DIRECTORS' REPORT DEAR MEMBERS, We hereby present Annual Report together with the audited accounts of our business and operations for the year ended March 31, 2015. RESULT OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS During the financial year, your Company reported total income of Rs 2,06,022 Lakhs in 2014-15 compared to Rs. 1,90,349 Lakhs in 2013-14. Your Company recorded an EBITDA of Rs. 27,675 Lakhs and a net loss of Rs. 23,704 Lakhs during the year under review. During the year, direct export turnover was Rs. 11,020.27 Lakhs compared to Rs. 11,482.68 Lakhs during the preceding year. Lower capacity utilization continues to impact the performance of the Company. During the financial year the Company continues to focus on cost optimisation initiatives which helped in containing inflationary impact to some extent. We expect with the revival in economy, the demand for container glass will also recover. During the current financial year your Company has once again given major thrust on implementation of various cost saving measures and your Directors are confident that the aforesaid initiatives will result in substantial improvement in the performance of the Company, some of the efforts are visible in power & fuel cost DIVIDEND & RESERVE Your Directors do not recommend any dividend for the year ended 2014-15. Further, during the year under review no amount was transferred to General Reserve. MERGER OF GLASS EQUIPMENT (INDIA) LTD. (GEIL) AND QIIALITY MINERALS LTD. (QML) INTO THE COMPANY Hon'ble Calcutta High Court has vide its Order dated March 31, 2015 approved the merger of Glass Equipment (India) Ltd. and Quality Minerals Ltd. into the Company. SUBSIDIARY COMPANIES As on March 31, 2015, your Company has only one subsidiary namely HNG Global GmbH. During the Financial Year GEIL and QML had merged with the Company and as result they are no longer subsidiaries of the Company. Inspite of tough competition and challenging environment HNG Global GmbH has registered sales of Rs. 25,777.17 Lakhs in the financial year 2014-15 compared to Rs. 29,575.90 Lakhs in the financial year 2013-14. EBITA was Rs. 6,949.86 Lakhs in the Financial year 2014-15 compare to Rs. 5,450.70 Lakhs in the financial year 2013-14. The Company has joint venture agreement with Trakya Cam Sanayi II AS in HNG Float Glass Ltd. Shareholders of the Company who are interested in obtaining annual accounts of the subsidiary company and related detailed information may write to the Company Secretary at the Registered Office of the Company. These documents are also available for inspection during business hours by the shareholders of the Company at the Registered Office. Consolidated Financial Statements of the Company and its subsidiary duly audited for the financial year ended March 31, 2015 forms part of the Annual Report of the Company. TRUST SHARES Pursuant to amalgamation of Ace Glass Containers Limited with the Company, 21,41,448* shares and 13,68,872* shares having face value of Rs.10 each (corresponding to 1,07,07,240 shares and 68,44,360 shares having face value of Rs. 2 each) were issued to HNG Trust and Ace Trust respectively. At present HNG Trust & Ace Trust are holding 77,97,240 & 68,44,360 shares respectively. In terms of an undertaking given to the BSE Limited, the Company is required to make disclosures pertaining to utilisation of proceeds of shares allotted to the said Trusts until they are extinguished. Entire Shareholding of ACE Trust and 76,62,490 Shares of HNG Trust has been pledged in favour of L&T Finance Ltd., Axis Bank Ltd., State Bank of India and Syndicate Bank, for the loan availed by the company. *The Company's shares were sub-divided from Rs. 10 per share to Rs. 2 per share w.e.f. November 13, 2009. DIRECTORS & KEY MANAGERIAL PERSONNEL During the year under review Shri Kishore Bhimani, Independent Director has resigned from the Directorship of the Company w.e.f February 11, 2015. The Board places on record its sincere gratitude for the guidance and support rendered by Shri Bhimani during his long tenure as Director of the Company. During the year under review members have appointed Shri Ratna Kumar Daga, Shri Dipankar Chatterji and Shri Sujit Bhattacharya as Independent Directors who are not liable to retire by rotation. The Members have also through postal ballot appointed Shri Sanjay Somany and Shri Mukul Somany as Vice Chairman and Managing Director of the Company for a further period of three years w.e.f April 1, 2015 and Shri Rakesh Kumar Sharma as an Executive Director for a further period of two years w.e.f. March 1, 2015. Smt. Rita Bhimani founder and CEO of Ritam Communication was appointed as Woman Independent Director of the Company w.e.f March 3, 2015. Necessary declaration has been received from her under the relevant provisions of the Companies Act, 2013 and requisite notices in writing from a member proposing appointment of Smt. Rita Bhimani as Woman Independent Director of the Company has also been received. The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. The performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. The following policies of the Company are attached herewith and marked as Annexure IA & IB : 1. Nomination & Remuneration Policy 2. Board Evaluation Policy. DIRECTORS' RESPONSIBILITY STATEMENT The Directors hereby confirm that : a) In the preparation of the annual accounts for the year ended March 31, 2015 the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same. b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company as at March 31, 