Your Directors are pleased to present the 54th Annual Reporton the business and operations of the Company together with the audited statement ofaccounts of the Company for the year ended March 312020.
The highlights of the financial results for the year ended March312020 are as follows:
(Rs. in crores)
|For the year ended March 31 || |
| ||2020 ||2019 ||2020 ||2019 |
|Total Revenue ||465.19 ||590.01 ||470.12 ||596.51 |
|Profit /(Loss) before interest depreciation and tax ||(38.74 ) ||3.34 ||(40.98 ) ||0.27 |
|Interest & Financial Charges (Net) ||23.21 ||19.13 ||23.48 ||22.42 |
|Depreciation ||30.54 ||31.12 ||38.64 ||39.23 |
|Exceptional Items Gains/(Losses) ||32.13 ||- ||32.13 ||- |
|Profit/(loss) before tax ||(60.37) ||(46.91) ||(70.97) ||(61.37) |
|Provision for tax including taxes for earlier years ||0.82 ||- ||1.23 ||(1.32) |
|Profit/(loss) after tax ||(61.19) ||(46.90) ||(72.20) ||(60.05) |
Review of operation
During FY 2019-20 your Company was able to achieve net total revenueof Tiles & Related businesses of Rs. 465.19 crore decrease of 21% over last year dueto recessionary market conditions. The Company is enjoying strong brand equity in themarket. The Company has achieved overall EBITDA loss of Rs. 38.74 crores in FY 2019-20against an EBITDA of Rs. 3.34 crores in FY 2018-19. At a consolidated level the Companyhas achieved EBITDA loss of Rs. 40.98 crores (previous year Rs. 0.27 crores) on account oflosses incurred.
Sales was lower mainly in the project business as the company focussedon retail segment sales by creating consumer focused product strategy and growing salesnetwork. During FY 2019-20 there was volume growth of 16% in export sales. Companyreduced the exposure on project customers considering the market and liquidity situation.
The paid up Equity Share Capital as at March 312020 stood at Rs. 71.86crore. There was no change in the share capital during the year under review.
Employee Stock Option Plan (ESOP)
With a view to motivate attract and retain key employees of theCompany The Company introduced a "Nitco - Employees Stock Option Plan - 2019"(NITCO - ESOP - 2019) wich was approved by the shareholders on March 30 2019. The Plan isintroduced to create grant offer issue and allot such number of Stock Optionsconvertible into Equity Shares of the Company ("Options") in one or moretranches not exceeding 1200000 (twelve lakhs) equity shares of face value of Rs. 10each.
During the year under review there are no material changes in theNITCO - ESOP - 2019 and the same is in compliance with SEBI (Share Based EmployeeBenefits) Regulations 2014 (SBEB Regulations). The Disclosure pertaining to ESOPsrequired to be made under the Companies Act 2013 and the rules made thereunder and theSBEB regulations are provided on the website of the company.
JM Financial Asset Reconstruction Company (JMFARC) had acquired 98% ofthe Company's debt from its lenders and sanctioned debt restructuring effective from theCut-Off date 28th February 2018. Interest on restructured loans has beenprovided in the books as per the Restructuring agreement with JMFARC. Further the companyis negotiating with LIC for restructuring of its facility (outstanding Rs. 18.92 crs.) onterms similar to restructuring done by JMFARC. Pending negotiations with LIC no furtheradjustments in respect of LIC facility has been made.
Pending realisation from sale of non core assets there was default inrepayment of term loan installments of Rs. 6961.70 lakhs due to JMFARC which wererepayable as on 31.3.2020.
The company's debt was restructured in FY 2018. Pursuant to therestructuring agreement the balance amount of unsustainable debt amounting to Rs. 14032.15lakhs has been written back during FY 2019-20.
Joint Venture with New Vardhman Vitrified Pvt. Ltd.
With a view to get assured supply of Soluble Salt Vitrified Tiles yourCompany had acquired 51% equity stake in New Vardhman Vitrified Pvt. Ltd (NVVPL) during FY2011-12. The production at NVVPL was temporarily suspended from October 2018. During theF.Y. 2019-20 NVVPL has achieved net total turnover of Rs. 1.34 crore (previous year Rs.56.46 crore) EBITDA loss of Rs. 3.81 crore (previous year EBITDA profit of Rs. 3.59crore)
Subsidiary Companies and Consolidated Financial Statements
In accordance with the Companies Act 2013 and Accounting Standard(AS-21) on consolidated financial Statement the audited consolidated financial statementis provided in the Annual Report.
The Statement required under Section 129(3) of the Companies Act 2013in respect of the subsidiary companies is provided in Annexure I of this report.
The annual accounts of the subsidiary companies and the relateddetailed information will be made available to any member of the
Company / its subsidiaries who may be interested in obtaining the same.The annual accounts of the subsidiary companies will also be kept for inspection by anymember at the Company's Registered Office and Corporate Office and that of the respectivesubsidiary companies.
