Your Directors are pleased to present the 36th Annual Report onbusiness and operations of your Company alongwith the audited financial statements andaccounts for the year ended 31st March 2018.
Highlights for the financial year are as under:
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For the Year ended 31st March 2018
For the Year ended 31st March 2017*
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* Figures have been regrouped as per Indian Accounting Standards (INDAS).
Operations and Financial Overview
During the year under review your Company's turnover was at Rs. 204.81crore as compared to Rs. 201.46 crore for the previous year. The Company made a ProfitBefore Tax of Rs. 10.37 Crore for the year 2017-18 as compared to Rs. 9.68 Crores in theprevious year. The Profit After Tax was at Rs. 4.94 crore vs. Rs. 9.88 crore in theprevious year.
The year under review saw countrywide implementation of Goods andServices Tax (GST). This is a welcome reform that was introduced by the CentralGovernment. Though it impacted your Company's performance in the immediate months afterintroduction the impact was mitigated due to implementation of core strategies andacceleration of business in project markets in the remaining months coupled with improvedoperational efficiencies. Indian economy continued to grow at a strong pace and isexpected to show an improvement over the previous year. It is expected that the economywill grow at 7.2% in 2017-18 slightly higher than 7.1% in the previous financial year. Asmentioned earlier the long awaited GST Act was finally implemented successfully. Consumerspending got a temporary shock upon its implementation. It also impacted the Company'squarter wise performance. However as the year progressed demand recovered and achievednormalcy by 4th quarter. In this economic scenario your Company delivered a marginalgrowth in revenue and Operating Earnings before Interest Tax Depreciation andAmortisation (EBITDA).
A detailed analysis of the financial results is given in the ManagementDiscussion and Analysis Report which forms part of this report.
Your Directors are pleased to recommend a maiden dividend of 5% i.e.Rs. 0.50 per equity share of Rs. 10 each for the year ended on 31st March 2018 after 22years. The dividend if approved by the members would involve a cash outflow of Rs. 1.67crores (inclusive of tax on dividend).
Corporate Governance & Management Discussion and Analysis Report
Your Company believes that sound practices of good CorporateGovernance. Transparency Accountability and Responsibility are the fundamental guidingprinciples for all decisions transactions and policy matters of the Company. A Report onCorporate Governance alongwith a certificate from the Statutory Auditors of the Companyregarding compliance of conditions of Corporate Governance as stipulated under Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 forms part of this Annual Report. Further the Management Discussion and AnalysisReport for the year under review as stipulated under Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 is given inAnnexure I to this Report.
The Nomination and Remuneration Committee of the Board of Directors ofthe Company inter alia administers and monitors the Employees Stock Option Scheme of theCompany. The Stock Option Scheme 2014 is in compliance with Securities and Exchange Boardof India (Share Based Employee Benefits) Regulations 2014 and there have been no materialchanges in the said scheme during the year under review.
During the year under review 37389 nos. of Stock Options got vestedunder the Employees Stock Option Scheme -2014 and were exercised immediately aftervesting. Accordingly the Company made the allotment of 37389 Equity Shares. TheNomination and Remuneration Committee of the Board of Directors further granted 11129Stock Options during the year under review comprising about 0.04% of the current paid upcapital.
The applicable disclosures as stipulated under the SEBI Guidelines ason March 31 2018 (cumulative position) with regard to the Employees' Stock Option Scheme(ESOS) are provided in Annexure II to this Report.
Voting rights on the shares issued to employees under the ESOS areeither exercised by them directly or through their appointed proxy.
During the year with the allotment of 37389 equity shares onexercising of Stock Options by employees the total paid up equity share capital of theCompany increased from 27672561 equity shares of Rs. 10/- each to 27709950 equityshares of Rs. 10/- each. The said equity shares have been listed on the Bombay StockExchange Limited and they rank pari passu with the existing equity shares in all respects.Accordingly the Paid-up Share Capital of the Company stood at Rs. 277099500 dividedinto equity shares of Rs.310 each as on 31st March 2018.
The promoters of the Company i.e. Mahindra and Mahindra Limited (M& M) hold 15144433 equity shares which represents 54.65 percent of the total paidup capital of the Company. Your Company continues to be a subsidiary company of M & M.The Company does not have any subsidiary company.
