DIRECTORS’ REPORT Dear Shareholders, Your Directors are pleased to present the Twenty-Seventh Annual Report of the Company together with the Audited Accounts and Auditors' Report for the financial year ended 31st December, 2014. FINANCIAL RESULTS AND OPERATIONS During the year under review, the turmoil on the weather and political front coupled with negative consumer sentiments had resulted in the decline in the demand and prices for consumer durable goods. The consumer remained cautious and was inclined towards essential commodities only while keeping the high-end appliances/electronics shopping on hold. Further, the new norms of Bureau of Energy Efficiency have led to the increase in cost of air conditioners and refrigerators. However, with the new government coming in, the consumer sentiments are expected to turn positive resulting in better growth in the Consumer Electronics & Home Appliances Industry. The net sales of the Company have increased to Rs. 15,132.11 Million for the financial year ended 31st December, 2014 from Rs. 14,261.88 Million for the financial year ended 31st December, 2013. The finance costs of the Company has reduced to Rs. 944.61 Million for the financial year ended 31st December, 2014 from Rs. 1,017.22 Million for the financial year ended 31st December, 2013. The Company has incurred a net loss of Rs. 437.88 Million for the financial year ended 31st December, 2014 as compared to the net loss of Rs. 727.77 Million for the financial year ended 31st December, 2013. DIVIDEND In view of the loss incurred during the year under review, the Board of Directors do not recommend any dividend for the financial year ended 31st December, 2014. TRANSFER TO RESERVES In view of the loss incurred during the year under review, your Directors propose not to transfer any amount to the General Reserve. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND The Company has transferred a sum of Rs. 0.98 Million in respect of unclaimed/ unpaid dividend for the financial year 2006-07 to the Investor Education and Protection Fund (IEPF). Dividend for the financial year ended 2007-08 and thereafter, which remain unclaimed for a period of seven years will be transferred to the IEPF. Members who have not encashed dividend warrant(s)/instrument(s) for the said years are requested to obtain duplicate warrant(s)/demand drafts by writing to the Company's Registrar and Transfer Agent. FIXED DEPOSITS The Company has not accepted/renewed any deposit within the meaning of Section 58A of the Companies Act, 1956 and as such, no amount of principal/ interest was outstanding as on the Balance Sheet date. PARTICULARS OF EMPLOYEES The Company does not have any employee whose particulars are required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. FOREIGN EXCHANGE EARNINGS AND OUTGO During the year under review, the foreign exchange outgo amounted to X 865.80 Million as against X 928.20 Million during the year ended 31st December, 2013. There were no foreign exchange earnings during the year under review and previous year ended on 31st December, 2013. CONSERVATION OF ENERGY The Company has shifted its parameters from the 'can do' alternative to the 'must do'. Conservation of energy has been an area of focus of your Company with emphasis has always been on reduction in power consumption in products, manufacturing process and operations. Your Company is focused on developing green technology and products based on the main principles of minimizing environmental impact across the entire product life cycle, from procurement, manufacturing, distribution, usage to disposal. Your Company is launching products that embody the environmental values of reducing energy consumption, resources and hazardous substances, protecting water resources and leveraging green wherever possible. The Company has always been conscious of the need for sustainable development and conservation of energy and has been sensitive in making progress towards this initiative. The Company has formed an in-house team comprising of experts to regularly keep a check on the energy conservation at the work place. Some of the specific measures undertaken by the Company are: • Replacement of all high consumption luminaries to LEDs and CFLs lights. • Daily monitoring of energy consumption of production line as per Kwh/Product Target and analysis of the same on weekly basis . • Improved capacity of equipments by reducing tact time. • All major equipments and Air conditioners are under auto shut off mode during break and specified intervals. • Monitoring and maintaining power in distribution network to minimize the losses. • Created awareness in the employees by giving scheduled training about importance of the energy conservation and basic technique of conservations. • Displayed visual information in entire work places to encourage employees to think about energy conservation. • Adherence to preventive maintenance schedule to ensure all machineries run at rated efficiency. • Optimized rating of pumps in pump house. • Introduced natural sources of light by providing transparent sheets and ventilators on roofs for good circulation of air. • Replaced old energy inefficient AC's with 5 star energy efficient AC's. • Installed motion sensor switches for auto switch ON/OFF of toilet lights and exhaust fan. • Replaced DA (Acetylene Gas) by LPG manifold system at brazing station at production shop floor resulting in cost saving. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION The Consumer and Electronics Industry is a key player in the economy and is one of the most globalised industries in the world. It is a strategic enabler and a driving force for all the services. Research & Development (R&D) is an integral part of any industry and is supporting the entire value chain of R&D activities in the country ranging from the basic components to sophisticated product development. The Company firmly believes that a well planned R&D acts as a catalyst to foster innovation and enhance the interface in both, conventional and emerging technological arenas. Accordingly, the Company has formed an in-house R&D team comprising of skilled experts in varied fields to keep pace with the rapid technological changes in the industry. The process captures customers need, the business potential and integrates it with the product development programme. Your Company focuses on creating new exponential value, with the ultimate aim of reinventing the way people live their lives. The manufacturing facilities are continuously modernized to convert the ideas envisaged by the R&D into most efficient, environment friendly and state-of-the art processes to deliver the best products which stand to the test of time. The quality assurance ensures that manufacturing processes doesn't deviate from the specified path, adhere and confirm to the stringent national and international standards for safety and at the same time products which are eco-friendly and have delightful aesthetic feel. The R&D activities involve: • Development of high end products to be offered in Indian Market. • Development of new design in products. • Development of new range of products. • Meeting the changing needs of the consumers. • Improvement in operational process. Benefits derived from R&D activities: • Introduction of refrigerators with smart features such as Cool Booster, Ice Zone, Steel Bottle Rack, Twin Drawer Base etc. • Introduction of Powertrain Control Module (PCM) and Vehicle Control Module (VCM) door finish with stylish look. • Developed washing machines with vibrant colours and aesthetically superior looks. • Introduced washing machines with multiple wash selection options as well as less water consumption. • Introduction of air conditioners with powerful cooling even at high temperatures. During the year under review, the recurring expenses on R&D amounted to X 10.14 Million representing 0.07% of the turnover. Future plan of action in R&D and Technology Absorption : As the management continues to expand its investment in core technologies and cutting edge growth businesses, your Company ensures that its technology continues to grow stronger with every passing year. The Company plans to design and develop technologies that give higher degree of reliability and wishes to extend the technology in other related areas. The Company shall focus on environment friendly products and shall also focus on innovation and modernization with optimum utilization of capital and maintain the position in the market. HEALTH, SAFETY AND ENVIRONMENT MEASURES Health and well being is a state of complete physical, mental and social well being - and not merely the absence of disease or infirmity. Ensuring safe and health-oriented working conditions is integrated into the organization. The Company is committed to complying with all statutory and regulatory requirements related to health and safety of the workers/employees. The Company has been taking efforts in building health awareness among employees. The Company has been giving a lot of attention to improving greenery all around its manufacturing plant. Energy conservation initiatives, safety initiatives and quality initiatives are being taken on a regular basis to ensure sustainability. The Company has a well equipped health centre that delivers qualitative preventive health services not only to its employees but also to their families and to the society at large. First-Aid preparedness in the factory is ensured at all times. Medical surveillance that includes pre-employment, periodic medical examinations and occupational rehabilitation is ensured so that employee health and well being is maintained. The Company ensures that all employees are covered under preventive health checks and health promotion programs. Technical equipments and various installations in buildings and at work stations are kept up-to-date. The Company is taking all reasonable steps to eliminate or reduce the exposure of employees to conditions adversely affecting their safety or health while on the job. The Company encourages off the job and on the job employee safety and health awareness as well. Some of the health and safety initiatives taken by the Company include: • Basic first aid course and demonstration of fire extinguishers courses conducted for the employees and security guards during the year. • Conducting health checkup session periodically. • Periodic Training conducted for security guard regarding fire prevention & control. • Regular training programs for the workers, on the job & off the job. • Installation of new machineries to mitigate the risk of injury to humans. • Display of cautionary signs at high hazardous area to warn workers about imminent hazard dealt at site. • Procurement of safety equipments in campus such as LPG gas detector, Road Convex mirror, Fire blanket, Fire Bucket, First aid box & B.A. (Breathing Apparatus) set. • Implementations of work permit system with availability of security guard for close monitoring. • Conducting regular safety audit & mock drill as per calendar in the campus. • Incident/Accidents investigation, reporting with root cause, corrective and preventive actions, in case of any incident/accident. • Provision of fire extinguisher point at high hazardous area. • Carry out HPT (Hydraulic Pressure Testing) of pressurized extinguisher as per Maharashtra fire prevention & life safety measures act. • Display of MSDS (Material Safety Data Sheet) at chemical storage area. • Display of UN classification boards at Zone - 0 area (Highly flammable area). • Celebration of Safety promotional activities like - National safety week & fire service week. • Replacement of old furnace oil and installed LPG manifold system to avoid air pollution. Environmental Initiatives: The Company is committed to