Your Directors are pleased to present the Third Annual Report together with the AuditedFinancial Statements of the company for the financial year ended on 31st March 2020.
1 FINANCIAL PERFORMANCE
The Audited Standalone and Consolidated Financial Statements of the Company as on 31stMarch 2020 are prepared in accordance with the relevant applicable IND AS and provisionsof the Companies Act 2013 ("Act").
The summarized financial highlight is depicted below:
|Particulars || |
| ||2019-20 ||2018-19 |
|Revenue from operations ||24546.14 ||24299.19 |
|Other Income ||406.66 ||458.15 |
|Total Income ||24952.80 ||24757.34 |
|Profit before Finance Cost Depreciation & || || |
|Amortization and Tax Expenses ||7267.96 ||6851.82 |
|Finance Cost ||75.89 ||179.85 |
|Depreciation & Amortization ||891.83 ||793.00 |
|Profit Before Tax ||6300.24 ||5878.97 |
|(i) Provision for Taxation (Current) ||1752.00 ||1492.00 |
|(ii) Deferred Tax ||251.40 ||188.38 |
|(iii) Provision for tax of earlier years ||- ||- |
|Profit After Tax ||4296.84 ||4198.59 |
|Non-Controlling Interest ||- ||- |
|Net Profit after Non-Controlling Interest ||- ||- |
|Other Comprehensive income ||(9.26) ||(7.73) |
|Total Comprehensive Income /(Expenses) ||4287.58 ||4190.86 |
2 PERFORMANCE HIGHLIGHTS
Sales stood at Rs. 245 Crores up 11% versus Rs. 221 Crores* of last year.
EBITDA stood at Rs. 69 Crores up 13% versus Rs. 61 Crores of last year.
EBITDA Margin improved to 28% versus 27% of last year.
Net profit is Rs. 43 Crores up 10% versus Rs. 39 Crores of last year.
* (For comparative purpose sales excludes trading income of
Rs. 22.88 Crores for Financial Year 2019)
Anup's order book continues to remain very strong and opened this financial year withconfirmed orders of Rs. 267 Crores to be delivered in next 4-5 quarters.
3 EFFECT OF COVID-19 PANDEMIC
The spread of COVID-19 has severely impacted businesses around the globe includingIndia. There has been severe disruption to regular business operations due to lock-downdisruption in transportation supply chain and other emergency measures. The Company'soffice and plant was under lockdown since 23rd March 2020. As a result the volumes for theperiod from March to June
2020 has been impacted. The Company is monitoring the situation closely and operationsare being ramped up in a phased manner taking into account directives from the Government.In view of the outbreak of the pandemic the Company undertook timely and essentialmeasures to ensure the safety and well-being of all its employees at its plant locationand the head office. The Company observed all the government advisories and guidelinesthoroughly and in good faith.
The Board of Directors have recommended a final dividend of
Rs. 7.00 (70%) per equity share of Rs. 10/- each for the year ended on 31st March 2020.The proposal is subject to the approval of shareholders at the ensuing Annual GeneralMeeting (AGM). The final dividend on equity shares if approved by the members wouldinvolve a cash outflow of Rs. 7.14 Crores.
5 TRANSFER TO RESERVES
During the year under review no amount is appropriated from Profit and Loss Accountand transferred to any Reserve Account.
6 MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There are no material changes and/or commitments which may affect the financialposition of the Company between the end of the financial period and the date of thisreport.
7 SHARE CAPITAL
During the financial year under the review there has been no change in the AuthorisedCapital of the Company. However during the year company has allotted 5556 Equity Sharesto the eligible employees pursuant to the exercise of the options granted to them underThe Anup Engineering Limited Employee Stock Option Scheme (DEMERGER) 2018 atprice of Rs. 244.02/- each including premium of Rs. 234.02/- each on 18th July 2019.
During the year under review the Company has neither issued shares with differentialvoting rights and sweat equity shares.
