The Directors are pleased to present the 78th Annual Report of the Company, together with the audited financial statements for the financial year ended 31 March 2017. This Report states compliance as per the requirement of the Companies Act, 2013 (“the Act”), the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and other rules & regulations as applicable to the Company.
The highlights of the Standalone Financial Results are as under:
(Amount: Rs. in crore, except for EPS)
Revenue from Operations & Other Income
Gross Profit before Finance Cost and Depreciation
Less: Finance Cost
Profit/(Loss) before Taxes
Less: Provision for Tax expenses
Profit/(Loss) after Tax
Less : Other Comprehensive Income
Add: Balance in Profit & Loss Account
Balance available for appropriation
Amount transferred to General Reserves
Earnings per share (?) Basic
Earnings per share (?) Diluted
The highlights of the Consolidated Financial Results are as under:
(Amount: Rs. in crore, except for EPS)
Revenue from Operations & Other Income
Profit before Taxes
Profit/(Loss) from associates after Taxes
Profit/(Loss) before Taxes
Less: Provision for Taxation
Profit/(Loss) after Tax
Earnings per share (Rs.) Basic
Earnings per share (Rs.) Diluted
The financial results of the Company are elaborated in the Management Discussion and Analysis Report.
Your Directors are pleased to recommend a dividend of 140% (Rs. 2.80) on 101290176 equity shares of Rs. 2 each for the financial year 2016-17. The amount of dividend and the tax thereon aggregate to Rs.34.13 crore (previous year Rs.34.02 crore). The dividend on equity shares, subject to the approval of the Members at the Annual General Meeting on 3 August 2017, will be paid on or after 10 August 2017 to the members whose names appear in the Register of Members as of the close of business hours on 28 July 2017; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as of the close of business hours on that date.
Shares that may be allotted on exercise of stock options granted under the Employee Stock Option Scheme before the book closure date for payment of dividend will rank pari-passu with the existing shares and be entitled to receive the dividend.
Dividend Distribution Policy
As per Regulation 43A of the Listing Regulations, the top 500 listed companies shall formulate a dividend distribution policy. Accordingly, the policy was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or for retaining profits earned by the Company. The policy is available on the Company’s website: www.baiaielectricals.com.
CHANGES IN SHARE CAPITAL
The paid-up equity share capital of the Company as on 31 March 2017 was Rs.20.26 crore. There was no public issue, rights issue, bonus issue, preferential issue, etc. made by the Company during the year. The Company has not issued shares with differential voting rights. The increase in number of shares is due to the issue of 341200 equity shares of Rs.2 each to the employees upon their exercise of stock options. These shares were included, on weighted average basis, for the computation of EPS.
No disclosure is required under Section 67(3)(c) of the Act, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said Section are not applicable.
The equity shares of the Company continue to remain listed on BSE Limited and National Stock Exchange of India Limited. The stipulated listing fees for FY 2017-18 have been paid to both the stock exchanges.
The Company’s cash and cash equivalent as at 31 March 2017 was Rs.25.08 crore. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.
The below table depicts Company’s credit ratings profile in a nutshell:
[ICRA]A (pronounced ICRA A plus)
Commercial Paper (CP)
[ICRA]A1 (pronounced ICRA A one plus)
Line of Credit (LOC)
Short Term Rating - [ICRA] A1 (pronounced ICRAAone)
Long Term Rating - [ICRA] A (pronounced ICRA A)
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Act and the Rules framed there under.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the financial statements annexed to the Report.
During FY 2013-14, the Company had issued 1000 Secured Rated Listed Redeemable Non-Convertible Debentures (NCDs) of Rs.10,00,000/- each, aggregating to Rs.100.00 crore, on private placement basis, in two series, Series - 1 of 400 NCDs & Series - 2 of 600 NCDs, which were listed on National Stock Exchange of India Limited (NSE) under ISIN ‘INE193E07014’ and ‘INE193E07022’, respectively. The said Series - 1 and Series - 2 NCDs were redeemed on their respective due dates for redemption on 28 April 2016 and 24 April 2017.
Axis Trustee Services Limited was the Debenture Trustee for the debenture holders, whose details are provided in the Corporate Governance section of the Annual Report. Further, pursuant to Regulation 53 of the Listing Regulations, disclosures in compliance with the Accounting Standard on “Related Party Disclosures” are given in the notes to the financial statements annexed to the Report.
