DIRECTORS' REPORT The Directors are pleased to present the 21st Annual Report and Audited Statement of Accounts for the financial year ended 31st March, 2015 FINANCIAL PERFORMANCE Indian economy witnessed another challenging year with nil / negative economic growth in the Industries where we operate in the financial year 2014-15. The sluggishness in economy, policy inertia and lacklustre infrastructure projects have all impacted the Indian economy as well as your Company. Despite these tough conditions. Your Company delivered another year of steady performance. Your Company's gross turnover stood at Rs. 61,681 lacs in the year 2014-15, as compared to Rs. 64,252 lacs in the year 2013-14. The profit before depreciation, interest and tax stood at Rs. 3,215 lacs in in the year 2014-15, as against Rs. 3,080 lacs in theyear2013-14. The profit after tax is Rs. 675 lacs in the year 2014-15 as against Rs, 403 lacs in the previous year i.e. an increase of 67.50 %. Your company has taken several steps to reduce cost and increase its market share in all products. DIVIDEND Your Directors are pleased to recommend 10% Dividend per Equity share on the Paid up Equity Share Capital of the Company for the year 2014-15. Total dividend (including dividend tax) will absorb Rs. 238 lacs out of the profits available for the year 2014-15. The payment of dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. INCREASE IN SHARE CAPITAL Your Company has increased the Authorized Share Capital of the Company from Rs. 24,50,00,000/- (Rupees Twenty Four Crore Fifty Lacs) divided into 12,25,00,000 (Twelve Crore Twenty Five Lacs) Equity Shares of Rs. 21- (Rupees Two) each to Rs. 50,25,00,000/- (Rupees Fifty Crore Twenty Five Lacs Only) on 8th May, 2015 . The increased authorised share capital was restructured to 10,00,00,000 (Ten Crore) Equity Shares of Rs. II- (Rupees Two) each and 3,02,50,000 (Three Crore Two Lacs Fifty Thousand) 8% Redeemable Cumulative Preference Shares of Rs. 10/- (Rupees Ten) each to enable the Company to allot shares, once the scheme becomes effective after all approvals, as proposed in the Scheme of Amalgamation between ACE TC Rentals Private Limited and your Company filed with the Hon'ble High Court of Punjab and Haryana. CORPORATE DEVELOPMENT - MERGER ACE TC Rentals Private Limited is proposed to be merged with the Company with effect from April 1, 2014 pursuant to a scheme of amalgamation ("the scheme"). The scheme has been filed in the High Court for the States of Punjab and Haryana. Once the Scheme is approved and becomes effective, which is expected to be effective in this financial year, the Company will issue 1,84,90,500 equity shares of Rs 2 each fully paid up and 3,02,19,380 Cumulative Non-Particiapating Redeemable Preference shares of Rs 10 each to the members of ACETC Rentals Private Limited. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS Your Company has a wholly Owned Subsidiary and a Fellow Subsidiary, at the end of the current financial year ended on 31st March, 2015, namely: 1. Frested Limited, Cyprus-wholly Owned Subsidiary 2. SC Forma SA, Romania - Fellow Subsidiary During the year under report, the only wholly Owned Indian Subsidiary Company, "Action Developers Limited" [CIN U45200DL2008PLC177936] has opted for voluntary dissolution under Section 560 (5) of the Companies Act, 1956 under Fast track scheme vide SRN C32950198 dated 15/11/2014 and accordingly the name of "Action Developers Limited" is struck off in the records of Registrar of Companies and the said wholly Owned Indian Subsidiary Company stands dissolved. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies. In accordance with section 129(3) of the Companies Act, 2013 and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the Company has prepared consolidated financial statements of the Company and all its subsidiaries, which form part of this Annual Report. A report on the performance and financial performance of the Subsidary and Associate Companies as per Companies Act, 2013 is provided in the prescribed form AOC -1 alongwith the Consolidated Financial Statements and therefore not repeated here for the sake of brevity. The Policy for determining material subsidiaries may be accessed on the Company's website viz, www.ace-cranes.com The existing term of appointment of all the Independent Directors as mentioned in above table is upto the date of forthcoming Annual General Meeting (AGM) and are eligible and offer themselves for re-appointment as Independent Directors on the Board. The Company has received notices alongwith the requisite deposit from the members pursuant to Section 160(1) of the Companies Act, 2013 signifying their intention to propose their candidature for appointment as Director of the Company at the forthcoming AGM. The Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with Article 88 (1) of the Articles of Association of the Company Mrs. Mona Agarwal is liable to retire by rotation in ensuing Annual General Meeting and being eligible offer herself for re-appointment at the forthcoming AGM. Your Directors recommend for their re-appointment. None of the Directors of your Company is disqualified as per provisions of the Companies Act, 2013. KEY MANAGERIAL PERSONNEL: Pursuant to the Provisions of Section 203 of the Companies Act, 2013, Mr. Vijay Agarwal, Chairman & Managing Director, Mrs. Mona Agarwal, Mr. Sorab Agarwal & Mrs. Surbhi Garg, Whole Time Director Mr. Rajan Luthra, CFO and Mr. Neeraj Jain, Company Secretary were designated as Key Managerial Personnel of the Company. Subsequently, Mr. Neeraj Jain resigned w.e.f. 4th February 2015 . Mr. Radhey Shyam Jhanwer has been appointed as Head-Corporate Affairs & Company Secretary w.e.f. 5th February, 2015. COMMITTEES OF THE BOARD Detailed information on the Board and its Committees is provided in the Report on Corporate Governance forming part of this Annual Report. Board and Audit Committee Meetings Audit Committee As at March 31, 2015, the Audit Committee comprised of three Independent Directors namely, Mr Subhash Chander Verma, Dr. Amar Singal & Mr Girish Narain Mehra and one