Om Metals Infraprojects Ltd.
|BSE: 531092||Sector: Engineering|
|NSE: OMMETALS||ISIN Code: INE239D01028|
|BSE 00:00 | 11 Oct||20.25||
|NSE 00:00 | 11 Oct||20.55||
|Mkt Cap.(Rs cr)||195|
|Mkt Cap.(Rs cr)||195.01|
Om Metals Infraprojects Ltd. (OMMETALS) - Director Report
Company director report
Your Directors have pleasure in presenting 46th Annual Report of yourCompany together with the Audited Financial Statements forthe financial year ended 31stMarch 2018.
Financial Results . .
(Rs. In Lacs
Note: Previous year's figures have been regrouped / reclassified wherever necessary inconformity with Indian Accounting Standards (IND AS) to correspond with the current year'sclassification / disclosure and may not be comparable with the figures reported earlier.
Financial Performance and State of Company's Affairs and Future Outlook
The strength of your Company lies in identification execution and successfulimplementation of the projects in the infrastructure space. To strengthen the long-termprojects and ensuring sustainable growth in assets and revenue it is important for yourCompany to evaluate various opportunities in the
different business verticals in which your Company operates. Your Company currently hasseveral projects under implementation and continues to explore newer opportunities bothdomestic and international. Your Board of Directors' considers this to be in strategicinterest of the Company and believe that this will greatly enhance the long-termshareholders' value.
The Company has reported consolidated revenue from operations Rs. 30972.97 Lakhs asagainst Rs. 24944.63 Lakhs in the previous year and Profit before Tax (PBT) of Rs.4969.84Lakhs as against Rs.2459.19 Lakhs in the previous year.
At present your Company operates in following core sectors - Engineering PackagingReal Estate and Infrastructure Development and is actively exploring some newopportunities.
The Company has reported standalone revenue from operations Rs 29801.44Lakhs as againstRs. Rs. 24942.72Lakhs in the previous year and a Profit before Tax (PBT) of Rs.4795.87Lakhs as against Rs. 2767.27 Lakhs in the previous year.
DIVISIONAL ANALYSIS ENGINEERING DIVISION
The Turnover of this division(including joint controlled operations) this year is Rs.19904. 84 lakhs and profit before tax (PBT) is Rs.2931.18 lakhs as against Turnover of Rs.19039.60 lakhs & profit before tax (PBT) is Rs. 973.03 lakhs in the last year.
The Engineering Division focuses on turnkey engineering procurement and constructioncontracts for Hydro mechanical equipment for Hydro Power and Irrigation projects. TheCompany post execution of civil work for Ka I isindh dam has since been qualified forcomplete EPC for dam except EM package and shall address a larger share of hydro powerproject. This is a feat for diversifying in the civil construction space and the Companywill not have to take recourse to civil companies for meeting PQ norms for bidding incivil space. The Company is now all geared up to encash the burgeoning opportunities inexecuting complete EPC contract in the space of H M components and civil structure. Theprojects in Hydro power space involve multifarious activities viz. civil constructionelectromechanical component and Hydro mechanical equipments. The Company has executed over60 Hydro-Mechanical turnkey proj ects in power and irrigation. The maj or revenue sourcethis financial year are from kutchch project of SSNNL Knowledge city project in Ujjainand Rampurproject (UP) and Kameng project in Arunachal Pradesh.
Orders received during the Year:
1. Kpong Left Bank (Ghana) for Rehabilitation and Completion of Kpong Left BankIrrigation Project.
2. Kundah H.E. Project for Design engineering supply transport execution andcommissioning of all components of Hydro Mechanical works and steel liner for pressureshaft and penstocks.
3. Arun-III H.E. Project (Nepal) for All hydro-Mechanical works including PressureShaft Steel Liner of 900 MW project located in SankhuwasabhaDistt. In Nepal.
REAL ESTATE DIVISION
The Turnover of this division this year is Rs. 699.86 lakhs and profit is Rs. 150.82lakhs against Turnover of Rs. 1607.30 Lakhs & profit is Rs. 223.48 Lakhs in the lastyear.
