The Directors are pleased to present the Thirty-Fifth Annual Report ofJohn Cockerill India Limited (formerly CMI FPE Limited) ("the Company") on thebusiness and operations of the Company together with the audited financial statements ofthe Company for the year ended March 31 2021.
|FINANCIAL PERFORMANCE || ||(Rs. in lakhs) |
|Particulars ||Financial Year 2020-2021 ||Financial Year 2019-2020 |
|Total Income ||20258.46 ||38675.50 |
|Profit before depreciation and amortisation expense finance costs and tax expense ||(2276.08) ||3766.89 |
|Less : || || |
|Depreciation and amortisation expense ||503.32 ||566.70 |
|Finance costs ||241.52 ||308.64 |
|Profit / (Loss) before Tax ||(3020.92) ||2891.55 |
|Less : Tax expense : || || |
|Current tax ||- ||566.66 |
|Deferred tax ||(114.71) ||(49.61) |
|Profit / (Loss) for the year ||(2906.21) ||2374.50 |
|Other comprehensive income for the year net of tax ||(59.17) ||(136.36) |
|Total comprehensive income for the year ||(2965.38) ||2238.14 |
OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE
On the evening of March 24 2020 the Government of India announced anation-wide lockdown as a preventive measure against the COVID-19 pandemic in India. Thislockdown was further extended till May 31 2020 and conditional unlocking started in June2020. Hence this fiscal year started on a very grim note and the first quarter wascompletely washed out. The impact of this pandemic has affected almost all the industriescountries and the overall global economy Specifically in India the Q1 FY 2021 GDP droppedby approx. 24%.
For the Indian Steel industry which was already facing strong headwindssince the beginning of 2019 due to general elections intensified trade tensions slowdownin automobile industry and overall economic slowdown this pandemic had only added to theindustry's challenges. Capacity addition had already slowed down as the industry wentthrough a consolidation phase with stressed assets getting acquired under the Insolvency& Bankruptcy Code (IBC) route. On top of it COVID-19 emerged as a severe blow to theindustry. India's finished steel production is expected to be around 94 million tonneswhich is 10% lower than the previous financial year.
Two of our major customers announced temporary suspension of theircapacity expansion projects and notified force majeure on their two very large orderswith the Company which were already under execution. Many of the green field opportunitiesthat the Company were pursuing got delayed as the customers had reduced their capitalallocation. The Company's plants were completely shut down for around two months but mostof the other functions such as project management design sales etc. continued to workfrom home. Thus the working capital got blocked revenue inflows were held up the fixedexpenses continued to be incurred and the COVID continued to affect the mindset of theentire country at both micro and macro levels.
As a result of above factors for the financial year 2020-21 therevenue from operations has dropped by 46.70% to ' 19805.83 lakhs and the Company hasincurred loss of ' 3020.92 lakhs as against profit before tax of ' 2891.55 lakhs in theprevious year.
After conditional removal of lockdown measures the Steel industrystarted its journey on the recovery path. The Union Budget in February 2021 had announceda number of infrastructure projects and increased the outlay on capital expenditure whichis expected to strengthen the steel demand in the medium-term. The announcements such ascapex augmentation in railways metro rail projects and vehicle scrappage policy arelikely to benefit both primary and secondary steel producers. The domestic steel pricesstarted to rise from July 2020 onwards peaked in January 2021. While the larger playershave reported faster recovery the smaller players still appear to face some challengesdue to their limited diversification and limited financial capabilities. However thebroad based recovery in the industry appears to be real considering the increase in thesales volumes in Q3 of FY21.
National Steel Policy (NSP) 2017 had envisaged crude steel capacityof 300 million tonnes (MT) and per capita consumption of finished steel @ 158 kgs by2030-31 as against the per capita consumption of 74.30 kgs in 2019. However the capexplans of all the steel producers have been adversely impacted due to liquidity crunch anduncertainty in demand amidst the slowdown in economy earlier and later by COVID-19pandemic. Moreover the steel industry is highly working capital intensive and hence itwill be critical to see how the funds will be raised for such large capacity additions.
