DIRECTORS' REPORT DEAR MEMBERS, Your Directors are pleased to present the 52 Annual Report for the year ended 31st March 2015 OPERATING RESULTS The Company witnessed a decline in revenue from operations by 15% to Rs. 100.77 crores from Rs. 119.06 crores in the previous year. This is primarily due to the slowdown in domestic as well as international markets. Further, the Company has been using part of its capacity for trials and research for the new technologies that shall be introduced in its new manufacturing facility, the Advanced Manufacturing & Technology Centre. The EBITDA as a percentage of revenue rose to 19% from 18% last year. The Profit after tax has risen by Rs. 0.47 crores to Rs. 6.49 crores from Rs. 6.02 crores in the previous year. For a detailed discussion on the Company's financial and operating results, please refer to the Financial Performance section of the Management Discussion and Analysis Report in this Annual Report. DIVIDEND The Company is in the final phase of construction of its new clean, green and lean manufacturing facilities in Lucknow, Uttar Pradesh along with substantial investments in new technologies and capabilities. In view of the ongoing expansion and development, a sizeable outlay of funds is expected in the coming year. Hence, the directors do not recommend any dividend this year. Further, the Company has not transferred any amount to General Reserve during the year. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS As per the requirement of section 186(4) of Companies Act, 2013, particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements on page number 132 & 133. The Company is in compliance with the limits as prescribed under Section 186 of Companies Act, 2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules, 2014. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. The Company's policy on related party transactions may be accessed on the Company's website at http://www.ptcil.c Particulars of contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013, are presented in Annexure III to the Directors' Report in Form AOC 2. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. However in view of expansion of scope of the AMTC project (as explained in detail under head “Business” of this report) to equip the said plant with new technologies to create a competitive advantage and value addition to the Company's products, the management expects a delay of 12-18 months in the start of commercial production of the new Plant. UNSECURED, COMPULSORY CONVERTIBLE DEBENTURES During the year, the Company converted the 4,00,000 (Four Lakhs) Zero Coupon Compulsory Convertible Debentures (“CCDs”) of face value of Rs. 1,000/- (Rupees One thousand) each issued to the Investors after taking th necessary approval from shareholders at 50 Annual General Meeting held on July 16, 2013 into 10,47,813 equity shares of Rs. 10/- each. The Company converted 1,39,130 CCDs in to 3,64,456 fully paid equity shares in the first tranche and thereafter 2,60,870 CCDs were converted into 6,83,357 fully paid equity shares in the second tranche. On the Investors' request, shareholders' permission was sought by obtained in the 51st Annual General Meeting extension of tenure of balance CCDs from 12 months to 18 months as per SEBI (ICDR) Regulations, 2009 on date of this report, no CCDs are pending for conversion. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT In terms of the provisions of Clause 49 of the Listing Agreement, the Management's discussion and analysis is set out in this Annual Report on Page 53 . 2. BUSINESS NEW UNIT With the experience and learning that PTC has acqui in the past 10 to 15 years with Replicast®, automation, robotics, CNC machining and other technologies, PTC is currently building a new state-of-the-art Advanced Manufacturing & Technology Centre, (AMTC) in Lucknow, India which will house the most advanced technologies like Replicast® and RapidCast™ with latest equipment and machineries. PTC's CNC machining capability shall also be expanded and shall include the latest 5-Axis CNC machines also. This facility shall have the added capability to produce single piece castings of up to 5,000 kgs. This new facility shall also have Titanium Casting capability for the first time in India. In the first phase, the built up area for the plant shall be 150,000 square feet. With the new technologies and capabilities that have been added to this project, the total project cost is expected to be approximately Rs. 142 crores, which is proposed to be met by borrowings from banks & financial Institutions, internal accruals and raising of fresh funds through issue of equity/convertible securities. All our manufacturing technologies will not just improve the quality and performance or products and reduce total cost, but the entire process has been re-engineered to make it more green and reduce or eliminate wastage at every stage of the manufacturing process. Considerable improvements in productivity have been kept in mind, and automation and robot-assisted manufacturing has been employed which further increases the consistency and reliability of the process. Beside the manufacturing process being 'green', the entire building shall also be a green building with solar panels on the roof of the