EMPLOYEES STOCK OPTION SCHEME
The Company implemented the Employees Stock Option Scheme (“Scheme”) in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘the SEBI SBEB Regulations’) as a measure to reward and motivate employees as also to attract and retain the talent.
Disclosures pertaining to the Scheme of the Company pursuant to the SEBI SBEB Regulations are placed on the Company’s website: www.baiaielectricals.com. The details of options vested, exercised and cancelled are provided in the notes to the standalone financial statements. No employee has been issued stock options, during the year, equal to or exceeding 1% of the issued capital of the Company at the time of grant.
During the year under review, 507500 stock options were granted to the eligible employees at the market price prevailing on National Stock Exchange of India Limited (NSE) as on the date of their grant. The issuance of equity shares pursuant to exercise of stock options granted under Growth Plan does not affect the profit and loss account of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable.
The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI SBEB Regulations and the resolutions passed by the shareholders. The certificate would be placed at the Annual General Meeting for the inspection by the Members.
CLOSURE OF GLS BULBS AND TUBE LIGHTS MANUFACTURING UNIT LOCATED AT KOSI
The operations of the Company’s GLS bulbs and Tube lights manufacturing unit located at Kosi, Uttar Pradesh, which originally belonged to a sick company registered with BIFR and purchased by the Company in an open bid invited by the Operating Agency for BIFR, in the year 2012-13, were closed during the year under review as the efforts put in by the Company’s management to improve its operations were not yielding the desired results and there was not even a remote chance of improvement therein on account of the following factors:
a. Energy saving LED based lighting products having a very long life have gained popularity in a very short time and the reducing prices of LED products has resulted in demand for GLS bulbs coming down continuously;
b. GLS bulbs are being phased out;
c. Under-utilisation of manufacturing capacity across the industry, so is with the Unit;
d. Higher cost of production of FTLs in comparison with competitors and the market of the same is also falling;
f. Non-availability of and difficulty in retention of skilled manpower because of losses made by the Unit;
g. Implementation of E-Waste (Management) Rules, 2016, requires technology up-gradation and calls for major investment in order to comply with stricter norms.
SCHEME OF ARRANGEMENT FOR DEMERGER OF MANUFACTURING BUSINESS OF HIND LAMPS LIMITED INTO THE COMPANY
During FY 2015-16, the Board of Directors of the Company (“Company’VTransferee Company”) had approved the proposal for demerger of manufacturing business of Hind Lamps Limited (“HLL’V''''Transferor Company”) into the Company, pursuant to a Scheme of Arrangement (“Scheme”) as they were of the view that the transfer and vesting of the Manufacturing Business of the Demerged Company with the Company will enable both the companies to achieve and fulfill their objectives more efficiently and economically and the same is also in the interest of all the stakeholders. The Company’s management expertise and quality systems & controls will enhance the performance of this business.
Since, the Transferor Company, was declared as a sick industrial company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA”) by the Board for Industrial and Financial Reconstruction (“BIFR”), the said Scheme was filed with BIFR for its approval by the Transferor Company. However, subsequently, the Central Government of India, vide Notification No. S.O. 3568 (E) dated 25 November 2016, brought the provisions of the SICA Repeal Act into force with effect from 1 December 2016 and SICA was repealed.
Section 4(b) of the SICA Repeal Act (as amended by Section 252 of the Insolvency and Bankruptcy Code, 2016) provides that any proceeding of whatever nature, pending before the BIFR shall stand abated. Accordingly, Case No.09/2002 filed by the Company stood abated as on 1 December 2016. However, the proviso to Section 4(b), entitles the Company to make a reference to the National Company Law Tribunal (“NCLT”) under the provisions of the Insolvency and Bankruptcy Code, 2016 provided that such reference is made within the time period prescribed therein.
Accordingly, both the Transferor Company and Transferee Company are in the process of filing petitions before the NCLT, Allahabad Bench and Mumbai Bench, having jurisdictions over the respective companies for approval of Scheme under the applicable provisions of the Act read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
The Scheme is subject to the approval of the shareholders in the Court/NCLT convened meeting, sanction of the Court/ NCLT and such other approvals as may be applicable.