NSP also aims to facilitate the domestic industry to meet the entiredemand of steel including high-grade automotive steel electrical steel special steelsand alloys. For competitive export prices with optimum quality the domestic steelproducers are undertaking modernization plans to bring down their production costs.Though the pandemic has prolonged the course of NSP but the expected increase in steeldemand is likely to mitigate the initial lag. Domestic steel industry is expected toreport improvement in capacity utilization rates from FY22 which has otherwise remainednear 75% for the last few years.
The plant operations and the stalled projects have restarted. TheCompany has won new orders of ' 18600 lakhs during FY 2020-21 as against ' 6900 lakhs inFY2019-20 and have a closing order backlog of ' 51372 lakhs as on March 31 2021.
The Company is in constant touch with all our customers and is takingall the required steps to complete the on-going projects within the revised timelines thatare being agreed with the customers.
The Company is pursuing new orders worth ' 20000 lakhs from variousdomestic and overseas customers which are in advanced stages. Apart from this the Companyis working on several back-up opportunities worth sizeable amounts where technical andcommercial discussions are going on with various prospective customers.
Material Changes and Commitments affecting the financial position ofthe Company
There have been no material changes and commitments affecting thefinancial position of the Company between the end of the financial year and date of thisreport. There has been no change in the nature of business of the Company.
The 2nd wave of COVID-19 pandemic and the lockdown likeconditions imposed across various parts of the country have moderately affected thebusiness operations. The health and well-being of the employees has become a top priorityas a number of employees and their family members have been infected with the virus andthis has also resulted in the loss of a few valuable lives. The fabrication activities atHedavali plant have been impacted due to shortage of oxygen. The Company also have somechallenges to depute its manpower at customer sites worldwide for supervision of erectionand commissioning activities due to pandemic situation in those countries. The Companyalso foresees some risks of supply chain interruption and cost increases due to currentvolatile situation. The Company has implemented a number of measures to mitigate theimpact on its operations and are closely monitoring the situation.
There has been no change in the nature of business of the Company butthe manner of operations and methods of functioning had to be altered to adhere to theCOVID-19 restrictions and directions like social distancing no gathering / meetings ofpersonnel electronic communications replacing physical interface with the customersimplementing "work from home" regulations restricted travel etc. Both thefactories have worked efficiently during the year despite the controlled COVID-19environment. Safety measures and processes have been installed and improved upon at theplants and work-sites. All COVID-19 protocols and compliances have been strictly followed.
In spite of severe economic impact from the COVID-19 pandemic theCompany has managed to remain debt-free and did not seek to avail any moratorium on any ofits dues to the lenders or financial institutions. The Company has also ensured that allits statutory obligations including employee salaries have been paid on time. The bankershave continued their unstinted support in all respects and the Board records itsappreciation for the same.
In view of the loss for the year under review and the need to conserveresources during the difficult times the Directors have with regret decided not torecommend any dividend for the financial year 2020-21. The Company has not transferred anyamount to General Reserve.
Cockerill Maintenance and Ingenerie SA (CMI SA) is the Holding Companyand part of the John Cockerill Group having interest in sectors like Energy DefenceIndustry Environment and Services. The Company is a part of the Industry Sector of theJohn Cockerill Group.
The Company continues to have close collaborative relationship withcustomers supported by an extended global manufacturing network aligned with customerlocations. John Cockerill Group focuses on R & D activities investments have beenmade to support long-term profitable growth and extending help to the customers in valuecreation.
The John Cockerill Group has been extremely supportive of their Indianoperations and continues to provide constant support in terms of technology research anddevelopment systems manufacturing etc.
CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required under Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("the Listing Regulations") asamended a Cash Flow Statement is furnished as part of this Annual Report.
The Company does not have any subsidiaries and hence is not required topublish Consolidated Financial Statements.
CHANGE OF NAME OF THE COMPANY
As informed in the last year's Annual Report the name of the Companywas changed from CMI FPE Limited to John Cockerill India Limited effective from June 162020 pursuant to the Certificate of Incorporation consequent to the change of name issuedby the Registrar of Companies Maharashtra Mumbai. The Company had taken steps to changethe name of the Company in all the official records and the Management is pleased toinform that the new name has been incorporated in almost all the official records and thefilings and returns are being handled in the new name of the Company.