building. Other energy efficient measures like rain-water harvesting, waste heat recovery, recycling and reclamation of direct and indirect materials, etc. shall also be employed in the new plant. SUBSIDIARY During the previous year, the Company had entered into a Joint Venture Agreement with Modrany Power, a.s., a leading Czech producer and supplier of piping systems for the power industry. Modrany Power & PTC Piping Systems Private Limited had been incorporated as a subsidiary of PTC during the previous year to jointly acquire knowledge and bid & execute projects for high pressure piping systems and allied equipments. The consolidated financial statements presented by the Company include financial information of its subsidiary prepared in compliance with applicable Accounting Standards. The Company will make available the annual report of subsidiary company upon request by any shareholder of the Company interested in obtaining the same. Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiary, are available on the website of the Company. Statement containing salient features of financial statements of subsidiary as required under Section 129(3) of Companies Act, 2013 read with Rule 5 of The Companies (Accounts) Rules are presented in Annexure II to the Directors' Report in form AOC 1. RESEARCH AND DEVELOPMENT The Company has already been recognized by the Department of Scientific and Industrial Research (DSIR), under the Ministry of Science & Technology, Government of India, for its in-house Research and Development facilities. DSIR has also granted approval to PTC Industries Limited u/s 35 (2AB) of the Income Tax Act, 1961 for availing various incentives provided under the Act in connection with its research and development ac During the year, the Company has continued to work under the Technology Development and Demonstration Programme (TDDP) for development and commercialization of the RapidCast™ technology for manufacture of stainless steel castings of weight up to 5,000 kilograms. The Company has been conducting several trials in this project and a review of the progress was also carried out during the year by the Project Review Committee appointed by DSIR. This project is expected to be commissioned by the end of this year. QUALITY AND SAFETY The Company continues to accord high priority to quality, safety, training, development, health and environment. It has always sought to deliver value to its customers through its commitment to quality. During the year, it continued to adhere to international quality standard certifications such as ISO 9001:2008 and ISO 14001:2004 OHSAS 18001:2007, PED (Pressure Equipment directive), TUV W0 MERKBLATT and various Marine Classification Approvals. The Management is committed to strengthening the safety measures in the workplace and bring about constant improvements in this area. The Company has been able to lay down the foundations for a quality centric work culture by involving its employees and ensuring a good work environment. Proper equipment has been installed to extract dust, smoke and smell which makes the environment clean and healthy. Safety measures are mandatory and are constantly reviewed for improvement. The workers understand the importance of good housekeeping both at work and at home. PTC has always emphasized on minimizing the environmental impact of its operations and its products through adoption of continuous improvements in its efficiency. Further, the Company contributes positively to the communities around or near its operations by participating actively in community initiatives. The Company's EHS department operating under an experienced environmental engineer, oversees compliance with various international guidelines for environment, health & safety AWARDS & RECOGNITIONS In July 2014, Forbes India identified PTC Industries among sixteen 'Hidden Gems' of Indian industries. These are fast growing companies which are constantly innovating and aiming for greater heights. Forbes' selection of PTC was due to its investments in unique technology and commitment to innovation. Recently, our Managing Director, Mr. Sachin Agarwal was also recognized for his achievements in a publication 'Small Big Bang' by Indian Institute of Management (IIM) where he has been picked for his significant contribution to industry and his leadership qualities. 3.HUMAN RESOURCE MANAGEMENT A nurturing and encouraging environment is the seed for good human resource management. PTC believes that the holistic growth and development of its workforce is intrinsic to the growth and progress of the Company. The employees are given ample opportunities to become aware of and learn about technological developments in the industry and novel approaches adopted by others in the world to update their knowledge and approach through internal and external seminars and workshops. The Company encourages skill development and cross-functional training. Effective communication channels are in place for interactions between the management and the staff. Innovation is a central ideal within the Company and employees are encouraged in this direction by giving them just enough structure and support to help them navigate uncertainty and tapping into each individual's creative process without stifling it. Every