DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS 1. The Directors hereby present their Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2016. 2. DIVIDEND: Your Directors are pleased to recommend a Final Dividend of Rs. 4/- per equity share of face value of Rs. 10/- each for the year ended 31st March, 2016. The Interim Dividend of Rs. 20/- per equity share was paid on 23rd March, 2016. The Final Dividend, subject to the approval of Members at the Annual General Meeting on 30th July, 2016, will be paid on or after 30th July, 2016 to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Saturday, 23rd July, 2016 to Saturday, 30th July, 2016 (both days inclusive). The total dividend for the financial year, including the proposed Final Dividend, will amount to Rs. 24/-per equity share and will absorb Rs. 1440 Lakhs. (Previous Year Rs. 1440 Lakhs). The tax on distributed profits, payable by the Company would amount to Rs. 293.15 Lakhs as against Rs. 293.15 Lakhs for the previous financial year. 3. OPERATIONS: The Division-wise details are given below: i. VITRUM GLASS During the year under review, the Division achieved a turnover of Rs. 136.06 Crore which includes export of Rs. 18.61 Crore as against Rs. 22.74 Crore previous year. Due to over capacity in the glass industry, the division could not raise prices from its customers, despite a rise in costs. However, cost reduction efforts helped and the division could maintain its targeted profit. Over-capacity in the industry is slowly getting absorbed. The division is expected to improve its performance in the current year. ii. EMPIRE MACHINE TOOLS - MFTM (Metal Forming, Testing & Metrology) This Division is in the business of Engineering, Consultancy, and procurement of imported machines in the fields of Metal forming, welding, Proto-typing etc. Market conditions have been sluggish in these areas. Profitability has been affected by the imposition of Service Tax on the income of this Division. Markets show signs of lifting now, and we can expect a stronger performance in 2016. iii. EMPIRE MACHINE TOOLS - MCAT (Metal Cutting & Allied Technologies) Order in-flow for this division has been slow. Projects in Power generation, Railways etc. have not taken-off as anticipated. Service Tax has been imposed on the income of this division, affecting profitability adversely. The Indian Economy appears to be lifting now, and 2016 should prove to be a better year. iv. EMPIRE INDUSTRIAL EQUIPMENT Order booking in this Division has been good, especially helped through orders from a large Nigerian Refinery. Orders from Indian Customers' have been slow, however. The year 2016 should prove better. There is greater potential in the area of Solar Grid and Roof-top projects, in Led Projects, in Smart City Re-construction Projects etc. Service Tax has been imposed on the income of this division, adversely affecting profitability. The year 2016 should show improved profitability. v. EMPIRE VENDING (GRABBIT) GRABBIT is the only national player in this industry with multiple branch offices at Mumbai, Delhi, Bangalore, Pune and Hyderabad. GRABBIT provides premium food & beverage vending services to corporate offices, hotels, banks etc. through automated vending machines. GRABBIT promises easy access to hygienic packaged food and beverages on a 24x7 basis. We install state of the art Imported Vending Machines which are unique in the industry. A range of snacks under the brand name "SNAKPAK" were introduced and are being sold through our vending machines. The division expects to do well during the current year. vi. EMPIRE FOODS The Division Imports Frozen and Chilled Food products from around the Globe and procures Indigenous frozen food products to sell in HORECA (Hotels, Restaurants & Caterers) sector, which includes Leading Chain of Five Star / Four Star Hotels, Leading Restaurants, Air Caterers, Distributors and others in Food Industry. The Division has done well during the year under review and maintained its market leadership position in the country. With Eleven Branch offices, it has strong distribution throughout the country and has Plans to Export its products to neighboring countries like Nepal and Bhutan. During the Year under review, Division received "STAR OF THE INDUSTRY AWARD" from CMO Council of Asia and Asian Confederation of Businesses. The Division Plans to strengthen its position by further adding a number of Indigenous products this year. The division expects to expand its business in the current year. vii. EMPIRE REAL ESTATE The construction of Empire Plaza-II at Vikhroli is completed and Occupation Certificate is obtained for approximately 2 Lakhs Sq. Ft. Out of that, 80% of the area is booked by reputed clients and revenue will start from 1st August, 2016. Empire Plaza-I at Vikhroli and Empire Complex at Parel are 80% occupied by reputed clients under Leave and License arrangements. Empire Industrial Centrum The Empire Industrial Centrum is being developed on a 35 -Acre property in Ambernath. The Project started in the year 2014 after obtaining all the necessary Government Approvals. Currently 7 buildings (3 Industrial and 4 Residential) are being constructed and the pace of construction is as per schedule. Till date we have booked 305 units with a total value of Rs. l03/-Crores. The project comprises of 80% Industrial units, 15% Residential units and 5% Commercial units. The project should prove profitable for the company. The Empire Business Centre (TEBC) TEBC provides flexible and customizable work space solutions with fully furnished offices, complete business support services, meeting and conference room facilities that enables our clients to run their businesses without incurring massive start up costs and over-head expenses. Based on a core concept of providing the 'best-in-class' service, we provide a custom mix of products and services that deliver significant and measurable returns to our clients. Our services are scaled to meet the needs of each client, whether big or small, local or international. The various Products and Services that TEBC offers are Conference and Meeting Room, Video Conference, Business Lounge, Hot Desking, Executive Membership, Day Office. The current occupancy of TEBC is at 100%. The division is expected to do well in the current year. 4 CAPITAL EXPENDITURE The major Capital Expenditure is on account of Building (Rs. 39.17 Lakhs), Plant & Machinery (Rs. 264.40 Lakhs), Vehicles (Rs. 140.54 Lakhs), Furniture & Fixtures (Rs. 58.64 Lakhs) Office Equipments (Rs. 149.78 Lakhs), and Software (Rs. 86.82 Lakhs) 5. EXTRACT OF THE ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT 9 is annexed to this report. 6. NUMBER OF MEETINGS OF THE BOARD During the year Five Board Meetings and Four Audit Committee Meetings were convened and held. The details of these are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 7. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: (a) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2016 and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; "Internal Financial Controls" means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including the adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information; (f) the directors had devised proper systems to ensure compliances with the provisions of the applicable laws and that such systems were adequate and operating effectively. 8. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. 9. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 relating to the remuneration for the Directors, key managerial personnel, and other employees. As required by the rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the prescribed details are annexed to this report. 10. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK There is no qualification, reservation or adverse remark or disclaimer made - (i) by the auditor in his report; and (ii) by the Company Secretary in practice in her secretarial audit report 11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT There are no loans given, guarantees issued or investments made to which provisions of Section 186 are applicable to the Company. 12. CORPORATE GOVERNANCE As per Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Listing Agreement with the Stock Exchange, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report. 13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES 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. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons who 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. Prior omnibus approval of the Audit Committee is obtained on a quarterly 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 basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The report of the Board in respect of the particulars of contracts or arrangements with related parties referred to sub-section (1) of section 188 in Form AOC-2 is annexed to this report. 14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 2014, relating to the foregoing matters is given in the Annexure forming part of this report. 15. REPORT ON RISK MANAGEMENT POLICY The Risk Management Committee with its members as Mr. Dileep Malhotra, Mr. Rajbir Singh and Mr. C. P. Shah performs its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management. 16. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES The Company has developed and implemented the CSR policy to carry out activities in health and education and also formed KARO Trust which has been registered on 12.03.2015 with Charity Commissioner, Mumbai for this purpose. The policy is put up on Company's website. CSR report as per the provision of section 135 of the Companies Act, 2013 is annexed to this report. 17. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and compliance committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 18. TRANSFER OF UNPAID/UNCLAIMED AMOUNTS TO IEPF Pursuant to the provisions of Section 125 of Companies Act, 2013 the Unclaimed Dividend, Fixed Deposits and interest thereon which remained unpaid/unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Companies Act, 2013. 19. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company. 20. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. 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 of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. 21. SECRETARIAL AUDIT REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mrs. Deepa Gupta, Practicing Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed to this report. 22. DIRECTORS In accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, Mr. Rajbir Singh, having Director Identification Number 00826402, retire by rotation at this Annual General Meeting. As per the Provision of the Companies Act, 2013 he has been appointed as Independent Director for a term of five years from the date of ensuing Annual General Meeting subject to the approval of the members. In accordance with the provisions of the Companies Act, 2013, and the Articles of Association of the Company, Mr. Dileep Malhotra, having Director Identification Number 00027168, retire by rotation at this Annual General Meeting and being eligible offer himself for re-appointment. Mr. Rasheed A Maskati, having Director Identification Number 00057850, will be retiring at the ensuing Annual General Meeting. The Board has placed on record its high sense of appreciation for the valuable services rendered by Mr. Rasheed A. Maskati during the period of his association with the Company. 23 SUBSIDIARIES, JOINT VENTURE OR ASSOCIATE COMPANIES There are no companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year. 24. DETAILS RELATING TO FIXED DEPOSITS The details relating to deposits covered under Chapter V of the Act - (a) Accepted during the year: Rs. 13471.88 Lakhs. (b) Remained unpaid or unclaimed as at the end of the year: Rs. 22.35 Lakhs. (c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved - (i) At the beginning of the year: Nil (ii) Maximum during the year: Nil (iii) At the end of the year: Nil Details of deposits which are not in compliance with the requirements of Chapter V of the Act, 2013: Deposits from Directors: Rs. 16.96 Lakhs. 25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. 26. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL CONTROLS The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. 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, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. 27. ACKNOWLEDGEMENT Your Directors would like to express their gratitude for the abundant assistance and co-operation received by the Company from its workers, staff, officers, Consortium Banks, members and other Government Bodies during the year under review. 28. AUDITORS The Company's Auditors, Messrs D. P. Ghevaria & Company, Chartered Accountants, Mumbai who retire at the ensuing Annual General Meeting of the Company are eligible for reappointment for one more year as per the Companies Act, 2013. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. As required under the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 29. COST AUDITORS Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its Construction activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs Vinay Mulay & Co. to audit the cost accounts of the Company for the financial year 20152016 on a remuneration of Rs. 1,00,000/-. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to Messrs Vinay Mulay & Co., Cost Auditors is included at Item No. 6 of the Notice convening the Annual General Meeting. On Behalf of the Board of Directors S. C. MALHOTRA Chairman Place : Mumbai Date : May 26, 2016 |