The Directors have pleasure in presenting herewith their Forty Fifth Annual Reporttogether with the Audited Accounts of the Company for the year ended March 31 2018.
OPERATIONS AND FINANCIAL RESULTS
|SUMMARY OF FINANCIAL RESULTS AS PER IND-AS || |
(Figures in Rs Lakhs)
|Particulars ||2017-18 ||2016-17 |
|Gross Sales ||8234.35 ||6790.93 |
|Less: Excise Duty ||136.84 ||575.59 |
|Net Sales ||8097.51 ||6215.34 |
|Add: Other income ||223.14 ||135.04 |
|Total income ||8320.65 ||6350.38 |
|Profit / (Loss) before Depreciation ||660.61 ||(315.21) |
|Less: Depreciation ||498.06 ||600.08 |
|Profit / (Loss) before Tax ||162.55 ||(915.29) |
|Less: Exceptional items ||- ||- |
|Less: Income Tax for Current Year ||- ||- |
|Less: Income Tax adjustment for previous years ||- ||15.78 |
|Less: Deferred Tax adjustment ||26.57 ||58.83 |
|Less: Other Comprehensive Loss ||0.69 ||10.65 |
|Profit / (Loss) After Tax ||135.29 ||(851.33) |
|Balance brought forward ||2006.26 ||2905.13 |
|Profit Available for Appropriation ||2141.55 ||2053.80 |
|Proposed Dividend on Equity Shares ||29.63 ||NIL |
|Dividend Tax on the above ||6.03 ||NIL |
|Transferred to General Reserve ||NIL ||NIL |
|Surplus Carried to Balance Sheet ||2141.55 ||2006.26 |
*Dividend for Financial Year 2015-16 amounting to '47.54 Lakhs (Including DividendDistribution Tax) was paid in Financial Year 2016-17.
DIVIDEND / RESERVES
Your Directors recommend a dividend of Rs1.50/- per Equity share of nominal value of Rs10 each (i.e. 15 %) for the year ended March 31 2018. The total outgo towards dividend onequity shares together with dividend tax amounts to Rs 35.66 Lakhs.
First half of the year showed recessionary trends globally as well as in the domesticmarkets in the capital goods sector which continued from the preceding year. Howeversecond half of the year showed a considerable growth in OEM segments whereas in MROsegments there was a marginal drop. The growth was more prominent in export markets.During the year under review your Company reported highest ever sales in its history.Despite the pressure of rising material prices your Company could mitigate the costimpact by effective capacity utilization cost reduction initiatives and better productmix.
PBIDT for the year under review is Rs 9.43 Crs.
After a period of three consecutive years of loss your Company has now turned aroundand has made a profit after tax of Rs 1.35 Crs.
WORKING CAPITAL MANAGEMENT:
The significant ratios of the Company such as Ratio of Inventory to Sales of 17.93%Receivable to Sales of 24.68 % and Net Working Capital to Sales of 13.06 % compared tothe previous year were 24.75% 24.41% and (-12.36%) respectively which showed considerableimprovements indicating prudent working capital management.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an adequate system of internal controls in all spheres of itsoperations which are commensurate with the size and the nature of its business. YourCompany has in place adequate controls on resource utilization and provision of accurateand speedy financial statements. Your Company ensures compliance with policies andprocedures and other statutory and legal obligations on an ongoing basis. Your Company'sInternal Financial Controls on its entire processes have been vetted by the StatutoryAuditors. Internal control is supplemented by effective and independent internal audit.Management regularly reviews the findings of the Internal Auditors and ensures effectiveimplementation of suggestions/observations of the Internal Auditors. In addition theAudit Committee of the Board regularly addresses significant issues raised by the Internaland the Statutory Auditors.
The Company during the year was successful in developing some new customers andproducts in Europe and expects to expand its portfolio in both domestic and exports marketfor its future growth. The Company is looking forward for an improvement in the domesticdemand due to several infrastructure projects being undertaken by the Government. Thiswill revive industrial growth in the capital goods sector and benefit us. The Companyplans to target new product addition new customer acquisitions and extended geographicalreach.
The Company has set high benchmarks on quality and on time delivery providingcompetitive edge in current business scenario. The Company's operations are certified toISO 9001:2015. Your Company's overseas customers have validated the operations of itsplant at of Dharwad.
