You are here » Home » Companies » Company Overview » Morganite Crucible (India) Ltd

Morganite Crucible (India) Ltd.

BSE: 523160 Sector: Engineering
NSE: N.A. ISIN Code: INE599F01012
BSE 16:01 | 05 Aug 1714.00 -21.80
(-1.26%)
OPEN

1828.80

HIGH

1828.80

LOW

1661.00

NSE 05:30 | 01 Jan Morganite Crucible (India) Ltd
OPEN 1828.80
PREVIOUS CLOSE 1735.80
VOLUME 933
52-Week high 2290.00
52-Week low 1180.00
P/E 36.65
Mkt Cap.(Rs cr) 480
Buy Price 1695.00
Buy Qty 100.00
Sell Price 1714.00
Sell Qty 20.00
OPEN 1828.80
CLOSE 1735.80
VOLUME 933
52-Week high 2290.00
52-Week low 1180.00
P/E 36.65
Mkt Cap.(Rs cr) 480
Buy Price 1695.00
Buy Qty 100.00
Sell Price 1714.00
Sell Qty 20.00

Morganite Crucible (India) Ltd. (MORGANITECRUCIB) - Director Report

Company director report

And Management Discussion And Analysis

To

The Members

Your Directors are pleased to present the 35th Annual Report together with the AuditedFinancial Statements of the Company for the financial year ended March 31 2020.

FINANCIAL PERFORMANCE:

(Rs. in Lakhs)

Particulars 2019-20 2018-19
Revenue from Operations 12855 12014
Other income 664 595
Total income 13519 12609
Operating Expenses 10539 9991
Mehsana Relocation Cost 605 -
Profit before finance cost depreciation and amortisation 2375 2618
Depreciation and Amortisation Expense 534 431
Profit before tax 1841 2186
Provision for tax 529 649
Profit after tax 1312 1537
Proposed equity dividend 448 336
Corporate dividend tax - 69
Total Outflow 448 405

PERFORMANCE REVIEW:

During the year under review the Company has achieved net turnover of '12855 lakhs as compared to ' 12014 lakhs in the previous year. The grossprofit before tax and depreciation were ' 2375 lakhs as compared to '2618 lakhs in the previous year. The operating expenses increased to '10539 lakhs as compared to ' 9991 lakhs in the previous year. During theyear upon receipt of recommendation from Board of Directors in their meeting held onOctober 17 2019 and subsequent members approval on December 2 2019 your Companydiscontinued the operations of Mehsana Plant w.e.f. February 1 2020 and relocated theMehsana Plant to Aurangabad. Estimated relocation costs of ' 605.58 lakhs was accounted inFY 2019-20 which includes severance pay to the employees who have opted not to relocateprovision for assets written off which have not been shifted to Aurangabad due to wear andtear of those assets charges for assets transportation and their restoration atAurangabad. Looking to the nature

of the transaction the management has shown the relocation cost as a separate lineitem as "Mehsana Relocation Cost" in the financial results.

Your Company intends to sell the land and building of Mehsana Plant in coming year andhas initiated the identification and evaluation of potential buyers for land and buildingof Mehsana Plant. Further no other material changes or commitments have occurred betweenthe end of the financial year and the date of this Report which affect the financialstatements of the Company in respect of the reporting year.

DIVIDEND:

In view of profitability achieved by the Company and to conserve the resources forchallenging situation ahead your Directors are pleased to recommend a final dividend of '16/- per equity share amounting to ' 448 lakhs for the financial year2019-20 for approval of the members in the ensuing 35th Annual General Meeting of theCompany.

ECONOMIC SCENARIO AND OUTLOOK:

All through the year 2019-20 the economic outlook in India continued to worsen withdeclines in exports consumer spending and private investment. GDP growth was alreadymoderating throughout the year depressing demand for metal products before the COVID-19pandemic made its presence felt at the end of the fiscal year. With the arrival of theCOVID-19 driven economic shutdown in March 2020 the economic outlook for the year2020-2021 remains extremely uncertain and weak with our target markets expected to bearthe impact of the lockdowns and the resultant unemployment driving down consumer demand.Global markets were more mixed going into the COVID-19 pandemic which has decimatedindustrial production in our major markets due to a combination of lockdowns and resultingunemployment removing consumer demand from the markets. Recovery of demand globally willdepend on a combination of consumer spending supply-side restrictions driven by safeworking requirements unemployment and the penetration of government stimulus into thewider economy.