There is a potential realizable value of Land Bank/ developable/under development areain Company/subsidiary/Joint Venture.
Real Estate Project Details
Construction has resumed after the judgement of Hon'ble JDA tribunal which in itsverdict ordered that all approvals and maps of the project approved by JDA are as perpolicies/ bye laws and within legal framework. The construction has started steadily.
* delivered for possession A Subject to approval of Design/ Area
Kevun-tapped Land Bank
The Turnover of this division this year is Rs. 2364.27 lakhs and reported loss ofRs.264.77 lakhs.
There is a potential realizable value of Land Bank/ developable/under development areain Company/subsidiary/Joint Venture.
The Company had entered into this new venture for manufacturing of Closure for waterPET bottles and Carbonated Soft Drinks (CSD) caps. The World demand for caps &closures is likely to exceed USD 55 bln / 2 tin units in 2020. The Clients/PotentialClients includes Bisleri Xalta and other local players.
INFRASTRUCTURE AND CIVIL EPC CONTRACTS
Knowledge City Project: First smart City Infrastructure Development project in 50%Joint Venture on EPCbasisforVikram Udyogpuri Ltd in Ujjain.
Silos: Project received from Food Corporation of India (FCI) for construction anddevelopment of 4 Silos and for the same the Company has formed 4 SPV's and has 50% stakein each.
SALE OF CINEPLEX DIVISION
Your company had sold its Cineplex Division to Princess Infra and Development LLP at anapproved valuation of Rs. 18 00 00000. The valuation had been carried out by anindependent valuers appointed by the Company. This division was not a core activity ofyour Company.
Your Company sees good prospects in the domestic economy with the thrust oninfrastructure development. The Company has invested in building up the capacities overthe years and has also mapped the emerging opportunities with the internal capabilities.Increase in the pace of implementation of various initiatives by the government andrevival of the investment cycle would be conducive for achieving the growth aspirations ofthe Company. The road ahead planned for your company includes:
Enlarge global footprint through acquisition and strategic Joint Ventures in thecore business.
Completion of existing real estate projects.
Establish presence in varied structure steel design and fabrication works inbridges Pipe laying and heavyengineeringworks.
Tap India's second largest potential in the world both in Hydro Electric PowerRiver Linking and irrigation by capitalizing on the plans of the government of India plansof accelerating infrastructure projects.
CHANGES IN NATURE OF BUSINESS. IF ANY
There have been no changes in the business carried on by the Company or itssubsidiaries.
The Board in its meeting held on February 14 2018 declared an interim dividend of Rs0.35/- per equity share of face value of Rs. 1/- each absorbing a sum of Rs.337.06 Lacswhich was paid on or
before March 31 2018. Your directors recommend that the aforesaid interim dividendshall be declared asfinal dividend fortheyearended March 312018.
Together with the Corporate Tax on dividend the total outflow on account of equitydividend will be Rs. 63747247/-via-a-via Rs. 23181675 /- fortheyear2016-17.
Considering the capital requirement for ongoing business expansion the Board ofDirectors does not recommend any final dividend on equity shares.
The dividend payout for the year under review is in accordance with the Company'spolicy of consistent dividend payout keeping in view the Company's need for capital itsgrowth plans and the intent to finance such plans through internal accruals to themaximum.
Appropriations to general reserve for the financial year ended March 31 2018 as perstandalone financial statements are as under: (In Rupees
The company does not propose to transfer any amount to Reserve.
CHANGES IN SHARE CAPITAL IF ANY
The paid up Equity Share Capital as on March 31 2018 was Rs.9.63 Crore. During theyear under review the Company has not issued shares with differential voting rights norgranted Employee Stock Options or Sweat Equity Shares.
INFORMATION ABOUT SUBSIDIARIES/JV/ASSOCIATE COMPANY
There has been no material change in the nature of the business of the subsidiaries.
Pursuant to provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries in Form AOC-1 isattached to the financial statements of the Com pa ny as An nexu re 11.
