DIRECTORS' REPORT To the Members, Your Directors take pleasure in presenting the Seventy-ninth Annual Report together with the Audited Annual Financial Statements of the Company for the Financial Year ended 31st March, 2015. DIVIDEND Your Directors recommend a dividend of 15% (i.e. Rs. 1.50 per equity share) on 23,90,276 equity shares of Rs. 10/- each for the financial year ended 31st March, 2015. The dividend, if approved at the forthcoming Annual General Meeting, will absorb Rs. 35.85 lac excluding tax on dividend of Rs. 7.50 lac. OPERATIONS AND STATE OF THE COMPANY'S AFFAIRS During the year under review, the market remained sluggish and the industrial slowdown continued. The revenue from the operations for the year under review was Rs. 87.27 crore as against Rs. 96.61 crore for the previous year. The profit before tax for the year was Rs. 62 lakhs as against Rs. 66 lakhs for the previous year. Despite the drop in revenue of around Rs. 10 crore, the company was able to minimise the adverse impact on the profit for the year under review, through diligent control on the cost of material and operating expenses and with better quality of orders. FUTURE OUTLOOK There has not been any significant change in the demand for capital goods in the steel, mining and sugar industry, where your Company is active. This pattern is expected to continue for some more time and your Company, therefore, considers it necessary to expand the market base by introducing new products together with active marketing strategy for other products introduced in the last couple of years. Keeping the above in view, the Company has entered into a new collaboration agreement with AVIiTEQ Vibrationstechnik GmbH, Germany for manufacture of wide range of unbalance motors, which finds application not only in material handling segment but are also used extensively in various other segments such as construction, foundry, etc. The Company has also entered into a new collaboration with FLEXIMAT GmbH, Austria, for manufacture of special design of Flip Flop Screens which are used for difficult to screen material such as wet coal and other wet minerals and are extensively used in power plants and chemical industry. The above products shall be launched in the market in the latter part of this current year and the Company expects significant contribution from these products in the current and future financial years. JOINT VENTURE COMPANY The commercial operations of Mozer Process Technology Pvt. Ltd. (MPTPL), the Company's Joint Venture Company with Allgaier Werke GmbH, Germany, with respect to its principal business activity, namely, marketing, commissioning and servicing of Mozer Type Dryers, are yet to commence. However, MPTPL expects to book its first revenue from its principal business activity during the first quarter of the Financial Year 2015-16. MPTPL, however, earned a revenue of Rs. 7.57 lac during the Financial Year ended 31st March, 2015 from miscellaneous trading activities and commission services rendered as compared to no revenue from operations during the previous Financial Year ended 31st March, 2014. Besides, MPTPL earned interest and other income of Rs. 3.20 lac during the Financial Year ended 31st March, 2015 as compared to Rs. 2.88 lac during the previous Financial Year ended 31st March, 2014. MPTPL suffered a nominal loss of Rs. 1.89 lac during the Financial Year ended 31st March, 2015 as compared to a loss of Rs. 29.09 lac for its first Financial Year ended 31st March, 2014. The Company has no subsidiaries. A Statement in Form AOC-I relating to the Associate/Joint Venture Company as required pursuant to Section 129 (3) of the Companies Act, 2013, read with Rule 5 of Companies (Accounts) Rules, 2014, is attached to the Financial Statements. BUILDING MATERIAL DIVISION A new Business Division of the Company, viz. the Building Material Division as a Strategic Business Unit for manufacture of high quality Dry Mix Mortar/ Dry Mix Products and related building materials, is being set up at Ajmer, Rajasthan. The initial investment for setting up the plant at Ajmer is estimated at around Rs. 20 crores which shall be financed primarily from a term loan facility of Rs. 15 crores and the balance amount of investment shall be financed from internal accruals. The Company has already acquired the land for the project. Construction of the plant is in progress and the commercial production of the said unit is expected to commence in the last quarter of the current Financial Year 2015-16. CAPITAL EXPENDITURE The total capital expenditure incurred for the year under review was Rs. 581.93 lac (including Rs. 496.90 lac incurred for the Building Material Division at Ajmer). EXTRACT OF ANNUAL RETURN An extract of the Annual Return as on the Financial Year ended on 31.03.2015 as required under Section 134(3) of the Companies Act, 2013, read with Section 92(3) of the said Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 are set out in Annexure-I, forming part of this Report. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO As required under Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of Companies (Accounts) Rules, 2014, particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are set out in Annexure-II, forming part of this Report. RELATED PARTY TRANSACTIONS Your Board has framed a Related Party Transactions Policy which is available on the Company's website. During the year, the Company had not entered into any contract/ arrangement/ transaction with any related party which could be considered material in accordance with the Related Party Transactions Policy of the Company. Details of related party transactions (which are not considered material) entered into on an arm's length basis during the Financial Year ended 31st March, 2015 are set out in Annexure-III, forming part of this Report, pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Section 188 of the said Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. DETAILS RELATING TO REMUNERATION OF DIRECTORS & EMPLOYEES A statement as required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, relating to details of remuneration of directors and employees, are set out in Annexure-IV, forming part of this Report. NUMBER OF BOARD MEETINGS 8 (Eight) Board meetings of the Company were held during the Financial Year ended 31st March, 2015. For further details, please refer to the Report on Corporate Governance forming part of this Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013 read with Section 134(5) of the said Act, the Directors, to the best of their knowledge and belief, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company, along with proper explanation relating to material departures, if any; b) appropriate accounting policies have been selected and applied consistently and such judgments and estimates have been 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 March, 2015 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) the Board had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively; and f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and operating effectively. DIRECTORS Mr. Ravi Ranjan Prasad (DIN 00030458) was appointed as an Independent Director on the Board on 25th July, 2014 and the same was confirmed by the shareholders at their 78th Annual General Meeting held on 12th September, 2014. Mr. Sukhendu Ray, Independent Director (DIN 00009110), resigned from the Board of Directors of the Company with effect from 2nd April, 2015. The Board acknowledges and places on record the invaluable contributions rendered by Mr. Ray during his tenure as a Director of the Company. Mrs. (Prof.) Bharati Ray (DIN 06965340) was appointed as an Independent Woman Director on the Boardon 7th April, 2015 subject to the approval of the shareholders at their forthcoming 79th Annual General Meeting. Mr. Prasad, Mrs. (Prof.) Ray & Mr. Ratan Lal Gaggar (DIN 00322904) another Independent Director, are not liable to retire by rotation in terms of the provisions of Section 149(13) of the Companies Act, 2013. Mr. Sanjoy Saha (DIN 00226685) retired from his position of Executive Director (Whole-time Director) with effect from 1st May, 2015 and thus ceased to be a Director on the Company's Board. The Board acknowledges and places on record the invaluable contributions rendered by Mr. Saha both as an employee and as a Whole-time Director of the Company during his long association with the Company. The Board of Directors of the Company, at its meeting held on 7th April, 2015, re-appointed Mr. Indrajit Sen (DIN 00216190) as the Managing Director of the Company for a further period of three years with effect from 1st May, 2015 subject to the approval of the shareholders at their forthcoming 79th Annual General Meeting. Mr. Sanjay Bagaria, Chairman, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Company has received, at the first meeting of the Board of Directors held during the Current Financial Year 2015-16, the declarations pursuant to Section 149(7) of the Companies Act, 2013 from Mr. Ratan Lal Gaggar, Mr. Ravi Ranjan Prasad & Mrs. (Prof.) Bharati Ray, Independent Directors of the Company, to the effect that they meet the criteria of independence as specified in Section 149(6) of the said Act. The Nomination & Remuneration Committee of the Board has devised and the Board has duly adopted a Board Diversity Policy dealing with Board composition and appointments, which is available on the Company's website. The Nomination & Remuneration Committee nominates new appointees to the Board and the appointments are made by the Board. The Nomination & Remuneration Committee of the Board has also formulated the criteria for determining the qualifications, positive attributes and independence of Independent Directors to be appointed on the Board of the Company. REMUNERATION POLICY The Nomination & Remuneration Committee of the Board has devised and the Board has duly adopted a Remuneration Policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees of the Company. The Remuneration Policy of the Company ensures that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the employees in order to run the Company successfully. The Policy sets out the guiding principles for determining the remuneration payable to the