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Nitco Ltd.

BSE: 532722 Sector: Consumer
NSE: NITCO ISIN Code: INE858F01012
BSE 00:00 | 19 Sep 28.70 1.05
(3.80%)
OPEN

27.45

HIGH

30.35

LOW

26.50

NSE 00:00 | 19 Sep 28.75 1.05
(3.79%)
OPEN

27.50

HIGH

30.45

LOW

26.45

OPEN 27.45
PREVIOUS CLOSE 27.65
VOLUME 52235
52-Week high 60.45
52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 206
Buy Price 28.80
Buy Qty 500.00
Sell Price 28.70
Sell Qty 3.00
OPEN 27.45
CLOSE 27.65
VOLUME 52235
52-Week high 60.45
52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 206
Buy Price 28.80
Buy Qty 500.00
Sell Price 28.70
Sell Qty 3.00

Nitco Ltd. (NITCO) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 52nd Annual Report with theaudited statement of accounts of the Company for the year ended March 31 2018.

Financial results The highlights of the financial March 31 2018 are as follows:

( Rs in crores)
Standalone Consolidated
For the year ended March 31 2018 2017 2018 2017
Total Income 606.98 724.13 621.81 746.74
Less: Excise duty including excise duty on traded products 15.32 66.35 16.51 68.25
Net Comparable Total Income 591.66 657.78 605.30 678.49
Profit /(Loss) before interest depreciation and tax 5.27 8.40 8.36 25.61
Interest & Financial Charges (Net) (8.46) (2.58) (13.86) (8.31)
Depreciation (72.46) (37.98) (80.53) (49.67)
Exceptional Items 247.86 - 247.86 -
Profit/(loss) before tax 172.22 (32.16) 161.84 (32.37)
Provision for tax including reversal of taxes for earlier years 20.35 - 22.92 (1.19)
Other Comprehensive Income (0.20) (0.16) (0.20) (0.16)
Total Comprehensive Income 192.37 (32.32) 184.56 (33.71)
Non-controlling interest - - 4.13 0.19
Total Comprehensive Income after Non-controlling interest 192.37 (32.32) 188.69 (33.52)

Review of operation

The recent year has witnessed several major changes in government policies.Implementation of Goods & Service Tax (GST) Act Real Estate (Regulation &Development) Act ("RERA") and continuation effect of demonetization in retailindustry etc. have impacted real estate as well as building material industry inparticular. Under such constraints your Company was able to achieve total income (NetComparable) of Rs 591.66 crores a decrease of 10% over last year.

The Company has achieved EBITDA of Rs 5.27 crores in FY 2017-18 against an EBITDA of Rs8.40 crores in FY 2016-17. This was made possible due to tight control on costs and thestrong brand equity enjoyed by the Company. At a consolidated level the Company hasachieved EBITDA of Rs 8.36 crores (previous year Rs 25.61 crores).

Loan Restructuring and infusion of fresh equity

JM Financial Assets Reconstruction Company Limited ("JMFARC") has acquiredthe Company's debt from 16 lenders (approximately 98%) and has become the secured lenderto the Company. JMFARC has sanctioned a debt restructuring package with effect fromFebruary 2018. The terms of restructuring inter-alia includes conversion of debt intoequity preference shares restructured term loan and debentures. JMFARC also subscribedto fully paid equity shares as well as equity warrants of your Company. Details areprovided in the note 45A to the standalone financial statements.

Joint Venture with New Vardhman Vitrified Tiles Pvt. Ltd.

Your Company had acquired 51% equity stake in New Vardhman Vitrified Tiles Pvt. Ltd.(NVVPL) during FY 2011-12. During the FY 2017-18 NVVPL has achieved net turnover of Rs126.59 crore EBITDA of Rs 1.32 crore and loss before tax of Rs 11.00 crore. The Companyis regular in servicing its commitment to its lenders and has repaid term loaninstallments of Rs 56 crore since commencement of its operations.

Credit Rating

The last Credit Rating issued to the Company by CARE Limited was on 1stOctober 2012. However the credit rating was suspended since the Company was underCorporate Debt Restructuring.

Dividend

Your Board does not recommend any dividend for the financial year ended March 31 2018.

Material Changes

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

The Company adopted Indian Accounting Standard (Ind-AS) from April 1 2017 notifiedunder the Companies (Indian Accounting Standards) Rules 2016 and the Companies (IndianAccounting Standards) (Amendment) Rules 2017 and accordingly Consolidated FinancialStatements have been prepared in accordance with the Accounting Standard notified underSection 133 of the Companies Act 2013 and the relevant rules issued thereunder read withthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘SEBI(LODR) Regulations 2015') and the other accounting principles generally accepted inIndia. The Consolidated Financial Statements form part of the Annual Report. The Statementrequired under Section 129(3) of the Companies Act 2013 in respect of the subsidiarycompanies 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 CorporateOffice and that of the respective subsidiary 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 adequacy 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 are placed before theAudit Committee of the Board.

(ii) Internal Controls over Financial Reporting

The Company has in place adequate 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 for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.

Directors' Responsibility Statement

The Directors confirm that: a) In the preparation of the annual accounts for the yearended March 31 2018 the applicable accounting standards read with requirements set outunder Schedule III to the Companies Act 2013 have been followed with proper explanationrelating to material departures; b) Appropriate accounting policies have been selected andapplied consistently and have made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as onMarch 31 2018 and of the loss of the Company for the year ended March 31 2018; c) Properand sufficient care has been taken for maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe 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 adequate 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 adequate and operating effectively.

Directors

During the year under review there is no change in the composition of Board ofDirectors.

