Your Directors are pleased to present the Thirty Fourth Annual Report of John CockerillIndia Limited (formerly CMI FPE Limited) on the business and operations of the Company andthe audited financial statements for the year ended March 31 2020.
| || ||(Rs in lakhs) |
|Particulars ||Financial Year 2019-2020 ||Financial Year 2018-2019 |
|Total Income ||38675.50 ||51754.90 |
|Profit before depreciation and amortisation expense finance costs and tax expense ||3766.89 ||5290.52 |
|Less: || || |
|Depreciation and amortisation expense ||566.70 ||577.53 |
|Finance costs ||308.64 ||9.60 |
|Profit / (Loss) before Tax ||2891.55 ||4703.39 |
|Less : Tax expense: || || |
|Current tax ||566.66 ||902.60 |
|Deferred tax ||(49.61) ||291.05 |
|Profit / (Loss) for the year ||2374.50 ||3509.74 |
|Other comprehensive income for the year net of tax ||(136.36) ||31.47 |
|Total comprehensive income for the year ||2238.14 ||3541.21 |
OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE
Operations ancial year 2019-20 the global business scenario fin During theremained subdued and there were no positive structural factors which could providefundamental support to the global steel industry. For the major part of financial year2019-20 India's economic growth was subdued due to the slowdown in sectors like capitalgoods consumer durables infrastructure and construction sectors which are the primarilysteel-intensive sectors. This adversely affected the steel demand and consequently thedemand and prices witnessed a steady decline and reached a bottom in September 2019. In2019-20 crude steel output registered a fall at 108.500 million tonne (MT) down 2.2 percent from 110.921 MT in 2018-19. The market demand started an upward trend from mid ofNovember 2019 after the end of monsoon and festive season.
However the onset of COVID-19 pandemic severely affected the steel industry in Indiaby impacting its labour force and supply chain both domestically and globally. Exportsand imports also took a beating due to the COVID-19 pandemic and the subsequent lockdown.
The spread of coronavirus also impacted the country's consumption of steel which fell6.6% month-on-month to 0.580 MT in March 2020. The crude steel production at 7.38 MTobserved a significant decline 22.7% in March 2020 as against 9.56 MT during February2020. The finished steel export declined 20.5% to 0.453 MT from 0.570 MT February 2020.The onset of COVID-19 and the lockdown overall have now presented a bleak situation forthe steel sector as a whole.
As a result of above factors for the financial year 2019-20 our revenue fromoperations has dropped by 25.24% to Rs 37100.35 lakhs and profit before tax has droppedby 38.52% to Rs 2891.55 lakhs from the previous year which incidentally was thestrongest performance in the history of the Company.
Your Company has received orders of approx. Rs 69 crores only (including foreignexchange impact on year end orders) during the year under review and has a closing orderbacklog of Rs 538 crores as on March 31 2020.
Lockdown measures to contain the spread of COVID-19 pandemic have immensely affectedsteel customers like auto and construction segments that had to close down. According toIndian Steel Association it is expecting the demand to contract by around 7% in 2020because of measures taken to contain the pandemic as against the forecast of 5% growthindicated in February 2020.
Being an intermediate product and dependent on derived demand steel companies haveresorted to rationalising their production. However almost all of our customers areevaluating restarting of production in a phased manner from June 2020. These customersare expecting domestic demand to restart gradually with segments like packaging steelproducts for domestic gas distribution infrastructure special steel for automotive etc.For the next couple of months their focus will be on a balance between domestic andexports. As we understand from our customers their export orders will be fulfilled out ofcurrent inventories and production will be ramped up in a gradual manner after thedomestic demand picks up upon relaxation of lockdown.
Your Company is in constant touch with all its customers and is fully geared up tocomplete the on-going projects within the revised timelines that are being agreed uponwith the customers. Even during the lockdown period though the plant operations werestopped the design and project management activities have been continued with more than70% of our employees in these functions working from home.
Your Company is pursuing new orders worth Rs 700 crores from various domestic andoverseas customers of which prospects worth Rs 70 crores are in very advanced stage. Apartfrom this the Company is working on back-up opportunities worth Rs 1000 crores wheretechnical discussions are going on with various prospective customers.
Material Changes and Commitments affecting the financialposition of the Company
There has been no change in the nature of business of the Company. There have been nomaterial changes or commitments affecting the financial position of the Company betweenthe end of the financial of the Company to which the financial statements relate and thedate of this Report.