The Company has not accepted any deposits from the public and as suchthere are no outstanding deposits in terms of the Companies (Acceptance of Deposits)Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY
It is the Company's policy not to give loans directly or indirectlyto any persons (other than to employees under contractual obligations) or to other bodycorporates or give any guarantee or provide any security in connection with a loan to anyother body corporate or person. The Company does not make any investment in securities ofany other body corporate. The Company has not taken or given any loan or advances in thenature of loan to its holding Company The Company has no investments.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Being a responsible Corporate Citizen the Company is committed tofulfilling its social responsibilities. Guided by the prevailing regulatory requirementsthe Company has constituted a Corporate Social Responsibility ("CSR")Committee' and also framed a Policy on CSR. The Ministry of Corporate Affairs had amendedthe Companies (Corporate Social Responsibility Policy) Rules 2014 ("CSR Rules")and to give effect to this amendment the CSR policy of the Company was amended during theyear under review. The revised CSR policy is available on the website of the Company viz.www.johncockerillindia.com.
The CSR Committee as on March 31 2021 comprises of Ms. Roma Balwanias Chairperson Mr. Yves Honhon and Mr. Vivek Bhide as members. Effective from April 12021 Mr. Jean Gourp was appointed as a member of the CSR Committee in place of Mr. YvesHonhon.
The terms of reference of the CSR Committee number and dates ofmeeting held attendance of the Directors etc. are furnished separately in the CorporateGovernance Report.
The Company has created a tab on the home page of the Company's websitefor CSR related information to be displayed. The information related to CSR Committee CSRpolicy and the projects undertaken by the Company are updated on a regular basis.
A report on CSR activities as required under Rule 8 of the CSR Rules isfurnished as Annexure A and forms an integral part of this Report.
In terms of Section 135 of the Companies Act 2013 ("theAct") read with the applicable Rules during the year under review the Company wasrequired to spend ' 68.51 lakhs on CSR activities and the Company had spent ' 9.12 lakhsduring the financial year ended March 31 2021. The COVID-19 pandemic prevented theCompany to complete the execution of its CSR projects during the year 2020-21. The ChiefFinancial Officer of the Company has certified to the Board that the funds disbursed forCSR activities were utilized for that purpose.
There are several projects finalised and justifiable on the basis ofneeds sustainability and the capability of these projects to improve social assets. Theshortfall of ' 59.39 lakhs in the spending during the year under report will be spent onongoing projects identified by the Company for health and education in a phased manner asper the annual action plan recommended by the CSR Committee and approved by the Board. Themanner of execution modalities of utilization of funds and implementation schedulesmonitoring mechanism were discussed in detail at the CSR Committee meeting held onFebruary 10 2021.
The unspent amount of ' 59.39 lakhs has been transferred to a separatebank account opened by the Company with Kotak Mahindra Bank Limited and the expenditurefor ongoing projects would be utilized from this account.
The Company has partnered with agencies of repute in locations wherethe Company's factories are located and having pan-India presence to provide support toCSR long-term projects.
The Company's permanent employee strength stood at 413 as on March 312021.
The Company believes that the quality of employees is the key to itssuccess. In view of this it is committed to equip them with skills enabling them toevolve with technological advancements.
The Company and the Group considers safety well-being and security ofits employees of paramount importance. Employees had to embrace new and different ways ofworking such as work from home' and have been subject to stress fears and anxietiesnever experienced before. The HR department of the Company was continuously in touch withthe employees to guide and solve problems. It created awareness regarding COVID-19 andeducated employees about the precautions. The Company conducted meetings through telephoneand video calls in reference to the need for social distancing. The Company preparedsystematic operating plan to address COVID-19 after the lockdown was partially lifted.
The Company strictly adheres to the prescribed norms and practicesregarding health safety and environment. Considering the health and safety of employeesand advisories orders and directions issued by the State and Central Government torestrict the novel Corona virus the Company implemented a work from home' policy toensure employee safety All COVID-19 protocols and directives were strictly implementedand all employees received substantial support during the period of disruption caused bythis pandemic.
