DIRECTORS' REPORT DEAR MEMBERS Your directors have pleasure in presenting the FORTY FORTH annual report of the Company along with the audited financial statements for the financial year ended March 31, 2015 OPERATIONS REVIEW AND FUTURE OUTLOOK The gross turnover of the company increased to Rs. 20,427.24 Lacs during the year under review from Rs. 19,367.16 Lacs in the previous year. Accordingly Profit Before Tax (PBT) and Net Profit were Rs. 1,713.90 Lacs and Rs. 1,230.92 Lacs respectively as compared to Rs. 1,057.85 Lacs and Rs. 706.10 Lacs respectively in the previous year. During the year under review the company could sell non-plant grade bauxite amounting to Rs. 69.27 Lacs, as compared to Rs. 840.18 Lacs, in the previous year, due to non receipt of permission from the Gujarat Government. Recently the company has received the permission from the state Government for sale of non plant grade bauxite. The Market for abrasive grains is showing improvement in the current year. Your Company has also installed an additional tilting furnace which will increase the productivity and reduce the cost of production of white fused grains. Your Company has installed wind power plants of 11.1 M.W. in Rajasthan & Karnataka. The plants in Karnataka are operating satisfactorily but the plants in Rajasthan faced several local problem like theft of cables etc. Therefore the generation of power was lower compared to pervious year. During the year the gross revenue from sale of power to respective state power distribution companies was Rs. 626.96 Lacs as compared to Rs. 698.77 Lacs in the previous year. Your Company has a total thermal power plant capacity of 18 Mega Watt (MW) out of which 9 MW is based on coal and 9 MW on furnace oil. Due to unaffordable price of furnace oil, the furnace oil based power plant is used as and when required and found viable. Your directors are hopeful that the company's performance will improve significantly in the current year. DIVIDEND Based on the Company's performance, your directors are pleased to recommend a final dividend of Rs. 0.25 per share (i.e. 25%) for the financial year 2014-15 on the capital of 11,96,39,200 equity shares of Rs.1.00 each, in previous year it was Rs. 0.20 per share (i.e. 20%). The final dividend and dividend distributed tax involve the cash out flow of Rs. 359.99 Lacs (Previous Year Rs. 279.95 Lacs), the dividend is subject to approval of members of the Company in the Annual General Meeting. SHARE CAPITAL The paid up Share Capital of the Company as on 31st March, 2015 was Rs. 11.96 Crores. During the year under review the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on 31st March, 2015, none of the Directors of the Company hold convertible instruments. RESERVES The Company proposes to transfer Rs. 4 Crores to Reserves. PROMOTER CHANGE During the current year, the existing promoters have entered into a share purchase agreement with Bombay Minerals Ltd. and Cura Global Holdings Ltd. on 08 June 2015, for sale of their share 25.52% shareholding in the Company. The said agreement was acted upon on 15 July 2015 and Bombay Minerals Ltd. has acquired the 20.36% shareholding as per the said Share Purchase Agreement. Accordingly, total shareholding of the Bombay Minerals Ltd. stood at 38.36%, therefore Bombay Minerals Ltd. triggered the takeover code and made the public offer for acquisition of 26% shareholding from the public shareholders. The takeover process is going on and expected to complete by September 2015. Accordingly Bombay Minerals Limited has became the promoter of the company w.e.f. 15 July 2015. HOLDING SUBSIDIARY AND ASSOCIATE COMPANY During the current year, w.e.f. 15 July 2015 Bombay Minerals Limited, became the holding company of the Company. FIXED DEPOSIT Accepted during the year: NIL. Remained unpaid or unclaimed as at the end of the year: NIL. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: (i) at the beginning of the year: NIL (ii) maximum during the year: NIL (iii) at the end of the year: NIL. Non Complied Deposits: NIL. GOING CONCERN During the year there is no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. INTERNAL FINANCIAL CONTROLS The Company has adequate system of internal controls to ensure that all the assets are safeguarded and are productive. Necessary checks and balances are in place to ensure that transactions are adequately authorized and reported correctly. The Internal Auditors of the Company conduct Audits of various departments to ensure that the necessary controls are in place. The Audit Committee of the Board reviews these and the Company, when needed, takes corrective actions. STATUTORY AUDITORS The Company's Statutory Auditors, M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. 301003E) retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment, but have expressed their unwillingness to be re-appointed. Therefore the Board of Directors have recommended M/s SRBC & Co LLP. (ICAI Firm Registration No. 324982E) as Statutory Auditors of the company. Your company has also received a certificate from the proposed auditors to the effect that they are eligible for appointment under the applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, as amended, time to time. Members are requested to appoint the proposed auditors in ensuing AGM from conclusion of this 44th AGM to the 45th AGM for a period of one year. AUDITORS' REPORT The Auditors' Report read with notes to the financial statements is self-explanatory and does not call for any further explanation. There is no adverse remark in the audit report for the year. SECRETARIAL AUDITOR The Board has appointed Mr. Jain Gupta, Company Secretary in Whole time Practice, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith marked as Annexure A. COST AUDITORS M/s K G Goyal & Associates was appointed as Cost Auditors u/s 233(1B) of Companies Act 1956 for the year 2013-14. The Cost Audit Report had been filed in XBRL format in requisite form on 25 September 2014 for the FY 2013-14. The cost audit report for the F Y 2014-15 will be filed in due course of time. M/s. K G Goyal & Associates, Cost Accountants have been appointed as Cost Auditor u/s 148 of Companies Act 2013 and rule 3 & 4 of Companies (Cost Records and Audit) Rules, 2014 of the Company for the financial year 2015-16 for the products manufactured by the Company at a fee of Rs. 50,000/- plus Service Tax and reimbursement of out of pocket expenses. The Fees is subject to confirmation of the members in ensuing AGM. DIRECTORS Mr. S G Rajgarhia, Director having been longer in the office, retires by rotation at the ensuing annual general meeting and being eligible offers himself for re-appointment. Mr. S G Rajgarhia is a director of the Company. A brief resume of the appointee is given in the notice to the Annual General Meeting. Your directors recommend his re-appointment at the ensuing annual general meeting in the overall interest of the Company. During the year Mrs. Anisha Mittal was appointed as additional director w.e.f. 30 March 2015. In the current year, w.e.f. 15 July 2015, Mr. Hemul Shah and Mr. Pundarik Sanyal and w.e.f. 06 August 2015 Mr. Mihir H Devani were appointed as additional directors of the company. Mr. Mihir H Devani was also appointed as Whole Time Director of the Company subject to confirmation of members in ensuing AGM. In the current year w.e.f. 15 July 2015 Mr. Umesh Kumar Khaitan, Independent Director, Mr. Prem Prakash Khanna, Executive Director and Mr. Rajesh Kumar Khanna, Whole Time Director, and w.e.f. 06 August 2015 Mr. Manoj C Ganatra, Independent Director were resigned from the company. During the current year, w.e.f 15 July 2015 Mr. S G Rajgarhia has ceased as Key Managerial Personnel of the company and w.e.f. 06 August 2015 Mr. Mihir H Devani, Whole Time Director has been appointed as Key managerial Personnel of the company. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134 (3)(c) of the Companies Act, 2013, your Directors hereby confirmed that: (i) in the preparation of the annul accounts for the year ended 31st March, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same; (ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the Profit of the Company for the year ended as on that date; (iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the Directors have prepared the annual accounts of the Company on a "going concern" basis; (v) the Directors have laid down internal financial controls to be followed by the Company and the such internal financial controls are considered adequate and are operating effectively; and (vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are considered adequate and operating effectively. CREDIT RATING OF BANK BORROWINGS For Long Term Bank Facilities A (Single A) rating has been assigned by Credit Analysis & Research Ltd. (CARE). This rating indicates adequate safety and carries low credit risk. For short term borrowings A1+ (A One Plus) has been assigned by CARE. This rating indicates very strong degree of safety and carries lowest credit risk. CRISIL has also given assigned us "CRISIL A/Stable" rating for cash Credit, term loan and proposed term loan. "CRISIL A1" rating for letter of credit and bank guarantee. CODE OF CONDUCT The Company has laid down a code of conduct for the directors and senior management personnel. It is available on the website of the Company www.orientabrasives.com A declaration by the Managing Director regarding annual affirmation of compliance of the code by all concerned is annexed to the report on Corporate Governance. With a view to regulate trading in securities by Directors, KMP, & Designated Employees, the company adopted a code of conduct to Regulate, Monitor and Report Trading by Insiders. CORPORATE SOCIAL RESPONSIBILITY The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which is approved by the Board. During the year, the Company has spent Rs. 14.96 Lakhs out of Rs. 29.02 Lakhs (2%) of the average net profits of last three years) on CSR activities. The Annual Report on CSR activities is annexed herewith as Annexure B. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES: All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arm's length basis. During the year, the Company had entered into a contract with Orient Refractories Ltd. related party that is considered material contract in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board may be accessed on the Company's website at the link <http://www.orientabrasives.com/OAL%20policies/> Related%20Party%20Transactions%20Policy.pdf. Members can refer Note no. 26 to the financial statement which sets out related party disclosures. The Annual Report on related party contract is annexed herewith as Annexure C. EXTRACT OF ANNUAL RETURN Extract of annual return of the Company is annexed herewith as Annexure D to this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo, required to be made pursuant to section 134 of the Companies Act 2013 read with the Companies (Accounts) Rules, 2014 is given in Annexure-E and forms part of this report. MANAGEMENT DISCUSSION AND ANALYSIS Notes on Management Discussion and Analysis of the company have been given in Annexure-F and forms part of this report. RISK MANAGEMENT The Company has framed a Risk Management Policy to identify to study and mitigate the various risks and access the key business risk areas and a risk mitigation process. A detailed exercise is being carried out to study and mitigate the various risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. CRITERIA FOR APPOINTMENT OF INDEPENDENT DIRECTORS The Independent Directors shall be of high integrity with relevant expertise and experience so as to have as diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, Law, governance and general management. CRITERIA FOR APPOINTMENT OF MANAGING DIRECTOR / WHOLE TIME DIRECTORS The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board. REMUNERATION POLICY The Company follows a policy on remuneration of Directors and Senior Management employees. The policy can be accessed from the company website at www.orientabrasives.com PERFORMANCE EVALUATION In accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement the Nomination and Remuneration Committee has laid down the criteria for evaluation of individual Directors, the Board as a whole. Based on the criteria the exercise of evaluation was carried out as structured process covering various aspects of the Board functioning such as composition of Board and Committees, experience and expertise, performance of specific duties and obligation, governance and compliance issues attendance, contribution at meeting etc. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors at a separately convened meeting in which the performance of the Board as a whole was evaluated and reviewed. The performance of the Independent Directors was carried out by the entire Board (Excluding the Director being evaluated). The Directors expressed their satisfaction with the evaluation. FAMILIARISATION PROGRAMME FOR BOARD MEMBERS On appointment, the concerned Director is issued a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. Each newly appointed Independent Director is taken through a formal induction program including the presentation from the Director on the Company's manufacturing, marketing, finance and other important aspects. The Company Secretary briefs the Director about their legal and regulatory responsibilities as a Director. The induction for Independent Director include interactive sessions with Executive Directors, Business and Functional Heads, visit to the manufacturing site etc. The details of such familirisation programme have been displayed on the company's website link: http://www.orientabrasives.com/investor_relations.htm INDUSTRIAL RELATIONS The industrial relations with staff and workers during the year under review continue to be cordial. HUMAN RESOURCES The Company's human resources continue to be its most valuable asset. The team has remained as committed as ever and produced results that are considered significant. Quality, quick delivery and focus on resolving customer issues are the hallmark of the team performance. There is a strong focus on team spirit, during the year, many events/training programs were conducted to develop personality and outlook of its employees. Employee relations continue to be cordial. CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT A separate section on Corporate Governance is attached to this report as Annexure-G. A certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the listing agreements with stock exchanges is enclosed as Annexure-H. A certificate from the Managing Director that all board members and senior management personnel have affirmed compliance with the code of conduct for the year ended March 31, 2015 is attached as Annexure-I. CEO/CFO certificate is enclosed as Annexure-J. DISCLOSURES: 1. Vigil Mechanism The Vigil Mechanism of the Company, which also incorporate a whistle blower policy in the terms of Listing Agreements deals with instances of fraud and mismanagement, if any. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at www.orientabrasives.com 2. Audit Committee The Audit Committee was reconstituted w.e.f. 06 August 2015 comprised of Mr. Pundarik Sanyal (Chairman), Independent Director, Mr. R S Bajoria, Independent Director and Mr. Hemul Shah, Non Independent Director. All the recommendations made by the Audit Committee were accepted by the Board. 3. Number of Board Meeting The Board of Directors of the Company met six times in the year, the details of which are provided in the Corporate Governance Report. 4. Particulars of loans given, investment made, guarantees given and securities provided Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement. Please refer the Standalone Financial Statement. 5. Particulars of Employees and related disclosures Pursuant to the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and in terms of provisions of the Section 136 (1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at Corporate Office of the Company during the working hours and any member interested in obtaining such information may write to the Company Secretary. 6. Your Directors further state that during the year under review, there were no cases filed, pursuant to the sexual harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review: 1. Details of relating to deposit and unclaimed deposits or interest thereon. 2. Issue of equity shares with differential rights as to dividend or voting. 3. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Company's operation in future. ACKNOWLEDGEMENTS Your directors sincerely appreciate the dedication and efforts of the employees at all levels of the organisation in contributing to the success of the Company. The directors are also thankful to the Investors of the Company for their confidence in the Company. They also gratefully acknowledge the continued support and guidance received from the Auditors, Customers, Business Associates, various Government Authorities, Financial Institutions and the Banks. For and on behalf of the Board Sd/- Pundarik Sanyal Chairman (DIN-01773295) Place : Mumbai Date : 06 August 2015 |