DIRECTORS' REPORT TO THE MEMBERS (Pursuant to Section 134(3) of the Companies Act, 2013) The Directors have pleasure in presenting the Thirty Third Annual Report together with the Statement of Accounts for the year ended on March 31,2015 TRANSFER TO GENERAL RESERVES In view of loss during the year, there was no transfer to General Reserve. DIVIDEND In view of the loss during the financial year 2014-2015, your directors do not recommend dividend on the equity shares of the Company for the financial year 2014-2015 OUTLOOK Certifications: The Company has taken various steps to maintain/improve the quality systems which are in place for last several years. The Surveillance Audit for ISO/TS 16949:2002 for Quality Management System was successfully completed during April 2015. The Surveillance Audit for ISO 14001-2004 for Environmental Management System was successfully completed during June 2015. Business: Overseas Market: Considering the inputs received from overseas customers, the company is expecting an increase in exports of 5% and indirect exports of 10%. Domestic Market: OE - Based on the inputs received from the OE customers in India, we are expecting an increase between 10to 15% during the Financial Year 2015-16. Industrial and Aftermarket: We are planning growth of a 5% minimum through development of additional Industrial customers and adding additional parts for the Aftermarket. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIALYEAR: There have been no material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year and the date of the report. NUMBER OF MEETINGS OF BOARD OF DIRECTORS 4 (Four) meetings of the Board of Directors of the Company were held during the year. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. S. C. Saran, Director of the Company, retires at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Pursuant to the provisions of Section 149 of the Act, which came into effect from April 1, 2014, Mr. Shiamak Marshall, Mr. Jehangir H. C. Jehangir were appointed as Independent Directors at the Annual General Meeting of the Company held on August 7,2014. Mr. A. R. Rajwade was reappointed as the Managing Director of the Company from May 17,2014 for a period of two years which was approved by the shareholders at the Annual General Meeting held on August 7, 2014. Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1,2014, the appointments of Managing Director as key managerial personnel of the Company was formalised. With a view to strengthen the Board and also to meet the regulatory requirements, Ms. Devaki Saran, & Mr. Richard Koszarek were appointed as Additional Directors of the Company with effect from August 14, 2014 and Mr. Sharad Jain was appointed as Additional Director of the Company with effect from November 5, 2014. The Board has also appointed Ms. Devaki Saran as an Executive Director and Chief Financial Officer of the Company with effect from August 14,2014 for a period of three years. The resolutions seeking approval of the Members for the appointment of Ms. Devaki Saran, Mr. Richard Koszarek and Mr. Sharad Jain have been incorporated in the notice of the forthcoming annual general meeting of the Company along with brief details about them. The Company has received notices under Section 160 of the Act along with the requisite deposit proposing their appointment. The necessary resolution for seeking approval of shareholders for the appointment of Mr. Richard Koszarek as an Independent director with effect from August 14,2014 has been incorporated in the notice of the forthcoming annual general meeting of the Company. DECLARATION FROM INDEPENDENT DIRECTORS Mr. Shiamak Marshall, Mr. Jehangir H. C. Jehangir and Mr. Richard Koszarek, who are independent directors, have submitted a declaration that each of them meets the criteria of independence as provided in sub Section (6) of Section 149 of the Act and there has been no change in the circumstances which may affect their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required. VIGIL MECHANISM The Company has formulated and published a Whistle Blower Policy to provide a mechanism ("Vigil Mechanism") for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177 (9) of the Act. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND CRITERIA FOR INDEPENDENT DIRECTORS The Remuneration Policy for directors and-senior management and the Criteria for selection of candidates for appointment as directors, independent directors, senior management as adopted by the Board of Directors are placed on the website of the Company and are annexed as Annexure I & II to this report. DIRECTORS'RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: (I) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; (ii) they 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; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) they have prepared the annual accounts on a going concern basis; (v) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; (vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. ADEQUACY OF INTERNAL FINANCIAL CONTROLS Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15. The internal auditor also regularly reviews the adequacy of internal financial control system. DETAILS OF SUBSIDIARIES/JOINT VENTURES/ASSOCIATES The Company does not have any subsidiary/ joint ventures/ associates. EXTRACT OF ANNUAL RETURN As provided under sub Section (3) of Section 92 of the Act, the extract of annual return is enclosed, which forms part of the directors' report as Annexure III. AUDITORS M/s. J. L. Bhatt & Company, Chartered Accountants, the Auditors of the company who would retire at the ensuing Annual General Meeting offer themselves for reappointment. M/s. J. L. Bhatt & Company, Chartered Accountants, the 'existing auditors have furnished a certificate, confirming that if reappointed for the financial year 2015-2016 their reappointment will be in accordance with Section 139 read with section 141 of the Companies Act, 2013. SECRETARIALAUDIT Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Parikh & Associates, Practising Company Secretaries were appointed as the Secretarial Auditor for auditing the secretarial records of the Company for the financial year 2014-2015. The Secretarial Auditors' Report is annexed as Annexure IV. AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT The auditor's' report does not contain any qualifications, reservations or adverse remarks. As regards, secretarial auditors' observation, the company, is in the process of identifying and appointing a competent and experienced company secretary. Meanwhile, the company has engaged the professional services of practicing company secretaries and has taken care to comply with applicable provisions of the Companies Act, 2013. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with Clause (m) of Sub-section (3) of Section 134 of the Act read with Companies (Accounts) Rules, 2014 is annexed to this report as Annexure V. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure VI. DEPOSITS FROM PUBLIC The Company has not accepted any deposits from public. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORY/ JUDICIAL AUTHORITY There are no significant or material orders passed by any regulator or court that would impact the going concern status of the Company and its future operations. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS The Company has not given any loans or guarantees or made investments in contravention of the provisions of the Section 186 of the Companies Act, 2013. The details of the loans and guarantees given and investments made by the Company are provided as under Loans: Rs. NIL Investments: Rs. NIL Guarantees/ securities: Rs. NIL RISK MANAGEMENT POLICY The Board of Directors of the Company has framed a risk management policy and is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. RELATED PARTY TRANSACTIONS Particulars of transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2,014 are given in Form AOC-2 and the same forms part of this report as Annexure VII. DISCLOSURE UNDER THE SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. CORPORATE GOVERNANCE REPORT As per SEBI circular no .CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014 the revised clause 49 is not mandatory to the Company. ACKNOWLEDGEMENT The directors thank the Company's employees, customers, vendors, investors and academic institutions for their continuous support. The directors also thank the government of various countries, government of India, the governments of various states in India and concerned government departments/agencies for their co-operation. The directors appreciate and value the contributions made by every member of the Hindustan Hardy Spicerfamily. For and on behalf of the Board S. C. SARAN CHAIRMAN Date : July.20,2015 Place : Mumbai |