PG Electroplast Ltd.
|BSE: 533581||Sector: Engineering|
|NSE: PGEL||ISIN Code: INE457L01011|
|BSE 00:00 | 13 Jul||200.10||
|NSE 00:00 | 13 Jul||198.10||
|Mkt Cap.(Rs cr)||328|
|Mkt Cap.(Rs cr)||328.36|
PG Electroplast Ltd. (PGEL) - Director Report
Company director report
Your Directors have pleasure in presenting the 15thAnnual Report on thebusiness and operations of the Company together with the Audited Financial Statements forthe year ended March 31 2017.
1. Financial Highlights:
The financial statements of the Company have been prepared in accordance with theAccounting Standards read with Companies (Accounts) Rules 2006.
2. PERFORMANCE OVERVIEW:
Growth in the finished goods like set top Box Air Cooler and Plastic part of ACRefrigerators Washing machines Automotive Bathroom Fittings continued this year also.Performance of some new manufacturing facilities started by the Company during the yearlike mobile hand set Ceiling Fan parts has also been encouraging. However there was adecline in the sales of Kitchen appliances and Solar Lamps. The combined effect of thesefactors was that Earnings before Depreciation/amortization expense & Finance Cost roseup by 12.87% as compared to previous year.
Compared to the previous year Depreciation and amortization (including losses ondisposals) increased by 5.81% to Rs. 10.28 Crore reflecting higher capital expenditureover the last year. Cost of Raw Material & Components consumed increased by 43.51%proportionate to hike in Revenue from Operations by 41.56%. Other Income has decreased by25.77% and other expenditure increased by 28.73%.
3. PROJECTS & EXPANSION PLAN:
During the year the Company has incurred Rs. 41.47 crores on capital expenditures. Wehave installed several new injection moulding machines in our factories and increasedcovered area of existing factories by constructing new buildings/floors. Howeveroperations at Roorkee unit have now been transferred to Unit I.
The Board of Directors have not recommended any dividend because of the carried overprevious losses.
5. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of the Companies Act 2013 Mr. Anurag Gupta Directorof the Company will retire by rotation at the ensuing AGM and being eligible offerhimself for re-appointment.
During the reporting year Mr. Promod Gupta (managing Director) Mr. Anurag Gupta(Whole Time Director) Mr. Vikas Gupta (Whole Time Director) and Mr. Vishal Gupta (WholeTime Director) have been reappointed for another term of term of three years with effectfrom 15th July 2016. There has been no other change in composition of Board ofDirectors during the year.
None of the Directors have incurred any disqualification on account of non-compliancewith any of the provisions of the Act. During the year non-executive directors of theCompany had no pecuniary relationship or transactions with the Company other than sittingfees for the purpose of attending meetings of the Company.
The Company has received declarations from each of the Independent Directors confirmingthat he/she meets the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 and there has been no change in the circumstances which may affecttheir status as independent director during the year. The independent directors have alsoconfirmed that they have complied with the Company's code of conduct.
There were no changes in the Kay Managerial Personnel of the Company during the year.
MEETINGS OF BOARD OF DIRECTORS AUDIT COMMITTEE ETC.
For details of the Meetings of the Board and its Committees please refer to the Reporton Corporate Governance which forms part of this Report as Annexure I.
6. BOARD EVALUATION AND FAMILIARIZATION PROGRAMME:
The Board has carried out the annual performance evaluation of its own performance itsCommittees and Individual Directors pursuant to the provisions of the Companies Act 2013and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The manner in which the evaluation has been carried out has been provided in theCorporate Governance Report.
The details of programme for familiarization of Independent Directors of your Companyare available atwebpagehttp://www.pgel.in/investor.aspx.
7. CORPORATE GOVERNANCE REPORT & MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Corporate Governance Report and Management Discussion & Analysis Report asstipulated under SEBI(Listing Obligation & Disclosure Requirements) 2015 which formsintegral part of this report are presented as Annexure I & II respectively.Compliance certificate on corporate Governance issued by M/s RSJ Associates PracticingCompany Secretary also forms a part of the said Corporate Governance Report.
8. REMUNERATION POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy on remuneration of Directors and Senior Management Employees. Theremuneration policy is attached as 'Annexure III' to this report.
9. DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors to the best of their knowledge and belief confirm that:
a) in the preparation of the annual accounts of Financial Year 2016-17 the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;
b) the directors had 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 had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis; and
e) the directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
10. RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS:
The Company has a well-established Risk Management framework in place foridentification evaluating and management of risks including the risks which may threatenthe existence of the Company. In line with your Company's commitment to deliversustainable value this framework aims to provide an integrated and organized approach forevaluating and managing risks. Regular exercise has been carried out to identifyevaluate manage and monitor the risks.
Your Company's internal control systems are commensurate with the nature of itsbusiness and the size and complexity of its operations. The Company has in place adequatecontrols procedures and policies ensuring orderly and efficient conduct of its businessincluding adherence to the Company's policies safeguarding of its assets prevention anddetection of frauds and errors accuracy and completeness of accounting records andtimely preparation of reliable financial information. The internal controls coveroperations financial reporting compliance with applicable laws and regulationssafeguarding assets from unauthorized use and ensure compliance of corporate policies.Internal controls are reviewed periodically by the internal auditors and are subject tomanagement reviews with significant audit observations and follow up actions reported tothe Audit Committee. The Audit Committee actively reviews the adequacy and effectivenessof internal control systems and suggests improvements for strengthening them in accordancewith the changes in the business dynamics if required.
11. STATUTORY AUDITORS:
The present Statutory Auditors of the Company M/s Chitresh Gupta & AssociatesChartered Accountants Delhi having Firm Registration No. 017079N were appointed as theStatutory Auditors in Casual Vacancy for the Financial Year 2011-12. After that they wereappointed as Statutory Auditors at respective Annual General Meetings(AGM). At the 12thAGMheld on 11th August 2014 they were appointed again to hold the office from theconclusion of 12thAnnual General Meeting till the conclusion of 15thAnnualGeneral Meeting of the Company to be held in the year 2017 and this appointment had beenduly ratified by the Share holders of the Company at AGMs held in subsequent years.Accordingly M/s Chitresh Gupta & Associates Chartered Accountants hold office tillthe conclusion of ensuing Annual General Meeting of the Company.
As per provisions of the Companies Act 2013 no listed company shall appoint orre-appoint an Audit firm as Auditors for more than two terms of five consecutive years.M/s Chitresh Gupta & Associates has been associated as Auditors for last six financialyears. Thus the Board proposes the appointment of M/s Chitresh Gupta & Associates asthe Company's StatutoryAuditors for a further period of four years to hold office from 15thAGM to 19th AGM which shall be held in year 2021 (subject to ratification bymembers at every subsequent AGMs if required under prevailing Laws at that time).
M/s Chitresh Gupta & Associates Chartered Accountants have given consent to bere-appointed as Statutory Auditors of the Company. They have further confirmed that thesaid appointment if made would be within prescribed limits under section 141(3)(g) ofthe Companies Act 2013 and they are not disqualified for appointment.
The Statutory Auditor's Report on Financial Statements for the year ended on 31stMarch 2017 does not contain any qualification reservation adverse remarks or disclaimer.
12. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s RSJ Associates Practicing Company Secretary for conducting secretarial audit ofCompany for the financial year 2016-17. Their report is annexed with this report inAnnexure IV. The Secretarial auditor's report does not contain any qualificationreservation adverse remarks or disclaimer except regarding authorization under E-wasteManagement Rules 2016 (Applicable w.e.f. 01.10.2016) for which Company has beencommunicating with concerned department of Pollution Control Board. The company hasobtained consent from Maharashtra Pollution Control Board for Assembly of Mobile phonesElectrical and electronic goods vide certificate Dated 10/02/2016. Further they havewritten about recent orders passed by Honorable Securities Appellate Tribunal andAdjudicating Officer of SEBI in matter of the Company. Please refer para 23 & 24 forinformation on these cases.
13. COST AUDITORS:
The Board of Directors have appointed M/s Amit Singhal & Associates CostAccountants having Firm Registration Number: 101073 as Cost Auditors to audit the costrecords of the financial year 2017-18 and recommends ratification of their remuneration bythe shareholders at the ensuing annual general meeting.
14. CORPORATE SOCIAL RESPONSIBILITY:
The Company does not falls under criteria provided for CSR under Section 135 of theCompanies Act 2013 & rules made there under. Thus the Company is not required toconstitute a CSR committee. However the Company undertakes to act in a sociallyresponsible manner and serve the society at large.