Amid COVID-19 pandemic the senior executives of the Company initiateda voluntary pay cut of 20-25% for a period of six months. Following this all the otheremployees of the Company voluntarily agreed for pay cut ranging up to 15% for a period ofthree months. The total amount of savings achieved through this pay cut is ' 1.7 crores.The management would like to place on record the appreciation for the employees forstanding together to support the fight against COVID-19. The Directors also acknowledgethe contribution of the employees for waiver of the salary increase during the year2020-21 and thank all the employees and workmen of the Company for their contributionsupport and continued co-operation throughout the year.
Health and Safety
The details on Health and Safety are provided in the ManagementDiscussion and Analysis Report which forms part of this Report.
Prevention of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has in place a Policy against Sexual Harassment atWorkplace in line with the requirements of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 ("POSH"). The Company hasconstituted an Internal Committee with internal members and Mrs. Gauri Nilakantan (who hasextensive experience in this field) as an external member of the Committee.
All employees especially women employees were made aware of thePolicy and the manner in which the complaints can be lodged.
The following is reported pursuant to Section 22 of the POSH andRegulation 34(3) read with sub-clause 10(I) of Clause C of Schedule V of the ListingRegulations for the year ended March 31 2021 :
a. Number of complaints of sexual harassment received / filed duringthe year : Nil
b. Number of complaints disposed of during the year: Nil
c. Number of complaints pending for more than ninety days: Nil
d. Number of complaints pending as on end of financial year: Nil
e. Number of workshops or awareness programs carried out: 2
f. Nature of action taken by the employer or District officer: NotApplicable
During the year under review no case of sexual harassment in theCompany was reported.
The Company has established comprehensive Risk Management System toensure that risks to the Company's continued existence as a going concern and its growthare identified and addressed on timely basis. As a part of the review of business andoperations the Board with the help of management periodically reviews various risksassociated with the business of the Company and implements appropriate risk mitigationprocesses. However there are certain risks which cannot be avoided but the impact canonly be minimized. The recent disruption and uncertainty in business due to COVID-19pandemic is one such risk due to which the Company's operations have been badly impacted.It might have a long-standing impact on the Company's revenues and margins due toincapacitation of sections of workforce reduced productivity on emotional well-beingduring lockdown / quarantine inability to provide work to some of the employeesdisruption of supply chains demand softening and consolidation in the steel industrysuppliers' inability to service and non-opening of markets.
The details and the process of Risk Management as implemented by theCompany are provided in the Management Discussion and Analysis Report which forms partof this Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company's internal audit system has been continuously monitored andupdated to ensure that assets are safe-guarded established regulations are complied withand pending issues are addressed promptly The Audit Committee reviews reports presented bythe Internal Auditors on a routine basis. The Committee makes note of the auditobservations and takes corrective actions wherever necessary It maintains constant reviewwith statutory and internal auditors to ensure that internal control systems are operatingeffectively. Based on its evaluation (as provided under Section 177 of the Act and Clause18 of the Listing Regulations) the Audit Committee has concluded that as on March 312021 the Internal Financial Controls were adequate and operating effectively
M/s. S R B C & Co. LLP Statutory Auditors of the Company haveaudited the financial statements included in this Annual Report and have issued a reporton the internal controls over financial reporting (as defined in Section 143 of the Act).
The details and the process of internal control systems as implementedby the Company are provided in the Management Discussion and Analysis Report which formspart of this Report.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has a well-defined Whistle Blower Policy' and anestablished vigil mechanism to provide for adequate safeguard against victimization ofDirectors and employees who use the mechanism. The Whistle Blower Policy can be assessedon the Company's website at https://johncockerillindia.com/ financial report.aspx?Subcat=Whistleblower%20Policy&InvestorType=Policies.
