The members of
Sanghvi Forging & Engineering Limited
Your Directors take pleasure in presenting the 29th Annual Report of the Company alongwith the Audited financial statements for the year ended March 31 2017 for your perusalconsideration and adoption.
The financial performance for the fiscal year 2017 is summarized in the followingtable:
| || ||(Rs. in lacs) |
|Particulars || |
| ||2016-17 ||2015-16 |
|Income from Operations ||5376.59 ||6686.23 |
|Other Operating Income ||165.01 ||149.07 |
|Other Income ||11.44 ||93.30 |
|Total Income ||5553.04 ||6928.60 |
|Operating & Administrative Expenses ||5247.12 ||5463.79 |
|Operating Profit before Interest Depreciation and Tax ||305.92 ||1464.81 |
|Interest and Financial Charges ||1660.94. ||1616.44 |
|Depreciation and Amortization ||897.02 ||842.02 |
|Profit Before Tax ||(2252.04) ||(993.65) |
|Tax Expenses ||NIL ||5.05 |
|Short Provisions for Taxes ||NIL ||- |
|Profit After Tax ||(2252.04) ||(998.70) |
Financial and Operational Performance
Your Company has achieved a turnover of '5541.59 lacs and incurred a net loss of'2252.04 lacs for the financial year ended March 31 2017 as against a turnover '6835.30lacs and net loss of '998.70 lacs respectively during the previous year. Depreciation andamortization charge was increased from 842.02 lacs to 897.02 lacs during the financialyear 2016-17.
Interest charges were increased from '1616.44 lacs to '1660.94 lacs during thefinancial year 2016-17.
Employee benefit expenses have increase from '638.66 lacs making an increase of 0.03%.It signifies that the Company has been constantly making efforts to boost up its humanresources and invested in bringing experienced professionals in the organization .
The Company has taken a number of steps to sustain its leadership position in themarket and has been strengthening its relationships with its customers. In addition it isalso making constant efforts to add new customers and widen its customer base.
The combination of additional capacity of our new plant i.e. 15000 MTPA and integrationhas had a positive impact on the Company's operating margins. Your Company believes tostrengthen its topline and margins in the coming years. We have received majorityapprovals from different customers that validate our product quality.
The Company continued its focus on strengthening local manufacturing capabilities.However it also analyzed the trends in the steel industry and adapted to rapiddevelopment occurring in the world of steel. The Company has adopted strategic measures tominimize the adverse macro-economic implications.
No new Share Capital has been issued by the Company in the Fiscal Year 2016 -17.
Your company has managed to affirm the CARE D rating for its long-term andshort-term-bank facilities. There was no further revision in the ratings signifies thatcompany is somehow managing things even if delay and cost overruns in the new project. TheCompany expects to improve its ratings in the coming year through capacity utilizationwith substantial marketing efforts.
Investors' Relations and Grievances
All the shareholders'/investors' complaints/grievances received during the financialyear have been resolved and there were no investor grievances pending as on March 312017. A confirmation to this effect has been obtained from the Company's Registrar andShare Transfer Agent and authentication of the same can be verified from the SCORESwebsite at http://scores.gov.in. The details regarding investor complaints receivedand resolved during the year are mentioned in the report on Corporate Governance annexedto this report.
Management Discussion and Analysis Report
A detailed review of operations performance and future outlook of the Company iscovered under a separate Annexure to this report as Management's Discussion &Analysis.
In accordance with the provisions of Section 152 of the Companies Act 2013 ShriBabulal Sagarmal Sanghvi Director of the Company will retire by rotation at the ensuingAnnual General Meeting and is eligible for reappointment. Necessary resolution is beingproposed for his appointment as Director at the ensuing Annual General Meeting of theCompany. A brief resume and particulars relating to him are given separately under thereport on Corporate Governance.
Key Managerial Personnel
Shri Jayantilal B Sanghvi Managing Director Shri Vikram B. Sanghvi Whole TimeDirector & CFO and *Mr. Keval Thakkar Company Secretary are Key Managerial Personnelof the Company.
Meeting of the Board
During the year from April 2016 to March 2017 4 Board Meetings were convened and held.The details of the Board Meeting with regards to the Dates and attendance of each Directorthereat have been provided in the Corporate Governance Report. The intervening gap betweenthe Meetings was within the period prescribed under the Companies Act 2013.
Amount Transferred to Reserves
The Board of Directors has not recommended transfer of any amount of profit to reserve.
