DIRECTORS' REPORT TO THE MEMBERS, Your Directors are pleased to present to you the Annual Report on the business operations of the Company together with the Audited Financial Statement of Accounts for the Financial Year ended 31st March, 2016. PERFORMANCE REVIEW: Your Company's operations of its various projects under execution continued to be profitable, with continued efforts to reduce costs and improve yield as also bettering the productivity levels. During the year under review, the revenue from operations has gone down by 7.02% to Rs. 93,893.91 as compared to Rs. 1,00,985.93 Lacs of the previous year. The profit after tax for the year at Rs. 2,909.97 was lower by 29.99% as compared to Rs. 4,156.73 Lacs of the previous year. No material changes and commitments have occurred after the close of the financial year till the date of this Report, which affect the financial position of the Company. DIVIDEND: The Board of Directors of the Company at their meeting held on 11th March, 2016 have declared an aggregate interim dividend of Rs. 3.20 per share (160%) for the financial year ending 31st March, 2016 i.e. (i) Interim Dividend at the rate of Rs. 3.00 (150%) per equity share of Rs. 2/- each and (ii) an Additional Dividend on account of 90th Anniversary of the Company at the rate of Rs. 0.20 (10%) per equity share of Rs. 2/- each. The Interim Dividend was paid to the shareholders on 28th March, 2016. The interim dividend together with the dividend tax amounted to Rs. 932.95 Lacs. Your Directors do not recommend any Final Dividend for the year ended 31st March, 2016 and the aforesaid payment of Interim Dividend be treated as Final Dividend. Dividend of Rs. 3/- per equity share was paid for the financial year ended 31st March, 2015. TRANSFER TO RESERVES: The Company proposes to transfer Rs. 1,000 Lacs to General Reserve out of the amount available for appropriation and an amount of Rs. 15,899.13 Lacs is proposed to be retained and carried to Balance Sheet. FINANCE: During the year under review, liquidity position of your Company was maintained satisfactorily and optimum utilization of financial resources was achieved. Lower budgetary allocation of funds by some State Governments coupled with slow realization of funds in some projects increased level of borrowings marginally. However, due to better negotiations of pricing with the lenders, replacement of high interest bearing mobilisation advances with non-interest bearing mobilisation advance, the Company could reduce effective cost of borrowings. The Company has been prompt in meeting obligations towards its Bankers and other trade creditors. INCOME TAX ASSESSMENT: The Income Tax assessment of your Company has been completed till Assessment Year 2013-14. The appeals filed by your Company, against the assessment orders for various financial years are pending with the Income Tax Appellate Authorities and Bombay High Court. The amount of disallowance involved in various appeals is Rs. 12,879.53 Lacs. The major dispute is with regard to the execution of eligible infrastructure projects of water, sewerage and irrigation. Out of the total disallowance the amount of Rs. 12,467.92 Lacs pertains to the disallowance made u/s 80IA of the Income Tax Act, 1961. The balance amount of Rs. 411.61 Lacs pertains to other items of disallowance such as Section 14A disallowance, land valuation of Wadala property, commission expenses and purchase expenses etc. The necessary provision for tax of Rs. 4,339.18 Lacs has been made in accounts except for the disallowance made u/s 14A, as the same disallowance has been deleted in the previous years by the First and Second Appellate Authority. The appeals filed by the Income Tax Department are pending in the Bombay High Court for Assessment Year 2003-04, 2008-09 & 2010-11. The issue involved for Assessment Year 2003-04 pertain to the deduction u/s 80IA allowed by the Income Tax Appellate Tribunal, amounting to Rs. 1,068.27 Lacs. However due to subsequent retrospective amendment made to Section 80IA by Finance Act, 2009, as an abundant caution provision for the basic tax liability of Rs. 392.59 Lacs on the claim of Rs. 1,068.27 Lacs has been made in the accounts. Hence there is no tax liability. The issue involved for the Assessment Year 2008-09 & 2010-11 is with regard to the claim of disallowance of expenses u/s 14A of the Income Tax Act, 1961. The Income Tax Appellate Tribunal had deleted the disallowance made u/s 14A of the Income Tax Act, 1961. In case if this disallowance is confirmed by the Bombay High Court then your Company will have to make provision of tax of Rs. 31.78 Lacs. FACTORIES: The total number of factories of the Company as at the end of the year stands at 22. During the year the Company has permanently closed Vadgaon factory at Pune. DEVELOPMENT OF LAND: (i) Hadapsar: The Company has executed Development Agreement with M/s. Dosti Realty Ltd., the Developer for developing the Company's Hadapsar land at Pune admeasuring 48,288 sq. mtrs. M/s. Dosti Realty Limited will develop the land at their cost mainly for residential and / or commercial purpose. (ii) Wadala: The Company has executed Agreements with M/s. Dosti Realty Ltd., the