The primary end market served by our customers the automotive industry was already inthe middle of record volume declines in India in 2019 before matters were made muchworsen by the COVID-19 pandemic in March 2020. We expect a limited recovery in new vehiclesales in 2020-21 with the industry continuing to struggle with low domestic demand.Exports of vehicles will likely drive any recovery in

this industry after COVID-19 lockdown impact is absorbed. Globally we continued to seeweak automotive production in China Europe and North America which limited our ability tooffset declines in Indian vehicle production. We expect that this situation will remainunchanged in the coming year as major automotive producing countries all see 30% plusdrops in demand due to economic fallout of COVID-19.

The other large markets we serve through the non-ferrous and ferrous foundry customers- infrastructure constructions switch-gear and white goods will continue in the grip ofa global drop in demand through 2020-21. The only markets we see with potential growth inthe coming year are the global precious metals refining markets which will continue tobenefit from soaring gold and silver prices.

In the face of these difficult economic and market challenges in 2020-21 your companywill continue to focus on our strategy of offering technologically differentiated productsthat allow our customers to improve their efficiencies and reduce their operating costs.The economic uncertainty and ambiguity globally will likely have an adverse impact on thecompany's revenue going forward but the management team remains focused on marginprotection and cash generation.

EXPANSION PROJECT Project Avatar - Phase II

During the fiscal year 2018-19 the Board of Directors of your Company has approvedexpansion of clay graphite products at Aurangabad site considering market demand forbigger size ISO pressed crucibles and accessories and strategic focus on non-core businessin foundry products. Your Company has made significant progress towards completion of theproject however due to pandemic situation the project activity was halted from end ofMarch 2020. However post relaxation approval from various regulatory authority theproject activity resumed from start of May 2020 and expect to complete the project by endof December 2020.

Further as part of Project Avatar Phase II and considering synergy cost optimizationand further focus on product development the members of the Company vide its postalballot December 02 2019 approved transfer of Mehsana Unit business by way of shifting ofplant and machineries to Aurangabad Unit Maharashtra. The Company has also signedMemorandum of Understanding (MoU) on December 12 2019 with Mehsana Works Committee foramicable separation of workers and staffs as they choose not to join at Aurangabad

location. The Company has paid the agreed compensation to all applicable workers whohas signed the MoU.

The Company started shifting of plant and machineries from Mehsana location toAurangabad location from last few months however it got halted because of nationwidelock-down. During the shifting of Plant & Machineries your Company has taken care ofour Customer's requirements and satisfied all customer demands within timeline bymaintaining enough stock levels of the finished goods & also by importing someproducts from our fellow subsidiary companies abroad.

Installation of Solar Roof-top

Your Company is using electricity supplied by MSEDCL for industrial consumption andincurs considerable amount of costs by way of electricity charges every month. In order toachieve savings in electricity costs your Company has signed Power Purchase Agreement(PPA) with M/s AMPLUS Solar for installation of solar plant on the roof of our factoryand admin office building etc. with installed capacity of around 1000 KW on Op Ex model.There will be substantial cost reduction in per unit electricity costs and the benefits ofPPA agreement are listed below -

• No capex involved no investment of Company's money. No security deposits.

• Lower Electricity Unit rate vs Current MSEDCL unit rate.

• Contribution to green energy initiative.

• Technology upgradation option available.

• Free exit in case of closure .

CHANGES IN SHARE CAPITAL

The paid-up equity share capital of the Company stood at ' 280 lakhs ason March 31 2020. During the year the Company has not issued any shares or convertiblesecurities and does not have any Scheme for issue of shares including sweat equity to theemployees or Directors of the Company.