In accordance with the provisions of the Act Mr. Vivek Talwar retires by rotation andbeing eligible offers his candidature for re- appointment 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 Non-Executive Directors and ExecutiveDirectors.

Board Evaluation

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

Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Actread with the Rules framed thereunder the following persons were Key Managerial Personnelof the Company as on March 31 2018:

Sr. No. Name of the person Designation
1. Mr. Vivek Talwar Chairman & Managing Director
2. *Mr. Ajith Babu Narasimha Chief Executive Officer
3. Mr. B. G. Borkar Chief Financial Officer
4. Mr. Puneet Motwani Company Secretary & Offic Compliance

* Ceased to be the Chief Executive Officer w.e.f. November 28 2017

Corporate Governance

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.

Management Discussion and Analysis

Management Discussion and Analysis on matters related to business performance asstipulated in Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is given in a separate statement which forms part of the Annual Report.

Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any new contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.

Material related party transactions which are at arm's length are disclosed in formAOC-2 annexed as Annexure III.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://www.nitco. in/investors/nitco-policy.aspx Your Directors draw attention ofthe members to Note 37 to the standalone financial statement which sets out related partydisclosures.

Transfer to Investor Education and Protection Fund (IEPF)

The Company was not liable to transfer any amount to Investor Education &Protection Fund (IEPF) account during the year under review.

Corporate Social Responsibility

The Company has constituted CSR Committee pursuant to the provisions of Section 135 ofthe Companies Act 2013 and shall perform such other activities as may be required alongwith other regulatory provisions.

Risk and Concern

Changes in macro economic factors like GDP growth inflation energy cost interestrate world trade exchange rate etc. also play an important role in our industry therebyaffecting the operations of business. Any adverse change in the above may affect theperformance of your Company. Your Company periodically reviews the risk associated withthe business and takes steps to mitigate and minimize the impact of risk.

Public Deposits

The Company has neither accepted nor renewed any deposit from the public within themeaning of Section 73 and 74 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014 during the year ended March 31 2018.

Auditors

At the Company's 51st Annual General Meeting (AGM) held on September 202017 M/s Nayak & Rane Chartered Accountants Mumbai were appointed as the Company'sStatutory Auditors from the conclusion of the 51st AGM till the conclusion ofthe 56th AGM (subject to ratification of their re-appointment by the Members atevery AGM held after the AGM in which the appointment was made) of the Company on aremuneration as may be agreed upon by the Board of Directors and the Auditors.

Auditor's Report

The Board has duly examined the statutory auditor's report to accounts andclarifications wherever necessary have been included in the Notes to Accounts section ofthe Annual Report.

There is no qualification in statutory auditors report.

Secretarial Audit

The Board appointed M/s Mayur More & Associates Practising Company Secretary toconduct Secretarial audit for FY 2017-18.

The Secretarial Audit Report for the financial year ended March 31 2018 is annexedherewith marked as Annexure V to this Report. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.

Cost Audit

The Board has appointed M/s. R. K. Bhandari & Co Cost Accountants as cost auditorfor conducting the audit of cost records of the Company for the applicable segment for FY2017-18.

Audit Committee

The Audit Committee comprises Independent Directors namely Shri Pradeep Saxena(Chairman) Shri Sharath Bolar and Shri Vivek Talwar as other members.

Vigil Mechanism

The Policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website at the link: http://www.nitco. in/investors/nitco-policy.aspx.

Meetings of the Board

Six meetings of the Board of Directors were held during the year. For further detailsplease refer report on Corporate Governance.

Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy for the selection and appointment of Directors Key Managerial Personnel SeniorManagement and their remuneration. This policy along with the criteria for determining thequalification positive attributes and independence of a director is available on thewebsite of the Company i.e. http://www.nitco.in/Investors/PDFFiles/Nomination-and-Remuneration-Policy.pdf

Prevention of Sexual Harassment of Women at Workplace

As required under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and Rules framed thereunder the Company has implemented a policyon prevention prohibition and redressal of sexual harassment at the workplace. This hasbeen widely communicated internally and is uploaded on the Company's intranet portal. TheCompany has constituted Internal Complaints Committee (ICC) to redress the complaintsreceived regarding sexual harassment. During the year under review no complaints werereceived by the Committee for Redressal.

Particulars of Loans given Investments made Guarantees given and Securities provided

Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the note 5 13 and 19.1 to the standalonefinancial statement.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act is annexedherewith as Annexure I.

Extract of Annual Return

Extract of Annual Return (form MGT-9) of the Company is annexed herewith as Annexure IVto this Report.

Particulars of Employees and related disclosures

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided at Annexure- VI.

In terms of the provisions of rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 read with 2nd proviso of therules a statement showing the names of employees and other particulars of the top tenemployees and employees drawing remuneration in excess of the limits as provided in thesaid rules will be provided on a request made in writing to the Company.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act;

2. Issue of equity shares with differential rights as to dividend voting or otherwise;

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this report;

4. The Managing Director of the Company does not receive any remuneration or commissionfrom any of its subsidiaries;

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

Cautionary Statement

Statements in this Annual Report particularly those that relate to Directors Reportand Management Discussion and Analysis describing the Company's objectives projectionsestimates and expectations may constitute ‘forward looking statements' within themeaning of applicable laws and regulations. Although the expectations are based onreasonable assumptions the actual results might differ.

Appreciation and acknowledgement

Your Directors acknowledges with gratitude and wish to place on record their deepappreciation of continued support and cooperation received by the Company from the BanksLenders JMFARC various Government Authorities Shareholders Business AssociatesDealers Customers and Investors during the year.

For and on behalf of the Board

Vivek Talwar

Chairman & Managing Director

DIN: 00043180

Mumbai May 29 2018