Directors, Key Managerial Personnel and other employees of the Company. The remuneration payable to the Executive Directors is recommended by the Nomination & Remuneration Committee based on the guiding principles as set out in the Remuneration Policy and subject to the approval of the Board and the shareholders. As regards the Non-Executive Directors, the Board, from time to time, determines the sitting fee payable for attending each meeting of the Board or Committee thereof within the overall limits fixed under the Companies Act, 2013 and rules made thereunder. The Non-Executive Chairman is paid a Commission @ 1% of the net profits of the Company with the approval of the Board and shareholders. The employees of the Company are assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the Company. Individual remuneration is determined within the appropriate grade and is based on various factors such as job profile, skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs. BOARD EVALUATION The Nomination & Remuneration Committee of the Board has formulated the criteria for evaluating the performance of the Board and the individual Directors and the same has been adopted by the Board. The Independent Directors, in their separate meeting, evaluate the non-independent Directors and the Board as a whole once a year. The Independent Directors are evaluated individually once a year by the entire Board sans the Independent Director being evaluated. The various Committees of the Board are evaluated by the Board once a year. The first such evaluation of the Board as a whole, its various Committees and of the individual Directors has been completed. OTHER KEY MANAGERIAL PERSONNEL Mr. Suhas Chandra Saha, hitherto acting as the Company Secretary & Chief Financial Officer of the Company, ceased to be Chief Financial Officer with effect from 1st February, 2015 but continues to be the Company Secretary. Mr. Asish Kumar Neogi was appointed as the Chief Financial Officer of the Company with effect from 1st February, 2015. AUDITORS' REPORT There are no reservations, qualifications or adverse remarks in the Auditors' Report on the Annual Financial Statements for the Financial Year ended 31st March, 2015. AUDITORS In accordance with Section 139 of the Companies Act, 2013, M/s. Lodha & Co., Chartered Accountants, were appointed as the Statutory Auditors of the Company at the 78th Annual General Meeting (AGM) of the shareholders of the Company held on 12th September, 2014, for a period of three years with effect from the conclusion of the said 78th AGM till the conclusion of the 81st AGM subject to ratification at the 79th & 80th AGMs. They having expressed their willingness to continue in office and having further confirmed that their appointment, if ratified, shall be within the limits specified in Section 141(3)(g) of the Companies Act, 2013, the Board recommends to the shareholders, the ratification of the appointment of M/s. Lodha & Company as the Statutory Auditors of the Company at the ensuing Seventy-Ninth Annual General Meeting of the shareholders of the Company. COST AUDIT M/s. S. Datta & Co., Cost Accountants in Practice, who conducted the audit of the cost accounting records relating to all the products manufactured by the Company across all its plants for the Financial Year 2013-14 pursuant to Order No. F.No. 52/26/CAB-2010 dated 24th January, 2012, issued by the Cost Audit Branch, Ministry of Corporate Affairs, Government of India under Section 233B of the Companies Act, 1956, filed the Cost Audit Report with the Ministry of Corporate Affairs, Government of India on 30th September, 2014. The due date for filing the said report was 30th September, 2014. In terms of the Companies Act, 2013 and the rules made thereunder, audit of the cost accounting records relating to the products manufactured by the Company is not applicable for the Financial Year 2014-15. AUDIT COMMITTEE The Audit Committee of the Board, as on date, consists of Mr. Ravi Ranjan Prasad, Chairman of the Committee & Independent Director, Mr. Ratan Lal Gaggar, Independent Director and Mr. Indrajit Sen, Managing Director. For further details, please refer to the Report on Corporate Governance forming part of this Annual Report. SECRETARIAL AUDIT REPORT The Secretarial Audit Report for the Financial Year ended 31st March, 2015 issued by Mr. Arup Kumar Roy, Company Secretary in Practice, Secretarial Auditor of the Company, is annexed to this Report and marked as Annexure VI as required under Section 204 of the Companies Act, 2013. There are no reservations, qualifications or adverse remarks in the said Secretarial Audit Report. LOANS, GUARANTEES OR INVESTMENTS U/S 186 The Company has not granted any loans to other bodies corporate nor has the Company given any guarantees or provided any security for loans by other bodies corporate under Section 186 of the Companies Act, 2013. The Company invests its surplus fund in Fixed Deposits with banks or in Fixed Maturity Plans with Mutual Fund Houses, which are fixed income bearing debt funds. The Company has invested Rs. 50 lac in the equity shares of its Joint Venture Company, Mozer Process