In the last month of financial year 2019-20 the COVID-19 pandemic developed rapidlyinto a global crisis forcing governments to enforce lock-downs of all economic activity.For the Company the focus immediately shifted to ensuring the health and well-being ofall employees and on minimizing disruption to services to our customers globally. As ofMarch 31 2020 work from home was enabled to most of the non-factory employees to workremotely and securely.
The unprecedented outbreak of COVID-19 has impacted the global economy and human lifemaking it a very challenging environment for all the businesses. The changes forced onpeople and businesses by the pandemic are likely to last for some time and establishedways of doing business may undergo changes leading to new way of working. The COVID-19pandemic has dented the steel demand because of the nation-wide lockdown and resultant dipin the economic activities.
The economic fallout of and the subsequent recovery from COVID-19 impact will depend onmultiple factors such as recovery driven by containment efforts supply chain disruptionsimpact of lockdowns The continued spread of COVID-19 could adversely affect theworkforce customers economies and financial markets globally potentially leading tofurther economic downturn. This could decrease our customer's spend on capex adverselyaffect demand for our products increase pricing pressure impose supply-side constraintsetc.
The growth of your Company also depends on the outlook of the overall economic growth.Primary risk to the business will be on account of any adverse changes to the economy.There is uncertainty as to how long the impact of lockdown is expected to continue andwhen one can witness normalcy returning to the economy. While short term outlook isuncertain the long term outlook continues to be positive on account of various economicreforms increasing aspirations sustained consumption momentum and persistent infraspending. In the past also Indian economy showed strong recovery in the face of theglobal financial crisis. We are hopeful that the growth momentum picks up and the Indianeconomy will see a resurgence that will help the business of your Company.
The Board has duly taken into account the above developments in assessing their impacton the financial statements as fully disclosed the notes thereto.
Your Directors recommend a dividend of Rs 5/- per equity share of face value of Rs 10/-each i.e. 50% aggregating to Rs 246.89 lakhs for the financial year 2019-20 (PreviousYear final dividend of Rs 10/- per equity share). If declared by the members at theforthcoming Annual General Meeting ("AGM") dividend will be depositedwith the bank and paid after August 27 2020. The Tax Deducted at Source ("TDS")will be deducted by the Company as per the provisions of the Income Tax Act 1961.
The Board of Directors ("Board") has decided to retain the entireamount of profits for financial year 2019-20 in the Profit & Loss Account and havenot made any transfer to General Reserve.
Transfer of amounts to Investor Education and Protection Fund
A sum of Rs 124310/- being the dividend lying unclaimed for seven consecutive yearsout of the dividend declared by the Company for the year ended March 31 2012 wastransferred to the Investor Education and Protection Fund ("IEPF") of theCentral Government in September 2019.
The Company's Authorised Share Capital during the financial year ended March 31 2020stood at Rs 1000 lakhs. The Paid-up Equity
Share Capital of the Company remained at Rs 493.78 lakhs comprising of 4937813 equityshares of Rs 10/- each. During the year under review the Company has neither issued anyshares with or without differential voting rights nor has granted any stock options orsweat equity. As at March 31 2020 and at any time during the year none of the Directorsor the Key Managerial Personnel of the Company held /holds any instruments convertibleinto equity shares of the Company.
CHANGE OF NAME OF THE COMPANY
During the year under review the Board vide circular resolution approved the change ofname of the Company from CMI FPE Limited to John Cockerill India Limited subject to theavailability of the name from Central Registration Centre (CRC) Ministry of CorporateAffairs (MCA). The new name has been made available by the CRC of MCA vide its letterdated January 30 2020. The Board at its meeting held on February 7 2020 noted the nameavailability and approved the Postal
Ballot Notice for the approval of the members of the Company for the change of name byway of Special Resolution.
The members of the Company accorded their approval for the Special Resolution forchange of name and alteration of Articles of Association of the Company through PostalBallot. The Special Resolution for change of name was approved by the members of theCompany on March 17 2020. Necessary intimation in this respect was made to the StockExchange. The Registrar of Companies Maharashtra Mumbai had approved the change of nameof the Company to John Cockerill India Limited and Certificate of Incorporation consequentto the change of name has been issued by the Registrar of Companies Maharashtra Mumbaion June 16 2020. The Board at its meeting held on June 25 2020 noted the change of nameof the Company.
ADOPTION OF NEW SET OF ARTICLES OF ASSOCIATION
During the year under review the members of the Company through
Postal Ballot adopted a new set of Articles of Association of the Company in place ofthe existing Articles of Association to be consistent with Section 5 of the CompaniesAct 2013 ("the Act") including Rules made thereunder. The SpecialResolution was approved by the members on March 17 2020. The new set of Articles ofAssociation is uploaded on the website of the Company at www.johncockerillindia.com.
