacknowledges that the products manufactured by your Company meets the European qualitystandards and are sourcing these dryers for their various international markets. TheCompany expects further orders from Allgaier Werke GmbH in the current year.

It may be of interest for you to note that in India extraction of sandfrom natural sources such as river beds etc. are banned and therefore there is a growingdemand for manufactured sand requiring crushing cleaning drying and screening. TheCompany manufactures most of the machinery required for such sand plants and the JVCompany has successfully commissioned one such plant in Gujarat for drying and screening.This market is expected to grow rapidly in the future years.

Consolidated Financial Statements

The consolidated financial statements of the Company for the FinancialYear ended 31st March 2020 prepared after taking into consideration the financialstatements of its aforementioned Joint Venture

Company also forms part of the Annual Report for the FY 2019-20. Thesaid consolidated financial statements have been prepared adopting the Indian AccountingStandards (IND AS) under equity method of consolidation considering the transition dateas 1st April 2016. The consolidated revenue from operations and consolidated loss beforetax thus arrived at for the Financial Year ended 31st March 2020 are Rs. 12395.03 lakhand Rs. 315.07 lakh respectively as compared to a consolidated revenue from operations andconsolidated profit before tax for the previous Financial Year ended 31st March 2019 ofRs. 13415.71 lakh and Rs. 408.50 lakh respectively.

A Statement in Form AOC-1 relating to the Associate/Joint VentureCompany as required pursuant to Section 129 (3) of the Companies Act 2013 read with rule5 of Companies (Accounts) Rules 2014 is also attached to the Financial Statements.

The Company has no subsidiary.

Capital Expenditure

The total capital expenditure incurred by the Company during theFinancial Year under review was Rs. 587.90 lakhs.

Extract of Annual Return

An extract of the Annual Return as on the Financial Year ended on 31stMarch 2020 as required under Section 134(3) of the Companies Act 2013 read with Section92(3) of the said Act and Rule 12(1) of the Companies (Management and Administration)Rules 2014 are set out in Annexure-I forming part of this Report.

Energy Conservation Technology Absorption And Foreign ExchangeEarnings & Outgo

All feasible energy conservation methods are being pursued by theCompany and implemented in phases. As required under Section 134(3)(m) of the CompaniesAct 2013 read with the Rule 8(3) of Companies (Accounts) Rules 2014 particularsregarding Conservation of Energy Technology Absorption and Foreign Exchange Earnings& Outgo are set out in Annexure-II forming part of this Report.

Related Party Transactions

Your Board has framed a Related Party Transactions Policy which isavailable on the Company's website. During the year the Company had not entered intoany contract/ arrangement/ transaction with any related party which could be consideredmaterial in accordance with the Related Party Transactions Policy of the Company.

Details of related party transactions (which are not consideredmaterial) entered into on an arm's length basis during the Financial Year ended 31stMarch 2020 are set out in Annexure-III forming part of this Report pursuant to Section134(3)(h) of the Companies Act 2013 read with Section 188 of the said Act and Rule 8(2)of the Companies (Accounts) Rules 2014.

Details Relating to Remuneration of Directors & Employees

A statement as required under Section 197(12) of the Companies Act2013 read with Rule 5 of the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 relating to details of remuneration of Directors and employeesdrawn during the Financial Year ended 31st March 2020 are set out in Annexure-IVforming part of this Report.

Number of Board Meetings

6 (Six) Board meetings of the Company were held during the FinancialYear ended 31st March 2020. For further details please refer to the Report on CorporateGovernance forming part of this Annual Report.

Directors' Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act 2013 read withSection 134(5) of the said Act the Directors to the best of their knowledge and beliefconfirm that: a) in the preparation of the annual accounts the applicable accountingstandards have been followed by the Company along with proper explanation relating tomaterial departures if any;

b) appropriate accounting policies have been selected and appliedconsistently and such judgments and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at31st March 2020 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken 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;

d) the Annual Accounts have been prepared on a going concern basis ;

e) the Board had laid down internal financial controls to be followedby the Company and that such internal financial controls were adequate and were operatingeffectively; and

f) proper systems to ensure compliance with the provisions of allapplicable laws have been devised and such systems were adequate and operatingeffectively.

Directors

Mrs. (Prof.) Bharati Ray (DIN 06965340) Mr. Ratan Lal Gaggar (DIN00066068) & Mr. Sandipan Chakravortty (DIN 00053550) all Independent Directors on theBoard are not liable to retire by rotation in terms of the provisions of Section 149(13)of the Companies Act 2013.