ENVIRONMENT HEALTH AND SAFETY
As part of its commitment towards environment the Company has developed anEnvironmental Management System along with workplace practices to ensure high level ofsafety health and environmental standards. The Company has been certified for ISO 14001and OHSAS 18001.
HUMAN RESOURCE MANAGEMENT
Skill development and training both behavioral and domain based are ongoing exercisesthrough focused HR processes. Relations between employees and the management continue toremain cordial.
MATERIAL DEVELOPMENTS ON HUMAN RESOURCES INCLUDING NUMBER OF PEOPLE EMPLOYED
As on 31st March 2018 the total numbers of permanent employees on thepayrolls of the Company at all the locations were 98.
The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are as under:
PARTICULARS OF EMPLOYEES:
|1. Name of the Employee ||K. K. Tamhaney |
|2. Designation of the Employee ||Chief Executive Officer |
|3. Remuneration received ||5968079 |
|4. Nature of employment ||Full time |
|5. Qualifications and Experience of the employee ||B. Tech (Metallurgical Engineering) |
|6. Date of commencement of employment ||10.09.2009 |
|7. The age of employee ||56 |
|8. The last employment held by such employee before joining the Company ||GM - Operations - Mahindra Hinoday Industries Limited |
|9. The percentage of equity shares held by the employee in the Company ||NIL |
|10. Whether any such employee is a relative of any director or manager of the Company ||NIL |
PARTICULARS OF DIRECTORS' REMUNERATION:
The ratio of the remuneration of each Director to the median remuneration of theemployees
|Name of Director/ KMP and Designation ||Remuneration of Director/ KMP for Financial Year 2017-18. ||Previous year's Remuneration includes sitting Fees ||% increase/ decrease in Remuneration in the Financial Year 2016-17 ||Ratio of Remuneration of each Director to median Remuneration of employees ||Comparison of the Remuneration of the KMP against the performance of the Company |
|1 F. D. Neterwala - Chairman ||450000 ||260000 ||73.08% ||0.91:1.0 ||- |
|2 R. B. Mehta - Director ||260000 ||170000 ||52.94% ||0.52:1.0 ||- |
|3 A. F. Neterwala - Director ||150000 ||150000 ||NIL ||0.30:1.0 ||- |
|4 P. F. Neterwala - Director ||200000 ||100000 ||100.00% ||0.40:1.0 ||- |
|5 M. K. Fondekar - D irector ||250000 ||150000 ||66.67% ||0.50:1.0 ||- |
|6 H. R. Prasad - Director ||520000 ||260000 ||100.00% ||1.05:1.0 ||- |
|7 F. K. Banatwalla - Director ||520000 ||260000 ||100.00% ||1.05:1.0 ||- |
|8 M. P. Bharucha - Director ||150000 ||100000 ||50.00% ||0.30:1.0 ||- |
|9 Jimmy Parakh - Director ||410000 ||50000 ||720.00% ||0.83:1.0 ||- |
The sitting fees for attending the Board Meeting is rs 50000/- For attending AuditCommittee Rs 50000/-.
For attending all the Committee Meetings is Rs 10000/- (except StakeholdersRelationship Committee - NIL).