Pursuant to the provisions of section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company at www.ommetals.com
During the financial Year 2017-18 our Company has invested an aggregate of Rs.19200000/- in acquiring shares of Worship Infraprojects Private limited thereby making itwholly owned subsidiary of the Company.
Apart from this your Company funded its subsidiaries/JV's from time to time as perthe fund requirements through loans guarantees and other means to meet working capitalrequirements.
The developments in business operations / performance of major subsidiaries /JV /Associates consolidated with OMIL are as below:
OM METALS CONSORTIUM PRIVATE LIMITED - This wholly owned Subsidiary Company isdeveloping a high end residential project on a very prime parcel of 19000 sq. mt. land atJaipur and has a sellable built-up area of 6.3 lakh sqft with expected realization of'INR10000-12000/sqft. OMIL has invested INR 1.6 bn for land and development cost is expectedto be Rs 4 bn. The company expects to generate Rs 6.0 bn of Revenue from this project overnext 2-3 years which translates into pretax profits of Rsl.3bnappx. It has hired localvery reputed contractor for finishing the project under architectural leadership of Studio18 a renowned architecture firm of USA. The construction of Residential project Palaciaat A 2 Prithviraj Road near Statute Circle Jaipur (Raj.) had resumed after the judgementof Ho'bleJ DA tribunal which in its verdict ordered that all approvals and maps of theproject approved by J DA are as per policies/ bye laws and within legal framework.
OM METALS REAL ESTATE PRIVATE LIMITED-This wholly owned Subsidiary Company is holdingstakes in different SPV's and different subsidiaries for different projects in differentlocations. The development of all these projects is in some stages of clearances.
CHAHEL INFRASTRUCTURES LIMITED (earlier known as OM-SPML INFRASTRUCTURE LTD.) -
The Company has substantial stake totaling to 94.46% this Company has earmarked forthe development of sea port in Pondicherry. After the non clearance of the project we havemoved for arbitration proceedings there our as well as of Govt of Pondicherry claimsremain unconsidered and we are taking legal advice.
SANMATI INFRADEVELOPERS PRIVATE LIMITED -This SPV wherein we own 25% stake along withother stakeholders SPML Infra (25%) and Urban Infrastructure Trustees Ltd (UITL) (50%)which is a holding company of Pondicherry SEZ Co. Ltd (PSEZCL). PSEZCL owns a multiproduct SEZ in Pondicherry where 840 acre land has been acquired and balance 26 acre ispending. After the non clearance of this project we have moved to court for legalremedies.
BHILWARA JAIPUR TOLL ROAD PRIVATE LIMITED-This SPV where Om metals has 49% stake hasdone the development of the 212 km road project in Jaipur-Bhilwara Stretch on BOT basisand COD achieved in December 2014. Om Metals has executed 100% of EPC work for a totalproject cost of Rs. 410 Cr. After the COD of the project all 4 toll plazas are operationaland generating revenue. Due to cash shortfall in revenue generation we have beenapproaching new set of lenders for take over financing. Private vehicles were made tollfree wef 1.4.2018 by state govt and we are exploring with NHAI for conversion of thisstate highway into national highway and have also been talking to state govt for allowingcompensation for loss on account of exempted vehicles. The Ministry of road and transporthas given a public speech for conversion of some state high ways of Rajasthan intonational Highway.
WORSHIP INFRAPROJECTS PRIVATE LIMITED (earlier known as OM METALS-SPML INFRAPROJECTSPVT LTD) - A 457 Cr Kalisindh Dam project in a SPV created with SPML infra on 50:50 basisis complete with some final leg work going on. Om Metals had been executing EPC contractfor major work. This company was made wholly owned subsidiary of Om metals in current yearand this company in JV with Om metals has submitted a bid for EPC contract of Isharda dam-the outcome of result of bid is pending with project authority.
GURHA THERMAL POWER COMPANY LIMITED- This company as a 50% JV of Om Metals has alignite based thermal project in Rajasthan. Due to abnormal delay at the end of Govt wehave intimated ourstand ofterminatingthe project from ourside.