Contracts and arrangements with Related Parties
During the financial year all contracts/arrangements/ transactionsentered by the Company with related parties were in the ordinary course of business and onan arm's length basis. During the year the Company had not entered into anycontract/arrangement/ transaction with related parties which could be considered materialin accordance with the policy of the Company on materiality of related party transactions.All related party transactions are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval is also obtained from the Audit Committee forthe related party transactions which are of repetitive nature as well as the transactionswhich cannot be foreseen and accordingly the required disclosures are made to theCommittee on quarterly basis for approval of the Committee. The Company's major relatedparty transactions are generally with its holding and associate companies. The relatedparty transactions are entered into based on considerations of various businessexigencies such as synergy in operations sales transactions through tenders orotherwise. All related party transactions are negotiated on an arms-length basis and areintended to promote the Company's interests. The Policy on materiality of related partytransactions and dealing with related party transactions as approved by the Board may beaccessed on the Company's website at the link:http://www.epcmahindra.com/pdf/EPC_Policy_on_Related Party_ Transactions.pdf. The relatedparty transactions have been set out in the Note No. 31 to the financial statement.
The Company has constituted a Risk Management Committee comprising Mr.Nikhilesh Panchal Mr. Ashok Sharma and Mr. Anand Daga. Mr. Nikhilesh Panchal is theChairman of this Committee. The Company has adopted the Risk Management Policy. TheCommittee is entrusted with the responsibility to assist the Board in (a) overseeing andapproving the Company's enterprise wide risk management framework; and (b) overseeing thatall the risks that the organization faces such as strategic financial credit marketliquidity security property IT legal regulatory reputational and other risks havebeen identified and assessed.
There is an adequate mechanism in place about risks and uncertaintiesthat can impact itsability to achieve its strategic objectives risk assessment riskmitigation and minimization procedures and its periodical review.
Employees at all levels have contributed to the performance of yourCompany. Your Directors place on record the cooperation of employees during the year underreport. The Directors also place on record the unstinted cooperation extended by the staffmembers during the period under review.
The Management Discussion and Analysis Report gives an overview of thedevelopments in Human Resources / Industrial Relations during the year.
Safety Health and Environmental Performance
Your Company's commitment towards safety health and environment isbeing continuously enhanced and your Company encourages involvement of all its employeesin activities related to safety including promotion of safety standards. This is alsodemonstrated by the fact that there has been no single incidence of accident for the last12603days. The Safety Committee constituted for the same regularly reviews the adherenceof safety norms. Some of the programs undertaken by the Company include behaviour basedsafety training Knowledge based fire extinguisher training fire fighting training andSafety awareness etc. Various health checkup programs for employees were regularlyundertaken by the Company during the year. Requirements relating to various environmentallegislations and environment protection have been duly complied by your Company.
Directors and Key Managerial Personnel a) Key Managerial Personnel(KMP)
In accordance with the provisions of Section 203 of the Act thefollowing persons have been designated as KMP of the Company as at 31st March 2018:
|Name of the KMP ||Designation |
|Mr. Ashok Sharma ||Managing Director |
|Mr. Sanjeev Mohoni ||Chief Executive Officer (CEO) |
|Ms. Sunetra Ganesan ||Chief Financial Officer (CFO) |
|Mr. Ratnakar Nawghare ||Company Secretary (CS) |
Pursuant to the provisions of Section 149 of the Companies Act 2013the Non independent Director Ms. Sangeeta Prasad would retire and being eligible hasoffered herself for reappointment.
The Company has received declarations from all the IndependentDirectors of the Company under Section 149(7) of the Act confirming that they meet thecriteria of independence as laid down - in Section 149 (6) of the Companies Act 2013.
The information required pursuant to Section 197(12) read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of ratio of remuneration of a director to the median remuneration of the employeesof the Company for the financial year is given in the Annexure III to this Report.
The Company has devised a Policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors which includescriteria for performance evaluation of the non-executive directors and executive director.The statement indicating the manner in which formal annual evaluation of the Directorsthe Board and Board level committees is given in detail in the Report on CorporateGovernance which forms part of this Annual Report.
The Company had on the basis of the Policy for performance evaluationof Independent Directors Board Committees and other individual Directors followed aprocess of evaluation by the Board for its own performance and that of its Committees andindividual Directors.
The details of programmes for familiarisation of Independent Directorswith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company and related mattersare put up on the website of the Company. During the year the Independent Directors ofthe Company met on 27th April 2017.