Declaration Given by Independent Directors
The Independent Directors of the Company have given the declarations to the Companythat they meet the criteria of independence as provided in Section 149(6) of the CompaniesAct 2013.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Nomination & Remuneration and ComplianceCommittees.
a. For Independent Directors :-
Duties Role integrity and functions
Knowledge and Skills
b. For Executive Directors :-
Professional Conduct and Integrity
Sharing of Information with the Board
Key Performance in achievement of Goals The Directors expressed theirsatisfaction with the evaluation process.
Composition of Audit Committee
Pursuant to the provision of Section 177 (8) of the Companies Act 2013 AuditCommittee consists of All Independent Directors as mentioned in below table. The Committeeinter alia reviews the Internal Control System Reports of Internal Auditors andCompliance of various regulations. The Committee also reviews at length the financialstatements before they are placed before the Board.
Composition of the Committee is as below:
|Name ||Designation ||Category |
|Shri Ram S Kaushal ||Chairman ||Non-Executive and Independent |
|Shri Baba Pai ||Member ||Non-Executive and Independent |
|Shri Vikram B Sanghvi ||Member ||Executive and NonIndependent |
|Shri Shantaram Yarlagadda ||Member ||Non-Executive and Independent |
Vigil Mechanism / Whistle Blower
In staying true to our values of Strength Performance and Passion and in line with ourvision of being one of the most respected companies in India the Company is committed tothe high standards of Corporate Governance and stakeholder responsibility.
Pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013 andthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a VigilMechanism or Whistle Blower Policy' for directors employees and other stakeholdersto report genuine concerns has been established. The same is also uploaded on the websiteof the Company i.e. http://www. sanghviforge.com/pdf/whisler blower policy.pdf
Internal Financial Control
The Company's internal control procedure which includes internal financial controlsensure compliance with various policies practices and statutes and keeping in view theorganization's pace of growth and increasing complexity of operations. The internalauditors team carries out extensive audits throughout the year across all locations andacross all functional areas and submits its reports to the Audit Committee of the Board ofDirectors.
Corporate Social Responsibility
The Company having regard to its size and scope is generally compliant with relevantguidelines on Corporate Social Responsibility (CSR) even though not presently applicableto the Company. The Board has also constituted a committee at their Board Meeting held onMay 26 2014 in accordance with Section 135 of the Companies Act 2013 to mentor andmonitor CSR activities.
The call of fulfilling our CSR activities has sincerely been taken by us and we accordas much significance to CSR as any business project and the results are there for everyoneto see. Dedicated need-based interventions have been initiated in areas where we operate.Enabling local people by fostering self-reliance is the motive behind our communitydevelopment efforts.
Therefore our interventions are structured around promoting education as well asinformal education of Tribal Children generating livelihood empowering women andoverall social mobility.
Your Company is also constantly making efforts to maintain a greener planet and reduceits carbon footprint as much as possible. Through financial contributions and activeparticipation of employees your Company provides support to non-profit organisation thataddresses community sustainability. Your Company contributed through donations rain waterharvesting sponsorship and by participating in various activities.
Policy on Nomination and Remuneration
The contents of Nomination and Remuneration Policy of the Company prepared inaccordance with the provisions of Section178 of the Companies Act 2013 and Regulation 19of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 areprovided in the Corporate Governance 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. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained during the yearfor the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are audited and a statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval. The Company has developed a Related PartyTransactions policy for purpose of identification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website i.e. http:// www.sanghviforge.com/pdf/related party transaction.pdf
Report on Corporate Governance
A separate Section on Corporate Governance is forming part of the Annual Report and theCertificate from M/s Samdani Shah& Kabra Company Secretaries Vadodara the Company'sSecretarial Auditors confirming the compliance of conditions on Corporate Governance asstipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is attached to the report on corporate governance.
Your Directors report that the Company has not accepted any deposits during the currentfinancial year.
Your Directors confirm that all the properties and insurable interests of the Companyincluding buildings plant and machinery and stocks have been adequately insured.
Loan Guarantee or Investment
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
Listing of Shares
The Equity Shares of the Company are listed on the BSE Limited (BSE)with scrip code No.533411 and on the National Stock Exchange of India Limited (NSE) with scrip code ofSANGHVIFOR. The Company confirms that the annual listing fees to both the stock exchangesfor the financial year 2016-17 have been paid.
Company has its Wholly Owned Subsidiary Company in Netherlands in the name ofSanghvi Europe BV.
Statement containing salient features of the financial statement ofsubsidiaries/associate companies / joint ventures is attached in Form AOC-I in SeparateSection of this Annual Report.