OM METALS CONSORTIUM (Partnership firm)-This prestigious partnership firm fordevelopment of SRA project in Bandra Reclamation facing Bandra- WorliSea Link hascompleted the construction of the temporary transit camp.
A redevelopment project of MAHADA in partnership under Om Metals Consortium (OMC) whereOMIL holds 17.5 % stake. Other developmental partners in the consortium are DB RealtyGroup SPML Infra Morya Housing and Mahima developers. This multi-storied residentialproject is spread across 6 acres and entitled to FSI which translate into approx ~1.2mnsqft(subjected to all Govt clearances ).A premium of additional FSI available shall bepaid by OMC.
OMC has done a J V with DB realty for this project where DB realty would be incurring100% cost for the development and transfer 50% of salable area to OMC.
OM METALS -JSC JV - This JV has been executing Kameng HEP and the project is scheduledto complete by next year.
OM RAY CONSTRUCTION J V-This SPV is executing EPC of one project in Karnataka.
SPML-OM METALS JV -This J V has been executing project for development of smartinfrastructure( knowledge city) in Vikram Udyogpuri at Ujjain. The progress of thecontract is very smooth and we are expecting it to complete by 2019.
GUJRAT WAREHOUSING PRIVATE LIMITED- This SPV was incorporated for the development ofsilo for storing wheat for FCl.The partial land acquisition is complete and balance landis in process of negotiation..
WEST BENGAL LOGISTIC PRIVATE LIMITED- This SPV was incorporated for the development ofsilo for storing wheat for FCl.The land acquisition is in process.
UTTAR PRADESH LOGISTIC PRIVATE LIMITED- This SPV was incorporated for the developmentof silo for storing wheat for FCl.The land acquisition is in process.
BIHAR LOGISTIC PRIVATE LIMITED- This SPV was incorporated for development of silo forstoring wheat for FCl.Land acquisition is in process.
Subsidiaries/Associates of Om Metals Real Estates Private Limited (Wholly ownedsubsidiary of the Company):
OM METALS INFOTECH PRIVATE LIMITED-This Company has industrial land in Jaipur and thelong drawn legal hurdle has been sorted out by out of court settlement. A commercial/industrial project is at planning stage and we are exploring all sort of possibilitiesfor monetization.
OM METALS DEVELOPRS PRIVATE LIMITED - OMDPL entered into a JV with Mahindra Life spacefor a residential project in Hyderabad. Mahindra owns 80% of the built-up area rights inthe 10-acre premium residential project called 'Ashvita' and OMDPL holds the rights tothe remaining area. The 20% share of built-up area under OMIL is 80000 sqft and expectedrealization is '4500/sq.ft.(0.36 Bn I NR). The construction is complete the project ispartially delivered and sale of units are progressing very satisfactorily.
The Board of Directors of the Company has adopted the policy for the materialsubsidiaries which is available on the website of the company at the following link:
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the company have been prepared in accordancewith indian accounting standards (Ind AS) notified under section 133 of the companies act2013. The audited consolidated financial statement is provided in the Annual Report.
Companies which became / ceased to be Company's Subsidiaries. Joint VenturesorAssociate Companies:
Companies which have become subsidiaries/JV during the financial year 2017-18 :Worship Infraprojects Private Limited & Om-SPM L JV Ghana
Companies which has ceased to be the Subsidiaries/Step Subsidiary during thefinancial year 2017-18: Om Kerui Joint Venture Private Limited
MATERIAL CHANGES AND COMMITMENTS IF ANY BETWEEN BALANCE SHEET DATE AND DATE OFDIRECTORS' REPORT
There were no material changes and commitments between the end of the financial year ofthe Company to which the Financial Statements relates and date of Directors' Reportaffecting the financial position of the Company.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 ('the rules') all unpaidor unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Government of India after the completion of seven years. Furtheraccording to the rules the shares on which dividend has not been paid or claimed by theshareholders for seven consecutive years or more shall also be transferred to the demataccount of the IEPF authority. Accordingly the company has transferred the unclaimed andunpaid dividends of Rs49302/-to the IEPF Fund.