The Company's vigil mechanism allows the Directors employees and allstakeholders of the Company to report their genuine concerns about unethical behavioractual or suspected fraud or violation of the code of conduct / business ethics. The vigilmechanisms provides for adequate safeguards against victimization of the persons who availthis mechanism. The whistle-blower policy not only helps the Company in detection offraud but is also used as a Corporate Governance tool leading to prevention anddeterrence of fraud or misconduct. It also provides direct access to the employees toapproach the Chairman of the Audit Committee wherever necessary It is confirmed that nopersonnel of the Company in the context of whistle-blowing has been denied access to theAudit Committee.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review based on the recommendations of theNomination and Remuneration Committee the Board appointed Mr. Jean Gourp as an AdditionalDirector of the Company effective from June 25 2020.
The members of the Company at the Thirty-Fourth Annual General Meeting("AGM") of the Company held on August 27 2020 confirmed the appointment asfollows :
a) Mr. Nandkumar Dhekne was appointed as an Independent Director of theCompany to hold office for a term of 5 (five) years with effect from February 7 2020.
b) Mr. Vivek Bhide was appointed as the Managing Director of theCompany for a term of 3 (three) years with effect from February 8 2020.
c) Mr. Jean Gourp was appointed as a Non-Executive Director of theCompany with effect from June 25 2020.
Mr. D. J. Balaji Rao was appointed as an Independent Director of theCompany to hold the office for a term of 2 (two) years from April 1 2019 to March 312021. On completion of this term Mr. D. J. Balaji Rao ceased to be a Director of theCompany at the end of the day on March 312021. The Board places on record theappreciation for the valuable services support and guidance rendered by Mr. D. J. BalajiRao during his tenure as a distinguished Independent Director of the Company and as theChairman of the Audit Committee.
On the recommendations of the Nomination and Remuneration Committeethe Board of Directors at its meeting held on February 11 2021 subject to the approvalof the members of the Company at the ensuing Annual General Meeting appointed Dr. UrjitPatel (DIN : 00175210) as an Additional / Independent Director on the Board of the Companyto hold the office for a term of 5 (five) consecutive years with effect from April 12021.
Pursuant to the provisions of Section 161 of the Act Dr. Urjit Patelholds office up to the date of the ensuing AGM of the Company and is eligible forappointment as a Non-Executive Independent Director. The Company has received a noticefrom a member along with a cheque in favour of the Company under Section 160 of the Actsignifying his intention to propose Dr. Urjit Patel as candidate for the office ofIndependent Director of the Company at the ensuing AGM.
In pursuance of the Articles of Association of the Company and inaccordance with the provisions of the Act read with the Companies (Appointment andQualification of Directors) Rules 2014 Mr. Joao Felix Da Silva (DIN : 07662251)Non-Executive Director is liable to retire by rotation at the ensuing AGM and beingeligible offers himself for re-appointment. The Board recommends his re-appointment forthe consideration of the members of the Company at the ensuing AGM.
In accordance with the provisions of the Act read with the Rules issuedthereunder the Listing Regulations and the Articles of Association of the CompanyAdditional Director Independent Directors and Managing Director of the Company are notliable to retire by rotation.
A brief resume of the Directors seeking appointment or re-appointmentat the ensuing AGM nature of their expertise in specific functional areas and detailsregarding the Companies in which they hold directorships membership / chairmanship ofcommittees of the Board etc. is annexed to the Notice convening Thirty-Fifth AGM of theCompany.
The proposals regarding the appointment of Dr. Urjit Patel andreappointment of Mr. Joao Felix Da Silva are placed for the approval of the members.
During the year the Directors have provided guidance and direction tosteer the Company during the troubled COVID-19 pandemic situation.
All the Independent Directors have confirmed and declared that they arenot disqualified to act as an Independent Director in compliance with the provisions ofthe Act and Listing Regulations. The Board is of the opinion that the IndependentDirectors are persons of high integrity have relevant experience and expertise andfulfill the independence criteria and all the conditions specified in the Act and ListingRegulations thus making them eligible to act as Independent Directors. As per theregulatory requirements all the Independent Directors have registered their names in theIndependent Directors' Databank pursuant to the provisions of the Act and the Rules madethereunder.
The details of the number and dates of meetings held by the Board andits Committees attendance of Directors and remuneration paid to them are given separatelyin the Corporate Governance Report which forms a part of this Report.
