Your Directors are pleased to present the 51st Annual Report with theaudited statement of accounts of the Company for the year ended March 312017.
The highlights of the financial results for the year ended March 312017 are asfollows:
| || || || ||(Rs in Crore) |
|For the year ended March 31 || |
|2017 ||2016 ||2017 ||2016 |
|Income from Operations ||722.80 ||813.34 ||744.87 ||822.49 |
|Profit /(Loss) before interest depreciation and tax ||8.24 ||(3.74) ||25.03 ||20.02 |
|Interest & Financial Charges (Net) ||(2.58) ||(5.19) ||(7.88) ||(12.07) |
|Depreciation ||(37.98) ||(51.31) ||(49.67) ||(62.54) |
|Exceptional Items ||- ||(2.53) ||- ||(2.53) |
|Profit/(loss) before tax ||(32.32) ||(62.77) ||(32.52) ||(57.12) |
|Provision for tax ||- ||- ||0.32 ||(1.20) |
|Profit/(loss) after tax ||(32.32) ||(62.77) ||(32.20) ||(58.32) |
|Minority interest ||- ||- ||(0.55) ||(1.85) |
|Balance brought forward from previous year ||(560.68) ||(497.92) ||(558.83) ||(498.40) |
|Balance carried forward ||(593.00) ||(560.68) ||(591.59) ||(558.83) |
Review of operation
The Company's business model until FY 2011-12 was predominantly based on outsourcingof tiles from China. Due to sharp depreciation of Indian Rupee against US Dollar duringlater part of 2011 this model based on imports suddenly became unviable. The Companythereafter took steps to shift the business model to local outsourcing/joint venturearrangement. This sudden change in the model has taken a toll on the financial performanceof the Company during the last few years.
Despite several challenges faced by the Company including demonetization the Companywas able to achieve Income from Operations of ? 722.80 crore a decrease of 11.13% overlast year. Despite drop in turnover the Company achieved EBITDA of ? 8.24 crore in FY2016-17 against an EBITDA loss of? 3.74 crore in FY 2015-16. This was made possible due totight control on costs and the strong brand equity enjoyed by the Company at aconsolidated level the Company has achieved EBITDA of ' 25.03 crore in FY 2016-17 againstan EBITDA of? 20.02 crore in FY 2015-16. The management is confident that the strategy nowbeing pursued by the Company is appropriate for achieving the desired result.
Considering the brand equity enjoyed by the Company and the performance of the Companyduring the current year in a tough environment and several steps taken for improving theperformance of the Company the management is hopeful of a turnaround in near future. Themanagement therefore believes it is appropriate to prepare the financial statement on agoing concern basis.
Joint Venture with NewVardhman Vitrified Pvt. Ltd.
As a part of the business strategy your Company had acquired 51% eguity stake inNewVardhman Vitrified Pvt. Ltd (NWPL) during FY
2011- 12. The said company had set up a plant near Morbi Gujarat for manufacturing 8million sgmtrs (approximately) of vitrified and wall tiles which commenced production atthe last guarter of FY
2012- 13. The entire production of this plant is marketed by the Company under itsbrand name. With this arrangement Company's dependence on China for tiles sourcing hassignificantly reduced. NVVPL in its fourth full year of operation has achieved Incomefrom Operations of ? 151.00 crore EBITDA of ? 17.78 crore and Profit Before Tax of? 0.80crore. The Company is regular in servicing its commitment to its lenders and has repaidterm loan installments of ? 47 crore since commencement of its operations.
Corporate Debt Restructuring
The Company's debts were restructured under Corporate Debt Restructuring (CDR)mechanism effective April 2012. The CDR package included fresh funding commitment by Bankswhich was not released by them. As per the approved CDR package certain non-core assetsof the Company were to be disposed of which could not materialize due to adverse marketconditions. Consequently the Company defaulted on its obligation to its lenders and allCDR lenders have classified the Company's debts as Non Performing Asset (NPA).Consequently due to failure of the package the Company has exited from CDR mechanism.Fifteen lenders aggregating approximately 89% of total debt of the Company have assignedtheir debts to an Asset Reconstruction Company (ARC) as on March 312017.
Annual Report 2016-2017
The last Credit Rating issued to the Company by CARE Limited was on October 1 2012.However the credit rating is under suspension at present as the Company was underCorporate Debt Restructuring.