Detailed information on the operations of the different business segments of the Company and details on the state-of-affairs of the Company are covered in the Management Discussion and Analysis Report.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has in place well defined and adequate internal controls commensurate with the size of the Company and the scale and complexity of its operations. The Company has documented its internal financial controls considering the essential components of various critical processes, physical and operational, which includes its design, implementation and maintenance along with periodical internal review of operational effectiveness and sustenance. This ensures orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The internal financial controls with reference to the financial statements were adequate and operating effectively.
INDIAN ACCOUNTING STANDARDS (IND AS), 2015
The financial statements up to year ended 31 March 2016 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
The annexed financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Act [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
These financial statements are the first financial statements of the Company under Ind AS.
Detailed information on the impact of the transition from previous GAAP to Ind AS is provided in the annexed financial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the provisions of Section 135 read with Schedule VII of the Act, the Company, as a part of its Corporate Social Responsibility (“CSR”) initiative, has adopted a CSR Policy outlining various CSR activities to be undertaken by the Company in the area of health, water, sanitation, promoting education, skill development, empowerment of women and genderequality and promotion of art & culture, etc. The CSR policy of the Company is available on the Company’s website www.baiaielectricals. com under ‘Investors’ tab.
During the year under review, the Company has spent Rs.108.48 lakh on CSR activities. The Board has constituted a CSR Committee inter-alia to recommend on the CSR projects/programmes, the amount on each CSR activity and to monitor such CSR activities, being undertaken by the Company.
The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure ‘A’ to this Report.
The relations with the employees of the Company have continued to remain cordial.
PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under, the Company has implemented a policy on Prevention of Sexual Harassment of Women at Workplace. An Internal Complaints Committee has been set up to receive complaints, investigate the matter and report to the management for redressal of complaints of sexual harassment.
During the year, no complaint was received by the committee.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company believes to conduct its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. The Company is committed to developing a culture where it is safe for all employees to raise concerns about any wrongful conduct.
The Board of Directors has approved the vigil mechanism/ whistle blower policy of the Company which provides a framework to promote a responsible and secure whistle blowing. It protects employees wishing to raise a concern about serious irregularities within the Company. It provides for a vigil mechanism to channelize reporting of such instances/complaints/grievances to ensure proper governance. The Audit Committee oversees the vigil mechanism. No employee has been denied access to the Audit Committee. The policy has been appropriately communicated to the employees within the organization and posted on the Company’s website: www.baiaielectricals. com.
RISK MANAGEMENT POLICY
Information on the development and implementation of a risk management policy for the Company including identification therein of elements of risk which in the opinion of the Board may threaten the existence of the Company is given in the report on Management Discussion and Analysis.
The two largest denomination notes, Rs.500 and Rs.1000 (“Specified Bank Notes”), together comprising 86 percent of all the cash in circulation, were demonetized with immediate effect, ceasing to be legal tender except for a few specified purposes, on 8 November 2016.
Demonetization has had short-term costs in the form of slow growth but holds the potential for long-term benefits. Long-term benefits include reduced corruption, greater digitalization of the economy, increased flows of financial savings and greater formalization of the economy, all of which could eventually lead to higher GDP growth, better tax compliance and greater tax revenues.
The report on Specified Bank Notes (SBNs) held and transacted by the Company during the period from 8 November 2016 to 30 December 2016, in the format specified by the Ministry of Corporate Affairs vide its notification dated 30 March 2017, is provided in the notes to the financial statements:
DIRECTORS & KEY MANAGERIAL PERSONNEL
- Appointment of Directors
In order to strengthen the Board, during the year under review, the Board of Directors had appointed Shri Anuj Poddar and Shri Siddharth Mehta, as Additional Directors of the Company with effect from 30 May 2016 and recommended their appointment as Independent Directors for the approval of the Members. The Members at the Annual General Meeting held on 4 August 2016, approved their appointment as Independent Directors of the Company for a term of five (5) years, effective 30 May 2016.
As on the date of this report, the Company’s Board comprises of ten (10) Directors, out of which, eight (8) are Non-Executive Directors (NEDs) including one (1) Woman Director. NEDs represent 80% of the total strength. Further, out of the said eight (8) NEDs, seven (7) are independent directors representing 70% of the total strength of the Board.
- Director coming up for retirement by rotation
In accordance with the provisions of the Act and the Articles of Association of the Company, Shri Madhur Bajaj retires by rotation and being eligible offers his candidature for re-appointment as a Director. The information as required to be disclosed under Regulation 36 of the Listing Regulations in case of reappointment of the director is provided in the notice of the ensuing Annual General Meeting.