PUBLIC DEPOSIT:

The Company has not accepted any deposits from the public/ members under Section 73 ofthe Act read with Companies (Acceptance of Deposits) Rules 2014 during the financial yearunder review.

RELATED PARTY TRANSACTIONS:

During the year under review all related party transactions

entered during the year were in the ordinary course of business and on arm's lengthbasis. No material related party transactions i.e. transactions exceeding ten percent ofthe annual consolidated turnover as per the last audited financial statements wereentered during the year by your Company. Accordingly the disclosure of Related PartyTransactions as required under Section 134(3) (h) of the Companies Act 2013 in Form AOC 2is not applicable. Further the Company has not given any loans and advances which are inthe nature of loans to any subsidiary company or to associate company or to firms/companies in which directors are interested hence disclosure as per Regulation 34(3) ofSEBI LODR Regulations 2015 is not applicable. During the fiscal year 2019-20 theNon-Executive Directors of the Company had no pecuniary relationship or transactions withthe Company.

In compliance with the provisions of Section 188 of Companies Act 2013 and Regulation23 of Securities Exchange Board of India ('SEBI') (Listing Obligations and DisclosureRequirements) ('LODR') Regulations 2015 the Audit Committee had given omnibus approvalfor related party transactions which were of repetitive in nature and entered with fellowsubsidiaries companies for sale purchase of goods and services for a period of one year.In every Audit Committee meeting during the year the schedule of related partytransactions for each quarter end were placed before the Committee to ensure transactionswere within limit of the approval.

As per Regulation 46 of SEBI LODR Regulations 2015 the Policy on Materiality ofRelated Party Transactions and dealing with Related Party Transactions is available onCompany's website at http://www.morganmms.com/en-gb/investors/

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THEFINANCIAL YEAR AND DATE OF REPORT:

During the year under review there have been no other material changes or commitmentsgiven which affects the financial position of the Company between the end of the financialyear and the date of the report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

During the year under review the Company has not provided any loans given guaranteesand made investments covered under Section 186 of the Companies Act 2013.

BOARD OF DIRECTORS:

During the year Mr Ian Keith Arber Non-Executive Director and Ms Pauline TanNon-Executive Director resigned from the Board effective from May 21 2019 and August 72019 respectively. The Board placed on record its appreciation for the services renderedby them during their tenure with the Company. Mr Martin Coll was inducted as Non-executiveDirector of the Company effective from May 21 2019 and member of the Audit CommitteeRisk Management Committee and Corporate Social Responsibility Committee.

In accordance with provisions of Companies Act 2013 and the Article of Associations ofthe Company Mr Martin Coll Non-Executive Director of the Company retires by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forre-appointment.

BOARD EVALUATION

The annual evaluation process of the Board of Directors as individual Director andBoard as a whole were conducted in the Board of Directors meeting held on February 052020 in accordance with the provision of the Companies Act and the SEBI ListingRegulations.

The Board Evaluation Form was circulated to all Directors on parameters such as boardcomposition and quality board meetings and procedure board development succession planand independent judgement etc. The Board members given their ratings and comments foroverall performance of the Board and action plan is being prepared for the comingfinancial year. The entire Board has actively participated in every Board and Committeemeeting having focused on adherence of corporate governance norms.

During the year under review the independent directors has submitted certificate ofindependence under Section 149 (6) (d) of the Companies Act 2013. The policy on thefamiliarisation program for Independent Directors including details of NominationRemuneration Committee and their roles and responsibility are provided in the CorporateGovernance Report. The evaluation of Board including independent directors was carried outbased on parameters of attendance in every Board and Committee meeting participation indiscussions and independent judgement.

The Board of Directors and Senior Management Personnel has confirmed compliance to theCode of Conduct of the Company and submitted the required annual compliance declaration tothe Company Secretary. The Managing Director Certificate on affirmation to the Code ofConduct is attached as Annexure - 4 .