The last Credit Rating issued to the Company by CARE Limited was onOctober 12012. However the credit rating is under suspension at present as the Companywas under Corporate Debt Restructuring.
Board does not recommend any dividend for the financial year endedMarch 312020.
Lockout at Tiles manufacturing unit at Alibaug
On 27th January 2020 lock out has been declared at tilesmanufacturing unit at Alibaug for a temporary period. The lock out was necessitated due tonon cooperation coercive and threatening tactics by workmen at the factory premises andwith a view to safeguard the interest of the organisation the safety and security of thepersonnel and the property of the Company.
Impact oF COVID 19 pandemic:
The outbreak of novel Coronavirus (COVID-19) pandemic and theconsequent lockdown restrictions imposed by the central and state governments has causedsignificant disturbance and slowdown of economic activity in India and across the globe.
The Company has taken proactive measures to comply with variousregulations/guidelines issued by the Government and local bodies to ensure safety of itsworkforce and the society in general.
Operations in many states/union territories were disrupted duringMarch. Management believes that it has taken into account all the known impacts arisingfrom COVID 19 pandemic in the preparation of the financial results. As per the currentassessment other than the impairment recorded no significant impact on carrying amountsof assets is expected and management continue to monitor changes in future economicconditions. However the impact assessment of COVID 19 is a continuing process given theuncertainties associated with its nature and duration. The eventual outcome of the impactof the COVID 19 pandemic on the Company's business may be different from that estimated ason the date of approval of these financial results.
No material changes or commitments have occurred other than mentionedabove between the end of the financial year and the date of this report which affect thefinancial statements of the Company in respect of the reporting year.
Internal Control System
(i) Internal Control Systems and their adequacy
The Company has in place adequate internal controls commensurate withthe size of the Company and nature of its business and the same were operating effectivelythroughout the year. Internal Audit is carried out periodically covers all areas ofbusiness. 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 areplaced before the Audit Committee of the Board.
(ii) Internal Controls over Financial Reporting
The Company has in place adequate internal financial controlscommensurate with size and complexity of its operations. During the year such controlswere tested and no reportable material weakness in the design or operations were observed.The Company has policies and procedures in place for ensuring proper and efficient conductof its business the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
Directors' Responsibility Statement
The Directors confirm that:
a) In the preparation of the annual accounts for the year ended March31 2020 the applicable accounting standards read with requirements set out under ScheduleIII to the Act have been followed with proper explanation relating to materialdepartures;
b) Appropriate accounting policies have been selected and appliedconsistently and have made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company as on March 31 2020and of the loss of the Company for the year ended March 312020;
c) Proper and sufficient care has been taken for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) The annual accounts have been prepared on a going concern basis.
e) The Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
f) The Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
Details of Directors Appointed/Resigned during the year
During the year under review Mr. Pradeep Saxena- Independent Directorof the company has resigned from the Board w.e.f. April 23 2019 due to hispre-occupation. Mr.Siddharth Kothari was appointed as an independent director w.e.f August09 2019.
Mr. Vivek Talwar retires by rotation at the ensuing AGM and beingeligible offers himself for re-appointment.
Pursuant to the recommendations of the Nomination & RemunerationCommittee the Board at its meeting held on February 12 2020 has approved there-appointment of Mr. Vivek Talwar as Managing Director for a further term of 3 years fromApril 01 2020 to March 31 2023 subject to the approval of shareholders. Based on hisskills experience knowledge and report of his performance evaluation the Board was ofthe opinion that his association would be of immense benefit to the Company and it wouldbe desirable to avail his services as Managing Director.
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed under section 149(6) of the Companies Act 2013.
Pursuant to the provisions of the Companies Act 2013 and Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 astructured questionnaire was prepared after taking into consideration the various aspectsof the Board's functioning composition of the Board and its Committees cultureexecution and performance of specific duties obligation and governance.
The performance evaluation of the Independent Directors was completed.The performance evaluation 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. Mahesh Shah $ ||Chief Executive Officer |
|4. ||Mr. Ramesh Iyer# ||Chief Financial Officer |
|5. ||Mr. Puneet Motwani ||Company Secretary & Compliance Officer |
# Appointed as Chief Financial Officer w.e.f. March 012020.
Mr. B. G. Borkar superannuated from the services of the company on May31 2020 and ceased to be Chief Financial Officer w.e.f February 29 2020.
$ Mr. Mahesh Shah ceased be Chief Executive Officer of the companyw.e.f July 3 2020.