Non-independent Director namely, Mr Vijay Agarwal. All the recommendations made by the Audit Committee were accepted by the Board. Nomination and Remuneration Committee As at March 31, 2015, the Nomination and Remuneration Committee comprised of three Independent Directors namely, Dr Amar Singal, Mr. Girish Narain Mehra and Mr Subhash ChanderVerma. Corporate Socal Responsibility Committee (CSR Committee) As at March 31, 2015, CSR Committee comprised of two Independent Directors namely, Dr Amar Singal & Maj. Gen. (Retd.) Dr Keshav Chandra Agrawal and one Non-independent Director namely, Mrs. Mona Agarwal. Stakeholders Relationship Committee As at March 31, 2015, Stakeholders Relationship Committee comprised of two Independent Directors namely, Dr Amar Singal & Mr. Subhash Chander Verma and one Non-independent Director namely, Mr. Sorab Agarwal. NUMBER OF MEETINGS During the year ended 31st March, 2015, five meetings of the Board were held. During the year ended 31st March, 2015, five meetings of the Audit Committee were held. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134 of the Companies Act, 2013, your Directors hereby confirm that they: I) have followed in the preparation of Annual Accounts for the financial year 2014-15, the applicable Accounting Standards and no material departures have been made forthe same;. II) had 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 as at 31st March, 2015 and of the profit of the Company for the year ended on that date; III) had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; IV) had prepared the annual accounts on a going concern basis. V) 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. VI) 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. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis for the year as stipulated under Clause 49 of the Listing Agreement is separately given and forms part of this Annual Report provides a more detailed analysis on the performance of individual businesses and their outlook. REPORT ON CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of Corporate Governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of Corporate Governance is attached to the Report on Corporate Governance. RELATED PARTY TRANSACTIONS All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm's length basis and in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction. All Related Party Transactions are placed before the Audit Committee for approval. The policy on Related Party Transactions as approved by the Board is available on website of the Company viz, www.ace-cranes.com Details of Related Party Transactions are given at Note No. 27((B)(8)(e)to the Standalone Financial Statements. None of the Directors of the Company has any pecuniary relationships or transactions vis-a-vis the Company. CORPORATE SOCIAL RESPONSIBILITY The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available at the website of the Company viz, www.ace-cranes.com The Annual Report on CSR Activities, as stipulated under the Act and the Listing Agreement forms an integral part of this Report and is appended as Annexure-I RISK MANAGEMENT The Company has implemented a comprehensive and fully integrated 'Enterprise Risk Management' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives. The Company has introduced several improvements to Enterprise Risk Management and processes to drive a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management, Internal Audit, Legal and compliance methodologies and processes in order to maximise enterprise value of the Company and ensure high value creation for our stakeholders overa period of time. The details of the Enterprise Risk Management framework with details of the principal risks and the plans to mitigate the same are given in the 'Risk Management Report' section of the 'Management Discussion and Analysis Report' which forms part of thisAnnual Report. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. Such controls were tested during the financial year and no material weaknesses in the design or operation were observed. Review of the financial controls is done on an ongoing basis. POLICIES WHISTLE BLOWER POLICY/VIGIL MECHANISM The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, employees and other stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Policy provides that the Company investigates such incidents, when reported, in an impartial manner and takes appropriate action. The WB Policy also provides mechanism for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy has been posted on the website of the Company and the details of the same are explained in the Report on Corporate Governance forming part of this Annual Report. The Whistle Blower Policy is available at the website of the Company viz, www.ace-cranes.com PREVENTION OF SEXUAL HARRASSMENT POLICY The Company has a Prevention of Sexual Harassment Policy in force in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees will deliver their best without any inhibition, threat or fear. The Company has Zero tolerance to any form of harassment especially if it is sexual in nature. No Complaints were received during the year. REMUNERATION POLICY The Board, on the recommendation of the Nomination & Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and Other Employees of the Company. The Remuneration Policy for Non-Executive Directors, Key Managerial Personnel and Other employees of the Company is provided as Annexure-ll to this Report. RESEARCH AND DEVELOPMENT Your Company continues to invest in a comprehensive Research & Development (R&D) programme to develop a unique source of sustainable competitive advantage and build future readiness by leveraging contemporary advances in several relevant areas of science and technology and blending the same with classical concepts of product development. The Company has dedicated R&D centres at Jajru Road, Faridabad and at Dudhola Link Road, Dudhola Village, Palwal. Both these centres have accreditations from the Ministry of Science and Technology, Govt, of India. Both the centres continuously carries out Research and