The following policies of the Company are attached herewith marked asAnnexure IV and Annexure V: a) Policy on Appointment of Directors and Senior Managementand Succession Planning for Orderly Succession to the Board and the Senior Management.
b) Policy for Remuneration of the Directors Key Managerial Personneland other employees.
Significant and material orders passed by the Regulators or Courts orTribunals
During the previous year the Director Horticulture Maharashtrahad issued the Order dated 30th July 2016 deregistering the Company in the State ofMaharashtra for a period of 10 years and also restricting to participate in any subsidyrelated business in the State on account of failure of samples in testing.
The Company had taken up the matter at the appropriate levels and basedon the merits the samples were subsequently retested and passed at the recognizedlaboratory. Subsequently the Department of Horticulture had registered the Company as perOrder dated 26th September 2017 for a period of 5 years from 2017-18 and accordingly theearlier order of July 2016 stands set aside.
Further the Order dated 28th March 2017 from the Director Horticultureand Farm forestry Madhya Pradesh inter alia de-registering the Company in the State ofMadhya Pradesh from participating in State Sponsored Horticulture Subsidy Scheme in thecountry for a period of 1 year was stayed vide its Order dated 1st April 2017.Subsequently based on the merits of the matter the said order was cancelled vide Orderdated 29th June 2017 by the Director Horticulture Madhya Pradesh.
Directors' Responsibility Statement
Pursuant to section 134 (5) (e) of the Companies Act 2013 yourDirectors based on the representations received from the Operating Management and afterdue enquiry state that: a) in the preparation of the annual accounts for the year endedMarch 31 2018 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame; b) the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2018 andof the profit of the Company for the year ended on that date; c) the Directors have takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) the Directors haveprepared the annual accounts on agoing concern' basis; e) the Directors have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and are operating effectively; and f) the Directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems are adequate and operating effectively.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee (CSR Committee) hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board.
The CSR Policy may be accessed on the Company's website at the link:http://www.epcmahindra.com/pdf/EPC_CSR_Policy.pdf The key philosophy of all CSRinitiatives of the Company is guided by three core commitments of Scale Impact andSustainability.
During the year under review your Company initiated few projects suchas supply of drinking water pipe line upgradation of the toilet facilities of a school inthe rural area medical check-up camps. These projects were mainly implemented directlythrough employee participation. During the year under review the Company has spent Rs.16.44 lacs which is over 2% of the average net profits of last three financial years onCSR activities.
The Annual Report on CSR activities is annexed herewith marked asAnnexure VI.
Disclosures under Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules framed thereunder
During the year under review there were no complaints reported/resolved pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the Rules framed thereunder.
Vigil Mechanism/Whistle Blower policy
In order to ensure that the activities of the Company and its employeesare conducted in a fair and transparent manner by adoption of highest standards ofprofessionalism honesty integrity and ethical behaviour the Company has adopted a vigilmechanism policy. Whistle Blower or Complainant as the case may be under the said Policyshall be entitled to direct access to the Chairperson of the Audit Committeein appropriateor exceptional cases.This policy is explained in the Report on Corporate Governance andalso posted on the website of Company.
The Auditors Messrs. Deloitte Haskins & Sells CharteredAccountants Baroda holds office under second term of five years until the conclusion ofthe Annual General Meeting to be held in the year 2021 as per the Resolution passed by theShareholders on July 29 2016 subject to the ratification by members in every AnnualGeneral Meeting. The Auditors are eligible for reappointment under Section 139 (1) of theCompanies Act 2013 and have furnished a certificate to this effect. The Directorsrecommend for ratification of their reappointment as Auditors of the Company.
The Company had filed the Cost Audit Report as per the Companies (CostAccounting Records) Rules 2011 prescribed under Section 148 (6) of Companies Act 2013and Rule 6(6) of the Companies (Cost Records and Audit) Rules 2014 pertaining to thefinancial year 2016-17 before the due date of filing. Pursuant to section 148 of theCompanies Act 2013 the Board of Directors on the recommendation of the Audit Committeeappointed M/s Shilpa & Company Cost Accountants as the Cost Auditors of the Companyfor the financial year 2018-19. M/s Shilpa & Company have confirmed that theirappointment is within the limits of section 139 of the Companies Act 2013 and have alsocertified that they are free from any disqualification specified under Sections 141(3) and148(5) of the Companies Act 2013.