During the year 2017-1819509 equity shares in respect of which dividend has not beenclaimed for the Interim dividend declared in financial year 2009-10 and interim dividenddeclared in financial year 2010-11 were transferred to the IEPF Authority pursuant to theprovisions of Section 124(6) of the Companies Act 2013and the rules thereunder.
Further 19509 corresponding shares were transferred as per the requirement of the IEPF rules.
MEETINGS OF THE BOARD OF DIRECTORS
Eight meetings of the Board of Directors were held during the year. For furtherdetails please refer to the corporate governance report which forms part of this report.The maximum interval between any two meetings did not exceed 120 days in prescribed asper the Companies Act 2013.
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors of theCompany confirms that- (a)ln the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;
(b) 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 and ofthe profit and loss of the company for that period;
(c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the company and for preventinganddetectingfraud and otherirregularities;
(d) The directors have prepared the annual accounts on a going concern basis; and
(e) The directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants and the reviews performed by management andthe relevant board committees including the audit committee the board is of the opinionthat the Company's internal financial controls were adequate and effective during thefinancial year 2017-18.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The constitution of Board of Directors and KM P of the Company during the year 2017-18is as under:
In terms of Section 152 of the Companies Act 2013 Mr. Dharam Prakash Kothari shallretire at the ensuing Annual General Meeting and being eligible offer himself forre-appointment.The three years term as President & Director of Mr. Vikas Kothari hasexpired on27th March 2018. It is proposed to reappoint him for a furtherperiod of five years from 28th March 2018.
After the balance sheet date:
The Board at its meeting held on April 20 2018 had appointed Mr. Naresh Kumar Paliwalas an Additional Independent Director of the Company to hold office up to date of ensuingAnnual General Meeting of the Company. The appointment of Mr. Naresh Kumar Paliwal as aNon-executive Independent Director is also proposed at the ensuing Annual General Meetingof the Company.
INDEPENDENT DIRECTORS AND DECLARATION
Mr. Ram Kumar Gupta had resigned from the directorship of the Company with effect fromJanuary 06 2018.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under Section149 (6) of the Act and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015.
In terms of the requirements of the Act and Listing Regulations the Board carried outthe annual performance evaluation of the Board as a whole. Board Committees and theindividual Directors.
The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual directorto the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
Independent Directors in their separate meeting reviewed and evaluate the performanceof non- independent directors Board as a whole Managing Director and the Chairmantaking into account the views of executive directors and non-executive directors andcriteria laid down by the Nomination and Remuneration Committee.
FAMILARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
To familiarize the Independent Directors with the strategy operations and functions ofour Company the executive directors/ senior managerial employees make presentation to theIndependent Directors about the company's strategy operations etc. Independent Directorsare also visiting factories and branch offices to familiarize themselves with theoperations of the company and to offer their specialized knowledge for improvement of theperformance of the company. Further at the time of appointment of an Independentdirector the company issues a formal letter of appointment outlining his/ her rolefunction duties and responsibilities as a director. The format of the letter ofappointmentisavailableatourwebsitewww.ommetals.com
The Policy of the familiarization programmes of Independent Directors are put up on thewebsite of the Company at the link:
NOMINATION AND REMUNERATION COMMITTEE:
As per the section 178(1) of the Companies Act 2013 the Company's Nomination andRemuneration Committee comprises of following Non-executive Directors as under:
For further details please referto the corporate governance report which forms partof this report
*Mr. Ram Kumar Gupta resigned from the post of independent director as on 06/01/2018.