- Independent Directors
The Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation.
In accordance with Section 149(7) of the Act, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.
A calendar of meetings is prepared and circulated in advance, to the Directors.
During the year, six (6) Board Meetings were convened and 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 Act and Listing Regulations.
The Audit Committee comprises of three independent directors as its Members. During the year five (5) Audit Committee Meetings were convened and 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 Act and Listing Regulations.
The CSR Committee comprises of three Members of which one is the Independent Director. The Committee met twice during the reporting period. Details of the Committee and meetings are given in the Corporate Governance Report.
- Board Effectiveness
Familiarisation Programme for the Independent Directors:
In compliance with the requirement of Listing Regulations, the Company has put in place a familiarisation programme for the independent directors to familiarize them with their role, rights and responsibility as directors, the working of the Company, nature of the industry in which the Company operates, business model, etc. The details of the familiarisation programme are explained in the Corporate Governance Report. The said details are also available on the website of the Company www. baiaielectricals.com.
Evaluation of the performance of the Board, its Committees and the Directors:
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. The criteria applied in the evaluation process are explained in the Corporate Governance Report.
Key Managerial Personnel
The following persons have been designated as Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Act, read with the Rules framed there under:
a. Shekhar Bajaj, Chairman & Managing Director and CEO;
b. Anant Purandare, President & Chief Financial Officer; and
c. Mangesh Patil, EVP - Legal & Taxation and Company Secretary and Compliance Officer.
None of the Key Managerial Personnel of the Company have resigned during the year under review.
Policy on Remuneration of Directors, Key Managerial Personnel and Senior Managerial Personnel & Criteria for matters under Section 178 of the Act
Information regarding Policy on Remuneration of Directors, Key Managerial Personnel and Senior Managerial Personnel & Criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Act are provided in the section of Corporate Governance Report.
Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Managerial Personnel
Your Company has laid down a well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Managerial Personnel.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions with Related Parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for the transactions which are of a foreseen and repetitive nature.
The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly and on annual basis.
The Policy on Related Party Transactions as approved by the Board is available on the Company’s website: www. baiaielectricals.com.
There were no materially significant related party transactions i.e. transactions exceeding ten percent of the annual turnover of the Company as per the last audited financial statements, entered into by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Thus, the disclosure in ‘Form AOC-2’ is not applicable.
None of the Directors or Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
The details of related party transactions are given in the notes to the financial statements.
TRANSFER OF UNCLAIMED AMOUNTS/SHARES TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 124 of the Act, relevant amounts which remained unpaid or unclaimed for a period of seven (7) years have been transferred by the Company to the Investor Education and Protection Fund (IEPF).
The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 4 August 2016 (date of last Annual General Meeting) on the website of the Company www.baiaielectricals.com, as also on the website of the Ministry of Corporate Affairs.
Further, Section 124(6) of the Act requires that all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall also be transferred to IEPF. Ministry of Corporate Affairs vide its notifications dated 5 September 2016 and 28 February 2017 has notified the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and the IEPF Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 (“Rules”) containing, inter alia, the provisions for transfer of such shares to “IEPF Suspense Account”.
Accordingly, in due compliance of the provisions of Rule 6(3) of the aforesaid Rules, the Company sent individual letters through Speed Post to such shareholders, in respect of whom dividend for a consecutive period of seven (7) years had remained unpaid and public notice was released in newspapers on 3 December 2016. Subsequently, on amendment of the said Rules vide MCA notification dated 28 February 2017, another public notice was released in newspapers on 6 May 2017 giving such shareholders a fresh opportunity to claim the unpaid dividends, up to such date of transfer. The Company is accordingly in the process of taking appropriate steps with regard to transfer of such shares in accordance with the amended Rules, in line with the necessary guidelines being issued by MCA in this regard.
As provided under these Rules, the shareholder shall be allowed to claim such unpaid dividends and shares transferred to IEPF by following the required procedure. The said Rules have been made available under the ‘Investor’ section of the Company’s website: www.baiaielectricals. com
MATERIAL CHANGES & COMMITMENTS
There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators or Courts or Tribunals, which may impact the going concern status of the Company and its future operations.
SUBSIDIARIES / ASSOCIATES / JOINT VENTURES
The Company has no subsidiary as on 31 March 2017.