During the year under review your Company has not accepted any deposits from thepublic within the meaning of Sections 73 and 74 of the Act read with the applicable Rules(including any statutory modification(s) or re-enactment(s) thereof for the time being inforce).
No amount on account of principal or interest on deposits from public was outstandingas on March 31 2020.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY
It is the Company's policy not to give loans directly or indirectly to any persons(other than to employees under contractual obligations) or to other body corporates orgive any guarantee or provide any security in connection with a loan to any other bodycorporate or person. Your Company does not make any investment in securities of any otherbody corporate. Your Company has not taken or given any loan or advances in the nature ofloan to its holding Company.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As per the provisions of Section 135 of the Act and Rules made thereunder the Board ofDirectors has constituted a Corporate Social Responsibility ("CSR")Committee. The Company has adopted a CSR policy as recommended by the CSR Committeecovering the objectives initiatives outlay implementation monitoring etc. The
CSR Policy is displayed on the website of the Company www.johncockerillindia.com.
As on March 31 2020 the CSR Committee comprises of Ms. Roma Balwani as Chairpersonand Mr. Yves Honhon and Mr. Vivek Bhide as members. The Board of Directors at its meetingheld on February 7 2020 appointed Mr. Vivek Bhide as the member of the Committee w.e.f.February 8 2020 in place of Mr. Raman Madhok who ceased to be a member of the Committeeconsequent to his ceasing to be a Director of the Company.
The terms of reference of the CSR Committee number and dates of meeting heldattendance of the Directors etc. are furnished separately in the Corporate GovernanceReport.
A report on CSR activities in the format prescribed under the Companies (CorporateSocial Responsibility Policy) Rules 2014 duly approved by the members of CSR Committeehas been appended as Annexure A and forms an integral part of this Report.
In terms of Section 135 of the Act read with the applicable Rules during the yearunder review the Company was required to spend Rs 44.26 lakhs on CSR activities and theCompany had spent Rs 11.63 lakhs during the financial year ended March 31 2020. Theshortfall in the spending during the year under report is intended to be utilized in aphased manner in future upon identification of suitable projects within the Company's CSRpolicy.
The Company has undertaken projects in the areas of Education Health & Nutritionand Environment. These projects are in accordance with Schedule VII of the Act and theCompany's CSR Policy.
The Company has partnered with agencies of repute and has committed to incurexpenditure for CSR initiatives in the coming years through structured programs andprojects. These projects and programs are on-going and have a qualitative long term impacton the beneficiaries.
The HR department's mandate is to provide internal services related to leadershipdevelopment talent management employee compensation labour relations and many otherservices essential to drive the organization's strategic objectives and priorities.
The permanent employee strength of the Company was 505 as on March 31 2020. HumanResources department continues to lead enhancements and standardization of the PerformanceManagement process. The department provides innovative and responsive training programsand this year has clocked 9570 hours in addition to training hours on safety.
Your Company once again demonstrated their leadership by winning the JohnCockerill Public Award' for the fourth consecutive year and this time for Safety -A culture at Taloja'. This clearly signifies the importance of Safety in the Company.
Efforts will continue in ensuring that the Company's workforce is well supportedcompetent and dedicated to support all areas of business and ready to meet allchallenges.
The industrial relations continued to be cordial at all levels throughout the year.Your Directors wish to thank all the Employees and Workmen of the Company for theircontribution support and continued cooperation throughout the year.
Health and Safety
The details on Health and Safety are provided in the Management Discussion and AnalysisReport which forms part of this Report.
Prevention of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013
As per the requirement of the Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013 ("POSH") your Company has a robustmechanism in place to redress any complaints. The Company has complied with the provisionsrelating to the constitution of Internal Complaints Committee under POSH.
The Internal Committee (IC) is composed of internal members and an external member whohas extensive experience in the field.
Frequent communication of this Policy is done through various programs and at regularintervals to the employees. Third party workshops and awareness programs are organized forsensitizing the employees to the provisions of the said Act.
During the year under review no case of sexual harassment in your Company wasreported.
Risk management is an integral part of your Company's operating framework. Your Companybelieves that identifying and managing the risks in a timely manner helps in maximizingreturns. The Company's approach to address business risks is comprehensive and includesperiodic review of such risks and a framework for mitigating controls and also areporting mechanism for such risks.