Familiarisation Programme for Independent Directors
The details of programmes for familiarization of Independent Directors and trainingwith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company and related mattersare put up on the website of the Company i.e. http://www.sanghviforge.com/pdf/familiarisation program.pdf
M/s Shah & Bhandari Chartered Accountants the existing Statutory Auditors of theCompany were reappointed at the 27th Annual General Meeting (AGM) held on September 262014 to hold office till the conclusion of forthcoming 29th AGM. Accordingly they willretire at this AGM. In accordance with the provision of Section 139 and other applicableprovisions if any of the Companies Act 2013 and the relevant Rules framed thereunderthe Board of Directors have proposed to appoint M/s. V.K. Shastri & Co. CharteredAccountants as Statutory Auditors of the Company for a term of five consecutive years atthe ensuing 29th AGM till the conclusion of 34th AGM subject to ratification at everyannual general meeting in place of retiring Auditors M/s. Shah & Bhandari. CharteredAccountants.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Samdani Shah &Kabra Practicing Company Secretary Vadodarato undertakethe Secretarial Audit of the Company for the FY 2017-18. The Report of the SecretarialAudit Report is annexed herewith as Annexure A for the year ended on March 312017. There is no qualification in the Secretarial Report submitted by M/s. Samdani Shah& Kabra to the Company.
The Board of Directors has appointed M/s Parikh Mehta & Associates CharteredAccountants as Internal Auditors of the Company for the FY 2017-18 Pursuant to theprovisions of Section 138 of the Companies Act 2013 and The Companies (Accounts) Rules2014.There is no qualification reservation adverse remark or disclaimer by the StatutoryAuditors in their report or by the Secretarial Auditor in their Secretarial Audit Reportand hence no explanation or comments of the Board is required in this matter.
Directors' Responsibility Statement
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
(a) that in the preparation of the annual financial statement for the year ended March31 2017 the applicable accounting standards had been followed along with properexplanation relating to material departures if any
(b) that the accounting policies to the financial statement have been selected andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the company as at March 312017 and of the profit and loss of the company on that date;
(c) that proper and sufficient care has been taken 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) that the annual financial statement on a going concern basis; and
(e) that the proper internal financial controls were in place and that the internalfinancial controls were adequate and were operating effectively.
(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
Many initiatives have been taken to support business through organizational efficiencyprocess change support and various employee engagement programmes which has helped theOrganization achieve higher productivity levels. A significant effort has also beenundertaken to develop leadership as well as technical/ functional capabilities in order tomeet future talent requirement.
The Company's HR processes such as hiring and on- boarding fair transparent onlineperformance evaluation and talent management process state-of-the-art workmen developmentprocess and market aligned policies have been seen as benchmark practices in theIndustry.
Pursuant to The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 notified on December 9 2013 the Company has set up a Committee tolook into complaints under the said Act. The Company has not received any complaintsrelating to sexual harassment at work place from any woman employee during the year.
Disclosure by Senior Management Personnel i.e. One Level Below the Board Including allHODs
None of the senior management personnel have undertaken financial and commercialtransactions with the Company where they have personal interest that would have apotential conflict with the interest of the Company at large.
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:
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
Material Changes and Commitments
Your Directors are of the opinion that there are no material changes and commitmentsaffecting financial position of the Company which have occurred between end of financialyear of the Company and the date of this report.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure B.
Conservation of Energy
The Company has taken several steps towards conserving energy through itsSustainability' initiatives disclosed separately in the Annual Report. Theinformation on Conservation of Energy as required under Section 134(3) (m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is providedin Annexure D of this Annual Report.
Safety Health and Environment
The Company has continuously exercised effective safety health and environmentpolicies. Water and air pollution control measures are successfully operated andindustrial trade effluents are used for gardening. The tree plantation at the factory siteis maintained properly and the same shall be duly taken care of at our new plant.
Ratio of Remuneration of Director
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act the
Report and Accounts are being sent to the Members and others entitled theretoexcluding the information on employees' particulars which is available for inspection bythe Members at the Registered Office of the Company during business hours on working daysof the Company up to the date of the ensuing Annual General Meeting.
If any Member is interested in obtaining a copy thereof such Member may write to theCompany Secretary in this regard.
The Constitution of Risk Management Committee is not applicable the company however thecompany has voluntarily constituted Risk management Committee to monitor the risk and totake actions on deviations.
Your Directors express their sincere appreciation for the wholehearted and continuedsupport assistance and cooperation extended by the shareholders banks supplierscustomers employees and all concerned towards the Company during the year under review.
|On the behalf of the Board of Directors || |
|Place: Vadodara ||Babulal S Sanghvi |
|Date: August 11 2017 ||Chairman |