Performance Evaluation of the Board
The Company believes that systematic evaluation contributessignificantly to improve performance at three levels : Organisational Board andIndividual Board Director. It encourages the leadership teamwork accountabilitydecision making communication and efficiency of the Board. Evaluation also ensuresteamwork by creating better understanding of the Board dynamics Board-Managementrelations and thinking collectively as a group within the Board.
In terms of the requirement of the Act and the Listing Regulations anannual evaluation of the Board its Committees and individual Directors was undertakenwhich included the evaluation of the Board as a whole Board Committees and peerevaluation of the Directors.
The details of the above annual evaluation are mentioned in theCorporate Governance Report which forms a part of this Report.
The Board and the Nomination and Remuneration Committee confirmed thatthe performance evaluation was completed during the year under review.
Key Managerial Personnel
The following were the Key Managerial Personnel ("KMP") ofthe Company in compliance with the provisions of Section 203 of the Act during the yearended March 31 2021 :
|i) Mr. Vivek Bhide ||Managing Director |
|ii) Mr. Kiran Rahate ||Chief Financial Officer |
|iii) Mr. Haresh Vala ||Company Secretary |
During the year under review there was no change in the KMP.Remuneration Policy
The Company's Remuneration Policy is prepared in accordance with theprovisions of the Act and the Listing Regulations and is available on the website of theCompany - www.johncockerillindia.com.
The remuneration (including revisions) of the Directors is recommendedby Nomination and Remuneration Committee ("NRC") to the Board for its approval.The remuneration (including revisions) of the Directors so recommended by NRC to theBoard should be within the limits specified in the Act read with the Rules thereunder andas approved by the members of the Company
The remuneration to be paid to KMP and Senior Management is recommendedby NRC to the Board for its approval.
The details of the Remuneration Policy is mentioned in the CorporateGovernance Report which forms a part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledges the responsibility for ensuringcompliances with the provisions of Section 134(3)(c) read with Section 135 of the Act andprovisions of the Listing Regulations and in the preparation of the annual accounts forthe year ended March 31 2021 and state that :
a. in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any;
b. the Directors have selected such accounting policies as mentioned inthe Notes to the financial statements and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at the end of the financial year and of the loss of theCompany for the year ended on that date;
c. the Directors have taken proper and sufficient care to the best oftheir knowledge and ability for maintenance of adequate accounting records in accordancewith the provisions of the Companies Act 2013 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;
d. the Directors have prepared the annual accounts on a 'going concern'basis;
e. the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
f. the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and such systems are adequate and are operatingeffectively.
During the year under review 4 (four) Board Meetings were held on June25 2020 August 7 2020 November 10 2020 and February 11 2021. Further details areprovided in the Corporate Governance Report which forms a part of this Report. Theintervening gap between the meetings was within the period prescribed under the Act andthe Listing Regulations.
Committees of the Board
In compliance with the requirement of applicable laws and as part ofthe best governance practice the following Committees of the Board were functional as onMarch 31 2021 :
i. Audit Committee
ii. Stakeholders Relationship Committee
iii. Nomination and Remuneration Committee
iv. Corporate Social Responsibility Committee
v. Risk Management Committee
vi. Borrowings Committee
vii. Banking Operations Committee
The details with respect to the composition of the Committees theirterms of reference and attendance at the meetings of the Committee of the Board are givenin the Corporate Governance Report which forms a part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all transactions with related partieshave been carried out in ordinary course of business and were on arms' length basis inaccordance with the provisions of the Act read with the Rules thereunder and the ListingRegulations. Prior omnibus approval of the Audit Committee is obtained for thetransactions which are of a foreseeable and repetitive nature. The details of all suchtransactions executed with related parties are placed before the Audit Committee on aquarterly basis for their review and are also placed before the Board.
CMI SA is the Holding Company of the Company and all the subsidiariesof CMI SA are treated as related parties of the Company. Such related party transactions;including those with the Holding Company and fellow subsidiaries which have been carriedout during the current year and previous year are mentioned in the Annual Report inaccordance with the Indian Accounting Standards 24 on Related Party Transactions notifiedby the Companies (Indian Accounting Standards) Rules 2015 as amended and are notrepeated in this Report of the Directors. None of the related party transactions enteredinto by the Company was in conflict with the Company's interest. There were no materiallysignificant related party transactions made by the Company with the Promoters DirectorsKey Managerial Personnel or other designated persons which may have a potential conflictwith the interests of the Company at large.
