DIRECTORS' REPORT Dear Members, Your Directors present the 58th Annual Report together with the Audited Financial Statements for the year ended 31st March, 2016. OPERATIONS Turnover of the Company during the year 2015-16 was Rs. 9,393.59 lacs as compared to Rs. 9,396.82 lacs during the year 2014-15. The Company's performance in terms of sales revenue was almost same as last year however there is a significant improvement in the gross margins hence the losses have reduced. The Company has a healthy order booking for financial year 2016-17. SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2016 was Rs. 3,01,15,860/-. During the year under review, the Company has not issued any shares with or without differential voting rights nor has granted any stock options or sweat equity. DEPOSITS During the year under consideration, the Company has not accepted any deposits. There were no unpaid or unclaimed deposits as on 31st March, 2016. BOARD OF DIRECTORS Smt. Uma Nevatia, Executive Vice Chairperson of the Company was reappointed as Whole Time Director with effect from 1st April, 2015. As per the provisions of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Smt. Uma S. Nevatia, Director of the Company retires by rotation and being eligible, offers herself for re-appointment The term of office of Shri S. K. Nevatia as Chairman and Managing Director of the Company, has expired on 31st March, 2016. The Board of Directors of the Company on the recommendation of the Nomination & Remuneration Committee have re-appointed Shri S. K. Nevatia as Chairman and Managing Director on the existing terms & conditions for a period of three years w.e.f. 1st April, 2016. Appropriate resolution for the approval of the members has been proposed in the notice for the ensuing Annual General Meeting. The Company has received the necessary declaration from each Independent Director in accordance with section 149(7) of the Companies Act, 2013, that he meets the criteria of independence as laid out in sub-section (6) of section 149 of the Companies Act, 2013 and the Listing Regulations. KEY MANAGERIAL PERSONNEL Shri Alen Ferns, Company Secretary & Compliance Officer of the Company resigned as the Key Managerial Personnel with effect from 15th December, 2015. Shri A.K. Nemani, Chief Financial Officer of the Company resigned as the Key Managerial Personnel with effect from 10th February, 2016. Ms. Meenakshi Anchlia, Company Secretary & Compliance Officer of the Company was appointed as the Key Managerial Personnel with effect from 10th February, 2016. Shri Shyam Aswani, Chief Financial Officer of the Company was appointed as the Key Managerial Personnel with effect from 11th February, 2016. BOARD MEETINGS During the year under review the Board of Directors met five times i.e. on 27.05.2015, 13.08.2015, 05.11.2015, 10.02.2016 and 02.03.2016. The details of the Board Meetings are given in the Corporate Governance Report which forms a part of this Annual Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to section 134(3)(c) of the Companies Act, 2013, the Directors confirm that: a) that in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) that we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit / (loss) of the Company for that period; c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the annual financial statements have been prepared on a going concern basis; e) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively; and f) that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively. PERFORMANCE EVALUATION OF THE BOARD Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of Committees of the Board. The Independent Directors met separately on 2nd March, 2016 to discuss the following: i) review the performance of Non-Independent Directors and the Board as a whole; ii) review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; iii) assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. All Independent Directors were present at the meeting and discussed the above and expressed their satisfaction. SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint venture or Associate Companies. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS During the financial year 2015-16, the Company has not given any loans, guarantees or made any investments as per the provisions of section 186 of the Companies Act, 2013. RELATED PARTY TRANSACTIONS All transactions entered with related parties for the year under review were on arm's length basis and in the ordinary course of business and that the provisions of section 188 of the Companies Act, 2013 and the rules made there under are not attracted. Thus, disclosure in form AOC-2 in terms of section 134 of the Companies Act, 2013 is not required. All Related Party Transactions are placed before the Audit Committee. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. A statement giving details of all Related Party Transactions are placed before the Audit Committee for review and approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz. www.hirect.com. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company. EXTRACT OF ANNUAL RETURN The extract of the Annual Return in form MGT-9, as required under section 92 of the Companies Act, 2013, is annexed as Annexure - A and forms an integral part of this report. SECRETARIAL AUDIT 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 has appointed M/s. GMJ & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure - B and forms an integral part of this report. The Secretarial Audit Report does not contain any qualifications and adverse remark. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a Vigil Mechanism / Whistle Blower Policy as per the relevant provisions of the Listing Regulations and section 177 of the Companies Act, 2013. The details are given in the Corporate Governance Report which forms a part of this Annual Report. The Vigil Mechanism / Whistle Blower Policy is uploaded on the website of the Company, viz. www.hirect.com NOMINATION AND REMUNERATION POLICY The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnels and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. CORPORATE SOCIAL RESPONSIBILITY (CSR) As per the Companies Act, 2013, all companies having net worth of Rs. 500 crore or more or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any three preceding financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of the Board of Directors comprising three or more directors, at least one of whom should be an Independent Director and such Company shall spend at least 2% of the average net profit of the Company's three immediately preceding financial years. Accordingly, Company has constituted CSR Committee comprising of Shri V. K. Bhartia, Shri S. K. Nevatia and Smt. Uma S. Nevatia as member of the Committee. The Committee is responsible for formulating and monitoring the CSR policy of the Company. Details about the CSR policy are available on our website, viz. www.hirect.com Due to average net profit of last three years being negative, your Company is not required to spend any amount of CSR activities during the year under review. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure - C and forms an integral part of this report. AWARDS AND RECOGNITION The Company has been committed towards ensuring high standards of Environment and Safety practices. It is a matter of great satisfaction that these initiatives taken by the Company have been appreciated at various forums. The Company received following accolades during the year from "National Society of Friends of the Trees": 1. "The Annual Vegetable, Fruit & Flower Show" - Full Garden - Rank I 2. Any outstanding specimens of Bonsai - Rank II 3. In collection of Bonsai - Rank III AUDIT COMMITTEE An Audit Committee of the Board has been constituted in terms of the relevant provisions of the Listing Resolutions and section 177 of the Companies Act, 2013. Constitution and other details of the Audit Committee are given in the Corporate Governance Report which forms a part of this Annual Report. MANAGEMENT DISCUSSION AND ANALYSIS As required under Listing Regulations, Management Discussion and Analysis Report forms part of this Annual Report. AUDITORS At the Annual General Meeting held on 14th August, 2014, M/s. Khandwala & Shah, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Khandwala & Shah, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the members. M/s. Khandwala & Shah, Chartered Accountants are eligible for re-appointment and have expressed their willingness to act as Auditors, if appointment ratify. The Company has received a certificate from them that they are qualified under section 139 of the Companies Act, 2013 for appointment as auditors of the Company. The Audit Committee and Board of Directors hence recommend for ratification of their appointment. The members are requested to consider, approve and ratify their appointment. M/s. Daga & Chaturmutha, Chartered Accountants, Branch Auditors of the Company for Nashik Plant and M/s. Yogesh N. Shah & Co., Chartered Accountants, Branch Auditors of the Company for Dehradun Plants are retiring at the ensuing Annual General Meeting and being eligible for re-appointment have expressed their willingness to act as Branch Auditors of the Company. The Members are requested to authorize the Board of Directors to appoint Branch Auditors of the Company and fix their remuneration. AUDITORS' OBSERVATIONS The observations of the auditors contained in their report are self explanatory and therefore, do not call for any further comments. The Audit Report does not contain any qualifications and adverse remark. DETAILS IN RESPECT OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS Adequate systems for internal controls provide assurances on the efficiency of operations, security of assets, statutory compliance, appropriate authorization, reporting and recording transactions. The scope of the audit activity is broadly guided by the annual audit plan approved by the top management and Audit Committee. The Internal Auditors prepare regular reports on the review of the systems and procedures and monitors the actions to be taken. RISK MANAGEMENT The Company has in place a Risk Management Policy which was reviewed by the Audit Committee and approved by the Board of Directors of the Company. The policy provides for a robust risk management framework to identify and assess risks such as operational, strategic, financial, regulatory and other risks and put in place an adequate risk management infrastructure capable of addressing these risks. CORPORATE GOVERNANCE As per Regulation 34 (3) read with Schedule V of the Listing Regulations, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Annual Report. CODE OF CONDUCT Your Company is committed to conducting its business in accordance with the applicable laws, rules and regulations and highest standards of business ethics. In recognition thereof, the Board of Directors has implemented a Code of Conduct for adherence by the Directors and Senior Management Personnels of the Company. This will help in dealing with ethical issues and also foster a culture of accountability and integrity. LISTING The Company has listed its shares on The Bombay Stock Exchange Ltd. & National Stock Exchange of India Ltd. The Company is regular in payment of listing fees. LISTING AGREEMENT The Securities and Exchange Board of India (SEBI), on 2nd September, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective from 1st December, 2015. Accordingly, all listed entities were required to enter into the Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited during February 2016. POLICIES We seek to promote and follow the highest level of ethical standards in all our business transactions guided by our value system. The Listing Regulations mandated the formulation of certain policies for all listed companies. All our Corporate Governance policies are available on our website viz www.hirect.com The policies are reviewed periodically by the Board and updated based on need and new compliance requirement. DEPOSITORY SERVICES The Company's Equity Shares have been admitted to the depository mechanism of the National Securities Depository Limited (NSDL) and also the Central Depository Services (India) Limited (CDSL). The Company has been allotted ISIN No. INE835D01023. Shareholders therefore are requested to take full benefit of the same and lodge their holdings with Depository Participants (DPs) with whom they have their Demat Accounts for getting their holdings in electronic form. PARTICULARS OF EMPLOYEES The information required pursuant to section 197(12) read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - D and forms an integral part of this report. The information required pursuant to section 197(12) read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable because Company has not employed any employee drawing salary of Rs. 5, 00,000/- per month or Rs. 60,00,000/- per annum during the year under review. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. During the year under review, there were no complaints reported to the Internal Complaint Committees. INFORMATION ON MATERIAL CHANGES AND COMMITMENTS There are no material changes and commitments affecting the financial position of the Company which have occurred between 31st March, 2016 and 27th May, 2016 being the date of this report. PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO The information pursuant to section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure - E and forms an integral part of this report. SAFETY, ENVIRONMENTAL CONTROL AND PROTECTION The Company has taken all the necessary steps for safety, environmental control and protection at the plants. ACKNOWLEDGMENT The Directors wish to convey their appreciation to the Company's shareholders, customers, suppliers, bankers, distributors and all the technology partners for the support they have given to the Company and the confidence, which they have reposed in its management and the employees for the commitment and dedication shown by them. For and on behalf of the Board of Directors For Hind Rectifiers Limited S. K. Nevatia Chairman & Managing Director Dated: 27th May, 2016 Place: Mumbai Registered Office: Lake Road, Bhandup (W), Mumbai - 400 078 |