Your Company follows the globally recognized COSO framework. The Company recognizesthat the emerging and identified risks need to be managed and mitigated to:
Protect its shareholders and other stakeholders' interests
Achieve its business objective
Enable sustainable growth
The details and the process of Risk Management as implemented by the Company areprovided in the Management Discussion and Analysis Report which forms part of this Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
A robust system of internal control commensurate with the size and nature of itsbusiness and the scale and complexities of its operations forms an integral part of theCompany's policies. Your Company has an effective internal risk mitigation system whichis constantly assessed and strengthened with new / revised standard operating procedures.
The internal audit role is entrusted to PricewaterhouseCoopers Private Limited areputed firm of Chartered Accountants. The main thrust of internal audit is to test andreview controls appraisal of risks and audit of business processes besides benchmarkingcontrols with the best practices in the industry.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. Your Company has a robust Management Information System which is an integral partof the control mechanism.
The Audit Committee of the Board of Directors Statutory Auditors and gs findintheBusinessHeadsareperiodicallyapprisedoftheinternalaudit and corrective actions taken.Internal Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the Internal Audit function reports to the Audit Committee.
This formalized system of internal control and risk management framework facilitateseffective compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("the Listing Regulations") the Act and relevantstatutes as amended from time to time applicable to the Company.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
Your Company has a robust mechanism through its Whistle Blower
Policy approved and adopted by the Board of Directors of the Company in compliance withthe provisions of the Act and the Listing Regulations.
The Company's vigil mechanism allows the Directors employees and all stakeholders ofthe Company to report their genuine concerns about unethical behavior actual or suspectedfraud or violation of the code of conduct / business ethics. The vigil mechanisms providesfor adequate safeguards against victimization of the persons who avail this mechanism. Thewhistle-blower policy not only helps the Company in detection of fraud but is also usedas a Corporate Governance tool leading to prevention anddeterrenceoffraudormisconduct.Italso for a term of 5 (five) consecutive years providesdirect access to the employees to approach the Chairman of the Audit Committee wherevernecessary. It is affirmed that no personnel of the Company has been denied access to theAudit Committee.
The Whistle Blower Policy is available on the website of the Company www.johncockerillindia.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Retirement by rotation and subsequent re-appointment
In accordance with the provisions of the Act read with the Companies (Appointment andQualification of Directors) Rules 2014 and the Articles of Association of the CompanyMr. Yves Honhon (DIN 02268831) Non-Executive Director is liable to retire by rotation atthe ensuing AGM and being eligible offers himself for re-appointment. The Boardrecommends his re-appointment for the consideration of the members of the Company at theensuing AGM. Brief profile of Mr. Yves Honhon has been given in the Notice convening theAGM.
In accordance with the provisions of the Act read with the Rules issued thereunder theListing Regulations and the Articles of Association of the Company Additional DirectorIndependent Directors and Managing Director of the Company are not liable to retire byrotation.
Change in Directorate
(i) Cessation of Directorship of Mr. Raman M. Madhok Independent Director
Mr. Raman M. Madhok (DIN 01798377) Independent Director of the Company informed theBoard of Directors of his desire to step down from Directorship due to personal reasonswith effect from August 6 2019. Mr. Raman M. Madhok had confirmed that there was no othermaterial reason for his resignation.
Mr. Raman M. Madhok had joined the Board in the year 2009 and since then has been anactive member of the Board and its Committees where he was a member. He has contributedimmensely to the functioning of the Board and the management has benefited from his adviceand directions. The Board places on record its collective unanimous appreciation of thevaluable services rendered and contribution made by Mr. Raman M. Madhok during his tenureas an Independent Director on the Board of the Company during the last 10 years.
(ii) Cessation of Directorship of Mr. Fabrice Orban Non-Executive Director
Mr. Fabrice Orban (DIN 05114495) Non-Executive Director of the Company informed theBoard of Directors at its meeting held on October 30 2019 to step down as a Director onthe Board of the Company with effect from October 30 2019 due to personal reasons.
The Board places on record its sincere appreciation of the valuable services renderedand contribution made by Mr. Fabrice Orban during his tenure as a Non-Executive Directoron the Board of the Company.
(iii) Appointment of Mr. Nandkumar Dhekne as an Additional / Independent Director ofthe Company
Based on the recommendation of the Nomination and Remuneration Committee ("NRC")the Board of Directors of the Company at its meeting held on February 7 2020 hadapproved the appointment of Mr. Nandkumar Dhekne (DIN 02189370) as an Additional /Independent Director on the Board of the
Company to hold the office w.e.f. February 7 2020 subject to the approval of themembers of the Company.