Indian Accounting Standards (IND AS)
Pursuant to the notification issued by The Ministry of Corporate Affairs datedFebruary 16 2015 relating to the Companies (Indian Accounting Standard) Rules 2015 theCompany and its subsidiaries will adopt IND AS with effect From April 1 2017with the comparatives for the periods ending March 312017. The Company is taking stepsfor timely implementation of IND AS.
In view of the losses incurred during the year your Board is not able to recommend anydividend For the financialyear ended March 31 2017.
No material changes or commitments have occurred between the end of the financial yearand the date of this report which affect the financial statements of the Company inrespect of the reporting year.
Subsidiary Companies and Consolidated Financial Statements
In accordance with the Companies Act 2013 and Accounting Standard (AS-21) onConsolidated Financial Statement the audited consolidated financial statement's providedin the Annual Report.
The Statement required under Section 129(3) of the Companies Act 2013 in respect ofthe subsidiary companies is provided in Annexure II of this report.
The annual accounts of the subsidiary companies and the related detailed informationwill be made available to any member of the Company / its subsidiaries who may beinterested in obtaining the same. The annual accounts of the subsidiary companies willalso be kept for inspection by any member at the Company's Registered Office and thatofthe respectivesubsidiary companies.
Internal Control System
(i) Internal Control Systems and their adequacy
The Company has in place adequate internal controls commensurate with the size of theCompany and nature of its business and the same were operating effectively throughout theyear. Internal Audit is carried out by external auditors and periodically covers all areasof business. The Internal Auditors evaluates the efficacy and adeguacy of internal controlsystem its compliance with operating systems and policies of the Company and accountingprocedures at all the locations of the Company. Based on the report of the InternalAuditors process owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon areplaced before the Audit Committee of the Board.
(ii) Internal Controls over Financial Reporting
The Company has in place adeguate internal financial controls commensurate with sizeand complexity of its operations. During the year such controls were tested and noreportable material weakness in the design or operations were observed. The Company haspolicies and procedures in
place Forensuring properand efficientconductofits business the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financialinFormation.
Directors' Responsibility Statement
The Directors confirm that:
a) In the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed with proper explanation relating to material departures;
b) Appropriate accounting policies have been selected and applied consistently and havemade judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as on March 31 2017 and of the loss ofthe Company for the year ended March 312017;
c) Proper and sufficient care has been taken For maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) The annual accounts have been prepared on a going concern basis;
e) The Directors have laid down internal financial controls to be Followed by theCompany and that such internal financial controls are adeguate and are operatingeffectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adeguate and operating effectively.
Your attention is invited to the Special Business mentioned in the notice of the AnnualGeneral Meeting regarding re-appointment of Mr. Vivek Talwar as Managing Director of theCompany for a period of 3 years. The information relating to the same has been given inthe Explanatory Statement accompanying the notice.
The Board of Directors have re-appointed Mr. Pradeep Saxena as an Independent Directorof the Company for second consecutive term of 3 years subject to the approval of theshareholders at the ensuing Annual General Meeting.
During the year under review the Board of Directors accepted the resignation of Mr.Rohan Talwar from the post of Director w.e.f. February 14 2017 due to his pre-occupationwith his hospitality business overseas.
In accordance with the provisions of the Act Mr. Vivek Talwar retires by rotation andbeing eligible offers his candidature For reappointment as Director.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under section 149(6)of the Companies Act 2013. The Company has devised a Policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors which includecriteria for performance evaluation of the executive director.
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 a structuredquestionnaire was prepared after taking into consideration the various aspects of theBoard's functioning composition of the Board and its Committees culture execution andperformance of specific duties obligation and governance.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman was carried out by the Independent Directors.
Key Managerial Personnel
The Company has following Key Managerial Personnel:
|Sr. No. ||Name of the person ||Designation |
|1 ||Mr. Vivek Talwar ||Chairman & Managing Director |
|2 ||#Mr. Ashok Goyal ||Chief Executive Officer |
|3 ||*Mr. Ajith Babu ||Chief Executive Officer |
|4 ||Mr. Bhaskar Borkar ||Chief Financial Officer |
|5 ||Mr. Puneet Motwani ||Company Secretary & Compliance Officer |
# Ceased to be the Chief Executive Officer w.e.f. November 14 2016
* Appointed as the Chief Executive Officer w.e.f. November 14 2016
Pursuant to Regulation 34 read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a detailed report on Corporate Governanceforms a part of this Annual Report. A certificate from the auditors of the Companyconfirming compliance with the conditions of Corporate Governance as stipulated underRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is given in a separate statement which forms part of this Annual Report.