DIRECTORS' REPORT To, The Members, 1.0 The Directors take pleasure in presenting the Sixty Third Annual Report of the Company and the Audited Statements of Accounts for the financial year ended 31st March, 2016. 2.0 DIVIDEND AND RESERVES 2.1 The Board of Directors is pleased to recommend a Dividend of 50% (i.e. @ Rs. 5/- per Equity Share) for the Financial Year (FY) 2015-16, subject to the approval of the Members. Dividend for the previous FY 2014-15 was declared @ 50% (i.e. @ Rs. 5/- per Equity Share)*. 2.2 The Dividend for FY 2015-16 shall be paid to those Shareholders and Beneficial Owners whose names appear in the Register of Members as on the date of the Book Closure for dividend payment. 2.3 The Board recommends transfer of Rs. 227 Lacs (Rs. 324 Lacs)* to General Reserve, and the balance of Rs. 6,491 Lacs (Rs. 5,271 Lacs)* for retention in the Profit & Loss Account. (*Figures in brackets indicate previous year). 3.0 OPERATIONS In FY 2015-16, the total Sales and Other Income went up by 5.13%. The year ended with Sales and Other Income of Rs. 41,239 Lacs (Rs. 39,225 Lacs)*. The Company's Sales and Other Income during FY 2015-16 comprised of the following: 3.1 Welding Consumables at Rs. 27,470 Lacs (Rs. 27,354 Lacs)* recorded a marginal growth of 1% over the previous year. 3.2 Equipment & Project Engineering at Rs. 13,213 Lacs (Rs. 11,306 Lacs)* was higher by around 17% over the previous year, due to better performance of Project Engineering division. 3.3 Other Income of Rs. 556 Lacs mainly comprised of forex gain, interest, rent income and profit on sale of investment etc. (Rs. 565 Lacs)*. (*Figures in brackets indicate previous year). 4.0 CAPEX The Company incurred CAPEX of Rs. 1,527 Lacs and CAPEX of Rs. 136 Lacs was in various stages of progress as of 31st March 2016. The balance CAPEX programme of FY 2015-16 shall be completed by end of June 201 6. For FY 2016-17, CAPEX is budgeted at Rs.1,646 Lacs, mainly for the following- (a) Automation at Consumables and Equipment Plants. (b) Production Equipments to balance lines for achieving capacity levels. (c) Production related Equipment to improve "in-process quality and deviation control". (d) Analytical Instruments for R&D. (e) IT Compliances. 5.0 SUBSIDIARY COMPANIES 5.1 Ador Welding Academy Pvt. Ltd. (AWAPL) AWAPL, a Wholly Owned Subsidiary of the Company, focuses on creating a pool of skilled welding technicians to serve a cross-section of industries in the infrastructure sector and also renders consulting to corporates on setting up / improving their welding processes. AWAPL registered a total revenue of Rs. 1 58 Lacs (Rs. 1 31 Lacs)*, with a net loss (before exceptional and extraordinary items and tax) of Rs. 24 Lacs (Rs. 53 Lacs)*. (*Figures in brackets indicate previous year). 5.2 Plasma Laser Technologies Ltd. (PLT) During FY 2013-14, the Company had recognised diminution in the value of its investment in PLT and had fully provided for the same in the financial accounts. In FY 2014-15, a Petition for liquidation of PLT was filed by the employees of PLT with the District Court sitting in Nazareth, Israel. In view of this & orders of District Court of Nazareth, the authority to operate & manage PLT vests with the Court. The due process of law for liquidation is in progress. Your Company does not foresee any further liability to devolve on it. 6.0 CONSOLIDATED FINANCIAL STATEMENTS The Consolidated financial statements relate to Ador Welding Ltd. and its wholly owned subsidiary, Ador Welding Academy Private Ltd. These consolidated financial statements are prepared in compliance with all the applicable Accounting Standards. The standalone financial statements of AWAPL are posted onto the website of the Company at the below weblink: <http://www.adorwelding.com/images/pdf/> key_financials/2016/financial-ftatementsf-for-fy-2015-16.pdf and hence the same are not annexed with this 63rd Annual Report. The Annual Accounts and other related information of the said Subsidiary Company will also be made available to the shareholders of the Holding Company. The Annual Accounts of the Subsidiary Company are available for inspection by the shareholders at the registered office of the Company and your Company shall furnish a physical copy of the detailed accounts of subsidiary to any shareholder of AWL, on request. 7.0 RISK MANAGEMENT Your Company has formulated an Enterprise Risk Management (ERM) framework, to manage various financial & non-financial risks, amongst other things. The Company has also adopted the ERM Policy, which helps to continuously assess & monitor the risks assumed by the Company. The processes are in place for identifying, evaluating and managing the risks. Based on the ERM Policy, the Board further states that there are no elements of risks, which threaten the existence of the Company. 8.0 RELATED PARTY TRANSACTIONS The Policy on Related Party Transactions is approved by the Board of Directors and the same is uploaded on the Company's website: <http://www.adorwelding.com/images/pdf/> corporate_policies/RPT_policy.pdf During FY 2015-16, the Company entered into certain Related Party Transactions, in the ordinary course of business and on arms length basis, with the prior approval of the Audit Committee. The Audit Committee grants omnibus approval alongwith the Annual Budget for the transactions with the related parties, which are foreseen & repetitive in nature. A detailed summary of Related Party Transactions vis-a-vis the omnibus approval, is placed before the Audit Committee & the Board of Directors for their review on a quarterly basis. There are no materially significant Related Party Transactions executed between the Company & its Promoters, Directors, Key Managerial Personnel or other designated persons, that may have a potential conflict with the interest of the Company at large. None of the Directors have any pecuniary relationships or transactions vis-a-vis the Company. 