Pursuant to Regulation 34 read with Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a detailed report on CorporateGovernance forms a part of this Annual Report. A certificate from the auditors of theCompany confirming compliance with the conditions of Corporate Governance as stipulatedunder Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 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 businessperformance as stipulated in Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is given in a separate statement which formspart of the Annual Report.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in the ordinary course of business andon an arm's length basis. During the year the Company had not entered into any newcontract / arrangement / transaction with related parties which could be
considered material in accordance with the policy of the Company onmateriality of related party transactions.
Material related party transactions which are at arm's length aredisclosed in form AOC-2 annexed as Annexure II.
The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the Company'swebsite at the link: https://nitco.in/ corporate/investors/nitco-policy. Your Directorsdraw attention of the members to Note 36 to the standalone financial statement which setsout related party disclosures.
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.
In accordance with the provisions of the Section 124(6) of theCompanies Act 2013 and Rule 6 of the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 ('IEPF Rules') the Company hastransferred 95929 equity shares of Rs. 10 each held by 258 shareholders to IEPF. The saidshares correspond to the dividend which had remained unclaimed for a period of sevenconsecutive years from the financial year(s) 2005-06 2006-07 2007-08 2008-09 and2010-11. Subsequent to the transfer the concerned shareholders can claim the said sharesalong with the dividend(s) by making an application to IEPF Authority in accordance withthe procedure available on www.iepf.gov.in and on submission of such documents asprescribed under the IEPF Rules. All corporate benefits accruing on such shares viz. bonusshares etc. including dividend shall be credited to IEPF.
Corporate Social Responsibility
The Board has constituted a Corporate Social Responsibility("CSR") Committee in terms of the provisions of Section 135 of the Act readwith the Companies (Corporate Social Responsibility Policy) Rules 2014 inter alia togive strategic direction to the CSR initiatives formulate and review annual CSR plans andprogrammes formulate annual budget for the CSR programmes and monitor the progress onvarious CSR activities. Details of the composition of the CSR Committee have beendisclosed separately as part of the Corporate Governance Report.
In view of continuous losses in the preceding financial years theCompany is not required to contribute to the CSR activities as mandated under theprovisions of section 135 of the Companies Act 2013.
Risk and Concern
Changes in macro economic factors like GDP growth inflation energycost interest rate world trade exchange rate etc. also play an important role in ourindustry thereby affecting the operations of business. Any adverse change in the above mayaffect the performance of your Company. Your Company periodically reviews the riskassociated with the business and takes steps to mitigate and minimize the impact of risk.
The Company has neither accepted nor renewed any deposit from thepublic within the meaning of Section 73 and 74 of the Companies Act 2013 read withCompanies (Acceptance of Deposits) Rules 2014 during the year ended March 312020.
At the Company's 51st Annual General Meeting (AGM) held onSeptember 20 2017 M/s. Nayak & Rane Chartered Accountants (ICAI FRN 1 17249W) Mumbai were appointed as the Company's Statutory Auditors from the conclusion of the 51stAGM till the conclusion of the 56th AGM (subject to ratification of theirreappointment by the Members at every AGM held after the AGM in which the appointment wasmade) of the Company on a remuneration as may be agreed upon by the Board of Directorsand the Auditors. Pursuant to the amendments made to Section 139 of the Companies Act2013 by the Companies (Amendment) Act 2017 effective from May 7 2018 the requirement ofseeking ratification of the Members for the appointment of the Statutory Auditors has beenwithdrawn from the Statute. Hence the resolution seeking ratification of the Members forcontinuance of their appointment at this AGM is not being sought.
The Board has duly examined the statutory auditor's report to accountsand clarifications wherever necessary have been included in the Notes to Accountssection of the Annual Report. There is no qualification in statutory auditor's report.
In terms of the provisions of Section 204 of the Act and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardappointed M/s MMJB & Associates LLP Practising Company Secretaries to conductSecretarial audit for F.Y. 2019-20. The Secretarial Audit Report for the financial yearended March 31 2020 is annexed herewith marked as Annexure III to this Report.