PARTICULARS OF DIRECTORS' REMUNERATION:
|The percentage increase in remuneration of: || |
| Chief Executive Officer ||8 % |
| Chief Financial Officer ||9 % |
| Company Secretary ||12 % |
| Median remuneration of employees ||4.96 Lakhs |
|Number of permanent employees on the rolls of Company ||98 |
|explanation on the relationship between average increase in remuneration and Company performance ||The average increase in median remuneration was in line with the increase of salary in the industry. |
|Comparison of the remuneration of the Key Managerial personnel against the performance of the Company ||Sales and Operating Income for the year ended March 31 2018 is Rs 8149 Lakhs and PBIDT is Rs 943 Lakhs. Details of % increase of KMP has been stated above. Increase in the remuneration of KMP is in line with prevailing scales for similar positions in the industry and commensurate with the operating income and & performance of the Company. |
|Variations in the market capitalization of the Company price earnings ratio as at the closing date of the current financial year and previous financial year ||The market capitalization as on March 31 2018 was Rs 117.11 Crore (Rs 58.26 Crore as on March 31 2017) price earnings ratio of the Company as at March 312018 and as at March 31 2017 |
|Percentage increase/decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer ||The Company has not made any public issue or rights issue of securities in the recent past so comparison have not been made of current share price with public offer price. The Company's shares are listed on the BSE Limited. |
|Average percentage increase made in the salaries of employees other than the key managerial personnel in the last financial year i.e. 2017-18. ||9.7 % |
|Average percentage increase in the managerial remuneration compared to average percentage increase in average salary of other employees. ||Not Applicable as there is No Executive Director. |
|Justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||Not Applicable as there is No Executive Director. |
|The key parameters for any variable component of remuneration availed by the Directors ||There are no variable component of remuneration availed by the Directors. |
|The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid director during the year ||Not applicable |
|Affirmation that the remuneration is as per the remuneration policy of the Company ||It is hereby affirmed that the remuneration paid is as per the remuneration policy for Directors Key Managerial personnel and other employees. |
(i) In terms of the provisions of Sections 149 150 152 and other applicableprovisions of the Companies Act 2013 and the Rules made thereunder Mr. H. R. Prasad Mr.M. P. Bharucha and Mr. F. K. Banatwalla (Independent Directors) have been appointed atthe 41st Annual General Meeting of the Company held on 20th August2014 to hold office as Independent Directors of the Company for a period of 5 years i.e.upto 46th Annual General Meeting of the Company Mr. J. J. Parakh (IndependentDirector) was appointed at the 44th Annual General Meeting of the Company heldon 4th August 2017 to hold office as Independent Director of the Company fora period of 5 years i.e. upto 49th Annual General Meeting of the Company.
(ii) Pursuant to the provisions of Section 152 (6) of the Companies Act 2013 and theRules made thereunder Mr. M. K. Fondekar (DIN: 01089689) and Mr. F. D. Neterwala (DIN:00008332) retire by rotation at the ensuing Annual General Meeting.
(iii) In terms of the recently notified Securities and Exchange Board of India (ListingObligation Disclosure Requirements) (Amendment) Regulations 2018 Director attaining ageof 75 years has to be reappointed by passing a Special Resolution. Mr. H. R. Prasad (DIN:00133853) who is 83 years old needs to be reappointed. The Board recommends hisreappointment to the Members.
COMMITTEES OF THE BOARD
In terms of the Provision of the Companies Act 2013 as applicable to Listed Companiesthe following Committees of the Board have been duly constituted
I. Audit Committee:
The Audit Committee Members as at March 31 2018 comprised of:
|Name of Director ||Category |
|Mr. F. K. Banatwalla ||Chairman & Independent Director |
|Mr. F. D. Neterwala ||Promoter - Non Executive Director |
|Mr. H. R. Prasad ||Independent Director |
|Mr. Jimmy Parakh ||Independent Director |
The information generally provided to the Committee for its consideration and approvalsinclude:
- Quarterly half yearly and annual financial results of the Company and performancereport on its business segments;
- annual budget and performance targets;
- appointment of statutory and internal auditors;
- appointment of key managerial personnel;
- review of foreign exchange exposures and exchange rate movement if material;
- contracts in which Director(s) are interested or deemed to be interested;
- defaults in payment of statutory dues if any;
- compliance of various laws and Indian Accounting Standards - (IND-AS;)
- any remarks/ observances/ findings made by the Statutory and Internal Auditors of theCompany;
- making of loans and investment of surplus funds;
- whistle blower policy /vigil mechanism
During the Financial Year 2017-18 5 Meetings of the Audit Committee were held.
II. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee as at March 31 2018 comprised of:
|Name of Director ||Category |
|Mr. H. R. Prasad ||Chairman & Independent Director |
|Mr. R. B. Mehta ||Promoter - Non Executive Director |
|Mr. F. K. Bamnatwalla ||Independent Director |
The Committee frames the Remuneration Policy and recommends remuneration / revision /merit increment and related matters of the Executive Director Chief Executive OfficerChief Financial Officer Company Secretary and Senior Executives.
During the year 2017-2018 1 Meeting of the Nomination and Remuneration Committee washeld.
III. Stakeholders Relationship Committee
The composition of the Stakeholders Relationship Committee as at March 31 2018 is asunder:
|Name of the Director ||Category |
|Mr. F. D. Neterwala ||Non-Executive Director |
|Mr. R. B. Mehta ||Non-Executive Director |
|Mr. A. F. Neterwala ||Non-Executive Director |
The Committee meets as often as necessary. In accordance with the authority granted bythe Board/Share Transfer Committee deals with the following matters concerningshareholders.