The details of the familiarization program for Independent Directors are posted on thewebsite of the Company and can be accessed at -

http://www.morganmms.com/en-gb/investors/

BOARD MEETINGS AND ANNUAL GENERAL MEETING:

During the year the Board met five times on May 21 2019 August 7 2019 October 172019 November 12 2019 and February 05 2020. The 34th Annual General Meeting was held onAugust 7 2019. The intervening gap between any two meetings was within the periodprescribed by the Companies Act 2013.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The policy of the Company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under Section 178 (3) and Section 197 (12) of the CompaniesAct 2013 read with Rule 5 of Companies (Appointment And Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure - 1 to the Board's report.

PARTICULARS OF EMPLOYEES:

During the year under review no employee was in receipt of remuneration of '102 lakhs or more or employed for part of the year and in receipt of ' 8.50lakhs or more a month under Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 ('Act') and Rules made thereunder your Company hasadopted a policy on Prevention of Sexual Harassment at Workplace. During the year theCompany has not received any complaint with allegations of sexual harassment.

RISK MANAGEMENT POLICY:

The Board considers that risk management and internal control are fundamental toachieving the Morgan Group's aim of delivering long-term sustainable growth. The Risk

Framework covers business operational and financial risks reviewed by the Committee ona periodic basis. The severity of each risk is quantified by assessing its inherent impactand mitigated probability to ensure that the residual risk exposure is understood andprioritised for control to avoid future implications.

The Morgan Group is willing to take considered risks to develop new technologiesapplications partnerships and markets for its products and to meet customer needs. TheMorgan Group strives to eliminate risks to product quality and health and safety whichare essential to the success of our products and the safety of our people and contractors.

During the year the Committee in its meeting held on February 05 2020 has reviewedrisk relating to competition operations people management and development productquality technological obsolescence quality of contract compliances tax relatedmatters macroeconomics & political environment and development of action plan asprepared by the management for mitigating such risks relating to above risks in thefuture.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company believes commitment towards social responsibility is key to equitablegrowth and upliftment of the society that can benefit us all by encouraging moral of thesociety at respectable position.

Your Company's CSR efforts continue to focus on education skill developmenthealthcare and hygiene and all such other activities as mentioned in the Corporate SocialResponsibility Policy. We have undergone various CSR programmes during the year onmaintaining hygiene at schools green belt development at nearby industrial area andproviding basic amenities to orphanage home etc. In compliance with the provisions ofSection 135 of the Companies Act 2013 during FY 2019-20 your Company has spent theconsiderable amount which is required to be spent under CSR. Your company is slightlybehind in spending the required CSR fund however your management is in process to developvocational training programme for the graduate trainee.

The Corporate Social Responsibility policy formulated by the Company is available onthe website of the Company at -

http://www.morganmms.com/en-gb/investors/

The CSR activities as undertaken by the Company are attached as Annexure - 2 andform part of this annual report.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee has been vested with the authority to interalia recommend nominations for Board Membership and senior management position of theCompany and establishing criteria for selection to the Board with respect to thecompetencies qualifications experience integrity and succession plans. The committeecomprises of independent and non-executive directors of Board which details are given inCorporate Governance Report.

During the year the Nomination and Remuneration Committee met two times on May 212019 and August 07 2019 to take on record appointment of Mr Martin Coll as Non-executiveDirector of the Company effective from May 21 2019 and resignation of Mr Ian Keith Arberand Ms Pauline effective from May 21 2019 and August 7 2019 respectively.

PRODUCT QUALITY AND CERTIFICATIONS:

MCIL Technical Services and Product Development (TSPD) team continues to sustain itscommitment for providing the highest quality of products and services to our customersacross the globe. Our purpose is to make more efficient use of world's resources and toimprove quality of life. This purpose guides our actions aiding our efforts to work withour environment informs how we treat our people and ensures we fulfil our responsibilityof good corporate governance. The TSPD team has continuously focused on new productdevelopment and product enhancement by introducing process improvement changes and variousre-engineering and re-designing projects. Your Company is also giving greater focus onriser tube transfer ladle for non-ferrous application aluminium degassing hopperlinings anti-vortex plates aluminium scrap melting ductile iron flow control andinduction furnace crucibles etc.