Details of associate companies/joint ventures of the Company:
Name of the Company
% of shareholding of the Company as on 31 March 2017
Starlite Lighting Limited (SLL)
Hind Lamps Limited (HLL)
For the purpose of Section 2(6) of the Act, “associate company”, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. For the purposes of this clause, “significant influence” means control of at least twenty percent of total share capital, or of business decisions under an agreement. Though, the holding of the Company in the equity share capital of SLL and HLL is less than 20 percent, the Company is in a position to influence the operating and financial policies of these companies and hence the financial statements of SLL and HLL are consolidated with the Company’s financial statements considering them as Joint Venture and Associate of the Company, respectively.
Starlite Lighting Limited
The gross revenue of SLL for FY 2016-17 stood at Rs.126.82 crore (Previous Year: Rs.164.86 crore). Loss for the year was at Rs.21.40 crore (Previous Year Loss: Rs.5.73 crore).
Hind Lamps Limited
The gross revenue of HLL for FY 2016-17 stood at Rs.44.16 crore (Previous Year: Rs.53.32 crore). Loss for the year was at Rs.8.05 crore (Previous Year Loss: Rs.7.04 crore).
PRESENTATION OF FINANCIAL RESULTS
The financial results of the Company for the year ended 31 March 2017 have been disclosed as per Schedule III to the Act.
The summary of the key financials of the Company’s associate and joint venture (Form AOC-1), is included in this Annual Report. The copies of audited financial statements of the said companies will be made available to the Members of the Company, seeking such information at any point of time. The audited financial statements of the said companies will be kept for inspection by any Member of the Company at its registered office during business hours. The same are placed on the Company’s website: www.baiaielectricals.com.
The tenure of appointment of M/s. Dalai & Shah LLP, Chartered Accountants, Mumbai (Firm Registration No.: 102021W / W100110), the existing Statutory Auditors, will expire at the conclusion of the 78th AGM, as per the provisions of Section 139(2) of the Act and the Rules framed there under.
The Board of Directors of the Company at its meeting held on 9 February 2017 has, subject to the approval of the Members at the ensuing AGM, approved the appointment of M/s. SRBC & Co. LLP, Chartered Accountants (Firm Registration No.324982E / E300003) as the new Statutory Auditors of the Company in place of M/s. Dalai & Shah LLP for a term of five (5) years commencing from the conclusion of the 78th AGM till the conclusion of the 83rd AGM, subject to ratification of their appointment by the Members annually. M/s. SRBC & Co. LLP have confirmed their eligibility under Section 141 of the Act and the Rules framed there under for appointment as Auditors of the Company. As required under Regulation 33 of the Listing Regulations, the new auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
The notes on financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.
The Auditors’ Report on standalone financial statements does not contain any qualification, reservation or adverse remark or disclaimer.
Explanations/comments bv the Board on qualification, reservation or adverse remark or disclaimer made bv the Auditors in their Report on consolidated financial statements:
The auditors of Hind Lamps Limited (HLL), the associate of the Company, have qualified their opinion regarding recognition of deferred tax assets, aggregating to Rs.9.21 crore as at 31 March 2017 in absence of convincing evidence of availability of adequate future taxable profits to demonstrate virtual certainty of reversal of such deferred tax assets. The Company holds 19% interest in HLL and as such the proportionate impact of qualified opinion on the Company is only Rs.1.74 crore, which on comparison with the total assets of the Company at standalone and consolidated level as at 31 March 2017 is 0.06%. Further, the proportionate impact of this qualified opinion on comparison with the profit before tax for the year ended 31 March 2017 is 1.04% at standalone level and 1.08% at consolidated level. Hence, the Company assesses the impact of the qualified opinion as insignificant.
Pursuant to Section 148 of the Act read with the Rules made there under, the cost audit records maintained by the Company in respect of its manufacturing activities are required to be audited. The Board of Directors has, on the recommendation of the Audit Committee, appointed M/s. R. Nanabhoy & Co., Cost Accountants (Firm Registration No.000010), to audit the cost accounts of the Company for FY 2017-18. As required under the Act, the remuneration payable to the Cost Auditors is required to be placed before the Members in the general meeting for their ratification. Accordingly, a resolution seeking Members ratification for the remuneration payable to M/s. R. Nanabhoy & Co., Cost Accountants, is included at item no.5 ofthe Notice convening the AGM.