Pursuant to the provisions of Section 161 of the Act Mr. Nandkumar Dhekne holds officeup to the date of the ensuing AGM of the Company and is eligible for appointment as aNon-Executive Independent Director. The Company has received a notice from a member alongwith a cheque in favour of the Company under Section 160 of the Act signifying hisintention to propose Mr. Nandkumar Dhekne as candidate for the office of IndependentDirector of the Company at the ensuing AGM.
(iv) Re-appointment and cessation of Mr. Raman Madhok as the Managing Director of theCompany
The earlier term of Mr. Raman Madhok (DIN 00672492) as the Managing Director of theCompany expired on October 8 2019. In view of the developments in the Company it wasconsidered advisable that the Company continue to benefit from his stewardship for a fewmore months till his successor could be in place. At the request of the NRC and the BoardMr. Raman Madhok agreed to stay on for a maximum further period of six months. The Boardon the recommendation of the NRC subject to the approval of the members of the Companyapproved the re-appointment of Mr. Raman Madhok as the Managing Director for a furtherperiod of six months effective from October 9 2019. The members of the Company videpostal ballot on December 11 2019 approved the re-appointment of Mr. Raman Madhok as theManaging Director for such further period of six months on the same terms and conditionsincluding the remuneration.
Mr. Raman Madhok ceased to be the Managing Director and Key Managerial Personnel of theCompany effective from the close of working hours of February 7 2020 by mutual agreementbetween him and the Board. The Board at its meeting held on February 7 2020 approved thecessation and placed on record their deep appreciation for the valuable services renderedby Mr. Raman Madhok during his tenure as a Managing Director of the Company.
The Board places on record its collective unanimous appreciation of the valuableservices rendered and contribution made by Mr. Raman Madhok as the Managing Director onthe Board of the Company. The Board credited Mr. Raman Madhok for the strength with whichhe has taken the Company out of hard water.
(v) Appointment of Mr. Vivek Bhide as an Additional / Managing Director of the Company
On the recommendation of the NRC the Board at its meeting held on February 7 2020had appointed Mr. Vivek Bhide (DIN 02645197) as an Additional / Managing Director of theCompany for a period of 3 (three) years effective from February 8 2020 subject to theapproval of the members of the Company.
Mr. Vivek Bhide is a Key Managerial Personnel of the Company.
Pursuant to the provisions of Section 161 of the Act Mr. Vivek Bhide holds office upto the date of the ensuing AGM of the Company and is eligible for appointment as theManaging Director. The Company has received a notice from a member along with a cheque infavour of the Company under Section 160 of the Act signifying his intention to proposeMr. Vivek Bhide for the office of Managing Director of the Company at the ensuing AGM.
(vi) Appointment of Mr. Jean Gourp as an Additional / Non-Executive Director of theCompany
Based on the recommendation of the NRC the Board at its meeting held on June 25 2020approved the appointment of Mr. Jean Gourp (DIN 02268912) as an Additional / Non-ExecutiveDirector on the Board of the Company w.e.f. June 25 2020 subject to the approval of themembers of the Company.
Pursuant to the provisions of Section 161 of the Act Mr. Jean Gourp holds office up tothe date of the ensuing AGM of the Company and is eligible for appointment as aNon-Executive Director. The Company has received a notice from a member along with acheque in favour of the Company under Section 160 of the Act signifying his intention topropose Mr. Jean Gourp as a Non-Executive Director of the Company at the ensuing AGM.
Brief profiles of Mr. Nandkumar Dhekne Mr. Vivek Bhide and Mr. Jean Gourp are given inthe Notice convening the AGM for the information of the members.
The proposals regarding the appointment of Mr. Nandkumar Dhekne Mr. Vivek Bhide andMr. Jean Gourp are placed for your approval.
Declaration from Independent Directors
All the Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under the Act and the Listing Regulations. In theopinion of the Board the Independent Directors fulfill the conditionsofindependencespecifiedin the Act and the Listing Regulations. The Independent Directorshave also confirmed that they have complied with the Company's Code of Conduct. In termsof the Listing Regulations the Independent Directors have confirmed that they are notaware of any circumstance or situation which exist or may be reasonably anticipated thatcould impair or impact their ability to discharge their duties with an objectiveindependent judgment and without any external influence.
Performance Evaluation of the Board
The Board has carried out an annual evaluation of the performance of the Board theBoard Committees and of the individual directors pursuant to the provisions of the Act andthe Listing Regulations.