9.0 EXTRACT OF ANNUAL RETURN Pursuant to Section 92(3) and 134(3)(a) of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return is appended hereto as Annexure - I, and forms part of this Report. 10.0 CORPORATE SOCIAL RESPONSIBILITY (CSR) As part of our CSR initiatives, the Company spent Rs. 18.20 Lacs during FY 2015-16 out of the budgeted CSR expenditure of Rs. 46.64 Lacs, on various projects in the following areas: • Promoting education among children, women and underprivileged, including special education & employment enhancing vocation skills, especially skill development. • Promoting sanitation, hygiene and making available safe drinking water or means for the same, to the underprivileged. The above projects are in accordance with Schedule VII to the Companies Act, 2013. The unspent amount of Rs.28.44 Lacs was budgeted towards the following projects, which were under consideration as of 31st March, 2016: 1. Setting up vocational training facilities / centres in Pimpri, Chakan & Murud. 2. River clean up project in Pune. The Annual Report on CSR activities is annexed hereto as Annexure - II. The composition of the CSR Committee is covered under the Corporate Governance Report, which is annexed to this Report as Annexure - IV. 11.0 LOANS & GUARANTEES The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 12.0 FIXED DEPOSITS The Company has neither accepted nor renewed Fixed Deposits during FY 2015-16 and FY 2014-15. 13.0 INSURANCE The properties / assets of the Company are adequately insured. 14.0 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE The information required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption & foreign exchange earnings / outgo is appended hereto as Annexure - III. 15.0 CORPORATE GOVERNANCE As per the Listing Agreements executed with the Stock Exchanges, the Company has been following the Corporate Governance Code from FY 2001-02 onwards. The Company has complied with all the requirements of the Corporate Governance as per the provisions of Clause 49 of the Listing Agreement executed with the Stock Exchanges for the period 01st April, 2015 to 30th November, 2015 and of the Regulation 27(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the period 01st December, 201 5 to 31 st March, 201 6 and a separate Report is attached hereto as Annexure - IV. The Corporate Governance Compliance Certificate received from M/s. Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, is also attached to this Report. The Management Discussion and Analysis Report, as mandated under the Code of Corporate Governance, is also attached to this Report as Annexure - V. 16.0 SIGNIFICANT AND MATERIAL ORDERS During FY 2015-16, there were no significant orders passed against the Company by the regulators or courts or tribunals, impacting the going concern status and the Company's operations in future. 17.0 NOMINATION & REMUNERATION POLICIES As required under the provisions of Section 178(3) of the Companies Act, 2013, the Company has adopted the policies for Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, etc. The details of the Remuneration Policy for Directors are explained in the Corporate Governance Report attached hereto as Annexure - IV. 18.0 INDEPENDENT DIRECTORS All the Independent Directors of the Company have submitted declaration of their independence, as required under Section 149 (6) of the Companies Act, 2013. 19.0 DIRECTORS AND KEY MANAGERIAL PERSONNEL 19.1 Mr. Aditya T. Malkani (DIN: 01585637) and Mr. Deep A. Lalvani (DIN: 01771000), Directors of the Company, retire by rotation, as per the Articles of Association of the Company and are eligible for re-appointment. The Board of Directors, pursuant to Section 152 of the Companies Act, 2013 & Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014, has received Form MBP-1 and Consent to act as a Director in Form DIR-2, from M/s. Aditya T. Malkani & Deep A. Lalvani. 1 9.2 Necessary Resolutions for the re-appointment of the aforesaid Directors have been included in the Notice convening the ensuing AGM and details of the proposed appointees are mentioned in the Appendix to the Explanatory Statement to the Notice. 19.3 The Board of Directors of the Company at its Meeting held on 07th May, 2015 re-designated Mrs. N. Malkani Nagpal (DIN: 00031985) as the Whole-time Director, for a period of 3 years and the same was approved by the Members at the 62nd Annual General Meeting. 19.4 During FY 2015-16, Mr. Sanjay Hede, CFO tendered his resignation and was relieved from the services of the Company on & w.e.f. 29th May, 2015. The Board of Directors appointed Mr. Girish A. Patkar as the CFO of the Company w.e.f. 29th October, 2015. 