comply with all applicable environmental laws, rules and regulations. The Company is promoting environmental concern and education among its employees and within the communities in which it operates. The Company has developed an environmental, health and safety program, which includes the following elements: • Installation of Sewage Treatment Plant and utilization of treated water for gardening. • Accumulation of roof rain water for water harvesting purpose to avoid the scarcity in summer season. • Plantation of trees on different events. • Maintenance of Effluent Treatment Plant and Sewage Treatment Plant outlet water parameter within limit as per CPCB (Central Pollution Control Board). INFORMATION TECHNOLOGY Information Technology (IT) essentially refers to the digital processing, storage and communication of information of all kinds. The Company has been making continuous investments in Business Process Automation and Information Technology over the years. The IT infrastructure and software systems at the Company are at par with the best-in-class industries. The high focus areas include scalability of infrastructure, data security and business process controls. The Company's IT strategy is focused towards improving efficiency and providing a platform for a decision support system that will provide for a competitive sustainable advantage and at the same time ensure the highest level of data integrity and security. The usage of innovative and modern IT tools has brought in significant improvement in overall operations and productivity. CORPORATE SOCIAL RESPONSIBILITY The Company has formed a Corporate Social Responsibility Committee in terms of the provisions of Section 135 of the Companies Act, 2013 and Rules made thereunder read along with Schedule VII of the Act. The scope and composition of the Committee forms part of Corporate Governance Report. Corporate Social Responsibility (CSR) includes core elements of CSR activities such as ethical functioning, respect for all stakeholders, protection of human rights and care for the environment. Your Company believes that its success is interlinked with the well-being of all sections of the society and equal opportunity be given to all the sections of the society. The most important responsibility is to fulfill the expectations of our stakeholders and to continuously improve our social, environmental, and economical performance while ensuring the sustainability and operational success of our Company. INDUSTRIAL RELATIONS Your Company continues to enjoy the support from the workforce. Industrial Relations were cordial during the year under review. BOARD OF DIRECTORS During the year under review, Mr. Subhash S. Dayama was appointed as an Independent Director by the shareholders of the Company at the Annual General Meeting held on 30th June, 2014, for a term of 5 years from 30th June, 2014. Subsequently, in order to further comply with the requirements of the provisions of Section 149 of the Companies Act, 2013 and the provisions of Clause 49 of the Listing Agreement and so as to ensure optimum composition of Independent Directors on various Committees, the Board of Directors thought it fit to appoint Mr. Avinash H. Malpani and Mr. Naveen B. Mandhana also as Independent Director(s) for a period of five years. Accordingly, the Board of Directors of the Company at their meeting held on 14th August, 2014 have made to continue appointment of Mr. Avinash H. Malpani and Mr. Naveen B. Mandhana as Independent Director(s) to hold office upto a term of five consecutive years from 14th August, 2014, not liable to retire by rotation. These Directors have confirmed that they meet criteria of independence as provided in Sub-Section (6) of Section 149 of the Companies Act, 2013. After the Balance Sheet date, pursuant to the provisions of Companies Act, 2013, Mrs. Gayathri R. Girish was appointed as an Additional Director with effect from 31st March, 2015. She holds office upto the date of ensuing Annual General Meeting. The Company has received a notice in writing along with requisite deposit, from a member under Section 160 of the Companies Act, 2013, signifying its intention to propose candidature of each of Mr. Avinash H. Malpani and Mr. Naveen B. Mandhana for confirmation/appointment to the office of Director of the Company as Independent Director and also its intention to propose candidature of Mrs. Gayathri R. Girish to the office of Director of the Company. The Board recommends the confirmation/appointment of Mr. Avinash H. Malpani, Mr. Naveen B. Mandhana and Mrs. Gayathri R. Girish at the ensuing Annual General Meeting. A brief profile of the Directors seeking confirmation/appointment, nature of expertise in specific functional area, name of other public companies in which he/she holds directorship and membership/chairmanship of the committees of the Board of Directors and the particulars of the shareholding as stipulated under Clause 49 of the Listing Agreement entered with the Stock Exchanges is appended to the Notice. AUDITORS The members of the Company at the 26th Annual General Meeting held on 30th June, 2014 had approved the appointment of M/s. Khandelwal Jain & Co., (Firm Regn No 105049W) Chartered Accountants, Mumbai and M/s. Kadam & Co., (Firm Regn No. 104524W) Chartered Accountants, Ahmednagar, for the term of 3 years i.e. from the conclusion of 26th Annual General Meeting until the conclusion of 29th Annual General Meeting of the Company. Pursuant to Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014, the aforesaid appointment needs to be ratified by the members at the ensuing Annual General Meeting. Accordingly, the appointment of M/s. Khandelwal Jain & Co., (Firm Regn No 105049W) Chartered Accountants, Mumbai and M/s. Kadam & Co., (Firm Regn No. 104524W) Chartered Accountants, Ahmednagar, as the Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of 29th Annual