The Board evaluated its performance after seeking inputs from all the Directors on thebasis of criteria such as Board composition and structure effectiveness of boardprocesses information and functioning etc. The performance of the Committees wasevaluated by the Board after seeking inputs from the Committee members on the basis ofcriteria such as the composition of the Committees effectiveness of the Committeemeetings etc. The above criteria are as provided by the Guidance Note on Board Evaluationissued by the Securities and Exchange Board of India.
The Board and the NRC confirmed that the performance evaluation was completed duringthe year under review.
Key Managerial Personnel
Pursuant to the provisions of the Act the Key Managerial Personnel ("KMP")as on March 31 2020 are :
|i) Mr. Vivek Bhide ||Managing Director |
|ii) Mr. Kiran Rahate ||Chief Financial Officer |
|iii) Mr. Haresh Vala ||Company Secretary |
Changes in KMP
As informed above Mr. Raman Madhok ceased to be the Managing Director of the Companywith effect from the close of working hours of February 7 2020. Mr. Vivek Bhide wasappointed as the Managing Director and KMP of the Company w.e.f. February 8 2020.
During the year under review Mr. Akash Ohri ceased to be the Chief Financial Officerof the Company w.e.f. July 30 2019 as he has taken new assignment in the Industry Sectorof CMI SA in Belgium. Mr. Kiran Rahate was appointed as the Chief Financial Officer andKMP of the Company w.e.f. August 1 2019.
Pursuant to the provisions of the Act and the Listing Regulations the Board of yourCompany has framed a Remuneration Policy for the Directors KMP and other employees. Thephilosophy for remuneration is based on the commitment of fostering a culture ofleadership with trust. While formulating the policy the Board had considered the factorslaid down in the Act which are as under :
That the level and composition of remuneration is reasonable and sufficientto attract retain and motivate the Directors quality required to run the Companysuccessfully;
Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
Remuneration to Directors KMP and Senior Management involves a balancebetween fixed and incentive pay reflecting short and long term performance objectivesappropriate to the working of the Company and its goals.
The key principles governing the Remuneration Policy are as follows :
Role played by the individual;
Reflective of the size of the Company complexity of the sector / industry /Company's operations and the Company's capacity to pay;
Consistency with recognized best practices; and
Alignment to all regulatory requirements.
In accordance with the policy the Managing Director KMPs Senior Management andemployees are paid basic salary fixed salary benefits perquisites allowances andannual incentive remuneration / performance linked bonus subject to achievement of certainperformance criteria and such other parameters as may be considered appropriate from timeto time by the Board. The performance linked bonus would be driven by the outcome of theperformance appraisal process and performance of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by the management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatthe Companys internal financial controls adequate and operating effectively duringthe financial year 2019-20
Pursuant to Section 134(5) of the Act the Board of Directors to the best of theirknowledge and belief and according to the information and explanations obtained by themconfirm :
a. that in the preparation of the accounts for the financial year ended March 31 2020the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
b. that the Directors have selected such accounting policies as mentioned in the Notesto the financial statements and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company as at the end of the financial and of the profit of the Company forthe year ended on that date;
c. that the Directors have taken proper and sufficient care to the best of theirknowledge and ability for maintenance of adequate accounting records in accordance withthe provisions of the Companies Act 2013 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
d. that they have prepared the accounts for the financial year ended March 31 2020 ona going concern' basis;
e. that the Directors have laid down internal financial controls for the of theCompanywhich are adequate and are operating effectively; and f. that the Directors have devisedproper systems to ensure compliance with the provisions of all applicable laws and suchsystems are adequate and are operating effectively. a
The Board meets at regular intervals to discuss and decide on Company / business policyand strategy apart from other statutory
Board business. The Board / Committee meetings are pre-scheduled and a tentative annualcalendar of the meetings is circulated to the Directors well in advance to help them plantheir schedule and ensure meaningful participation in the meetings. Only in case ofspecial and urgent business if the need arises the Board's / Committee's approval istaken by passing resolutions through circulation or by calling Board / Committee meetingsat short notice as permitted by law.
The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Board Meetings and General Meetings.
The agenda for the Board and Committee meetings include detailed notes on the items tobe discussed to enable the Directors to take an informed decision.
The Board had held 5 (five) meetings during the financial 20. The details of the numberof meetings of the Board and attendance of Directors at the Board Meetings are mentionedin the report on Corporate Governance annexed hereto. The intervening gap between themeetings was within the period prescribed under the Act and the Listing Regulations.