Terms of Reference:
a) To formulate a criteria for determining qualifications positive attributes andindependence of a Director.
b) Formulate criteria for evaluation of Independent Directors Board and Committees.
c) Identify persons who are qualified to become Directors and who may be appointed inSenior Management in accordance with the criteria laid down in this policy.
d) To carryout evaluation of every Director's performance.
e) To recommend to the Board the appointment and removal of Directors and SeniorManagement.
f) To recommend to the Board policy relating to remuneration for Directors KeyManagerial Personnel and Senior Management.
g) Ensure that level and composition of remuneration is reasonable and sufficientrelationship of remuneration to performance is clear and meets appropriate performancebenchmarks.
h) To devise a policy on Board diversity.
i) To carry out any other function as is mandated by the Board from time to time and /or enforced by any statutory notification amendment or modification as may beapplicable.
j) To perform such other functions as may be necessary or appropriate for theperformance of its duties.
Remuneration to Executive Directors:
The remuneration paid to Executive Directors is recommended by the Nomination andRemuneration Committee and approved by Board in Board meeting subject to the subsequentapproval of the shareholders at the General Meeting and such other authorities as may berequired. The remuneration is decided after considering various factors such asqualification experience performance responsibilities shouldered industry standards aswell as financial position of the Company.
Remuneration to Non Executive Directors:
The Non Executive Directors are paid remuneration by way of Sitting Fees. The NonExecutive Directors are paid sitting fees for each meeting of the Board and itscommittees.
The policy under sub section (3) of section 178 of the Companies Act 2013 adopted byboard is appended as Annexure IV to the Directors' Report.
The Remuneration to Executive Directors and KMP are in affirmation of the Nominationand Remuneration Policy.
According to Section 177 of the Companies Act 2013 the Audit Committee is comprised ofthe following directors:
For further details please referto the corporate governance report which forms partof this report For other board committes please refer to the corporate governance reportwhich forms part of this report.
The term of M/S M.C. Bhandari & Co. Chartered Accountants (RegistrationNo.303002E) ended with the conclusion of audit for the financial year 2016-17. Afterconducting a detailed evaluation and based on the recommendation of Audit Committee theBoard approved the proposal for appointment of M/S Mahipal Jain & Co. CharteredAccountants (Registration No.007284C) as statutory auditors of the Company for a term of 5years from the financial year 2017-18 onwards on such terms and conditions andremuneration as may be decided by the Audit/ Board of Directors of the Company inconsultation with the auditors. The said appointment was approved by the members of theCompany at the 45th AG M held on September 292017.
Vide notification dated May 7 2018 issued by Ministry of Corporate Affairs therequirement of seeking ratification of appointment of statutory auditors by members ateach AGM has been done away with. Accordingly no such item has been considered in noticeof the 46th AGM.
The Auditors' Report to the members on the Accounts of the Company for the financialyear ended March 312018 contain with the following remarks
'Standalone financial statements includes unaudited financial statement of jointoperation Om-SPML JV Rwanda.
The Board of directors had explained that it's a new joint venture whose preliminaryexpense has only been started and hence seems reasonable. The Board had estimated Rs 337lacs as capital work in progress.
Pursuant to provisions of Section 143(12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the Audit Committee during the yearunder review.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014the Company hasappointed Mr. Brij Kishore Sharma Proprietor M/s B K Sharma & Associates a firm ofCompany Secretaries in Practice to conduct Secretarial Audit of the Company. The Reportof the Secretarial Audit in Form M R- 3 for the financial year ended March 31 2018 isenclosed as Annexure V to this Report. There are no qualifications reservations oradverse remarks made by the Secretarial Auditor in his report.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and as per theCompanies (Cost Records and Audit) Rules 2014 and amendments thereof the Board on therecommendation of the Audit Committee has approved the appointment of M/s. M. Goyal &Co. Cost Accountants as the Cost Auditors for the Company for the financial year endingMarch 312019.
The due date for filing the Cost Audit Report of the Company is within 180 days fromthe end of the accounting year.
In accordance with the requirement pursuant to Section 148 of the Act your Companycarries out an annual audit of cost accounts. The Cost Audit Report and the ComplianceReport of your Company for FY17 was filed with the Ministry of Corporate Affairs throughExtensive Business Reporting Language (XBRL) by M/s M. Goyal & Co. Cost Accountants.
A proposal for ratification of remuneration of the Cost Auditor for financial year2018-19 is placed before the shareholders
CONSERVATION OF ENERGYTECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure I to this Report.