15. VIGIL MECHANISM:
The Company has established a Vigil Mechanism / Whistle Blower Policy. All Employees ofthe Company and various stakeholders of the company are eligible to make ProtectedDisclosures in writing or through mail under the Policy in relation to matters concerningthe Company. The Vigil Mechanism or whistle blower policy may be accessed at web-link
16. PARTICULARS OF CONTRACTS OR ARRANGEMENT MADE WITH RELATED PARTIES:
During the year the Company had not entered into any contract/arrangement/transactionwith related parties which could be considered material in accordance with SEBI (ListingObligation & Disclosure Requirements) 2015 & policy of the Company.
All related party transactions entered into during the year under review by yourCompany were approved by the Audit Committee. Prior omnibus approval is obtained forrelated party transactions which are repetitive in nature and/or entered in ordinarycourse of business and at arm's length. There are no materially significant related partytransactions that may have potential conflict with interest of the Company at large.
The policy on materiality of Related Party Transactions and policy on dealing withRelated Party Transactions are available atweb-linkhttp://www.pgel.in/PDF/RelatedPartvTransactionsPolicv.pdf.
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in section 134 of the Companies Act are disclosed in formAOC-2 as Annex V.
Justification of transactions under sub-section (2) of section 188 of the CompaniesAct 2013:-
During the year Mr. Pranav Gupta relative of Directors has been appointed as Managerin the Company to look after operations in Unit III of the Company. He possesses PGDBAfrom Amity University.
To meet the increasing demand of factory space the Company has purchased a propertyF-20 admeasuring plot area 1000 sq. mtrs.situated at Site B UPSIDC Industrial AreaSurajpur Greater Noida UP. This plot is adjacent to Factory of Unit III.
Registered office of the Company is taken on rent from Mrs. Sudesh Gupta Relative ofDirectors. The Company has leased small unutilized portion of the factory of Unit 1 to PGInfotel Pvt. Ltd. to earn income from idle space. All the above transactions took place atprevalent market rate.
17. SUBSIDIARY JOINT VENTURE OR ASSOCIATE COMPANY:
Your Company does not have any subsidiary joint venture or associate Company. Duringthe year under review no company became or ceased to be subsidiary of the Company.
18. PARTICULARS OF LOAN GIVEN INVESTMENTS MADE GUARANTEE GIVEN AND SECURITIESPROVIDED UNDER SECTION 186 OF THE COMPANIES ACT 2013:
The Company has not given any loan or guarantee has not made any investment &provided any securities under section 186 of the Companies Act 2013 during the financialyear 2016-17.
19. EXTRACT OF ANNUAL RETURN:
In terms of provisions of Section 92 134(3)(a) of the Companies Act 2013 read withRule 12 of Companies (Management and Administration)Rules 2014 the extract of the AnnualReturn in form MGT 9 is annexed with this report as Annexure VI.
20. PARTICULARS OF EMPLOYEES:
The disclosure pertaining to remuneration and other details of directors and employeesas required under section 197(12) of the Companies Act 2013 read with Rule (5) of theCompanies (Appointment and remuneration of Managerial Personal) Rules 2014 and theamendment thereof have been provided in the
Annexure VII forming part of this report.
21. DEPLOYMENT OF IPO PROCEEDS(VIDE PROSPECTUS DATED 14/09/2011):
Given below are the details of utilization of IPO proceeds as on 31st March2017:
For more details please refer point 5 to Notes to Account -26.
22. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING &OUTGO:
(A) Conservation of Energy:
a) In our Endeavour to conserve energy the Company put efforts on continuous basis foroptimum use fuels & power.
b) All shop floors where manufacturing process are being done has started LED highbaylights which reduce the energy cost about 60%.
c) The Company has purchased several Injection Moulding Machines which are usingServo-Hybrid Technologies. Injection Moulding Machines consume very high power howeverServo-Hybrid Technologies save energy cost up to 60%.
d) The Company have installed variable frequency driver in all our electric motorswhich help to maintain better power factor on regular basis.
e) The Company tries to maintain power factor close to 1.
f) The Company has installed turbo ventilation systems on all its roofs which decreasesthe need of using exhaust fans.
g) The Company uses invertors' technology in compressor in AC plant which controls thespeed of the compressor motor so as to continuously regulate the temperature and reduceenergy consumption.
h) All the street lights & main machine flow highbay has been converted into LED.