Committees of the Board
In compliance with the requirement of applicable laws and as part of the bestgovernance practice the following Committees of the Board were functional as on March 312020 : .
i. Audit Committee ii. Stakeholders Relationship Committee iii. Nomination andRemuneration 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 their terms of referenceand attendance at the meetings of the Committee of the Board are given in the CorporateGovernance Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered with Related Parties for the year under review were carriedout in the ordinary course of business and based upon well-set principles of arms' lengthbasis in accordance with the provisions of the Act read with the Rules issued thereunderand the Listing Regulations. Thus a disclosure in Form AOC-2 in terms of Section 134 ofthe Act is not required. All details of related party transactions are furnished in theNotes to Accounts.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company at www.johncockerillindia.com. None of theDirectors has any pecuniary relationship or transactions with the Company exceptremuneration sitting fees and commission. None of the related party transactions enteredinto by the Company was in conflict with the Company's interests. There are 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.
The Board of the Company has approved the criteria for securing the omnibus approval bythe Audit Committee within the framework of the policy on related party transactions.Omnibus approvals are taken at the beginning of the financial year for the transactionswhich are repetitive in nature. A quarterly statement of all Related Party Transactions isplaced before the Audit Committee for review and approval at every meeting specifying thenature value and terms and conditions of the transactions. These are thereafter placedbefore the Board for approval.
Effective from April 1 2019 the payment of Technology fees to CMI SA @ 3% wasdiscontinued and the members approved the payment of 3% technical royalty fees on theportion of contracts secured by CMI SA and awarded to the Company to compensate for theefforts and expenses incurred by CMI SA.
At the 33rd AGM held on August 1 2019 the members approved the relatedparty transactions with CMI SA CMI Industry Automation Private Limited and CMIEngineering (Beijing) Co. Limited for transactions over a period of 2 to 3 years which areto be considered material in terms of the Listing Regulations. During the year ended March31 2020 total value of transactions with CMI SA was Rs 156.66 crores and thetransactions with CMI Industry Automation Private Limited and CMI Engineering (Beijing)Co. Limited were for Rs 5.86 crores and Rs 8.30 crores respectively.
The approval of the members of the Company for the payment of Brand fee @ 0.6% of theexternal sales and for the payment of 3% technical royalty fees to CMI SA on thoseportions of contracts assigned to the Company through CMI SA is sought in terms of theListing Regulations.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future.
M/s. S R B C & Co. LLP Chartered Accountants (ICAI Registration No.324982E/E300003) were appointed as the Statutory Auditors of the Company at the 32nd AGMheld on July 27 2018 to hold conclusion of the 37th AGM of the Company to be held in theyear 2023. M/s. S R B C & Co. LLP have confirmed that they comply with all therequirements and criteria and are qualified to continue to act as the Statutory Auditorsof the Company.
The Statutory Auditors have issued an unmodifiedopinion on the Financial Statements forthe financial year ended March 31 2020. There has been no qualification in their Reportand the Notes thereto are self-explanatory and do not require any explanations from theBoard.
During the year under review the Statutory Auditors had not reported any matter underSection 143(12) of the Act therefore no detail is required to be disclosed under Section134(3)(ca) of the Act.
The Company is required to conduct the audit of the cost accounting records maintainedby the Company under the provisions of the Act read with the Companies (Cost Records andAudit) Rules 2014 and accordingly such records are made and maintained in the prescribedmanner.
Based on the recommendation made by the Audit Committee the Board have appointed M/s.Kishore Bhatia & Associates Cost Accountants (Firm Registration No. 00294) as theCost Auditor of the Company to conduct the audit of the cost accounting records maintainedby the Company for the financial year 2020-21 on a remuneration ofRs 2.30 lakhs.
The Company has received consent from M/s. Kishore Bhatia & Associates CostAccountants to act as Cost Auditors for conducting audit of the cost records for thefinancial year 2020-21 along with a certificate confirming their independence and arms'length relationship.
As required under the Act the remuneration payable to the Cost Auditor is required tobe placed before the members of the Company for their ratification at the ensuing AGM.Accordingly a resolution seeking members' ratification of the remuneration payable toM/s. Kishore Bhatia & Associates Cost Accountants is included in the Notice conveningthe 34th AGM.
During the year under review the Cost Auditor had not reported any matter underSection 143(12) of the Act therefore no detail is required to be disclosed under Section134(3)(ca) of the Act.
The Board of Directors of the Company had appointed M/s. VKM & AssociatesPracticing Company Secretaries (Certificate of Practice No. 4279) as the SecretarialAuditor to conduct the audit of the Secretarial records for the financial year 2019-20.
The Company has received consent from M/s. VKM & Associates to act as theSecretarial Auditor for conducting the audit of the Secretarial records for the financialyear ended March 31 2020.