Developer for developing the Company's Wadala land admeasuring about 8,442.37 sq. mtrs and 5,627.96 sq. mtrs under Phase I and Phase II respectively, under SRA Scheme(s) at their cost. (iii) Badarpur: The Company has executed a Memorandum of Understanding with M/s. Sobha Limited, the Developer for developing the Company's Badarpur land at Delhi admeasuring about 27,504 sq. mtrs. M/s. Sobha Limited will develop the land for residential purpose at their cost. On getting all the permissions, approvals and sanctions from the concerned authorities the Company will enter into Development Agreement(s) with M/s. Sobha Limited. CORPORATE GOVERNANCE: The Company has implemented procedures and adopted practices in conformity with the code of Corporate Governance under the erstwhile Listing Agreement with the Stock Exchanges up to 30th November, 2015 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) w.e.f.1st December, 2015. The Company has implemented Code of Conduct for all its Executive Directors and Senior Management Personnel, Non-Executive Non-Independent Directors and Independent Directors, who have affirmed compliance thereto. The said Codes of Conduct have been posted on the website of the Company. The Management Discussion and Analysis Report and Corporate Governance Report, appearing elsewhere in this Annual Report forms part of the Directors' Report. A certificate from the Statutory Auditors of the Company certifying the compliance of conditions of Corporate Governance is also annexed thereto. PUBLIC DEPOSITS AND LOANS/ADVANCES: The Company had terminated its Fixed Deposits Schemes w.e.f. 28th July, 2009 and stopped accepting / renewing deposits since then. Accordingly, the Company has repaid all those deposits together with interest thereon as and when they matured on their respective due dates on fixed deposit holders claiming the same. An aggregate amount of Rs. 1.05 Lacs representing 5 fixed deposits had matured, the last one being matured in February, 2012 and all these 5 fixed deposits remained unclaimed as at 31st March, 2016. Since then, no instructions for repayment of any of these matured fixed deposits have been received. PARTICULARS OF INVESTMENTS, LOANS AND GUARANTEES: Details of Investments, Loans and Guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Financial Statements. CORPORATE SOCIAL RESPONSIBILITY: The Corporate Social Responsibility (CSR) Policy of the Company and the CSR programs/activities undertaken during the financial year 2015-16 are set out in "Annexure A" and forms part of the Directors' Report. For other details of the CSR Committee, please refer to Corporate Governance Report which forms part of this report. The policy is available on the website of the Company www.indianhumepipe.com In accordance with Section 135 of the Companies Act 2013 and the Rules there under the Company has incurred CSR expenditure of Rs. 89 Lacs for the financial year 2015-16 by way of corpus donation to Ratanchand Hirachand Foundation which had carried out CSR activities on behalf of Company as set out in Annexure A. DONATIONS: In addition to the above CSR expenditure, the Company has given following donations: • Rs. 10 Lacs to Swachh Bharat Kosh set-up by the Central Government for the promotion of sanitation. • Rs. 3.25 Lacs to Rotary Foundation, Charitable Organisation. RISK MANAGEMENT: The Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. The Company has a Risk Management Policy to identify, evaluate, monitor and mitigate risks. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY: The Company has an Internal Audit Department headed by Chief Internal Auditor. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, management undertake corrective action in their respective areas and there by strengthen the controls. INTERNAL FINANCIAL CONTROLS: The Company has in place adequate internal financial controls with reference to financial statements. VIGIL MECHANISM: The Company has Vigil Mechanism administered by the Audit Committee. The Vigil Mechanism is posted on the Company's website. CHANGE IN THE NATURE OF BUSINESS, IF ANY: There is no change in the nature of business during the year under review. SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS/ TRIBUNALS, IF ANY: There are no significant material orders passed by the Regulators/Courts/ Tribunals which would impact the going concern status of your Company and its future operations. DIRECTORS: Pursuant to the provisions of Section 149 of the Act, Mr. Ajit Gulabchad, Mr. Rajendra M. Gandhi, Mr. Rameshwar D. Sarda, Mr. Vijay Kumar Jatia, Mr. N. Balakrishnan and Mr. P. D. Kelkar were appointed as Independent Directors at the Annual General Meeting (AGM) of the Company held on 25th July, 2014 and 4th August, 2015 respectively. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Director during the year. Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are - Mr. Rajas R. Doshi, Chairman & Managing Director, Mr. Mayur R. Doshi, Executive Director, Mr. M. S. Rajadhyaksha, Chief Financial Officer and Mr. S. M. Mandke, Company Secretary. Remuneration and other details of the Key Managerial Personnel of the Company for the financial year ended 31st March, 2016 are mentioned in the Extract of the Annual Return which is attached to the Directors' Report. As per Section 152 of the Companies Act, 2013, Mr. Mayur R. Doshi, Executive Director of the Company, retire by rotation at the ensuing AGM and offers himself for re-appointment. The Board of Directors on the recommendation of Nomination and Remuneration Committee have re-appointed Mr Mayur R. Doshi as Executive Director of the Company w.e.f. 1st April, 2016 to 30th June, 2019. The terms of re-appointment and remuneration of Mr. Mayur R. Doshi is being placed before the shareholders for approval at the ensuing AGM of the Company. Profile of Mr. Mayur R. Doshi is given in the explanatory statement of the notice of AGM of the Company. Mr. Rajas R. Doshi, Chairman & Managing Director and Mr. Mayur R. Doshi, Executive Director are Directors of IHP Finvest Limited (the Holding Company). Further Mr. Rajas R. Doshi is the Chairman and Mr. Mayur R. Doshi is the member of Stakeholders Relationship Committee of the Holding Company. They are also Directors of Ratanchand Investment Private Limited (the Ultimate Holding Company). During the year they have received sitting fees of Rs. 90,000/- each from IHP Finvest Limited for attending meetings of Board and sitting fees of Rs. 15,000/- each for attending meeting of Stakeholders Relationship Committee respectively. Further they have also received sitting fees of Rs. 6,000/- & Rs. 5,000/- each respectively from Ratanchand Investment Private Limited for attending meetings of Board. BOARD COMMITTEES: The Board of Directors of your Company had already constituted various Committees and approved their terms of reference/role in compliance with the provisions of the Companies Act, 2013 and Listing Agreement (applicable uptil November 30, 2015)/ SEBI Listing Regulations (applicable from December 1, 2015) viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and CSR Committee and Risk Management Committee. PERFORMANCE EVALUATION: Pursuant to the provisions of Section 134(3)(p), 149(8) and Schedule IV of the Companies Act, 2013 and erstwhile Listing Agreement/ Listing Regulations, annual Performance Evaluation of the Board as well as of the Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, CSR and Risk Management Committees and individual Directors have been carried out by the Board. The Performance Evaluation of the Independent Directors was carried out by the entire Board and the Performance Evaluation of the Chairman, Non-Independent Directors and Board was carried out by the Independent Directors. INDEPENDENT DIRECTORS' MEETING: In terms of Section 149, Schedule IV of the Companies Act, 2013 and erstwhile Clause 49 of the Listing Agreement, the Independent Directors met on 3rd March, 2016 without the attendance of Non-Independent Directors and Members of Management of the Company and reviewed the: i) performance of Non-Independent Directors and the Board of Directors of the Company as a whole; ii) performance of the Chairman of the Company, taking into account the views of Executive and Non-Executive Directors; iii) assessed the quality, quantity and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. All the Independent Directors were present at the meeting. FAMILIARISATION PROGRAMME OF INDEPENDENT DIRECTORS: In compliance with the requirements of SEBI Listing Regulations, the Company has put in place a familiarization program for Independent Directors to familiarize them with their role, rights and responsibility as Directors, the operations of the Company, business overview etc. The details of the familiarization program are explained in the Corporate Governance Report and the same is also available on the website of the Company. REMUNERATION POLICY: The Board on the recommendation of the Nomination & Remuneration Committee had framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is annexed as "Annexure B". NUMBER OF MEETINGS: Annual programme of Board and Committee meetings is circulated in advance to the Directors. DIRECTORS' RESPONSIBILITY STATEMENT: In accordance with the provisions of Section 134 (5) of the Companies Act, 2013, the Directors state that: a) i n the preparation of the Annual Accounts for the financial year ended 31st March, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; b) appropriate accounting policies have been selected 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, 2016 and of the profit of the Company for the year ended on that date; c) proper and sufficient care has been taken 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; d) the Annual Accounts have been prepared on a going concern basis; e) internal financial controls have been laid down for the Company and that such internal financial controls are adequate and are operating effectively; and f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and operating effectively. AUDITORS' REPORT: The Auditors' Report to the Members on the Accounts of the Company for the financial year ended 31st March, 2016 does not contain any qualification, reservation or adverse remark. AUDITORS: STATUTORY AUDITORS: At the 89th AGM of the Company held on 4th August, 2015 the