However in accordance with Section 149 of the Companies Act 2013 theterm in office of Mrs. (Prof.) Bharati Ray (DIN 06965340) as an Independent Director ofthe Company expired at the close of business on 6th April 2020 on the completion of fiveyears from her effective date of appointment. She being eligible for a second and finalterm of five years under the Act and having consented to continue in office for suchsecond term the shareholders of the Company by means of a Special Resolution passed attheir 83rd Annual General Meeting held on 4th September 2019 re-appointed her as anIndependent Director for a second and final consecutive term of five years under the Act.

Further in view of the recent amendments in the Securities &Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 which had come into force with effect from 1st April 2019 as both Mr. Ratan LalGaggar and Mrs. (Prof.) Bharati Ray had already attained the age of 75 years the Boardafter taking into consideration the recommendation of the Nomination and RemunerationCommittee on the matter had approved their continuance in office as Independent Directorsof the Company with effect from 1st April 2019 which was duly approved by theshareholders of the Company by means of Special Resolutions passed at their aforementioned83rd Annual General Meeting.

Mr. Sanjay Bagaria (DIN 00233455) Non-Executive Chairman retired byrotation at the aforementioned 83rd Annual General Meeting and being eligible had offeredhimself for re-appointment and was duly re-appointed as a Director of the Company whoseperiod of office shall be liable to be determined by retirement of Directors by rotation.

Mr. Ravi Ranjan Prasad (DIN 00030458) Independent Director resignedfrom the Board of Directors of the Company with effect from 11th November 2019 due topersonal reasons. The Board acknowledges and places on record the invaluable contributionsrendered by Mr. Prasad during his tenure as a Director of the Company.

Mr. Sandipan Chakravortty (DIN 00053550) was appointed as anIndependent Director on the Board on 7th February 2020 subject to approval of theshareholders at their ensuing 84th Annual General Meeting by means of an OrdinaryResolution.

Mr. Sanjoy Saha (DIN 00226685) was appointed as a Non-ExecutiveDirector on the Board on 7th February 2020 subject to approval of the shareholders attheir ensuing 84th Annual General Meeting by means of a Special Resolution consideringthe fact that he has already attained the age of 75 years. Mr. Indrajit Sen (DIN00216190) Managing Director retires by rotation at the ensuing 84th Annual GeneralMeeting and being eligible offers himself for re-appointment.

The Company has received at the first meeting of the Board ofDirectors held during the Financial Year 2020-21 the declarations pursuant to Section149(7) of the Companies Act 2013 from Mr. Ratan Lal Gaggar Mr. Sandipan Chakravortty& Mrs. (Prof.) Bharati Ray Independent Directors of the Company to the effect thatthey meet the criteria of independence as specified in Section 149(6) of the said Act. TheNomination & Remuneration Committee of the Board has devised and the Board has dulyadopted a Board Diversity Policy dealing with Board composition and appointments which isavailable on the Company's website. The Nomination & Remuneration Committeenominates new appointees to the Board and the appointments are made by the Board.

The Nomination & Remuneration Committee of the Board has alsoformulated the criteria for determining the qualifications positive attributes andindependence of Independent Directors to be appointed on the Board of the Company.

Remuneration Policy

The Nomination & Remuneration Committee of the Board has devisedand the Board has duly adopted a Remuneration Policy relating to the remuneration for theDirectors Key Managerial Personnel and other employees of the Company.

The Remuneration Policy of the Company ensures that the level andcomposition of remuneration is reasonable and sufficient to attract retain and motivatethe employees in order to run the Company successfully. The Policy sets out the guidingprinciples for determining the remuneration payable to the Directors Key ManagerialPersonnel and other employees of the Company.

The remuneration payable to the Executive Directors is recommended bythe Nomination & Remuneration Committee based on the guiding principles as set out inthe Remuneration Policy and subject to the approval of the Board the shareholders and theCentral Government wherever applicable.

As regards the Non-Executive Directors the Board from time to timedetermines the sitting fee payable for attending each meeting of the Board or Committeethereof within the overall limits fixed under the

Companies Act 2013 and rules made thereunder. The Non-ExecutiveChairman is paid a Commission of upto 2% of the net profits of the Company subject to theapproval of the Nomination and Remuneration Committee the Board the shareholders and theCentral Government wherever applicable.

The employees of the Company are assigned grades according to theirqualifications and work experience competencies as well as their roles andresponsibilities in the Company. Individual remuneration is determined within theappropriate grade and is based on various factors such as job profile skill setsseniority experience and prevailing remuneration levels for equivalent jobs.

Board Evaluation

The Nomination & Remuneration Committee of the Board has formulatedthe criteria for evaluating the performance of the Board and the individual Directors andthe same has been adopted by the Board. The Independent Directors in their separatemeeting evaluate the non-independent Directors and the Board as a whole once a year. TheIndependent Directors are evaluated individually once a year by the entire Board sans theIndependent Director being evaluated. The various Committees of the Board are evaluated bythe Board.