In compliance with the provisions of Regulation 34(3) read withSchedule V(A) of the Listing Regulations read with Section 134(3)(h) of the Act it isconfirmed that no loans or advances in the nature of loans have been received or paid tothe Holding Company or any Fellow Subsidiary or any Director or to any firms or companiesin which a Director is interested and no investments have been made in the shares of theHolding Company or any of its subsidiaries. The Company does not have any subsidiaries.The Company has no investments. The prescribed disclosure in Form AOC-2 in terms ofSection 134 of the Act is not required.
The members of the Company at the Thirty-Fourth AGM held on August 272020 approved the material related party transactions with CMI SA CMI Industry AutomationPrivate Limited (name changed to John Cockerill Automation Private Limited) and BeijingCockerill Trading Company Limited for transactions over a period of 3 years which are tobe considered material in terms of the Listing Regulations.
The approval of the members of the Company is sought in terms of theListing Regulations for the payment of Brand fee @ 0.6% of the external sales and for thepayment of 3% technical royalty fees to CMI SA on those portions of contracts assigned tothe Company through CMI SA.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant or material orders were passed by the Regulators orCourts or Tribunals which impacts the going concern status of the Company and itsoperations in future.
In terms of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 the members of the Company at the Thirty- Second AGM held on July27 2018 approved the appointment of M/s. S R B C & Co. LLP Chartered Accountants(ICAI Registration No. 324982E/ E300003) as the Statutory Auditors of the Company for aninitial term of five years till the conclusion of the Thirty-Seventh AGM of the Company tobe held in the year 2023. Ratification of their appointment every year is no longerrequired pursuant to the revised provisions of Section 139 of the Act.
The Statutory Auditors have confirmed that they comply with all therequirements and criteria and are qualified to continue to act as the Statutory Auditorsof the Company.
M/s. S R B C & Co. LLP have issued their Independent AuditorsReport on the financial statements for the financial year ended March 31 2021 and theyhave made no qualification reservation or adverse remark or disclaimer in their Report.The Notes thereto are self-explanatory and do not require any explanations from the Board.
During the year under review the Statutory Auditors have not reportedany instances of fraud committed against the Company by its Officer or employees asspecified under Section 143(12) of the Act and therefore no detail is required to bedisclosed under Section 134(3)(ca) of the Act.
In terms of Section 148(1) of the Act read with the Companies (CostRecords and Audit) Rules 2014 the Company is required to arrange for the audit of thecost accounting records maintained by the Company and accordingly such records are madeand maintained in the prescribed manner.
M/s. Kishore Bhatia & Associates Cost Accountants (FirmRegistration No. 000294) were appointed as the Cost Auditors of the Company for conductingthe cost audit for the financial year 2020-21 at a remuneration of ' 2.30 lakhs and thesame was ratified by the members at the Thirty-Fourth AGM held on August 27 2020. CostAudit Report for the financial year ended March 31 2020 was filed with the CentralGovernment before the due date.
The Board after considering the recommendations of the AuditCommittee appointed the aforesaid firm as Cost Auditors for the financial year 2021-22and appropriate resolution in this connection has been included in the Notice conveningthe ensuring AGM of the Company for ratification purpose.
The Company has received consent from M/s. Kishore Bhatia &Associates Cost Accountants to act as Cost Auditors for conducting audit of the costrecords for the financial year 2021-22 along with a certificate confirming theirindependence and arms' length relationship.
During the year under review the Cost Auditor had not reported anymatter under Section 143(12) of the Act therefore no detail is required to be disclosedunder Section 134(3)(ca) of the Act.
M/s. VKM & Associates a firm of Company Secretaries in Practice(Certificate of Practice No. 4279) was appointed as the Secretarial Auditor to carry outthe Secretarial Audit of the Company. The Company has received consent from M/s. VKM &Associates to act as the Secretarial Auditor for conducting the audit of the Secretarialrecords for the financial year ended March 31 2021.