8 EMPLOYEE STOCK OPTION SCHEMES (ESOS)
The Company has instituted three schemes viz The Anup Engineering Limited - EmployeeStock Option Scheme - 2018 ("TAEL ESOS - 2018") The Anup Engineering Limited -Employee Stock Option Scheme (Demerger) - 2018 ("TAEL ESOS (DEMERGER) - 2018")and ANUP - Employee Stock Option Scheme - 2019 ("ANUP - ESOS 2019") pursuant toapproval of the shareholders of the Company in their Meetings held on 12th May 2018 12thMay 2018 and 7th August 2019 respectively.
The Company has issued 87500 options under TAEL ESOS - 2018 58371 options under TAELESOS (DEMERGER) - 2018 and 37500 options under Anup - ESOS 2019 up to 31st March 2020. Allthese options are convertible into equal number of Equity Shares of face value of Rs. 10each.
The disclosures with respect to TAEL ESOS - 2018 TAEL ESOS (Demerger) - 2018 and ANUPESOS - 2019 as required by Section 62 of the Companies Act 2013 Rule 12 of Companies(Share Capital and Debentures) Rules 2014 and the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 are set out in Annexure-A to theBoard's Report.
9 DISCLOSURE UNDER SECTION 67(3)(C) OF THE COMPANIES ACT 2013
No disclosure is required under section 67(3)(c) of the Companies Act 2013 read withRule 16(4) of Companies (Share Capital and Debentures) Rules 2014 in respect of votingrights not exercised directly by the employees of the Company as the provisions of thesaid section are not applicable.
The Company has not accepted or renewed any deposits in terms of Chapter V of theCompanies Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014 and hencefurnishing the details of deposit in terms of Chapter V of the Companies Act 2013 is notapplicable to the Company. Further there are no outstanding deposits as at 31st March2020.
11 PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
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.
12 CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR) Policy of the company defines its philosophyand guides its actions for undertaking and supporting socially relevant project andprograms. Company's underlying value system has a firm belief that only in a healthysociety healthy businesses flourish.
The Anup Engineering Limited Policy on Corporate Social Responsibility (TAELCSR) hasbeen put in place to facilitate and formalize the CSR processes set up a guidingstructure and define broader thematic areas for projects and programs. For doing so theCompany would always define an annual budget select CSR initiatives and would work withlike-minded individuals and organizations. The brief details of Corporate SocialResponsibility Policy initiatives undertaken and the amount spent during the financialyear 2019-20 is enclosed as Annexure-B.
13 HUMAN RESOURCES
Any organization is only as effective and successful as the people comprising itsworkforce. At Anup we believe that our human capital is our biggest asset and shapesbusiness outcomes. Engaging empowering and enabling employees is critical for sustainedgrowth and organizational results and at Anup we are committed to that effort.
A better employee experience is critical to long term organizational results of thecompany and we are invested in this effort through continuous dialogue feedback andreview on an ongoing basis. While focus has been on scaling this effort concerted stepshave been taken to ensure transformation of the HR function through the route oftechnology in a stronger performance management instituting performance conversationsand reviews and creating opportunities for succession and pipeline building in thecompany. HR areas relating to talent acquisition enhanced life cycle experience creationof rewards and recognition programs robust performance management framework and creatinglateral opportunities for people across diverse functions helps in creating a cohesiveempowered and an involved workforce. The Company believes in providing opportunities toits employees for their all-round growth and organizes various functional technicalbehavioral training and seminars during the year and many engagement activities.
14 RISK MANAGEMENT
The Company has developed and implemented a Risk Management Policy. The policyidentifies the threat of such events as "Risks" which if occurred willadversely affect value to shareholders ability of Company to achieve objectives abilityto implement business strategies the manner in which the Company operates and reputation.Such risks are categorized into Strategic Risks Operating Risks and Regulatory Risks.
The framework defines the process for identification of risks its assessmentmitigation measures monitoring and reporting. While the Company through its employeesand Executive Management continuously assess the identified Risks the Audit Committeereviews the identified Risks and its mitigation measures annually.