20.0 DIRECTORS PERFORMANCE EVALUATION The Company has conducted a formal annual performance evaluation, by the Board of its own performance & that of its committees and individual Directors, including the Executive Chairman & the Independent Directors. The detailed manner of evaluation has been explained in the Corporate Governance Report in Annexure - IV. 21.0 DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 1 34(3)(c) & 1 34(5) of the Companies Act, 2013, the Board of Directors of the Company hereby confirm that: a)in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed, alongwith proper explanation relating to material departures, if any; b) 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 & fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing & 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 & were operating effectively, and f) the Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and that such systems were adequate & operating effectively. 22.0 AUDIT COMMITTEE AND ITS RECOMMENDATIONS The composition of the Audit Committee is covered under the Corporate Governance Report, which is annexed to this Report as Annexure - IV. The Board has accepted all the recommendations of the Audit Committee and hence there is no further explanation to be provided for in this Report. 23.0 NUMBER OF BOARD MEETINGS The Company has conducted 4 (four) Board meetings during FY 2015-16 and the details thereof are covered under the Corporate Governance Report, which is annexed to this Report as Annexure - IV. 24.0 STATUTORY AUDITORS At the last Annual General Meeting held on 30th July, 2015, M/s. Walker Chandiok & Co. LLP Chartered Accountants, (FRN: 001076N/ N500013) were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting, to be held in the calendar year 2019. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every subsequent Annual General Meeting since their first appointment. Accordingly, the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. 25.0 STATUTORY AUDITOR'S REPORT There are no qualifications in the Auditor's Report & therefore there are no further explanations to be provided for in this Report. 26.0 SECRETARIAL AUDITOR & ITS REPORT The Board of Directors had appointed M/s. N. L. Bhatia & Associates, (Unique Identification Number: S1996MH016600), a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company for FY 2015-16. The Secretarial Audit Report is annexed herewith as Annexure - VI. There are no qualifications in the said Report and therefore there are no further explanations to be provided for in this Report. 27.0 COST AUDITOR Pursuant to the provisions of Section 148 of the Companies Act, 2013, the Board of Directors had appointed Mr. Vishvesh Desai, Cost Accountant, Pune, as the Cost Auditor of the Company for FY 2015-16. The brief information of the Cost Auditor and the Cost Audit Report is as under: 27.1 Name of the Cost Auditor: CMA Vishvesh Desai 27.2 Address: 10, Prabhakarsmruti CHS Ltd., 4th Lane, Dahanukar Colony, Kothrud, Pune - 411 029, Maharashtra, India. 27.3 Membership No.: F-7330 27.4 Firm Regn. No. : 102151 27.5 Due date for filing Cost Audit Report (XBRL) for FY 2014-15 by the Cost Auditor with the Central Government: Within 180 days from the end of the financial year. 27.6 Actual Date of filing of Cost Audit Report for FY 2014-15 with the Central Government: 16th September, 2015 The Company has appointed M/s. Kishore Bhatia & Associates, Cost Accountants, Mumbai (Firm Registration No. 00294) as the Cost Auditors for FY 2016-17. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor for FY 2016-17, is placed before the Members at the ensuing Annual General Meeting, for ratification. Accordingly, a Resolution seeking Members' ratification for the remuneration payable to M/s. Kishore Bhatia & Associates, Cost Auditors is included at Item No. 6 of the Notice convening the Annual General Meeting. 28.0 VIGIL MECHANISM & WHISTLE BLOWER POLICY The Company has framed a policy on Vigil Mechanism-cum-Whistle Blower, which enables any Director / employee of the Company to report their genuine concerns / instances of any unethical / improper activity, directly to the Chairman of the Audit Committee, as a Protected Disclosure. The detailed policy is also posted on the Company's intranet Portal SANVAD and onto its website <http://www>. adorwelding.com/images/pdf/corporate_ policies/whistle_Blower_cum_Vigil_Mechanism_ Policy.pdf 29.0 PREVENTION OF SEXUAL HARASSMENT POLICY The Company has adopted a policy under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During FY 2015-16 the Company reconstituted the Committee, as required under the Act & Rules made thereunder and has carried out awareness programs. No complaints were received by the Committee during FY 2015-16. 30.0 EMPLOYEES 30.1 The industrial relations at all the Plants and Offices of the Company continue to remain harmonious, cordial and peaceful. 30.2 The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company, is annexed herewith as Annexure - VII. 30.3 The manpower strength of the Company as at the date of this Report is 616. 31.0 ACKNOWLEDGEMENT Your Directors take this opportunity to place on record their warm appreciation for the invaluable contribution and spirit of dedication shown by the employees at all levels during FY 2015-16. The Directors also express their deep gratitude for the business assistance, co-operation and support extended to your Company by its Customers, Distributors, Dealers, Suppliers, Service Providers, Bankers, various Government Organisations / Agencies & Shareholders and look forward to their continued support and co-operation in future also. For and on behalf of the Board Aruna B. Advani Executive Chairman (DIN: 00029256) Place: Mumbai Date: 10th May, 2016 |