The particulars of the Cost Auditors and cost audit conducted by them for FY 2015-16 are furnished below:
ICWA membership no.
Registration No. of Firm
Jer Mansion, 70, August Kranti Marg, Mumbai 400 036
Cost Audit Report
Due date of filing of Report
30 September 2016
Actual date of filing of Report
30 August 2016
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed, M/s. Anant B. Khamankar & Co., Practicing Company Secretaries (Membership No.: FCS 3198; CP No.:1860) to undertake the Secretarial Audit of the Company.
The Company has undertaken Secretarial Audit for the financial year 2016-17 which, inter-alia, includes audit of compliance with the Act and the Rules made there under, Listing Regulations and other applicable Regulations prescribed by the Securities and Exchange Board of India and Foreign Exchange Management Act, 1999 and Secretarial Standards issued by the Institute of Company Secretaries of India. The report of the Secretarial Auditors for FY 2016-17 is annexed to this Report as Annexure ‘B’. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditors.
Your Company is in compliance with the corporate governance requirements mentioned in the Listing Regulations. Pursuant to Regulation 34 of the Listing Regulations, a separate report on corporate governance has been included in this Annual Report together with a certificate from the auditors of the Company regarding compliance of conditions of corporate governance.
All Board members and senior management personnel have affirmed compliance with the code of conduct for the year 2016-17. A declaration to this effect signed by the Chairman & Managing Director and CEO of the Company is contained in this Annual Report.
The CEO and CFO have certified to the Board with regard to the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations and the said certificate is contained in this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the operations of the Company, as required under the Listing Regulations, is provided in a separate section and forms an integral part of this Report.
BUSINESS RESPONSIBILITY REPORT
Listing Regulations mandates inclusion of the Business Responsibility Report (BRR) as a part of the Annual Report for top 500 listed entities based on market capitalization.
Since the Company is one of the top 500 listed entities, the Company has presented its BRR for the financial year 2016-17, which is part of this Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure ‘C’ to this Report.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return in Form MGT-9 as required under sub-section (3) of Section 92 of the Act read with Companies (Management & Administration) Rules, 2014, is annexed herewith as Annexure ‘D’ to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure pertaining to the 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 is annexed herewith as Annexure ‘E’ to this Report.
The information on employees who were in receipt of remuneration of not less than Rs.60 lakh during the year or Rs.5 lakh per month during any part of the year forms part of this Report and will be provided to any Member on a written request to the Company. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days up to the date of the ensuing AGM. If any Member is interested in inspecting the same, such Member may write to the Company Secretary in advance.
CONSOLIDATED FINANCIAL STATEMENTS
The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the associate and joint venture prepared in compliance with the Act, applicable Accounting Standards and the Listing Agreement as prescribed by SEBI.
A separate statement containing the salient features of the associate and joint venture in the prescribed ‘Form AOC-1’ is annexed herewith as Annexure ‘F’ to this Report.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act, your Directors confirm that:
(a) in the preparation of the annual accounts for the year ended 31 March 2017, the applicable accounting standards have been followed and that no material departures have been made 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 a true and fair view of the state-of-affairs of the Company as at 31 March 2017 and of the profits 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 annual accounts of the Company have been prepared on a ‘going concern’ basis;
(e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and
(f) systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Your Directors take this opportunity to thank the Central and State Government Departments, organizations and agencies for their continued support and co-operation. The Directors are also thankful to all valuable stakeholders viz., customers, vendors, suppliers, banks, financial institutions and other business associates for their continued cooperation and excellent support provided to the Company during the year. The Directors acknowledge the unstinted commitment and valuable contribution of all employees of the Company.
Your Directors also appreciate and value the trust reposed in them by Members of the Company.
The following annexures form part of this report:
a. Annual Report on Corporate Social Responsibility -Annexure ‘A’;
b. Secretarial Audit Report in ‘Form MR-3’-Annexure ‘B’;
c. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo – Annexure ‘C’;
d. Extract of Annual Return in Form MGT-9 – Annexure ‘D’;
e. Information under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014-Annexure ‘E’ and
f. Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures in ‘Form AOC-1’ -Annexure ‘F’.
For and on behalf of the Board of Directors
Mangesh Patil Anant Bajaj Shekhar Bajaj
EVP-Legal & Taxation and Joint Managing Director Chairman & Managing Director
Company Secretary DIN: 00089460 DIN: 00089358
FCS No.: 4752