15 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit department with adequateexperience and expertise in internal controls operating system and procedures. The systemis supported by documented policies guidelines and procedures to monitor business andoperational performance which are aimed at ensuring business integrity and promotingoperational efficiency. The Internal Audit Department reviews the adequacy of internalcontrol system in the Company its compliance with operating systems and laid downpolicies and procedures. Based on the report of internal audit function process ownersundertake corrective actions in their respective areas and thereby strengthen thecontrols. Significant audit observations and corrective actions thereon are presented tothe Audit Committee of the Board of Directors from time to time.
16 VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has Whistle Blower Policy to deal with instances of fraud andmismanagement if any. The details of the Whistle Blower Policy are explained in theCorporate Governance Report and also posted on the website of the Company atwww.anupengg.com > Investors > Policies.
17 SUBSIDIARIES ASSOCIATES AND JOINT VENTURES/ WHOLLY OWNED SUBSIDIARIES
As on 31st March 2020 the Company has a one wholly own subsidiary company which wasincorporated during the year namely "Anup Heavy Engineering Limited". Pursuantto the provisions of Section 129(3) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 a statement containing salient features of financial statements ofsubsidiaries associates and joint venture companies in Form AOC-1 is attached to theFinancial Statements. The separate audited financial statements in respect of thesubsidiary shall be kept open for inspection at the Registered Office of the Company. TheCompany will also make available these documents upon request by any Member of the Companyinterested in obtaining the same. The separate audited financial statements in respect ofthe subsidiary are also available on the website of the Company at www.anupengg.com >Investors>Financial Reports.
The Company has framed a policy for determining material subsidiaries which has beenuploaded on website of the company at www.anupengg.com > Investors > Policies.
18 DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors
The Board of Directors consists of 6 members out of which 3 are Independent Directorsincluding one women Independent Director and 3 are Non-Executive and Non-IndependentDirectors. As per the provisions of Section 152(6) of the Companies Act 2013 and thecompany's Articles of Association Mr. Punit S. Lalbhai (holding DIN 05125502) shallretire by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-appointment as the Director of the Company.
Key Managerial Personnel
As per the provisions of Section 203 of the Companies Act 2013 Mr. Rishi Roop Kapoor- Chief Executive Officer Mr. Rakesh Kumar Poddar-Chief Financial Officer and Mr.Chintankumar Patel - Company Secretary are the key managerial personnel of the Company.
19 BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual evaluation of its performance as well as that of its Committees andindividual directors. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.
20 REMUNERATION POLICY
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The Remuneration Policy is available on thewebsite of the Company at www.anupengg.com > Investors > Policies.
21 FAMILIARIZATION PROGRAM FOR THE INDEPENDENT DIRECTORS
The Independent Directors have been updated with their roles rights andresponsibilities in the Company by specifying it in their appointment letter along withnecessary documents reports and internal policies to enable them to familiarize with theCompany's procedures and practices. The Company has through presentations at regularintervals familiarized and updated the Independent Directors with the strategyoperations and functions of the Company and Engineering Industry as a whole. The detailsof such familiarization programs for Independent Directors are explained in the CorporateGovernance Report and posted on the website of the Company at www.anupengg.com >Investors > Policies.
22 DECLARATION OF INDEPENDENCE
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and they have complied with the Code for Independent Directors asprescribed in Schedule IV to the Companies Act 2013.
23 NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
Four (4) Meetings of the Board of Directors were held during the financial year ended31st March 2020. The intervening gap between two consecutive meetings was within theperiod prescribed under the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The details of the Board and the Committeemeetings are provided in the Corporate Governance Report forming part of this Report.
24 DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that: a. in preparation of the annualaccounts for the financial year ended 31st March 2020 the applicable accounting standardshave been followed along with proper explanation relating to material departures if any;b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
c. they have 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.they have prepared the annual accounts on a going concern basis;
e. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
25 RELATED PARTY TRANSACTIONS
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. There are no materially significant related party transactions made by the Companywith Promoters Directors Key Managerial Personnel etc. which may have potentialconflict with the interest of the Company at large or which warrants the approval of theshareholders. Accordingly no transactions are being reported in Form AOC-2 in terms ofSection 134 of the Act read with Rule 8 of the Companies (Accounts) Rules 2014. Howeverthe details of transactions with Related Parties are provided in the Company's financialstatements in accordance with the Accounting Standards.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions.