General Meeting is commended for ratification by the members. A certificate from M/s. Khandelwal Jain & Co., (Firm Regn No 105049W) Chartered Accountants, Mumbai and M/s. Kadam & Co., (Firm Regn No. 104524W) Chartered Accountants, Ahmednagar that their appointment is within the prescribed limits under Section 141 of the Companies Act, 2013 has been obtained by the Company. The Board recommends the ratification of appointment of the said Auditors at the ensuing Annual General Meeting. AUDITORS' REPORT The Auditors' Report is unqualified. The notes to the Accounts referred to in the Auditors' Report are self explanatory and therefore do not call for any further clarification under Section 217(3) of the Companies Act, 1956. AUDIT COMMITTEE Pursuant to the provisions of Section 177 of the Companies Act, 2013 and as per the provisions of the Listing Agreement, the Company has constituted an Audit Committee. The composition, scope and powers of Audit Committee together with details of meetings held during the year under review forms part of Corporate Governance Report. NOMINATION AND REMUNERATION COMMITTEE During the year under review, in view of the amended Listing Agreement and provisions of the Companies Act, 2013, the nomenclature of the Committee was changed from "Remuneration Committee" to "Nomination and Remuneration Committee" and the scope of Committee was revised to bring in line with the amended Listing Agreement. The composition, scope and powers of the Committee together with details of meetings held during the year under review forms part of Corporate Governance Report. STAKEHOLDERS' RELATIONSHIP COMMITTEE During the year under review, in view of the amended Listing Agreement and provisions of the Companies Act, 2013, the nomenclature of the Committee was changed from "Shareholders'/Investors' Grievance Committee" to "Stakeholders' Relationship Committee". The composition, scope and powers of the Committee together with details of meetings held during the year under review forms part of Corporate Governance Report. COST AUDIT The Central Government had directed, vide its Order No. 52/26/CAB-2010 dated 6th November, 2010, to conduct a Cost Audit in respect of the specified products viz., Machinery and Mechanical Appliances. The Board of Directors of the Company have accorded its approval for appointment of Mr. Jayant B. Galande, Cost Accountant in Whole-Time Practice, Aurangabad, (Membership Number 5255) as the Cost Auditor of the Company, to conduct Audit of the Cost Accounting Records maintained by the Company for the financial year commencing on 1st January, 2015 and ending on 31st December, 2015, subject to the approval of Central Government. In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, consent of the Members is sought by way of an Ordinary Resolution as set out in Item No 6 of the Notice for ratification of the remuneration amounting to Rs. 75,000/-(Rupees Seventy Five Thousand Only) plus applicable service tax and out of pocket expenses payable to the Cost Auditors for financial year commencing on 1st January, 2015 and ending on 31st December, 2015. In compliance with the provisions of The Companies (Cost Audit Report) Rules, 2011 and General Circular No. 15/2011 issued by Government of India Ministry of Corporate Affairs, Cost Audit Branch, we hereby submit that the Company has filed the Cost Audit Report for the financial year ended 31st December, 2013 on 11th February, 2015. The delay was on account of technical difficulties. As regards to the financial year ended on 31st December, 2014, the due date for filing the Cost Audit Report is 29th June, 2015 and the Company shall file the same on or before due date. SUBSIDIARY COMPANIES The Company does not have any subsidiary. CASH FLOW STATEMENT The Cash Flow Statement for the financial year ended 31st December, 2014, in conformity with the provisions of Clause 32 of the Listing Agreement with the Stock Exchanges in India and as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS-3) issued by the Institute of Chartered Accountants of India, is annexed hereto. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A detailed review of performance and future prospects of the Company is included in the section 'Management Discussion and Analysis Report' of the Annual Report. CORPORATE GOVERNANCE REPORT As per Clause 49 of the Listing Agreement, a separate section on Corporate Governance together with a Compliance Certificate from the Statutory Auditors of the Company forms part of this Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT The Audited Accounts for the year under review are in conformity with the requirements of the Companies Act, 1956 and the Accounting Standards. The Financial Statements reflect fairly the form and substances of transactions carried out; and reasonably present the Company's financial condition and results of operations. Your Directors confirm: a) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any; b) that the accounting policies selected have been applied consistently; and judgments and estimates are made 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 December, 2014 and of the loss of the Company for the year ended on that date; c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and d) that the Annual Accounts of the Company have been prepared on 'going concern' basis. ACKNOWLEDGEMENT The Directors wish to convey their appreciation to all the Company's employees for their enormous personal efforts as well as their collective contribution to the Company's performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers and all the other stakeholders for their continued support and for their confidence in its Management. For and on behalf of the Board of Directors of VALUE INDUSTRIES LIMITED S. S. DAYAMA Director DIN: 00217692 N. B. MANDHANA Director DIN: 01222013 Place : Mumbai Date : 14th May, 2015 |