Shareholders of the Company had re-appointed M/s. K. S. Aiyar & Co. Chartered Accountants, Mumbai bearing ICAI Registration No.100186W as Statutory Auditors of the Company for the financial year 2015-16 and 2016-17, until the conclusion of the Ninety-First AGM of the Company to be held in 2017, subject to ratification of their appointment at every AGM. COST AUDITOR: The Board of Directors have appointed Mr. Vikas Vinayak Deodhar, Cost Accountant, Mumbai, Membership No. 3813 as Cost Auditor of the Company for the financial year 2016-17 to conduct the audit of the cost records of applicable business of the Company on a remuneration of Rs. 1,20,000/- plus reimbursement of out of pocket expenses and/or travelling expenses as may be incurred by him and Service Tax as applicable, subject to ratification and confirmation by the shareholders at the ensuing AGM. SECRETARIAL AUDIT: Secretarial Audit for the financial year 2015-16 was conducted by M/s. J. H. Ranade & Associates, Company Secretaries, pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Report of the Secretarial Auditor is annexed as "Annexure C". There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in their Report. AWARDS / RECOGNITION: The Company was selected by Construction World (CW) Magazine, the largest circulated Construction Business Magazine in India and Gulf as one of 15 Construction Companies which managed to confront and surpass the challenges and make it to the Construction Worlds list of "India's Top Challengers 2014-15" for the second consecutive year. Mr. Mayur R. Doshi, Executive Director of the Company received the award on behalf of the Company at the 13th Construction World Annual Awards 2015, in an Award ceremony held in Mumbai. 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 Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed as "Annexure D". RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business except the transaction(s) with Ms. Anima B. Kapadia, Director and Sole Proprietor of Daphtary Ferreira & Divan, Solicitors and Advocates of the Company who is rendering legal services to the Company which was approved by the Audit Committee and Board. The details are given in Form AOC-2 is annexed as "Annexure E". There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel, their relatives which may have a potential conflict with the interest of the Company at large. All Related Party transactions are placed before the Audit Committee as also the Board for approval. A statement of all related party transactions was presented before the Audit Committee on quarterly basis, specifying the nature, value and any other related terms and conditions of the transactions. Further details of the transactions with related parties are provided in the Company's financial statements in accordance with the Accounting Standards. The Company has a Related Party Transaction Policy for identifying, monitoring and approving of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure F". PARTICULARS OF EMPLOYEES: The information required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "Annexure G". The statement containing particulars of employees as required under section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. INDUSTRIAL RELATIONS: The Company is having total strength of 1,250 permanent employees as on 31st March, 2016 working at various locations such as Factories / Projects/ Head Office and Research & Development Department, Mumbai. Industrial relations with the workmen at various units of the Company were by and large remained peaceful and cordial. VIGIL MECHANISM POLICY: The Company has a Vigil Mechanism policy which is uploaded on the website of the Company at www.indianhumepipe.com PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE: During the year under review, there were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF): Your Company has, during the year under review, transferred a sum of Rs. 3,78,819/- towards unclaimed dividend for the financial year 2007-08 and unclaimed interest of Rs. 58,778.14 on fixed deposits to Investor Education and Protection Fund, in compliance with the provisions of Section 205C of the Companies Act, 1956, which remained unclaimed by the members/fixed deposit holders of the Company for a period of 7 years from the date they became due for payment. GENERAL: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. Issue of shares (including sweat equity shares) to employees of the Company. The Company does not have ESOS/ESOP Scheme for its employees/ Directors. ACKNOWLEDGEMENTS: Your Directors record their gratitude to the Shareholders, Customers, Bankers, Government Departments, Vendors and Sub-contractors and all other Stakeholders for their continued support and co-operation during the year. Your Directors also wish to place on record their appreciation of the services rendered by the employees of the Company. Wishing you all good health, wealth and prosperity. For and on behalf of the Board of Directors, Rajas R. Doshi Chairman & Managing Director Registered Office: Construction House, 2nd floor, 5, Walchand Hirachand Road, Ballard Estate, Mumbai - 400 001 Date : 19th May, 2016 |