Technology Pvt. Ltd. RISK MANAGEMENT The Company has a Risk Management Plan in place approved by the Board of Directors. The Risk Management Committee is responsible for the implementation of the plan and reporting thereon to the Board. INTERNAL FINANCIAL CONTROLS In the opinion of the Board, the internal financial controls with reference to the Financial Statements established by the Board are adequate. During the year, such controls were tested and no material weakness in the design, operation or implementation thereof was observed. CORPORATE GOVERNANCE In compliance with Clause 49 of the Equity Listing Agreement with Stock Exchanges relating to Corporate Governance, the following Reports/Certificates are attached which form part of this Annual Report : i) Management Discussions and Analysis Report. ii) Report on Corporate Governance. iii) Certification by CEO/CFO. iv) Declaration from the Managing Director on compliance of Code of Conduct by the Directors and Senior Management Personnel. v) Auditors' Certificate regarding compliance of conditions of Corporate Governance. CORPORATE SOCIAL RESPONSIBILITY In accordance with Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) Committee of the Board of Directors of the Company has been constituted which, as on date, consists of Mr. Sanjay Bagaria, Chairman of the Committee, Mrs. (Prof.) Bharati Ray, Independent Director & Mr. Ratan Lal Gaggar, Independent Director. The CSR Committee has developed a CSR Policy which has been duly approved by the Board and is available on the website of the Company. The CSR Committee is responsible for implementing the CSR Policy of the Company and reporting thereon to the Board. An Annual Report on CSR Activities including the Responsibility Statement of the CSR Committee for the Financial Year ended 31st March, 2015 as required under Section 135 of the Companies Act, 2013, read with Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014 are set out in Annexure-V, forming part of this Report. VIGIL MECHANISM Pursuant to Section 177 of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and revised Clause 49 of the Equity Listing Agreement with Stock Exchanges, the Board of Directors of the Company have established a Vigil Mechanism (Whistle Blower Policy) of the Company for the purpose of enabling the Directors and Employees to report unethical behaviour, actual or suspected fraud and violation of the Company's Code of Conduct or ethics policy, and the same has been posted on the website of the Company. The Audit Committee of the Board is responsible for overseeing/ monitoring the functioning and implementation of the Vigil Mechanism which is available on the Company's website. HUMAN RESOURCE MANAGEMENT The human resource development programmes in various areas are undertaken on an ongoing basis. INDUSTRIAL RELATIONS Industrial relations for the year under review at all units remained cordial. FIXED DEPOSITS The Company did not have any outstanding fixed deposits as on 31st March, 2015 or as on 31st March, 2014. The Company did not accept any fixed deposits during the year. CREDIT RATINGS In March, 2014, credit rating agency ICRA Limited had reaffirmed the [ICRA]A (pronounced as ICRA A) long-term scale rating (signifying an adequate degree of safety regarding timely servicing of financial obligations and carrying low credit risk) assigned to the Rs. 12.25 crore fund based and Rs. 21.00 crore non- fund based working capital credit facilities enjoyed by the Company from its bankers. The outlook on the long-term scale rating had been revised from Stable to Negative. ICRA had also reaffirmed the [ICRA]A1 (pronounced as ICRA A one) short-term scale rating (signifying a very strong degree of safety regarding timely payment of financial obligations and carrying lowest credit risk) assigned to the Rs. 10.00 crore fund based sub-limits and Rs. 5.00 crore non-fund based sub limits within the overall working capital credit facilities enjoyed by the Company from its bankers. However, the credit ratings are due for a review in June, 2015. QUALITY CERTIFICATIONS The Quality Management Systems of the Company with respect to all its plants - at Baidyabati, Nagpur & Aurangabad - and also its Corporate Office at Kolkata, have been certified by the Indian Register Quality Systems (Accreditation by RvA, the Netherlands) to conform to the requirements of the Standard ISO 9001:2008. GENERAL No significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the Company or the Company's operations in future. An Internal Complaints Committee as required under the recently enacted The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, has been formed. ACKNOWLEDGEMENT Your Directors take this opportunity to thank all government authorities, banks, customers, suppliers and shareholders, for the continuous support extended by them to the Company. Your Directors place on record their appreciation for the dedication and commitments of the employees at all levels in achieving and sustaining excellence in all areas of the operation of the Company. For & on behalf of the Board Sanjay Bagaria Chairman Kolkata 8th May, 2015 |