2015 and of the loss of the Company for the year ended on that date. c) The Directors 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. d) The Directors have prepared the annual accounts on a 'going concern basis'. e) The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CORPORATE GOVERNANCE The Company has been practising the principles of good governance with a view to achieve transparent, accountable and fair management. The report on Corporate Governance along with the Certificate of the Auditors, M/s Lodha & Co., Chartered Accountants, confirming the compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES The contracts/arrangements/transactions entered by the Company during the financial year with the related parties were in the ordinary course of business and on an arm's length basis and those transactions which are not in ordinary course of business, approval of shareholders has been obtained in the previous annual general meeting. During the year the Company had not entered into any contract/arrangement/transactions with related parties which could be considered material 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 as approved by the Board may be accessed on the Company's website at the link: <http://www.hngil.com/report/policyonrelatedpartytransactions.pdf>. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Corporate Social Responsibility Committee has been formulated and comprises of Shri Sanjay Somany, Shri Mukul Somany and Smt. Rita Bhimani. The Committee recommended to the Board a Corporate Social Responsibility Policy indicating the activities to be undertaken by the Company. The aforesaid policy was approved by the Board on November 12, 2014. The CSR Policy may be accessed on the Company's website at the link <http://www.hngil.com/report/corporate> social responsibility policy.pdf. Since, Company has suffered losses in the previous financial years as well as in the current financial year no amount was spent on CSR activities. DEBT MANAGEMENT During the year under review, debt management exercise was undertaken by your Company. All the lenders except one Bank formed a Joint Lender Forum (JLF) and approved the Corrective Action Plan (CAP) to realign the existing banking facilities. The Company has approached the Lenders to realign the existing repayment and has received support from all except one banker. The Lenders finalised the CAP to give effect to the same. The support by the Lenders through CAP will enable the Company to focus on its operations and help it to revive quickly. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming a part of the Annual Report. OUTLOOK Indian economy is expected to grow marginally higher at 6.4% during the year 2015 as compared to 5.6% in 2014. The India's economy is on a cyclical upswing and forward-looking indicators suggest domestic demand is gathering momentum. Low inflation has enabled the Reserve Bank of India to cut interest rates by 50 basis points easing pressure on the private sector. Lower rates as well as the Government's Infrastructure and Disinvestment Programs is expected to provide a boost to domestic-oriented industries. Though, the glass industry is facing competition from alternative medium, the use of glass is of critical importance in the present day. With the increase in public awareness towards environment the use of glass is expected to increase in the near future. CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements have been prepared in accordance with the provisions of the Companies Act, 2013 and with Accounting Standard 21 read with Accounting Standard 23 issued by the Institute of Chartered Accountants of India and forms part of this Annual Report. RISK MANAGEMENT The Company manages and monitors the various risk and uncertainties that can have some adverse impact on the Company's business. Your Company is giving major thrust in developing and strengthening its internal audit so that risk threat can be mitigated. The Company has a formal Risk Management Policy. The Board of Directors from time to time review the same. INTERNAL FINANCIAL CONTROLS The Company has a comprehensive internal control system, including internal financial control, for all the major processes to ensure reliability of financial reporting, timely feedback on operational and strategic goals, compliance with policies, procedures, law and regulation, safeguarding of assets and economical and efficient use of resources. The Audit Committee of the Board of Directors of the Company actively review the adequacy and effectiveness of the Internal Control Systems and suggests improvements to them. The Company has a robust Management Information System (MIS), which is an integral part of the control mechanism. AUDITORS AND AUDITORS REPORT Statutory Auditors The Shareholders of the Company at the Annual General Meeting (AGM) held on 5th September, 2014, appointed Messrs Lodha & Co., Chartered Accountants, as Statutory Auditor of the Company from the conclusion of 68th AGM till the conclusion of 71st AGM of the Company subject to ratification by members at the every AGM & Messrs Singhi & Co., Chartered Accountants, as Branch Auditor of the Company from the conclusion of 68th AGM till the conclusion of 72nd AGM of the Company subject to ratification by members at the every AGM. Accordingly, appointment of Messrs Lodha & Co., as Statutory Auditor & Messrs Singhi & Co., as Branch Auditor is placed for ratification by shareholders at the ensuing AGM. Auditors Report The Auditors Report contains the following observations: As stated in Note no. 2.34.1 of the Financial Statements due to inadequacy of profit managerial remuneration to the extent of Rs. 944.63 lakhs (including Rs. 302.72 lakhs pertaining to previous year) for year 2014-15 , which due to inadequacy of profit exceeded the limits prescribed under the provisions of Companies Act, 2013 and Companies Act, 1956 respectively has become in excess of the limits laid down in the Companies Act, 1956 awaiting Central Government approval. Pending such approvals, impact thereof on the Financial Statements is not ascertainable. The Company has already made necessary application for obtaining Central Government approval. Secretarial Auditor The Board has appointed Mr. Babu Lal Patni, Practising Company Secretary to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit for the financial year ended March 31, 2015 is annexed herewith and marked as Annexure II to this report. The Secretarial Audit report does not contain any qualification, reservation or adverse remark. DISCLOSURES Audit Committee The Audit Committee comprise of all Independent Directors namely Shri Ratna Kumar Daga (Chairman), Shri Dipankar Chatterji, and Shri Sujit Bhattacharya as members. All the recommendations made by the Audit Committee were accepted by the Board. Vigil Mechanism The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreements is approved by the Board of Directors of the Company on May 20, 2014. Disclosures can be made by a Whistle Blower through an email to the Chairman of the Audit Committee. The Policy may be accessed on the Company's website at the link <http://www.hngil.com/report/> whistleblowerpolicy.pdf Meeting of the Board During the year 4 meetings of the Board of Directors were held. Details of compositions and other information's are provided in the Corporate Governance Report. Extract of Annual Return Extract of Annual Report in Form MGT-9 is provided separately as Annexure III and forms the part of Directors' Report. Particulars of Loans, Guarantees or Investment made guarantee given and securities provided Particulars of loans given investments made, guarantee 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 to note 2.18 to the standalone financial statement) GENERAL Fixed Deposits Your Company did not accept any deposits from the public covered under Chapter V of the Companies Act, 2013 during the financial year 2014-15. Issue of Shares During the year under review, your Company did not issue any equity shares with differential rights as to dividend, voting or otherwise or issue any sweat equity shares to employees of the Company under any scheme. Remuneration from Subsidiaries Neither of the Vice Chairmen and Managing Directors nor the Executive Director of the Company receive any remuneration or commission from its subsidiary. Significant or Material order No significant or material order was passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Material changes and commitments There have been no material changes and commitments affecting the financial position between the end of the financial year and the date of the report except the Merger of Glass Equipment (India) Ltd. (GEIL) and Quality Minerals Ltd. (QML) into the Company. Sexual Harassment During the year under review no case was filed pursuant to the Sexual Harassment of Women at Workplace (Prohibition and Redressal) Act, 2013. ANNUAL LISTING FEES The Company's shares continue to be listed at the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The annual listing fee for the year 2015-16 has been paid to all these exchanges. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of Section 197(12) of the Act read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014 a Statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set-out in the said Rule are provided as Annexure IV. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014 are provided in Annexure IV. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956 relevant amount which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund established by the Central Government. Pursuant to the provisions of Investor Education and Protection Fund (uploading of information regarding unpaid and unclaimed amount lying with companies), Rules, 2013 the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on the Ministry of Corporate Affairs website. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The statements containing the required particulars under the Act are provided as Annexure V and forms a part of this report. PERSONNEL AND INDUSTRIAL RELATIONS Your Company is consolidating the human resource operations and the internal systems to enhance the operations of the Company. The Human Resource team is very active as it recruits and retains the existing talent pool of the Company. It is continuously involved in manpower planning, forecasting and conducting regular workshops to enhance the skill sets. Cordial industrial relations resulted in efficient production at all the plants of your Company. ACKNOWLEDGEMENTS The Directors would like to express their sincere appreciation to the business associates for their support and contribution during the year under review. The Directors would also like to thank the Company's executives, staff and workers, shareholders, customers, suppliers, alliance partners and bankers for the continued support given by them to the Company and their confidence reposed in the management. For and on behalf of the Board, Chandra Kumar Somany (Chairman) DIN : 00124310 Place : Kolkata Date : May 28, 2015 |