- Transfer/Transmission/Deletion/Name change of physical shares
- Split/Sub-division consolidation and duplicate share certificates of physical sharesas approved by the Board. Re-materialisation of Shares.
IV. Corporate Social Responsibility Committee (CSR):
Pursuant to the provisions of the Section 135 of the Companies Act 2013 and the rulesmade thereunder regarding Corporate Social Responsibility became applicable to theCompany.
The composition of the CSR Committee as at March 31 2018 is as under:
|Name of the Director ||Category |
|Mr. F. D. Neterwala ||Non-Executive Director |
|Mr. H. R. Prasad ||Independent Director |
|Mr. A. F. Neterwala ||Non-Executive Director |
The Committee frames the CSR Policy of the Company; identifies the projects which theCompany can undertake towards the CSR initiatives and recommends the same to the Board ofDirectors for their approval.
Mr. M. S. Ashar Company Secretary functions as the Secretary to all the aboveCommittees.
During the period from 1st April 2017 to 31st March 2018 FiveMeetings of the Board were held as under:
- 29th May 2017
- 14th September 2017
- 12th December 2017
- 12th February 2018
- 20th February 2018
The formal evaluation procedure for evaluation by the Board of its own performance andthat of its Committee's and Individual Directors was done. The meeting of the IndependentDirectors of the Company was held on 23rd May 2018.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013 the Directorsbased on the representations received from the Operating Management confirm that:
(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
(b) In consultation with the Statutory Auditors appropriate accounting policies havebeen selected and applied consistently and judgments and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2018 and of the profit for year ended on that date;
(c) To the best of their knowledge and ability proper and sufficient care has beentaken for the maintenance of adequate accounting records in accordance with the applicableprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities if any;
(d) The annual accounts have been prepared on a going concern basis.
(e) The Directors have laid down internal financial controls in respect of policies andprocedures adopted by the Company for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safe guarding of its assetsthe accuracy and completeness of the accounting records and timely preparation of reliablefinancial information and such internal controls are adequate and are operatingeffectively.
(f) The Directors have devised proper system to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
ABSTRACT OF ANNUAL RETURN:
Pursuant to the provision of Section 134 (3) (a) of the Companies Act 2013 an abstractof the Annual Return for 2017-18 in the prescribed format is attached as Annexure I andforms an integral part of the Report.
DECLARATION BY INDEPENDENT DIRECTORS:
Pursuant to Section 149 (7) of the Companies Act 2013 each of the Independent Directorof the Company has given a declaration at the Board Meeting of the Company held on 23rdMay 2018 (being the first Board Meeting of the financial year 2018 - 2019) to the effectthat they meet the criteria of Independence as provided in Section 149 (b) of theCompanies Act 2013.
COMPANY'S POLICY ON DIRECTORS APPOINTMENT REMUNERATION ETC:
The Nomination and Remuneration Committee of the Board is evolving a policy onappointment and remuneration and other matters as provided in Section 178 (3) of theCompanies Act 2013. Any further appointment of Executive Directors and his remunerationor appointment of an Independent Director would be based on the policy that is beingevolved.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:
The Company has not provided any loans or given any guarantee / security to any person.
Details of Working Capital facilities and Term Loans obtained by the Company areprovided in the Notes no. 19 and 17 in the Notes to financial statement. Details ofinvestment made by the Company are provided in Note no 5 in the Notes to FinancialStatements under Investment Schedule. These Investments are made by the Company inordinary course of business out of the surplus funds presently available with theCompany with a view to get an effective return.
PARTICULARS OF CONTRACTS AND ARRANGEMENTS COVERED UNDER SECTION 188 OF THE COMPANIESACT 2013:
Your Company has formulated a policy on related party transactions. This policy dealswith the review and approval of related party transactions. The Board of Directors of theCompany has approved the criteria for making the omnibus approval by the Audit Committeewithin the overall framework of the policy on related party transactions. Prior omnibusapproval is obtained for related party transactions which are of repetitive in nature andentered in the ordinary course of business and at arm's length. All related partytransactions are placed before the Audit Committee for review and approval.
All related party transactions entered during the Financial Year were in ordinarycourse of the business and on arm's length basis. No material related party transactionswere entered during the Financial Year by your Company. Accordingly the disclosure ofrelated party transactions as required under Section 134(3)(h) of the Companies Act 2013in Form AOC 2 is not applicable to your Company.