As per Section 177(9) and (10) of the Companies Act 2013 and as per regulation 22 ofthe Listing Regulations the company has established Vigil Mechanism for directors andemployees to report genuine concerns and made provisions for direct access to theChairperson of the Audit Committee. Company has formulated the present policy forestablishing the vigil mechanism/ Whistle Blower Policy to safeguard the interest of itsstakeholders Directors and employees to freely communicate and address to the Companytheir genuine concerns in relation to any illegal or unethical practice being carried outin the Company. The said policy has been also put up on the website of the Company atthefollowing link:
http://www.ommetals.com/files/vigil-mechnasim.pdf RISK MANAGEMENT
Periodic assessments to identify the risk areas are carried out and management isbriefed on the risks in advance to enable the company to control risk through a properlydefined plan. The areas of risk include-Technology risk Competition risk Financial riskCost risk Legal risk Economic Environment and Market risk Political Environment RiskInflation and Cost Structure Technology Obsolescence Project Execution ContractualCompliance Operational efficiency hurdles in Optimum use of resources Human Resourcemanagement environment management etc. The Board is also periodically informed of thebusiness risks and the actions taken to manage them. The Company has formulated a policyfor Risk management with the following objectives:
Provide an overview of the principles of risk management
Explain approach adopted by the Company for risk management
Define the organizational structure for effective risk management
Develop a "risk" culture that encourages all employees to identifyrisks and associated opportunities and to respond to them with effective actions.
Identify assess and manage existing and new risks in a planned and coordinatedmanner with minimum disruption and cost to protect and preserve Company's human physicaland financial assets.
Fundamentals of our risk management system
The company has in place a code of conduct and high safety standards in plant operationto protect its employees and the environment. The company has instituted control bodieswhich verify important business decisions. Organizational measures are undertaken toprevent the infringement of guidelines and laws.
Goals of risk management
At OMIL the risks are detected at their earliest possible and necessary measures aretaken to avoid economic and environmental damage. The company lays due emphasis onavoidance of risks that threaten the company's continued existence.
Organizational responsibilities and tools
Regular risk analyses at the corporate level are conducted by OMIL's management and byvarious departmental heads.
Specific risks pertaining to operating divisions and units are continually registeredevaluated and monitored centrally. The Board of Directors regularly receives reports onthe risk situation of the company.
LOANS GUARANTEES AND INVESTMENTS
The particulars of Loans & guarantees given investments made and securitiesprovided covered under section 186 of the Companies Act 2013 forms part of the notes tothe financial statements provided in this Annual Report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business and approval of theBoard of Directors 8iShareholders was obtained wherever required.
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.ommetals.com/files/related-party-transcation.pdf
CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year and AnnualReport on CSR Activities are set out in Annexure III of this Report. The Policy isavailable on the website of the Company on the following link:
The Composition of the Corporate Social Responsibility Committee are given below:
EXTRACTSOF ANNUAL RETURN
The Extract of Annual Return as required under section 92(3) of the Companies Act 2013and rule 12(1) of the Companies (Management and Administration) Rules 2014 in Form MGT-9is annexed herewith foryour kind perusal and information. (Annexure: VI)
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of managerial Personnel) Rules 2014 are givenbelow:
A. Remuneration paid to Managing and Whole Time Directors
*Based on Annualized Salary. B. Remuneration paid to KMPs
C) There was increase of 4.35% in Median Remuneration of employees in Financial Year2017-18 as compared to financial year 2016-17.
D) Number of permanent employees on the rolls of Company was 220 employees as on31.03.2018.
E) Average Salary increase of non-managerial employees was 5.90 % per employee and thatof managerial employees 2.7% in financial year 2017-18. The average % increase inremuneration is in line with normal pay revision.
F) Remuneration paid during the year ended 31st March 2018 is as per the RemunerationPolicy of the Company.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thereis no employee who is drawing remuneration in excess of the limits set out in the saidrules.