The Audit Committee has also received a Certificate from the CostAuditor certifying their independence and arm's length relationship with the Company.
The Directors recommend the remuneration payable to the Cost Auditorsof the Company for the year 2018-19. The approval from Shareholders for the remunerationpayable to the Cost Auditors is being sought at the ensuing Annual General Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013read with the Rules therein the Secretarial Audit Report for the financial year ended on31st March 2018 issued by Mr. Sachin Bhagwat Practising Company Secretary is attached asAnnexure VII to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
Public Deposits & Loans / Advances
During the year the Company did not accept any fixed deposit. Therewere unclaimed/unpaid deposits and unclaimed/ unpaid interest warrants outstanding as on31st3March 2018 amounting to Rs.0.16 lacs. Your Company has neither made any loans oradvances nor did any guarantees or securities which are required to be disclosed in theAnnual Accounts of the Company.
Uses & Application of Funds raised under Rights Issue
In the year 2012 the Company had allotted 10358199 equity shares ata price of Rs. 40 per share (including a premium of Rs. 30/- per share) resulting in totalissue size of Rs. 41.43 crores under the Rights Issue. The uses and application of fundsraised under Rights Issue are given in Note No 34 to the Financial Statement. Withthis the Rights Issue proceeds of Rs. 41.43 crores have been fully utlised.
Energy Conservation and Technology Absorption and Foreign ExchangeEarnings and Outgo
The particulars relating to energy conservation technology absorptionforeign exchange earnings and outgo as required to be disclosed under sub-section(3) (m)of Section 134 of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts)Rules 2014 are provided in Annexure VIII to this Report.
DISCLOSURES: Audit Committee
The Audit Committee comprises Independent Directors namely M/s. VinayakPatil (Chairman) S Durgashankar and Anand Daga as other members. All the recommendationsmade by the Audit Committee were accepted by the Board.
The CSR Committee comprises M/s Ashok Sharma (Chairman) S Durgashankarand Vinayak Patil as other members.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises Directors namelyM/s. Anand Daga (Chairman) S Durgashankar and Vinayak Patil as other members.
Meetings of the Board
Four meetings of the Board of Directors were held during the year. Forfurther details please refer the Report on Corporate Governance of this Annual Report.
Extract of Annual Return
Pursuant to Sub- section 3(a) of Section 134 and Sub-section 3 ofSection 92 of the Companies Act 2013 read with Rule 12(1) of the Companies (Managementand Administration) Rules 2014 the extracts of Annual Return of the Company as at 31stMarch 2018 is annexed herewith as Annexure IX to this Report.
Statement of deviation(s) or variation(s)
During the year under review there were no deviations of fundsreported to the Audit Committee in respect of the funds raised in the year 2012 under theRights Issue.
Your Directors have devised proper systems to ensure compliance withthe provisions of all applicable Secretarial Standards and that such systems are adequateand operating effectively.
Further your Directors state that no disclosure or reporting isrequired in respect of the following items as there were no transactions on these itemsduring the year under review:
1. Details relating to deposits covered under Chapter V of theCompanies Act 2013.
2. Issue of equity shares with differential rights as todividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employeesof the Company under any scheme save and except ESOS referred to in this Report.
4. There were no frauds reported by auditors (includingSecretarial and Cost auditor) to the Audit Committee or Board and also not reported to theCentral Government.
5. There were no material changes and commitments if anyaffecting the financial position of the Company which have occurred between the end of thefinancial year and the date of this Report.
Particulars of Employees
Particulars of employees as required under Section 197 of the Act readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed to this Report and marked as Annexure III (B) and (C).In accordance with the provisions of Section 136 of the Act the Annual Report andAccounts are being sent to all the Members of the Company excluding the aforesaidinformation and the said particulars will be made available on request and also madeavailable for inspection at the Registered Office of the Company. Any Member interested inobtaining such particulars may write to the Company Secretary at the Registered Office ofthe Company.
Your Directors take this opportunity to place on record their sincereappreciation for the co-operation and continued support received from customers vendorssuppliers bankers business associates and shareholders.
For and on behalf of the Board
Vinayak Patil Ashok Sharma
Director Managing Director
|Place : Nashik |
|Dated: 3rd May 2018 |