The Secretarial Audit Report for the financial year ended March 31 2020 under the Actread with the Rules issued thereunder and the Listing Regulations (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force) is set out inAnnexure B 1 to this Report.
The Secretarial Compliance Report for the financial year ended March 31 2020 inrelation to compliance of all applicable SEBI Regulations / office circulars / guidelinesissued thereunder pursuant to requirement of the Listing Regulations is set out asAnnexure B 2 to this Report. There is no qualification arising from the Secretarial AuditReport and / or Secretarial Compliance Report for the year under review.
During the year under review the Secretarial Auditor had not reported any matter underSection 143(12) of the Act therefore no detail is required to be disclosed under Section134(3)(ca) of the Act.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as required under the provisions of the Act read with Rule 8(3) of theCompanies (Accounts) Rules 2014 in respect of conservation of energy technologyabsorption foreign exchange earnings and outgo are set out at Annexure C and forms anintegral part of this Report.
The Report of Corporate Governance as stipulated under Regulation 34 read with ScheduleV of the Listing Regulations as amended together with a certificate from the StatutoryAuditors of the Company is presented in a separate section forming an integral part ofthis Report.
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 enclosed to theReport of Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report as required under the Listing Regulationsdetailing the review of operations performance and future outlook of the Company isprovided in a separate section forming an integral part of this Report.
AWARDS AND ACCOLADES
During the year under review your Company was conferred with an award for excellentfinancial performance in the previous financial i.e. Financial year 2018-19 in theMid-corporate category under the Engineering & Machinery sector. This award wasconferred by M/s. Dun & Bradstreet and RBL Bank in their SME Business ExcellenceAwards 2019 function.
Your Company once again won the John Cockerill Public Award' for the fourthconsecutive year in a row for "Safety A culture" for its Taloja plant.
SEBI vide its circular dated May 12 2020 granted relaxation for compliance of ListingRegulations in respect of sending physical copies of Annual Reports to the shareholderswho have not registered their email address and those shareholders to whom Annual Reportshave been sent by mail and who have requested for a hard copy. This relaxation is for theAnnual Reports for Annual General Meeting held in the year 2020.
The Company has moved to "digital document platform" for Board and Committeemeetings. This has helped the Company to reduce administrative time plus postage andpapers for the preparation of the meetings. The Board members have adapted to the newsoftware quickly and the experience of adopting a nearly all-digital documentation processfor Board and Committee meetings keeps getting better.
EXTRACT OF ANNUAL RETURN
As per the provisions of the Act read with the applicable Rules an extract of theAnnual Return in Form MGT-9 is available on the website of the Company -www.johncockerillindia.com. The extract of Annual Return as at March 31 2020 in FormMGT-9 is annexed as Annexure D and forms an integral part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required to be disclosed in the Directors' Report as required underSection 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended from time to time isannexed as Annexure E and forms an integral part of this Report.
The information regarding employee remuneration as required pursuant to Rule 5(2) and5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules 2014 is available for inspection. Astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said Rules will be provided upon request. In terms offirst proviso to Section 136 of the Act the Report and Accounts are being sent to themembers and others entitled thereto excluding the information on employees' particularswhich is available for inspection by the members. Any member interested in obtaining acopy thereof may write to the Company Secretary.
None of the employees listed in the said Annexure is related to any Director of theCompany. None of the employees holds (by himself or along with his / her spouse anddependent children) more than 2% of the equity shares of the Company.
Your Company has adequately insured itself through various insurance policies totransfer the risks arising from third party or customer claims damage to property orpeople etc.
Directors' & Officer's Liability (D & O) policy covers the Directors andOfficers of the Company against the risk of third party claims arising out of theiractions / decisions in the normal course of discharge of their duties which may result infinancial loss to any third party.
The employees of the Company are covered under various employee benefit insuranceschemes that provide cover for Hospitalization Accidental Disability and Death.
Your Company has been able to operate efficiently because of the culture ofprofessionalism creativity integrity and continuous improvement in all functions andareas as well as the efficient utilization of the Company's resources for sustainable andprofitable growth.
Your Directors hereby wish to place on record their appreciation of the efficient andloyal services rendered by each and every employee without whose whole-hearted effortsthe overall satisfactory performance would not have been possible. Your Directors lookforward to the long term future with confidence.
Your Directors would like to express their appreciation for the cooperation andassistance received from the Government authorities bankers financial institutionsvendors shareholders and other stakeholders during the year under review.
| ||For and on behalf of the Board |
| ||Joao Felix Da Silva |
|Mumbai ||Chairman |
|June 25 2020 ||DIN : 07662251 |