employee from the grass root level to senior staff is given freedom to express his or her views and put forth their ideas. The management at PTC is highly engaged in its dictum of innovation and regularly demonstrates this intent with its words and actions. This active participation enables them to spot inflection points that may be missed by their staff and also gives them a deeper intuition when it's time to take a decision. Apart from regular interaction, the management provides ample opportunities for inventive thoughts to come forward through exclusive pages and time devoted to creative and innovative thinking in our in-house magazine and office functions. PARTICULARS OF EMPLOYEES The disclosure as required under the provisions of Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company has been given at Annexure IV of this re 4.CORPORATE GOVERN As stipulated in Clause 49 of the Listing Agreement, a separate section on Corporate Governance forming part of the Directors' Report and Management Discussion & Analysis Report and the certificate from Practicing Company Secretary confirming the compliance of the conditions on Corporate Governance are included in the Annual Report. NUMBER OF MEETINGS OF THE BOARD The Board met six times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the Listing Agreement. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Company seeks to maintain an appropriate mix of executive and independent directors in order to maintain the independence of the Board and segregate the functions of governance and management. As at year end, the Board consists of 10 members, four of whom are Whole-time directors, five are Independent directors and one is a Nominee director. During the year, the Company appointed two independent directors; both the appointees are qualified personnel with requisite qualifications, experience, positive attributes and satisfy all the criteria as set out under Schedule IV of Companies Act, 2013. These appointees are only eligible for sitting fees for attending Board meetings and Committee meetings and other out of pocket expenses duly made for attending meetings of the Board or any committee of the Board thereof. The Company is in process of forming a Remuneration Policy which will be approved by Nomination and Remuneration Committee of the Board. Your Company, in compliance with section 178(1) of the Companies Act, 2013 read with The Companies (Meeting of Board and its Powers) Rules, 2014, has duly constituted a Nomination and Remuneration Committee. This committee is chaired by an independent director and formulates the criteria for determining qualifications, positive attributes, independence of a director and other matters. Appointment and the remuneration of Board members, key managerial personnel or one level below the Board level is fixed on the basis of the recommendation of the Nomination and Remuneration Committee made to the Board, which may ratify them, with or without modifications. Disclosures pursuant to the requirements of section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been made in Annexure IV of this Board Report. DECLARATION BY INDEPENDENT DIRECTORS As per the requirement of section 149(7), the Company has received a declaration from every Independent Director that he or she meets the criteria of independence as laid down under section 149(6) read with rule 5 of the Companies (Appointment and Qualification of Directors) Rule, 2014 and Clause 49 of the Listing Agreement. BOARD EVALUATION Pursuant to the requirement of the Companies Act, 2013, a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. The Act states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board as explained under the Corporate Governance section of this Annual Report. In a separate meeting of independent Directors, performance of non-independent directors was evaluated. INDUCTIONS On the recommendations of the Nomination and Remuneration Committee, the Board appointed Mrs Shashi Vaish as an additional director in the category of woman independent director with effect from August 9, 2014. Mrs. Shashi Vaish is a Company Secretary and has an experience of over 39 years in the secretarial field. Further, the Nomination and Remuneration Committee also recommended the appointment of Mr. Brij Lal Gupta as an independent director with effect from December 6, 2014. Mr. Brij Lal Gupta has more than 41 years of experience in the banking sector and retired as the General Manager from Punjab National Bank in 2011. He has also worked with various finance companies in different capacities and serves as guest faculty with several institutions. The directors seek the shareholders' support in confirming the appointment of Mrs. Shashi Vaish and Mr. Brij Lal Gupta in the ensuing Annual General Meeting. During the year, the Nomination and Remuneration Committee also recommended the appointment of Mrs. Smita Agarwal as the Chief Financial Officer of the Company with effect from May 25, 2014. Mrs. Smita Agarwal has over 20 years of experience in accounting and has worked for one of the Big Four accounting firms in India and United Kingdom. She has been associated with the Company in various capacities since 2008. REAPPOINTMENTS As per the provisions of the Companies Act, 2013, Mr. Alok