(B) Technology absorption:
a) In manufacturing lines Bigger Moulding Machines are fitted with automatic conveyorbelt system line thereby reducing cost of production & enhance product quality.
b) The Company has stated using injection moulding machine with servo drive technology
c) The Company has purchased some PCB & SMT assembly & automation machines.
d) The Company has also installed Blow Molding Equipment.
e) The Company is installing industrial robots on its injection moulding machines inorder to reduce manpower cost.
These initiatives help the Company to manufacture long lasting cheaper and compatibleproducts.
The expenditure incurred on Research and Development:Rs. 27.13 Lakh.
(C) Foreign exchange earnings and Outgo-
The information in this regard is provided in point 8 & 9 of Note no 26-other noteson Account.
23. SIGNIFICANT & MATERIAL REGULATORY ORDERS:
Honorable Securities Appellate Tribunal (SAT) has passed an order on August 30 2016 inmatter of appeal challenging order of SEBI dated March 11 2016 filed by the Company.SEBI issued said order in the matter of alleged irregularities in Initial Public Offer ofthe Company in the period August 2011 to September 2011.
However vide above said order Tribunal has reduced the period of debarment from thesecurities market of ten years imposed upon the Company and promoter Directors to sevenyears and has stated that the Company shall be at liberty to use the money lying in theescrow account for the objects of the IPO as per law. Further Hon'ble SAT has not foundmerit in the allegations of PFUTP Regulations by the Company and its directors Howevercertain charges of Non-disclosure were upheld by Hon'ble SAT.
24. MATERIAL CHANGE & COMMITMENT OCCURRED BETWEEN END OF FINANCIAL YEAR & THEDATE OF REPORT:
There has been no change and commitment affecting the financial position of the Companybetween 31st March 2017 and date of this report except following:-
An adjudication order dated August 2 2017 has been passed by Adjudicating officer (AO)of SEBI in the matter of alleged irregularities in Initial Public Offer of the Company inthe period August 2011 to September 2011 for issue of 5745000 equity shares of facevalue 10/- each through 100% book building process.
In this matter a show cause Notice dated September 11 2013 was issued under rule 4 ofSEBI (Procedure for holding inquiry and imposing penalties by Adjudicating Officer) Rules1995 read with section 15I(2) of SEBI Act 1992.SEBI initiated adjudication proceedingsunder the Act to inquire into and adjudge the alleged violations of certainprovisions/Section/regulation of the SEBI Act 1992; SEBI (Prohibition of Fraudulent andUnfair Trade Practices relating to Securities Market) Regulation 2003 (PFUTPRegulations); SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 (ICDRRegulations) by the Company and its directors namely Mr. Promod Gupta Mr. Anurag GuptaMr. Vishal Gupta and Mr. Vikas Gupta.
Now vide order dated August 2 2017 Adjudicating officer of SEBI has imposed monetarypenalties of Rupees One Crore on the Company and Rupees One Crore on each of fourdirectors (mentioned in above paragraph) for the violation of ICDR Regulations. AO hasalso imposed penalty on 26 entities for violation of the provisions of Section 11C(2) and(3) of the SEBI Act 1992 they are not related to PG Electroplast Limited. As regards theviolation of the provisions of PFUTP Regulations by the Company and its directors AO findthat the Hon'ble SAT (Order dated August 30 2016) has not found any merit in the saidallegations.
25. OTHER DISCLOSURE:
The Board of Directors states that no disclosure or reporting is required in respect ofthe following items as there were no transactions/events on these items during the yearunder review:
a) Details related to deposits covered under chapter V of the Companies Act 2013
b) Details of frauds reported by the Auditors under section 143(12)
c) Issue/redemption of any kind of share or debenture
d) Amount transferred to Reserve
e) Complaints received under Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) act 2013
f) Amount required to be transferred to Investor Education and Protection Fund (IEPF)as Company did not have any funds lying unpaid or unclaimed for a period of seven years.Engineering
The Directors express their sincere appreciation for the invaluable contribution madeby the Company's employees which made it possible for the Company to achieve its goals.They also thank their valued shareholders bankers and customers suppliers businessassociates for their continuous support.