Given below is the explanation on the observations made by theSecretarial Auditor in his report:
|Observations made by the Auditor ||Explanation |
|The Composition of Committees of Director was not in compliance for a period from 23rd April 2019 to 8th August 2019 ||Mr. Pradeep Saxena who was a member of Audit Committee Nomination and Remuneration Committee and Stakeholders Relationship Committee had ceased to act as an independent director on 23 rd April 2019 and Mr. Siddharth Kothari was appointed in his place as an Independent Director with effect from 15th July 2019. As a result the composition of Committees got changed due to cessation of Mr. Saxena and the same was reconstituted at the Board Meeting held on 9th August 2019 after appointment of Mr. Siddharth Kothari. Since there was no board meeting held after the appointment of Mr. Siddharth Kothari until 9th August 2019 the constitution of the Committees remained unchanged during the period 23rd April 2019 to 8th August 2019. |
|Observations made by the Auditor ||Explanation |
|The Company has ||Company ratified all Related Party |
|not taken Omnibus ||Transaction after the end of every |
|approval or prior ||quarter in the subsequent Board |
|approval from Audit ||Meeting. However the same has |
|Committee for all ||been rectified and company will take |
|the Related Party ||prior omnibus approval from Audit |
|Transactions as ||Committee for all Related Party |
|per Section 177 of ||Transactions. |
|Companies Act 2013 || |
|and Regulation 23 of || |
|Listing Regulations. || |
|However all the || |
|Related Party || |
|Transactions were || |
|placed in the || |
|subsequent Board || |
|Meetings. || |
|Out of the total ||Mr. Vivek Talwar Promoter and |
|shareholding of ||Managing Director of the company |
|promoter and ||does not have any control over |
|promoter group only ||4242 Equity shares held by certain |
|4242 Equity Shares ||entities of Promoter group in physical |
|i.e. 0.01% of the ||form and hence its been practically |
|total shareholding of ||not possible for the company to |
|Promoter Category is ||dematerialize those shares. |
|not in dematerialized || |
|form as required under || |
|Regulation 31(2) of || |
|Listing Regulations || |
In terms of the provisions of Section 148 of the Act read with Rule 14of the Companies (Audit and Auditors) Rules 2014 the cost records in respect of marblebusiness are required to be audited by a qualified Cost Accountant. The Board ofDirectors upon the recommendation of the Audit Committee had appointed M/s. R. K.Bhandari & Co Cost Accountants as cost auditor for conducting the audit of costrecords of the Company for the applicable segment for F.Y. 2019-20.
The Company has in place an Audit Committee in terms of therequirements of the Companies Act 2013 read with the rules made thereunder and Regulation18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. Thedetails relating to the same are given in report on Corporate Governance forming a part ofthis report.
The Vigil Mechanism as envisaged in the provisions of sub-section (9)of Section 177 of the Act the Rules framed thereunder and Regulation 22 of the ListingRegulations is implemented by the Company through a Whistle Blower Policy to enable theDirectors its employees to voice their concerns or observations without fear or raisereports of instance of any unethical or unacceptable business practice or event ofmisconduct/ unethical behavior
actual or suspected fraud and violation of Code of conduct etc. to theAudit Committee.
Under the Whistle Blower Policy confidentiality of those reportingviolation(s) is protected and they shall not be subject to any discriminatory practices.The Policy also provides for adequate safeguards against victimization of persons who usesuch mechanism and make provision for direct access to the Chairman of the Audit Committeein appropriate and exceptional cases. The Policy on vigil mechanism and whistle blowerpolicy may be accessed on the Company's website at the link: https://www.mtco.in/corporate/investors/nitco-policy
Meetings of the Board
Four meetings of the Board of Directors were held during the year. Forfurther details please refer report on Corporate Governance.
The board has on the recommendation of the Nomination and RemunerationCommittee framed a policy for the selection and appointment of Directors Key ManagerialPersonnel Senior Management and their remuneration. This policy along with the criteriafor determining the qualification positive attributes and independence of a director isavailable on the website of the Company i.e.https://www.nitco.in/corporate/investors/nitco- policy
Prevention of Sexual Harassment of Women at Workplace
As required under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder the Companyhas implemented a policy on prevention prohibition and redressal of sexual harassment atthe workplace. This has been widely communicated internally and is uploaded on theCompany's intranet portal. The company has constituted Internal Complaints Committee (ICC)to redress the complaints received regarding sexual harassment. During the year underreview no complaints were received by the Committee for Redressal.
Particulars of Loans given Investments made Guarantees given andSecurities provided
Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilized by the recipient are provided in the Note 36 to the standalonefinancial statement.
Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed under theAct is annexed herewith as Annexure IV.
Extract of Annual Return
Extract of Annual Report (form MGT-9) of the Company is annexedherewith as Annexure V of this Report.
Particulars of Employees and related disclosures
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided atAnnexure- VI.
In terms of the provisions of rules 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 read with 2ndproviso of the rules a statement showing the names of employees and other particulars ofthe top ten employees and employees drawing remuneration in excess of the limits asprovided in the said rules will be provided on a request made in writing to the Company.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:
1. Details relating to deposits covered under Chapter V of the Act;
2. Issue of equity shares with differential rights as to dividendvoting or otherwise;
3. The Managing Director of the Company does not receive anyremuneration or commission from any of its subsidiaries;
4. No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and Company's operations infuture.
Appreciation and acknowledgement
Your Directors acknowledges with gratitude and wish to place on recordtheir deep appreciation of continued support and co-operation received by the Company fromJM Financial Asset Reconstruction Company (JMFARC) Banks Lenders various GovernmentAuthorities Shareholders Business Associates Dealers Customers and Investors duringthe year.
For and on behalf of the Board Vivek Talwar
Chairman & Managing Director
DIN: 00043180 Mumbai June 26 2020