The policy on Related Party Transactions as approved by the Board is available onwebsite of the company at www.anupengg.com > Investors > Policies.
26 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS
No significant or material orders impacting going concern basis were passed by theregulators or courts or tribunals which impact the going concern status and Company'soperations in future.
27 AUDITORS AND AUDITORS' REPORT Statutory Auditors
M/s Sorab S. Engineer & Co. Chartered Accountants (ICAI Registration No.110417W)Statutory Auditors of the Company were appointed as Statutory Auditors of the Company fora period of five years at the 1st Annual General Meeting of the Company held on 29thSeptember 2018 till the conclusion of 6th Annual General Meeting of the Company pursuantto the provisions of Section 139(1) of the Companies Act 2013.
The Report given by the Auditors on the financial statements along with the notes tothe financial statements of the Company for the financial year 2019-20 is forming part ofthe Annual Report. There has been no qualification reservation or adverse remark ordisclaimer in their Report.
M/s Maulin Shah & Associates Cost Accountants Ahmedabad (Firm Registration No.32503) carried out the cost audit for applicable business during the year. The Board ofDirectors has appointed them as Cost Auditors for the financial year 2020-21. Theremuneration payable to the Cost Auditors is required to be placed before the Members in ageneral meeting for their ratification. Accordingly a Resolution seeking Members'ratification for the remuneration payable to M/s Maulin Shah & Associates CostAuditors is included as item No. 4 of the notice convening the Annual General Meeting.
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 Ms. Ankita Patel Company Secretary in practice Ahmedabad to conduct theSecretarial Audit of the Company for the financial year 2019 - 20. The Secretarial AuditReport is annexed herewith as AnnexureC to the Board's Report. There were noqualifications observations reservations comments or other remarks in the SecretarialAudit Report which have any adverse effect on the functioning of the Company.
28 CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS
The Corporate Governance Report and Management Discussion & Analysis which formpart of this Report are set out as separate Annexures together with the Certificate fromthe auditors of the Company regarding compliance of conditions of Corporate Governance asstipulated in Regulation 34 read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
29 BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as required by Regulation 34 (2) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 for the year under review isannexed to the Boards' Report and forms an integral part of this report.
30 CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure-D tothe Board's Report.
31 EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company as on 31st March 2020 in Form MGT - 9in accordance with Section 92(3) of the Companies Act 2013 read with Companies(Management and Administration) Rules 2014 is annexed herewith as Annexure-E tothe Board's Report.
32 PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rules 5(2) and 5(3) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of the employees of the Company will be provided uponrequest. In terms of Section 136(1) of the Companies Act 2013 the Report and Accountsare being sent to the Members and others entitled thereto excluding the information onemployees' particulars which is available for inspection by the Members at the RegisteredOffice of the Company during business hours on working days of the Company up to the dateof the ensuing Annual General Meeting. If any Member is interested in obtaining a copythereof such Member may write to the Company Secretary in this regard. Disclosurespertaining to remuneration and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are given in Annexure-F to the Board's Report.
33 DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat
Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder.
Anup Internal Complaints Committee (AICC) is formed and its details are declared andaccessible across the organization. All AICC members are trained by subject experts onhandling the investigations and proceedings as defined in the policy.
The Company has not received any sexual harassment related complaints during the year2019-20.
34 ENHANCING SHAREHOLDERS' VALUE
Your Company believes that its members are its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your Company is also committed to creating value for its other stakeholders byensuring that its corporate actions positively impact the socioeconomic and environmentaldimensions and contribute to sustainable growth and development.
Your Directors would like to express their appreciation for the assistance andco-operation received from the Company's customers vendors bankers auditors investorsGovernment authorities and stock exchanges during the year under review. Your Directorsplace on record their appreciation of the contributions made by employees at all levels.Your Company's consistent growth was made possible by their hard work solidarityco-operation and support.
For and on behalf of the Board of Directors
Sanjay S. Lalbhai
Chairman DIN: 00008329
Date: 24th June 2020 Place: Ahmedabad
Annexure B to the Directors' Report