Your Company continues to remain ISO 9001:2015 certified for Quality Management SystemStandards certified by LUCIDEON Management Systems for continuously demonstrating focus oncustomer satisfaction through product quality and services delivery and on meetingstatutory and regulatory norms.

ENVIRONMENT HEALTH AND SAFETY (EHS):

The Morgan Group's EHS policy is framed to achieve in identification of potentialenvironmental and safety related risks the management and mitigation of identified risksand continuous performance monitoring. We continued to focus on 'zero harm' workplaceculture and conducting all our activities in a manner that achieves high standards ofhealth and safety for all employees and stakeholders. Your Company

is committed to providing an injury-free and environment- friendly workplace andimproved wellbeing of employees and contract workforce by regularly organisingoccupational health examinations consultation and counselling.

There were no lost time accidents in your Company's sites since December-2015 howeverduring the year there were 11 first-aid injuries and 2 significant near misses reportedand immediate action has been taken on the observations of unsafe actions and unsafeconditions. Further regular monitoring of air water and soil pollution was being carriedout throughout the year through external agencies.

Operational Health and Safety Improvements:

• Obtained CTE for new project in "Orange Category"

• Received 2.80 million LTA free man Hours certificate from Group Company inAugust 2019.

• MCIL Aurangabad achieved 3.18 million LTA free man days and 1470 LTA free daysand Morgan Group has also recognised the efforts taken by the MCIL management team.

• Focused on Method statement & JSA for all non-routine activities

• Automation of Liner pressing activity under commissioning

• Conducted CA & PHA - HAZOP study for LPG system

• Under Project Avtar phase II following EHS projects are under progress

• Fire detection and fire-fighting system (Hydrant & sprinkler)

• Public announcement system

• Installation of STP with MBR technology.

• Relocation of existing ETP & new Evaporator

• Roof Top Solar project

Well-being:

• Initiated EHS "E learning" programs in12 subjects for all employees.

• In house conducted Machine risk assessments.

• Procured new Automatic sample cutting machine to get desired sample sizeswithout any ergonomic issues and hazards to employee.

• Conducted EHS L2 audit by internal group EHS team

• Regular internal training/programs for developing awareness on health safetyand environment of employees and contractual labour

• Annual medical check-ups was completed and suggestions has been given formonitoring health of employees and contractual labour

• 6S and Behavioural Based Safety audits

FINANCE AND TAXATION:

During the Financial year 2019-20 your Company has made all statutory compliancesunder Goods and Service Tax Act Income Tax Act Foreign Trade Policy Customs Act etc.During the year your company has not received any new show cause notices (SCN) or demandnote for non-compliances. During the financial year 2019-20 your Company has liquidatedaccumulated IGST input credit of ' 550 Lakhs as per provision of GST law. Our VATassessment till FY 2015-16 has been completed and refund order received from theDepartment.

Your Company has continued to apply for Export Incentives under Merchandise Exportsfrom India Scheme (MEIS) as part of the Foreign Trade Policy 2015-20. During the year201920 we have received Duty Benefit Scripts amounted to ' 220 Lakhs. The process ofclaiming MEIS benefit is established and we are receiving MEIS duty benefit scripts onregular basis.

During the year the company has applied for Export Promotion Capital Goods Scheme(EPCG) under Foreign trade Policy for import of KILN Machineries from China and we havereceived duty benefit scripts worth of ' 107 Lakh thus saving GST & Customs duty onimports.

MCIL Advance Pricing Agreement (APA) with the Central Board of Direct Tax (CBDT) is inthe final stages and we are awaiting final approval from CBDT. Once APA will be signedthis will be an important milestone as it will give certainty in tax treatment ontransactions with our parent company as well as other Morgan group companies.

RESPONSIBILITY BUSINESS PROGRAMME (RBP) AND LEGAL GOVERNANCE:

The Morgan Leadership Behaviours states to always working safely ethically inclusivelyof taking a long-term view champion curiosity innovation and have an external mindset.The Morgan Group believes in building strong teams by inspiring and coaching our peopleprovide ongoing feedback and collaborate globally. The Morgan Group is also relentlessly

involved in driving performance through focus on key priorities and take ownership.

