DIRECTORS' REPORT To, The Members The Directors have pleasure in presenting herewith their Forty Third Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2016. DIVIDEND The Board of Directors of the Company have recommended a dividend of Rs. 2/- per Equity Share of nominal value of Rs. 10 each (i.e. 20%) for the financial year ended March 31, 2016 as against 30% paid for the previous year. The total outgo towards dividend on equity shares together with dividend distribution tax amounts to Rs. 47.54 Lacs. OPERATIONS The recessionary trends globally as well as in the domestic markets in the Capital goods sector for the year under review has impacted both our top and bottom line and the Company was unable to achieve its targets for the year. We are hopeful that the new products and market segments which have been developed would support additional revenue growth both in the domestic as well as overseas markets going forward. The PBIDT for the year under review is Rs. 7.39 Crs as against Rs. 7.10 Crs of the previous year. WORKING CAPITAL MANAGEMENT: The significant ratios of the Company such as Ratio of Inventory to Sales is 30.55 %, Receivable to Sales is 25.85 %, and Net Working Capital to Sales is 5.71 % as compared to in the previous year were 25.21%, 19.92% and 9.73% respectively. The working capital was rotated 11 times in the year, showing effective working capital management. Funds surplus to the operational requirements have been invested in safe and relatively risk free instruments to earn a reasonable return. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an adequate system of internal controls in all business a sphere of its activities which are commensurate with the size and the nature of its business. Your Company has adequate protection of the Company's resources, provision of accurate and speedy financial statements and reports, and compliance with the Company policies and procedures and other statutory and legal obligations. The internal control is supplemented by effective and independent internal audit. The Management regularly reviews the findings of the Internal Auditors and effective steps to implement any suggestions/observations of the Internal Auditors are taken and monitored regularly. In addition, the Audit Committee of the Board regularly addresses significant issues raised by the Internal and the Statutory Auditors. PROSPECTS The Company during the year was successful in developing some new customers and products in Europe and the Company expects to expand its product portfolio both in the domestic market and exports for the future growth. The Company is looking forward for improvement in the domestic demand due to the vision of the Government for development of infrastructure in the Country which will revive the growth thus giving positive effect on our business sectors. The Company plans to target new product addition, new customer acquisitions and extended reach. QUALITY MANAGEMENT The Company has set high benchmarks on quality and on time delivery, providing an edge to the Company in the competitive business scenario. The Company's operations are certified for ISO 9001:2008. All its overseas customers have validated Quality Management System of Dharwad factory. ENVIRONMENT, HEALTH AND SAFETY As part of its commitment to provide a high quality of life for all its stake holders, the Company ensures highest level of safety, health and environment for all its stake holders - employees, customers, vendors, business associates and neighbourhood. Company plans to get its plant at Dharwad certified for ISO 14001 and OHSAS 18001 in this financial year. HUMAN RESOURCE MANAGEMENT Skill development and training are ongoing exercises through focused HR initiatives. The relations between the employees and the management continue to remain cordial. The Company further proposes to invest in a high end Strategic/ Talent Management Software to further bring in cohesive and strategic thinking in employees. ASSOCIATE COMPANY As an 31st March, 2016. M/s Unitel Financial and Investments Pvt. Ltd. is the Associate Company as defined under section 2(6) of the Companies Act, 2013. During the year was no further investment made by the Associate Company. Pursuant to Section 129(3) of the Companies Act 2013, a statement in Form AOC-1 containing the salient features of the Financial Statement of the Associate Company is attached. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES INCLUDING NUMBER OF PEOPLE EMPLOYED As on 31st March 2016, the total numbers of employees on the payrolls of the Company at all the locations were 84. The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as under: DIRECTORS (i) In terms of the provisions of Sections 149, 150, 152 and other applicable provisions of the Companies Act, 2013 and the Rules made thereunder, Mr. K. M. Elavia, Mr. H. R. Prasad, Mr. M. P. Bharucha, Mr. P. Subrahmanyam and Mr. F. K. Banatwalla (Independent Directors) have been appointed at the 41st Annual General Meeting of the Company held on 20th August, 2014, to hold office as Independent Directors of the Company for a period of 5 years i.e. upto 31st March, 2019. (ii) Pursuant to the provisions of Section 152 (6) of the Companies Act, 2013 and the Rules made thereunder, Mr. F. D. Neterwala (DIN: 00008332) and Mr. A. F. Neterwala (DIN: 01418744) retires by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-election. COMMITTEES OF THE BOARD In terms of the Provision of the Companies Act, 2013 as applicable to Listed Companies, the following Committees of the Board have been duly constituted I. Audit Committee: The Audit Committee Members as at March 31, 2016 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. P. Subrahmanyam Independent Director The information generally provided to the Committee for its consideration and approvals include: - Quarterly, half yearly and annual financial results of the Company and performance report 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 accounting standards; - Any remarks/ observances/ findings made by the Statutory and Internal Auditors of the Company; - Making of loans and investment of surplus funds; - whistle blower policy /vigil mechanism During the Financial Year 2015-16, 4 Meetings of the Audit Committee were held. II. Nomination and Remuneration Committee: The Nomination and Remuneration Committee as at March 31, 2016 comprised of: Name of Director Category Mr. K. M. Elavia Chairman & Independent Director Mr. R. B. Mehta Promoter – Non Executive Director Mr. P. Subrahmanyam Independent Director The Committee frames the Remuneration Policy and recommends remuneration / revision / merit increment and related matters of the Executive Director, Chief Executive Officer, Chief Financial Officer, Company Secretary and Senior Executives. During the year 2015-2016, 2 Meetings of the Nomination and Remuneration Committee were held. III. Stakeholders Relationship Committee The composition of the Stakeholders Relationship Committee as at March 31, 2016 is as under: 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 by the Board, the Committee, deals with the following matters concerning shareholders, on fortnightly basis. - Transfer/Transmission/Deletion/Name change of physical shares. - Split/Sub-division, consolidation and duplicate share certificates of physical shares as 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 rules made thereunder regarding Corporate Social Responsibility became applicable to the Company. The composition of the CSR Committee as at March 31, 2016 is as under: Name of the Director Category Mr. F. D. Neterwala Chairman - 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 the Company can undertake towards the CSR initiatives and recommends the same to the Board of Directors for their approval. During the year 2015-2016, 1 Meeting of the CSR Committee was held. Mr. M. S. Ashar, Company Secretary functions as the Secretary to all the above Committees. BOARD MEETINGS: During the period from 1st April, 2015 to 31st March, 2016, Five Meetings of the Board were held as under: - 29th May, 2015 - 13th August, 2015 - 20th August, 2015 - 10th November, 2015 - 11th February, 2016 BOARD EVALUATION: The formal evaluation procedure for evaluation by the Board of its own performance and that of its Committee and Individual Directors was done. The meeting of the Independent Directors of the Company was held on 4th April, 2016. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Directors, based on the representations received from the Operating Management, confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; (b) In consultation with the Statutory Auditors, appropriate accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit for year ended on that date; 13 (c) To the best of their knowledge and ability, proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the applicable provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing 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 and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies, the safe guarding of its assets, the accuracy and completeness of the accounting records and timely preparation of reliable financial information and such internal controls are adequate and are operating effectively. (f) The Directors have devised proper system to ensure compliance with the provisions of 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 abstract of the Annual Return for FY 2015-16 in the prescribed format is attached Annexure I and forms an integral part of the Report. DECLARATION BY INDEPENDENT DIRECTORS: Pursuant to Section 149 (7) of the Companies Act, 2013 each of the Independent Director of the Company, has given a declaration at the Board Meeting of the Company held on 30th May, 2016 (being the first Board Meeting of the financial year 2016/17) to the effect that he meets the criteria of Independence as provided in Section 149 (b) of the Companies Act, 2013. COMPANY'S POLICY ON DIRECTORS APPOINTMENT, REMUNERATION ETC: The Nomination and Remuneration Committee of the Board is evolving a policy on appointment and remuneration and other matters as provided in Section 178 (3) of the Companies Act, 2013. Any further appointment of Executive Director and his remuneration or appointment of an Independent Director would be based on the policy that is being evolved. 