Other Key Managerial Personnel

Mr. Suhas Chandra Saha is the Company Secretary of the Company and Mr.Asish Kumar Neogi is the Chief Financial Officer of the Company.

Auditors' Report

The Auditors' Reports on the Annual Financial Statements (bothStandalone & Consolidated) for the Financial Year ended 31st March 2020 are withUnmodified Opinion i.e. there are no reservations qualifications or adverse remarks inthe same.

Auditors

In accordance with Section 139 of the Companies Act 2013 M/s. Ray& Ray (Firm Registration No. 301072E) Chartered Accountants of Webel Bhawan GroundFloor Block EP & GP Bidhan Nagar Sector V Salt Lake Kolkata – 700 091 wereappointed as the Statutory Auditors of the Company at the 81st Annual General Meeting(AGM) of the shareholders of the Company held on 20th September 2017 for a period offive years with effect from the conclusion of the said 81st AGM till the conclusion of the86th AGM.

Cost Records and Audit

In terms of the provisions of Section 148(1) of the Companies Act2013 read with the Companies (Cost Records and Audit) Rules 2014 the Company isrequired to maintain cost accounting records relating to all the products manufactured bythe Company and accordingly such accounts and records are made and maintained by theCompany.

Further in terms of the aforementioned provisions as the salesturnover of the Company was in excess of the specified limit of Rs. 100 crores during theFinancial Year ended 31st March 2018 audit of such cost accounting records relating toall the products manufactured by the Company was applicable for the Financial Year2018-19.

Accordingly M/s. S. Datta & Co. Cost Accountants in Practice whowere appointed as the Cost Auditors of the Company to audit the cost accounting recordsrelating to all the products manufactured by the Company across all its plants for thesaid Financial Year 2018-19 duly issued their Report which was filed by the Company withthe Ministry of Corporate Affairs Government of India on 12th February 2020. The duedate for filing the said report was 29th February 2020. The remuneration paid to the CostAuditors for the Financial Year 2018-19 was duly approved by the shareholders at their83rd Annual General Meeting held on 4th September 2019.

As the sales turnover of the Company during the Financial Year ended31st March 2019 was also in excess of the specified limit of Rs. 100 crores audit ofsuch cost accounting records relating to all the products manufactured by the Company wasapplicable for the Financial Year 2019-20 and accordingly M/s. S. Datta & Co. CostAccountants in Practice were re-appointed as the Cost Auditors of the Company to auditthe cost accounting records relating to all the products manufactured by the Companyacross all its plants for the said Financial Year 2019-20. The remuneration proposed to bepaid to the Cost Auditors for the Financial Year 2019-20 shall be placed before theshareholders for their approval at the ensuing 84th Annual General Meeting.

Audit Committee

The Audit Committee of the Board as on date consists of Mr. Ratan LalGaggar Chairman of the Committee & Independent Director Mr. Sandipan ChakravorttyIndependent Director and Mr. Indrajit Sen Managing Director. For further details pleaserefer to the Report on Corporate Governance forming part of this Annual Report.

Secretarial Audit Report

The Secretarial Audit Report for the Financial Year ended 31st March2020 issued by Mr. Arup Kumar Roy Company Secretary in Practice Secretarial Auditor ofthe Company is annexed to this Report and marked as Annexure VI as required under Section204 of the Companies Act 2013.

There are no reservations qualifications or adverse remarks in thesaid Secretarial Audit Report.

Loans Guarantees or Investments U/S 186

The Company has not granted any loans to other bodies corporate nor hasthe Company given any guarantees or provided any security for loans by other bodiescorporate under Section 186 of the Companies Act 2013.

The Company invests its surplus fund in Fixed Deposits with banks or inFixed Maturity Plans/ debt-oriented mutual funds with Mutual Fund Houses which are fixedincome bearing debt funds. The Company has invested Rs. 50 lakh in the equity shares ofits Joint Venture Company Mozer Process Technology Pvt. Ltd.

Risk Management

The Company has a Risk Management Plan in place approved by the Boardof Directors. The Risk Management Committee is responsible for the implementation of theplan and reporting thereon to the Board.

Internal Financial Controls

In the opinion of the Board the internal financial controls withreference to the Financial Statements established by the Board are adequate. During theyear such controls were tested and no material weakness in the design operation orimplementation thereof was observed.

Corporate Governance

In compliance with the provisions of the Securities & ExchangeBoard of India (Listing Obligations & Disclosure Requirements) Regulations 2015relating to Corporate Governance the following Reports/ Certificates are attached whichform part of this Annual Report : i) Management Discussions and Analysis Report. ii)Report on Corporate Governance. iii) Compliance Certificate by CEO/CFO. iv) Declarationfrom the Managing Director on compliance of Code of Conduct by the Directors and SeniorManagement Personnel. v) Certificate by a Practicing Company Secretary regardingcompliance of conditions of Corporate Governance.