Details of Top Ten Employees
The HODs of the Company work under the direct supervision of directors of the Companyand has been assigned responsibilities. The details of the top ten employees (excludingDirectors & KMP) are as under. Personnel in si no. 1 to 4 as being family members ofdirectors and as recognized as promoters in the company hold a key position in the companyequivalent to KM P.
None of the Employees was in receipt of remuneration in the year 2017-18 which was inexcess of that drawn by the managing director or whole-time director and holds by himselfor along with his spouse and dependent children not less than two percent of the equityshares of the company.
Power of Attorney Holders;
For the implementation and effective execution of the Projects and various Laws asapplicable to the Company the Board of Directors entrusted the following HOD's withresponsibility via Power of Attorney granted to them and these are directly responsiblefor compliances:
The Labour Management relation has been cordial during the year under review.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
In Compliance with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 your Company has constituted an 'InternalComplaints Committee' ('Committee'). No complaint has been received duringthe Year ended31st March 2018 in this regard. The Company has in place a Policy for Prevention ofSexual Harassment at Workplace as per requirement of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. Internal Complaint Committeehas been set up to redress the complaints received regarding sexual harassment. Allemployees (permanent contractual temporary trainees) are covered under this policy. NoComplaint has been received during the year ended 31st March 2018 in this regard.
HEALTH SAFETY AND ENVIRONMENT
The safety excellence journey is a continuing process of the Company. The safety of thepeople working for and on behalf of your Company visitors to the premises of the Companyand the communities we operate in is an integral part of business. There is a strongfocus on safety with adequate thrust on employees' safety.
The Company has been achieving continuous improvement in safety performance through acombination of systems and processes as well as co-operation and support of all employees.
The Equity Shares of the Company continue to remain listed with the National StockExchange (NSE) and Bombay Stock Exchange (BSE). The listing fees of the exchanges for thefinancial year 2018-19 have been paid.
CARE has assigned ratings symbol of 'BBB+ for its longterm facilities'& PR1 tocompany. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of provisions of Regulation 34 of Securities and Exchange Board of India(Listing Obligations and Disclosure) Regulations 2015 the Management Discussion andAnalysis is presented in a separate section forming part of the Annual Report.
INTERNAL CONTROL SYSTEMS ANDTHEIR ADEQUACY
The Company has a well-defined Internal Control system which is adequate andcommensurate with the size and nature of business. Clear roles responsibilities andauthorities coupled with internal information systems ensure appropriate informationflow to facilitate effective monitoring. Adequate controls are established to achieveefficiency in operations optimum utilization of resources and effective monitoringthereof and compliance with applicable laws. An exhaustive programme of internal auditsincluding all Branches of the Company all over India review by management and documentedpolicies guidelines and procedures supplement the internal control system.
The Audit Committee regularly reviews the adequacy and effectiveness of the internalcontrols and internal audit function.
Business Responsibility Report
Regulation 34(2) of the Listing Regulations provides that the Annual Report of the Top500 listed entities based on market capitalization (calculated as on March 31 of everyfinancial year) shall include a Business Responsibility Report("BRR"). Sinceyour Company does not feature in the Top 500listed entities as per market capitalizationas on March 312018the Business Responsibility Report forthe financial year 2017-2018does not form a part of the Annual Report.
Your Company has been following principles of Good Corporate Governance Practices overthe years. Your Company has complied with the Corporate Governance Code as stipulatedunder the Listing Regulations. A separate section on Corporate Governance along withcertificate from B K Sharma and Associates Practicing Company Secretaries confirmingcompliance forms part of the Annual Report.
Details of litigations pending or significant or material orders which were passed bythe Regulators or Courts or Tribunals is provided under Independent Auditor's Report
The company has not accepted any Fixed Deposits and as such no amount of principle orinterest was outstanding as of the Balance Sheet date.
Your Directors deeply appreciate the valuable co-operation and continued supportextended by the Company's Bankers Financial Institutions Government agenciesCollaborators Stockiest Dealers Business Associates and also the contribution of allemployees to the Company.
On Behalf of the Board of Directors