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 Loan as obtained by the Company are provided in the Notes no. 5 and 8 in the Notes to financial statement. Details of investment made by the Company are provided in Note no.12 in the Notes to Financial Statements. These Investments are made by the Company in the ordinary course of business, out of the surplus funds presently available with the Company, with a view to get an effective return. PARTICULARS OF CONTRACTS AND ARRANGEMENTS COVERED UNDER SECTION 188 OF THE COMPANIES ACT, 2013: All transactions entered into with Related Parties are in the ordinary course of business and are at arm's length. Details regarding transactions entered into with related parties are provided in the notes to accounts. All the related party transactions have prior approval of the Audit Committee and the Board of Directors and are within limits as prescribed under the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder and do not require the approval of the Members. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. CONSERVATION OF ENERGY, TECHNOLOGY & FOREIGN EXCHANGE EARNINGS AND OUTGO. The particulars required to be disclosed pursuant to Section 134 (3) of the Companies Act, 2013 read with rule 8 of the Companies (Accounts) Rule, 2014 are given in Annexure II, and is an integral part of this Report. RISK MANAGEMENT POLICY: The Board of Directors has identified and mitigated risks that may arise. However the executive Management has an adequately defined framework for risk management. The Company, like all business in the country, is exposed to business and economic risk arising out of market conditions and vagaries of monsoon. CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES: The Company has formed a Committee of the Board of Directors which have been entrusted with the powers to identify the CSR activities. The Committee has shortlisted certain projects at its meeting held on 11th February, 2016 and the implementation of the projects would be carried out in the current fiscal. Pursuant to the provisions of the Section 135 of the Companies Act, 2013 and the rules made thereunder regarding CSR expenditure, due to the loss in the current financial year the Company has not incurred any expenditure towards the CSR activity. CORPORATE GOVERNANCE: As per circular No. CIR/CFD/POLICY/CELL/7/2014 dated 15th September, 2014, the compliance with the provisions of Clause 49 and Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements), 2015 is not mandatory for the Company. Nevertheless the Company has been complying the provision on Voluntary basis. The Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the SEBI (Listing Obligation & Disclosure Requirements), Regulation 2015 of the BSE Limited with which the Company is listed are complied with. A separate report on Corporate Governance is attached as a part of the Annual 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 process and 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, PROHIBITION AND REDRESSAL) ACT, 2013. The Company has in place an Anti Sexual Harassment Policy since 2009 as per the Supreme Court Guidelines which is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2015-16 - No of complaints received: NIL - No of complaints disposed off: N.A. STATUTORY AUDITORS: M/s. Ford Rhodes Parks & Co., Chartered Accountants are the Statutory Auditor of the Company appointed in 42nd Annual General Meeting to hold office up to the conclusion of the ensuing Annual General Meeting of the Company. Being eligible, it is recommended to reappoint M/s. Ford Rhodes Parks & Co. in the forthcoming Annual General Meeting to audit the accounts of the Company for the financial year 2016 - 2017. INTERNAL AUDITORS: M/s. R. G. N. Price, Chartered Accountants, Mumbai are the Internal Auditors of the Company. In a year they carry out 3 Internal Audit Runs which are commensurate with the size of the Company, and nature of its business. SECRTARIAL 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. Kaushik M. Jhaveri & Co., a firm of Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the FY 2015 - 16 is annexed herewith as Annexure III There are no reservations or qualifications made in the Audit Report. APPRECIATION: Your Directors place on record their appreciation of the continue support and Cooperation extended to the Company by the Central and State Government agencies, and by our Shareholders, Customers, Suppliers, Bankers, Employees at all levels, Employee's Union and other Business Associates. CAUTIONARY NOTE: Certain statements in the Director's Report and Management & Discussion Analysis section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook. On Behalf of the Board of Directors F. D. Neterwala Chairman Mumbai: 30th May, 2016. |