In terms of the provisions of Section 204 of the Act and Regulation 24Aof the Listing Regulations a Secretarial Audit Report for the financial year ended March312021 has been annexed as Annexure B 1 to this Report.
The Secretarial Compliance Report for the financial year ended March31 2021 in relation to compliance of all applicable SEBI Regulations / circulars /guidelines issued thereunder pursuant to requirement of the Listing Regulations has beenannexed as Annexure B 2 to this Report.
There is no qualification arising from the Secretarial Audit Report and/ or Secretarial Compliance Report for the year under review.
There is no qualification reservation adverse remark or disclaimer bythe Secretarial Auditor in their Secretarial Audit Report therefore no detail is requiredto be disclosed under Section 134(3)(ca) of the Act.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 in respect of conservation of energytechnology absorption foreign exchange earnings and outgo are set out at Annexure C andforms an integral part of this Report.
The Directors reaffirm their continued commitment to good corporategovernance practices. During the year under review the Company was in compliance with theprovisions relating to Corporate Governance as provided under the Listing Regulations. Thecompliance report as stipulated under Regulation 34 read with Schedule V of the ListingRegulations as amended is provided in the Corporate Governance section of this AnnualReport. The requisite certificate from M/s. S R B C & Co. LLP Chartered AccountantsStatutory Auditors confirming compliance with the conditions of Corporate Governance asstipulated under the aforesaid Schedule V of the Listing Regulations is attached to theReport of Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 read with Schedule V of the ListingRegulations detailed overview of operations performance and future outlook of theCompany is covered under the Management Discussion and Analysis Report provided in aseparate section forming an integral part of this Report.
The Company has moved to "digital document platform" forBoard and Committee meetings. This has helped the Company to reduce multiple sector travelfrom Europe and from within India for the Directors and others - several times a year -thereby reducing gas / carbon emission; also considerable papers are fully avoided inthe preparation of the meetings. The Board members have adapted to the new softwarequickly and the experience of adopting a nearly all-digital documentation process forBoard and Committee meetings keeps getting better.
EXTRACT OF ANNUAL RETURN
As per the provisions of the Act read with the applicable Rules anextract of the Annual Return in Form MGT-9 is available on the website of the Company -www.johncockerillindia.com. This extract is also annexed as Annexure D and forms anintegral part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The statement of disclosure of remuneration as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended from time to time is annexed as Annexure Eand forms an integral part of this Report.
The information regarding employee remuneration as required pursuant toRule 5(2) and 5(3) of the above Rules is available for inspection. A statement showing thenames and other particulars of the employees drawing remuneration in excess of the limitsset out in the said Rules will be provided upon request. In terms of first proviso toSection 136 of the Act the Report and Accounts are being sent to the members and othersentitled thereto excluding the information on employees' particulars which is availablefor inspection by the members. Any member interested in obtaining a copy thereof may writeto the Company Secretary.
None of the employees listed in the said Annexure is related to anyDirector of the Company. None of the employees holds (by himself or along with his / herspouse and dependent children) more than 2% of the equity shares of the Company
Your Company has adequately insured itself through various insurancepolicies to transfer the risks arising from third party or customer claims damage to orloss of property or people etc.
Directors' & Officers' Liability (D & O) policy covers theDirectors and Officers of the Company against the risk of third party claims arising outof their actions / decisions in the normal course of discharge of their duties which mayresult in financial loss to any third party
The employees of the Company are covered under various employee benefitinsurance schemes that provide cover for Hospitalization Accidental Disability and Death.
The Directors place on record their deep appreciation to the employeesat all levels for their hard work dedication and commitment. In the period of extremeuncertainty due to public health and economic disruption caused by COVID-19 the employeesand associates of the Company along with their families had extended splendid support andmade significant contribution to ensure uninterrupted services to the customers.
The Directors would like to express their sincere appreciation for theassistance and co-operation received from the Government authorities bankers financialinstitutions customers vendors shareholders and other stakeholders during the yearunder review.
The Directors deeply regret the loss of life caused due to outbreak ofCOVID-19 and are grateful to all persons who risked their lives and safety to fight thispandemic.