Corporate Social Responsibility

In accordance with Section 135 of the Companies Act 2013 a CorporateSocial Responsibility (CSR) Committee of the Board of Directors of the Company has beenconstituted which as on date consists of Mr. Sanjay Bagaria Chairman of the CommitteeMrs. (Prof.) Bharati Ray Independent Director & Mr. Ratan Lal Gaggar IndependentDirector. The CSR Committee has developed a CSR Policy which has been duly approved by theBoard and is available on the website of the Company. The CSR Committee is responsible forimplementing the CSR Policy of the Company and reporting thereon to the Board. An AnnualReport on CSR Activities including the Responsibility Statement of the CSR Committee forthe Financial Year ended 31st March 2020 as required under Section 135 of the CompaniesAct 2013 read with Rule 8 of the Companies (Corporate Social Responsibility) Rules 2014are set out in Annexure-V forming part of this Report.

Vigil Mechanism

Pursuant to Section 177 of the Companies Act 2013 read with Rule 7 ofthe Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of theSecurities & Exchange Board of India (Listing Obligations & DisclosureRequirements) Regulations 2015 the Board of Directors of the Company have established aVigil Mechanism (Whistle Blower Policy) of the Company for the purpose of enabling theDirectors and Employees to report unethical behaviour actual or suspected fraud andviolation of the Company's Code of Conduct or ethics policy and the same has beenposted on the website of the Company. The Audit Committee of the Board is responsible foroverseeing/ monitoring the functioning and implementation of the Vigil Mechanism.

Human Resource Management

The human resource development programmes in various areas areundertaken on an ongoing basis.

Industrial Relations

Industrial relations during the year under review at all units remainedcordial.

Fixed Deposits

The Company did not have any outstanding fixed deposits as on 31stMarch 2020 or as on 31st March 2019. The Company did not accept any fixed deposits duringthe year.

Credit Ratings

In June 2020 credit rating agency ICRA Limited had downgraded thelong-term rating on the fund-based and non-fund based working capital credit facilitiesenjoyed by the Company from its bankers on consortium basis from [ICRA]BBB- (pronounced asICRA triple B minus) [signifying a moderate degree of safety regarding timely servicing offinancial obligations and carrying moderate credit risk] to [ICRA]BB+ (pronounced as ICRAdouble B plus) [signifying a moderate risk of default regarding timely servicing offinancial obligations]. The outlook on the long term rating had been revised from Stableto Negative. ICRA had also downgraded the short-term rating on the aforementionedfacilities from [ICRA]A3 (pronounced as ICRA A three) [signifying a moderate degree ofsafety regarding timely servicing of financial obligations and carrying higher credit riskas compared to instruments/ facilities rated in the higher categories] to [ICRA]A4+(pronounced as ICRA A four plus) [signifying a minimal degree of safety regarding timelyservicing of financial obligations and carrying very high credit risk and susceptibilityto default].

Quality Certifications

The Quality Management Systems of the Company with respect to itsplants at Baidyabati Nagpur & Aurangabad and also its Corporate Office at Kolkatahave been certified by the Indian Register Quality Systems (Accreditation by RvA theNetherlands) to conform to the requirements of the Standard ISO 9001:2008.

Application for Registration Under MSMED Act

In accordance with Notification No. S.O. 1702(E) dated 1st June 2020issued by the Ministry of Micro Small & Medium Industries Government of Indiarevising the financial parameters / limits of the twin criteria of investment in Plant& Machinery/ Equipment and sales turnover for obtaining registration under the MicroSmall & Medium Enterprises Development Act 2006 which shall come into force witheffect from 1st July 2020 the Board of Directors of the Company at its meeting held on29th June 2020 has decided that the Company would make an application for obtainingregistration under the said Act under the category of medium enterprise as it satisfiesboth the aforesaid revised twin criteria and as the Board is of the opinion that the saidregistration would result in multiple benefits for the Company.

General

No significant or material orders have been passed by the regulators orcourts or tribunals impacting the going concern status of the Company or theCompany's operations in future.

An Internal Complaints Committee as required under The SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013 hadbeen formed with Mrs. Swagata Roy Assistant General Manager – Finance thesenior-most woman employee in the Company as its Presiding Officer. No complaints ofsexual harassment were received by the Committee during the year under review.

Acknowledgement

Your Directors take this opportunity to thank all governmentauthorities banks customers suppliers and shareholders for the continuous supportextended by them to the Company. Your Directors also place on record their appreciationfor the dedication and commitment of the employees at all levels in achieving andsustaining excellence in all areas of operations of the Company.

For & on behalf of the Board
Kolkata Sanjay Bagaria
29th June 2020 Chairman

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