DIRECTORS’ REPORT Your Directors have pleasure in submitting this 55th ANNUAL REPORT together with the Audited Accounts for the year ended 31st March, 2016. PERFORMANCE : The 130 TPD tonnage plant at Kalwe has worked satisfactorily but is still not utilized to its full capacity due to less demand of our captive customer M/s. Mukand Limited. The Plants at other locations are working satisfactorily but with less demand from our liquid customers. During the year under review, sales were Rs. 17,55,29,042/- as against Rs. 17,29,29,027/- for the previous year. Profit before Depreciation and Tax during the year is Rs. 2,48,00,132/- as against Rs. 13,98,69,378/- in the previous year. DIVIDEND : Your Directors recommend payment of a dividend of Rs. 10/- (Previous year Rs. 10/-) per equity share. The proposed dividend, if approved, at the Annual General Meeting, will absorb Rs. 18,05,364/- including Dividend Distribution Tax (Previous years Rs. 17,54,925/-) DIRECTORS : Your Director, Mr. Shyam M. Ruia retires this year by rotation in accordance with the Articles of Association of the Company but being eligible offers himself for re-appointment. All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO : Particulars required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, are annexed herewith as “Annexure A”. GENERAL : The assets of the Company are adequately insured. CORPORATE GOVERNANCE : Report on Corporate Governance along with the certificate of the Auditors M/s. S G C O & Co., confirming the compliance of the conditions of Corporate Governance, is annexed with this report. MANAGEMENT DISCUSSION AND ANALYSIS : (i) Industry Structure and developments : The substantial excess capacity of industrial gases continues to exist during the year. Due to lower demand most of the large tonnage plants are underutilized. This has led to immense pressure on margins and future development plan of the Company. (ii) Opportunities, Threats, Risks and Concerns : Due to inadequate growth in the gas consuming industries, the demand of gases is adversely affected. The cost of production and logistics costs have been continually increasing with no corresponding increase in the sale price thus affecting our profitability. (iii) Segment-wise product-wise performance : The Company is primarily engaged in the manufacturing and sale of industrial gases, viz, Oxygen, Nitrogen, Argon only. Dissolved Acetylene is outsourced by the Company. (iv) Outlook : The manufacturing sector of the national economy is although slowly picking up but the demand of gases still continue to be sluggish. It is therefore difficult to forecast the demand of gases. We are continuing to explore markets such as pharmaceuticals, refineries, glass, food process, chemical etc. we are also trying to increase our presence in health care through supply of liquid and gaseous medical oxygen. (v) Internal Control Systems and their adequacy : The Senior Management periodically reviews factors and issues that influence the Company’s business and takes appropriate decisions to ensure that the Company’s interest and that of the stakeholders is protected. The Company has an inbuilt system of internal checks and controls. The Audit Committee of the Board of Directors reviews the Internal Controls and matters connected there-with. (vii) Material developments in Human Resources/Industry relations front, including number of people employed : The Company continues to give utmost importance to Human Resources Development and keeps relations normal. (viii) Cautionary Statement : Company’s projections and estimates will vary from actual results, which depend on a variety of factors over which the Company does not have any control. DIRECTORS’ RESPONSIBILITY STATEMENT : Your Directors make the following statement in terms of section 134(3) (c) of the Companies Act, 2013 and declare : (i) that in the preparation of the annual accounts, all applicable accounting standards have been followed; (ii) that the Directors 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 working of the Company for the year; (iii) that the Directors have taken proper and sufficient care for maintenance of adequate accounting records, in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis; (v) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; (vi) that systems to ensure compliance with the provisions of all applicable laws were in place, adequate and operating effectively. MEETINGS : During the year six Board Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. AUDITORS : M/s. S G C O & Co., Chartered Accountants, having Registration No. 112081W, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. They have confirmed their eligibility under section 141 of the Companies Act, 2013. The auditors have also confirmed that they hold a valid Certificate issued by the Peer Review Board of the Institutes of Chartered Accountants of India. SECRETARIAL AUDIT : The Secretarial Audit Report under section 204 of the Companies Act, 2013 has been obtained from M/s. Sanjay Dholakia & Associates – Practicing Company Secretary, for the year under review and the same is annexed herewith as “Annexure B”. SUPREME COURT ORDER IN RESPECT OF 75001 EQUITY SHARES : As a result of the Order of the Supreme Court dated 19th April, 2016, the legal rights acquired by Messer Griesheim GmbH (MGG) in 45001 shares purchased from Ruias should revert to the Ruias. Similarly 30000 shares acquired by MGG from public pursuant to the Takeover Code of Securities & Exchange Board of India (SEBI) should also be registered in favour of the Ruias. If either Goyal Gases Ltd. or Messer Holdings Ltd. has any claim over those shares, such a claim must be made and established by them in accordance with law viz. in suit No. 2410 of dated 23rd April, 2008 in the Bombay High Court and not in suits filed by Ruias. RELATED PARTY TRANSACTIONS : There were no material transactions with any of the related parties, during the year under review. SUBSIDIARY COMPANIES : Company does not have any subsidiary. EXTRACT OF ANNUAL RETURN : The details forming part of the extract of the Annual Return in form MGT 9 are annexed herewith as “Annexure C”. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE : The Company has constituted a Corporate Social Responsibility Committee pursuant to section 135 of the Companies Act, 2013. Report on Corporate Social Responsibility is annexed herewith as “Annexure D”. NOMINATION AND REMUNERATION COMMITTEE : The Company has a Nomination and Remuneration Committee pursuant to Section 178(1) of the Companies Act, 2013 for the appointment and payment of remuneration to the Directors and Key Managerial Personnel of the Company. WHISTLE BLOWER POLICY : The Company has a Whistle Blower Policy to deal with instances of fraud and mismanagement and the policy is uploaded on the website of the Company. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 : Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14, the internal committee constituted under the said act has confirmed that no complaint/case has been filed/pending with the Company during the year. ADEQUACY OF INTERNAL FINANCIAL CONTROL : The Company’s internal financial control systems are commensurate with the nature, size, and complexity of its business and operations. These are routinely tested and certified by Statutory as well as Internal Auditors. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS : The Company conducts familiarization program of the Independent Directors as detailed in the Corporate Governance Report which forms part of the Annual Report. BOARD EVALUATION : Pursuant to the provisions of the Companies Act, 2013 and regulation 17 of Listing Regulations, the Board has carried out annual performance evaluation of its own performance, the Directors individually as well the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders’ Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. On behalf of the Board S. M. RUIA Chairman Mumbai, 9th May, 2016 |