The Morgan Code (the Code)

The Morgan Code is a set of principles supported by policies that lay out how we shouldconduct ourselves. The Code applies to all employees and to the extent appropriate toMorgan's business partners including agents joint venture partners and third-partyrepresentatives.

The principles of the Morgan Code fall under four areas:

Working safely.

Working ethically.

Treating our people fairly.

Protecting our business.

Ethics and Compliance Training Programme

In compliance with Morgan Group's guidelines your Company has given e-learningtraining programme to all employees on various topic of anti-bribery and corruptionconflict of interest and anti-competitive practice. Apart from employees we have alsoupdated the various changes in the Morgan policies to workers and contractual labours.Your Company shall continue to engage in various training programmes in coming year onvarious topics for refreshing the knowledge.

Ethics 'speak-up' hotline

The employees contractors or other third parties who have a question about the Code orsee something that they feel is unethical or unsafe can discuss these with their managerssupporting teams or through the ethics hotline a confidential helpline operated by anindependent company.

The ethics hotline operated by the independent third-party company Expolink enablesemployees and others who are aware of or suspect misconduct illegal activities fraudabuse of Company's assets or violations of any Group policy to report these confidentiallywithout fear of retribution should they feel they cannot use a local channel. During theyear your Company has not received any complaint about frauds misconduct etc. fromanyone in the organization or outside third parties.

Further in compliance with SEBI LODR regulations and the provisions of Companies Act2013 the policy is also available on the website -

http://www.morganmms.com/en-gb/investors/

Compliance Commitment

As stated your Company is committed to conduct its business in safely and ethical waywith abiding all applicable laws regulations in India and abroad wherever we operate. TheCompliance Officer submits quarterly compliance report to Audit Committee and BoardMembers on various applicable laws to the Company and its compliance status thereon.During the year your Company has not identified any non-compliance relating to variousstatue applicable to the Company which affects the business operation.

HUMAN RESOURCES:

The Morgan Group values our employees and the contribution they make and we arecommitted to creating an inclusive culture where everyone can fulfil their potential. Ourprinciple of "not just what you do but how you do it that is important" helpsus to achieve our strategic aims delivering performance and value creation for ourstakeholders whilst our Leadership Behaviours and the Morgan Code guide the actions wetake to achieve them.

The effective engagement enables our employees to contribute to improving Morgan'sbusiness performance therefore we continue to inform all employees across the businessincluding Company results major business decisions and other matters which affect them.We are using a variety of media for this purpose including our intranet emailnewsletters peer-to- peer social media and also local team briefings - where we alsoseek to listen to employees' views and opinions. We seek to maintain constructiverelationships with all trade unions and labour unions across the geographies in which wework.

During the year your company has organised nearly 508 mandays training on 83 ofvarious topics against 654 mandays on 111 topics as compared to previous year fornurturing existing people's talent and motivating them to attain organisation goals. Theemployee turnover ratio was 19.02% as compared to 15.52% to previous year.

The principle of pay for performance underpins our compensation approach and we setcompensation levels using external benchmarking and relevant commercial considerationsthat are both competitive in the countries in which they operate and affordable. We offershort-term performance incentives globally to managers and technical and functionalexperts. The Morgan Group recognises the accomplishments of its people individually and asteams and makes awards to acknowledge achievement loyalty and innovation. Recognitionawards continue to be made across local businesses as well as to senior management withawards linked to business performance.

Your Company has conducted various training programme such as Sales Effectiveness SixSigma - Black Belt & Green Belt Low Cost Advanced Robotics & AutomationEmergency Preparedness Awareness & Requirements of ISO 9001:2015 standard &Internal Auditing KANBAN Workshop Maintaining Wellness without Medicine ProcessAutomation Emotional Quotient for Success Improving Cost & Quality ThroughManufacturing Excelling Workshop on SAFER BETTER EAISER & FASTER Corona Infection& Heat Stress and other technical and functional trainings to the employees andworkmen of the Company.