Agarwal retires at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. Mr. Alok Agarwal, a whole-time director of the Company, who manages the Quality and Technical divisions of the Company, has all the requisite skills, experience and knowledge for this role and the directors recommend his re-appointment, as proposed in the notice of the 52nd Annual General Meeting. RETIREMENTS AND RESIGNATIONS Mr. Arun Jwala Prasad retired as non-executive director of the Company with effect from August 9, 2014. Mr. Prasad joined the Company in 1997 and was an immense support in helping the Company builds its infrastructure. The Board places on record its sincere appreciation for Mr. Prasad's long and rewarding association with the Company. Mr. Radha Krishna Pandey resigned as independent director with effect from September 23, 2014. He was associated with the Company since March 2003 and contributed greatly to the growth and progress of the Company. The Board thanks him for providing valuable guidance during his tenure with the Company. COMMITTEES OF THE BOARD Currently, the Board has 8 (eight) committees. A detailed note on the Board and its committees is provided in the Corporate Governance Report section of this Annual Report. The composition of the committees and compliances, as per applicable provisions of the Act and Rules, are as for DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 your Directors confirm that: (a)in preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with the requirements set out under Schedule III of the Act have been followed and that there are no material departures from the same; (b)they have 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 at the end of the financial year ended on March 31, 2015 and of the profit of the Company for year ended on that date; (c)they have taken proper and sufficient care, to the best of their knowledge and ability, 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)they have prepared the annual accounts on a going concern (e)they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively to the best of their knowledge and ability; and (f)the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively. LISTING During the year under report the Company achieved another milestone and secured listing of its securities on BSE Limited w.e.f. March 12, 2015. In addition to connectivity with Central Depository Services Limited (CDSL), the Company has established connectivity with National Securities Depository Limited (NSDL) to facilitate its members. The Company has been listed on Over The Counter Exchange of India (OTCEI) since 1995. However OTCEI has been de-recognised as a stock exchange under the relevant provision of the Securities and Exchange Board of India Act, 1992 and the Securities Contracts (Regulation) Act, 1956 with effect from March 31, 2015. The Company has paid listing fees for the year 2015- 4.AUDIT STATUTORY AUD The statutory auditors of the Company, M/s Walker Chandiok & Associates, Chartered Accountants were appointed as statutory auditors of the company in the 51st Annual General Meeting of the Company to hold th office until the conclusion of the 56 Annual General Meeting, subject to ratification of such appointment every Annual General Meeting in accordance with the provisions of section 139 of the Companies Act, 2013 reads with Rule 3(7) of The Companies (Audit & Auditors) Rules, 2014, on a remuneration to be fixed by the Board of Directors of the Company. Accordingly, the re-appointment of M/s Walker Chandiok & Associates, Chartered Accountants, as statutory auditors, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The notes referred to by the auditors in their reports are self-explanatory and hence do not require any explanation. The Auditors' Report does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITOR M/s Amit Gupta & Associates, Practicing Company Secretaries were appointed as secretarial auditors of the Company for the year 2014-15 as required under Section 204 of the Companies Act, 2013 and Rules made there under. The secretarial audit report for FY 2014-15 forms part of the Annual Report (Annexure to the Directors' Report in Form MR. 3) and carries no qualifications, reservations, adverse remarks or disclaimers and hence no explanations are required. The Board has further appointed M/s Amit Gupta & Associates, Practicing Company Secretaries, as secretarial auditor of the Company for the financial year 2015-16. COST AUDIT In terms of the provisions of Rule 4(3) of the Company (Cost record and Audit) Rules, 2014 the Cost Audit is applicable on the Company during 2014-15 & 2015-16 ,in view of export revenue exceeding 75% of total revenue. However the Company continues to maintain Cost records in the prescribed manner in terms of the provisions of section 148(1) of the Companies Act, 2013 read with the Company (Cost record and Audit) Rules, 2014. SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future. AUDIT COMMITTEE AND VIGIL MECHANISM Pursuant to requirement of section 177(1) of Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Clause 49 of Listing Agreement, your Company has already formed the Audit Committee, composition of which is covered under Corporate Governance report section of this Annual Report. The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement, includes appointment of a Whistle Officer who will look into the matter, conduct detailed investigation and take appropriate disciplinary action. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Whistle Blower Officer or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: http://www.ptcil.com. During the year under review, no employee was denied access to Whistle Blower Officer or Audit Committee. EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure I to this Report. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. RISK MANAGEMENT PTC aims to have a formalized and systematic approach for managing risks across the Company. It encourages knowledge and experience sharing in order to increase transparency on the key risks to the Company to the extent possible. This approach increases risk awareness, and ensures proper management of risks as part of the daily management activities. During the year, the Company has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in: Reviewing and approving the Company's Risk Management Policy so that it is consistent with the Company's objectives; and Ensuring that all the risks that the Company faces such as strategic, operational, financial, compliance and other risks are identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee. The policy on Risk Management may be accessed on the Company's website at the link: http;//www.ptcil.com The objective of the Company's risk management process is to support a structured and consistent approach to identify, prioritize, manage, monitor and report on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has introduced several initiatives for risk management including the introduction of audit functions and processes to identify and create awareness of risks, optimal risk mitigation and efficient management of internal control and assurance activities. 5.CORPORATE SOCIAL RESPONSIBIL PTC strongly believes in concept of sustainable development and is committed to operate and grow its operations in a socially and environmentally responsible way. Our vision is to expand our operations whilst reducing the environmental impact of our operations and increasing the positive social impact on our community. As per the Companies Act, 2013, all companies with a net worth of Rs. 100 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising of three or more directors, at least one of whom should be an independent director and such company shall spend at least 2% of the average net profits of the company's immediately preceding financial years on CSR activities. The Company has duly constituted a Corporate Social Responsibility (CSR) Committee pursuant to the requirement of Section 135(1) of Companies Act, 2013 and the Rules made there under. On the recommendation of CSR committee, the Board has approved the Corporate Social Responsibility Policy which is available on the Company's website www.ptcil.c The Company has formed PTC Foundation, a not-for profit trust, during the year for the purpose of undertaking CSR activities. PTC Foundation shall work along with the Board and the CSR committee in order to identify and implement CSR initiatives of the Company. Key CSR initiatives of the Company focus for providing primary and secondary education, supporting technical learning institutes, empowering women, improving health and sanitation facilities and promoting Indian art and culture. The Company has spent an amount of Rs 13.89 Lakhs for its CSR activities during the fin 2014-15, which is little less than 2%. mainly due to pending documentation. The Company management is fully aware of its role in sustainable development and has decided to make additional expenditure of Rs. 5.98 Lakhs during 2015-16 (being shortfall of previous year). In addition to structured CSR, PTC keeps on contributing towards social causes in its own way. Recently, it contributed by taking an initiative for organizing a voluntary donation camp on May 5, 2015 at its registered office, wherein the Company and its employees voluntarily donated food, blankets, tents, water, etc., and the same were sent by a truck for distribution in Nepal. As per the requirement of Rule 9 of The Companies (Accounts) Rule, 2014, an annual report on CSR activities is attached to this Board's Report at Annexure 6.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo in accordance with the Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed to the Directors' Report in Annexu ACKNOWLEDGEs The Board of Directors thank the bankers of the Company and other financial institutions and government authorities for their guidance and continued support extended to the Company throughout the year. We look forward to having the same support in our endeavor to better the lives of all those who are associated with the Company. The Board of Directors also place on record their sincere appreciation for the significant contribution made by its employees, workers and outside professionals through their dedication, hard work and commitment exhibited in the overall development, growth and prosperity of the Company On behalf of the Board of Directors Sachin Lucknow Agarwal Managing Director Alok Agarwal Director-Quality & Tech Place: lucknow Date: June 25, 2015 |