Developments for developing new products and also focus on the quality of products, making them more economical, cost effective and user-friendly. AUDITORS AND AUDITORS' REPORT M/s. Rajan Chhabra & Co., Chartered Accountants, were appointed as the Statutory Auditors of the Company at 20th Annual General Meeting of the Company to hold the office for the three consecutive years subject to ratification at every Annual General Meeting. Your Company has received confirmation from the above mentioned firm regarding consent and eligibility under section(s) 139 & 141 of the Company Act, 2013, read with Company (Accounts) Rules, 2014 for ratification of appointment as the Statuary Auditors of the Company. As required under clause 41 of the listing agreement, the auditor has also confirmed that they hold a valid certificate issued by the Institute of Chartered Accountants of India. The Audit Committee and the Board of Directors recommended the ratifications of the appointment of the M/s. Rajan Chhabra & Co., Chartered Accountants, as the Auditor of your Company for financial year2015-16 till the conclusion of next AGM, at a remuneration to be decided by the Audit Committee of the Board of Directors. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not require any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. COST AUDITORS The Central Government has made it mandatory for the Company to conduct a cost audit and accordingly, your Directors have appointed M/s Vandana Bansal & Associates, Cost Accountants as the Cost Auditors to conduct the Cost Auditfortheyear 2015-16. SECRETARIAL AUDITOR The Board has appointed M/s. MZ & Associates, Company Secretaries to conduct the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is annexed to this Report as Annexure III. There is no qualification, reservation or adverse remark(s) in the Secretarial Audit Report. DISCLOSURES: EMPLOYEES The total number of permanent employees as on 31st March, 2015 stood at 975 as compared to 906 as on March 31,2014. PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES: 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) Rules, 2014 form part of this Report and are annexed as Annexure IV. There are no employees who are drawing remuneration in excess of the limits as set out in provisions of Section 197(12) of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. PUBLIC DEPOSITS During the year, your Company has not accepted any deposits under Section 73 of the Companies Act, 2013 (herein after referred to as the "Act") and as such, no amount on account of principal or interest on public deposits was outstanding as of March31,2015. PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES Details of loans, investments, guarantees and securities provided as covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the standalone financial statements. EMPLOYEES STOCK OPTION SCHEME During the year under review, the Company has not allotted any shares under Employee Stock Option Scheme (ESOS) and hence no disclosure is required to be made in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Regulations, 1999. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information pursuant to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under the Companies Act, 2013 is annexed as Annexure-Vand forms part of this report. EXTRACT OF ANNUAL RETURN Extract of the Annual Return in Form MGT- 9 is annexed herewith as Annexure-VI and forms part of this report. THE FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company viz, www.ace-cranes.com FORMAL ANNUAL PERFORMANCE EVALUATION OF THE BOARD AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their separate meeting, without participation of the Non- independent Directors and Management have considered and evaluated the Board's performance and performance of the Chairman and Non-independent Directors. The Independent Directors in the said meeting have also assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board. The Board of Directors has evaluated the performance of each of Independent Directors (without participation of the relevant Director). The Board has carried out the annual evaluation of its own performance and that of its Directors individually. The evaluation criteria as approved by the Nomination and Remuneration Committee included various aspects of the functioning of Board such as composition, process and procedures including adequate and timely information, attendance, decision making, roles and responsibilities etc. The performance of individual directors including the Chairman was evaluated on various parameters such as industry knowledge & experience, vision, commitment, time devoted etc. The evaluation of Independent Directors was based on aspects like participation & contribution to the Board decisions, knowledge, experience, integrity etc. General Your Directors state that no disclosure or reporting in respect of the following matters are made in the Directors' Report as there were no transactions on the se matters in the financial year 2014-15. 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. The Managing Director and the Whole-time Directors does not receive any remuneration or commission from any of its subsidiaries. 3. No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and the company's operations in future. ACKNOWLEDGEMENTS The Directors wish to place on record their sincere appreciation for the support and co-operation extended by all the customers, vendors. Dealers and business associates. The Company also expresses its gratitude to the Government authorities and the Company's Bankers for all the help and encouragement, they extend to the Company. The Board places on record its appreciation to all the employees for their dedicated and committed services. Your Directors deeply acknowledge the continued trust and confidence that the Shareholder place in the management and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years. For and on behalf of the Board of Action Construction Equipment Limited Vijay Agarwal Chairman & Managing Director Place: New Delhi Dated: 30th May, 2015 |