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.
Members may refer to note no. 36 to the financial statement which sets out relatedparty disclosures pursuant to IND-AS.
CONSERVATION OF ENERGY TECHNOLOGY & FOREIGN EXCHANGE EARNINGS AND OUTGO.
The particulars required to be disclosed pursuant to Section 134 (3) of the CompaniesAct 2013 read with rule 8 of the Companies (Accounts) Rule 2014 are given in Annexure 2and is an integral part of this Report.
RISK MANAGEMENT POLICY:
The Board of Directors has identified and mitigated risks that may arise. However theexecutive Management has an adequately defined framework for risk management. The Companylike all business in the country is exposed to business and economic risk arising out ofmarket conditions and vagaries of monsoon.
CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:
The Company has formed a Committee of the Board of Directors which have been entrustedwith the powers to identify the CSR activities. The Committee has shortlisted certainprojects. Pursuant to the provisions of the Section 135 of the Companies Act 2013 and therules made thereunder regarding CSR expenditure due to the loss in the previous twofinancial years the Company has not incurred any expenditure towards the CSR activity.
As per circular No. CIR/CFD/POLICY/CELL/7/2014 dated 15th September 2014the compliance with the provisions of Clause 49 and Regulation 27 of SEBI (ListingObligation & Disclosure Requirements) Regulations 2015 is not mandatory for theCompany. Nevertheless the Company has been complying the provisions on Voluntary basis.
The Company has taken adequate steps to ensure that all mandatory provisions ofCorporate Governance as prescribed under the SEBI (Listing Obligation & DisclosureRequirements) Regulations 2015 of the BSE Limited with which the Company is listed arecomplied with. A separate report on Corporate Governance is attached as a part of theAnnual Report along with the Auditors' statement on its compliance.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
The Board of Directors of the Company has established a robust vigil mechanism processand to govern the same well defined whistle blower policy has been adopted by the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has in place an Anti-Sexual Harassment Policy since 2009 as per the SupremeCourt Guidelines which is in line with the requirements of The Sexual Harassment of Womenat the Workplace (Prevention Prohibition & Redressal)Act 2013. Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy.
The following is a summary of sexual harassment complaints received and disposed offduring the year 2017-18
- No of complaints received: NIL
- No of complaints disposed off: N.A.
As per Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 The Members of the Company at the 44th Annual GeneralMeeting of the Company held on 4th August 2017 had appointed Messrs. WalkerChandiok & Company LLP (Firm Registration No. 001076N/N500013) as Statutory Auditorsof the Company to hold office for a period of 5 (Five) consecutive financial years fromthe conclusion of the Forty Fourth Annual General Meeting of the Company until theconclusion of the Forty Ninth Annual General Meeting of the Company. The Company hasreceived their written consent and a certificate that they satisfy the criteria providedunder Section 141 of the Act and that the appointment if made shall be in accordancewith the applicable provisions of the Act and rules framed thereunder.
The Report given by Messrs. Walker Chandiok & Company LLP (Firm Registration No.001076N/N500013) as Statutory Auditors of the Company on the financial statement of theCompany for the year 2017-18 is part of the Annual Report. There has been noqualification reservation or adverse remark or disclaimer in their Report.
During the year under review the Auditors had not reported any matter under Section143 (12) of the Act therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
M/s. Engineer & Mehta Chartered Accountants Mumbai are the Internal Auditors ofthe Company. In a year they carry out 3 Internal Audit Runs which are commensurate withthe size of the Company and nature of its business.
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. Kaushik M. Jhaveri & Co. a firm of Practicing Company Secretaries toundertake the Secretarial Audit of the Company. The Secretarial Audit Report for theFinancial Year 2017 - 18 is annexed herewith as "Annexure III". There are noreservations or qualifications made in the Audit Report.
Your Directors place on record their appreciation of the continued support andcooperation extended to the Company by the Central and State Government agencies and byour Shareholders Customers Suppliers Bankers Employees at all levels Employee's Unionand other Business Associates.
Certain statements in the Director's Report and Management & Discussion Analysissection may be forward looking and are stated as required by applicable laws andregulations. Many factors may affect the actual results which could be different fromwhat the Directors envisage in terms of future performance and outlook.
| ||On Behalf of the Board of Directors |
|Place: Mumbai ||F. D. Neterwala |
|Date: 23rd May 2018. ||Chairman |