AUDITORS:

Statutory Auditors

M/s B SR & Associates LLP Chartered Accountants Pune (Registration No. 116231W/W-100024) were appointed as Statutory Auditors of the Company from conclusion of32nd Annual General Meeting until conclusion of 35th Annual General Meeting. As perSection 139(2) of the Companies Act 2013 and rules framed thereunder M/s B S R &Associates LLP completing two terms of five consecutive years in ensuing 35th AnnualGeneral Meeting and shall not eligible to be reappointed for further period.

Further the Audit Committee and Board of Directors of the Company in their meetingheld on June 16 2020 based on the various proposals received from the Audit Firmsappointed M/s Deloitte Haskins & Sells LLP Chartered Accountants Pune (RegistrationNo. 1 17366W/W-100018) for a further period of five years from conclusion of 35th AnnualGeneral Meeting until conclusion of 40th Annual General Meeting subject to approval ofmembers on such professional fees and charges as mutually agreed between M/s DeloitteHaskins & Sells LLP and the Company.

The report is given by the Statutory Auditors on the financial statements of theCompany forms part of this Annual Report. There has been no qualification reservationadverse remark or disclaimer given by the Statutory Auditors in their report.

Secretarial Auditor

M/s KMP & Associates (FCS 9710 / COP 11947) Practicing Company Secretaries wereappointed to conduct the Secretarial Audit of the Company for the financial year 2019-20as required under Section 204 of the Companies Act 2013 and

rules thereunder. The Secretarial Audit Report for financial year 2019-20 forms part ofthe Board's Report as Annexure 3. The Board has continued appointment of M/s KMP& Associates Practicing Company Secretaries as Secretarial Auditor of the Companyfor the financial year 2020-21.

There has been no qualification reservation adverse remark or disclaimer given bySecretarial Auditor in their report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board has overall responsibility for establishing and maintaining a sound system ofinternal control to safeguard shareholders' investment and the Company's assets and forreviewing the effectiveness of this system. Your Company has a well-established frameworkof internal controls in operation supported by Morgan Group's policies and guidelinesincluding periodic monitoring assessment and internal audit. M/s R D Jaiswal & Co.Chartered Accountant was appointed as Internal Auditors of the company to conductinternal audits for the financial year 2019-20. M/s R D Jaiswal & Co. has conductedinternal audit on half yearly basis and detailed report was submitted to Audit Committee.Further the Audit Committee reviewed the adequacy and effectiveness of the implementationof audit recommendations including those relating to strengthening your company's riskmanagement policies and systems.

In compliance with Section 177(4)(vii) of the Companies Act 2013 ("Act")the Audit Committee needs to evaluate internal financial control system of the Company andmake further reporting to the Board and as per Section 143(3) (i) of the Companies Act2013 the Statutory Auditor of the Company is required to make representation in theirAuditor Report that the Company has adequate internal financial control system in placeand operating effectively.

During the year your Company consider that the internal financial control providesreasonable assurance in the area of safeguarding of Company's assets transactions areauthorised and recorded in a correct and timely manner and that such controls wouldprevent or detect within a timely period material errors or irregularities. The systemis designed to mitigate and manage risk rather than eliminate it and to address keybusiness and financial risks.

Your Company as well as statutory internal & secretarial auditors has madeperiodic checks relating to prevention and

detection of frauds and errors accuracy and completeness of accounting records timelypreparation of financial statements and applicable statutory compliances to the Company'sbusiness. The internal auditor and statutory auditor during their audit have not found anysignificant gaps for the financial year 2019-20 however have made certain recommendationfor continuous improvement of the process.

extract ANNUAL RETURN:

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of AnnualReturn in the prescribed format is appended as Annexure 5.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 (3) (c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financials year ended March 312020 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

(ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year andprofit of the Company for the year;

(iii) The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(iv) The Directors have prepared the annual accounts on a 'going concern' basis;

(v) The directors have laid down internal financial controls which are adequate andare operating effectively;

(vi) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.