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Directors Report of Carnation Industries Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 32nd Annual Report and the Audited Financial Statement of the Company for the financial year ended 31st March, 2015.

FINANCIAL PERFORMANCE (Rs. in Lacs)

For Year ended 31.3.2015

Revenue from operation and other operating revenue:

Export Sales (Net of Freight) 9030.29

Domestic Sales (Net of Central 150.25

Excise and Vat)

Export Incentives 425.82

Other Income 314.30

9920.66

Profit before Finance Costs, 993.17

Depreciation & Amortisation and Tax

Finance Costs 654.25

Depreciation & Amortisation 161.83

Profit/(Loss) before Tax 177.09

Provision for Tax

- Current 40.00

- Deferred (4.87)

- Tax for Earlier Years 1.71

Profit/(Loss) after Tax 140.25

Surplus brought forward from 290.58

previous year

Available Surplus/ (Deficit)

for appropriation 430.83

Proposed Dividend 20.74

Dividend Distribution Tax 4.15

Surplus/(Deficit) carried to Balance Sheet 405.94

For Year ended 31.03.2014

Revenue from operation and 8970.96 other operating revenue: 207.31 Export Sales (Net of Freight)

Domestic Sales (Net of Central 482.38 Excise and Vat) 172.81 Export Incentives 9833.46 Other Income 1022.24

Profit before Finance Costs, 558.53 Depreciation & Amortisation and Tax 180.20 Finance Costs 283.51 Depreciation & Amortisation

Profit/(Loss) before Tax 58.40 Provision for Tax (13.81) - Current 0.76 - Deferred 238.16 - Tax for Earlier Years 84.78 Profit/(Loss) after Tax

Surplus brought forward from

previous year 322.94 Available Surplus/ (Deficit) 27.66 for appropriation 4.70 Proposed Dividend 290.58 Dividend Distribution Tax

Surplus/(Deficit) carried to Balance Sheet

FINANCIAL REVIEW

During the financial year ended 31st March, 2015 the Company has achieved total revenue (net) from operations of Rs. 9920.66 lacs against Rs. 9833.46 lacs in the previous year. The profit before Finance Cost, Depreciation & Amortisation and Tax was Rs. 993.17 lacs against Rs.1022.24 lacs in the previous year. The profit before tax was Rs.177.09 lacs against Rs. 283.51 lacs in 2013- 2014. The profit after tax was Rs.140.25 lacs against Rs.238.16 lacs in 2013-2014.

Cash generation from operation was at a lower level than previous year due to increase in sundry debtors. The refund of input tax credit is better but still slow which has compounded the liquidity problem. The management has taken appropriate steps to ensure expeditious realization of the input tax credit and the export proceeds.

DIVIDEND

Your Directors have recommended a dividend of 6% (Re. 0.60 per Equity Share of Rs.10 each) for the financial year ended March 31,2015 subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. The dividend together with the dividend tax will entail a cash outlay of Rs.24.89 lakhs. The dividend will be paid to members whose names appear in the Register of Members as on 23rd September, 2015; in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

POLLUTION CONTROL MEASURES

The pollution control measures installed in the units of the Company are in full operation as required under the statutes.

SUBSIDIARY AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary or Associate Companies.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013 and as per the Articles of Association of the Company Mr. Arun Kumar Bose (DIN: 00131295), Whole time Director, will retire by rotation at the ensuing Annual General Meeting and being eligible , offers himself for reappointment.

Dr. Sephali Roy (DIN: 07151823) was appointed as an Additional cum Independent Director of the Company and shall hold office upto the date of the Annual General Meeting. The Company has received a notice from a member of the Company proposing her candidature for the office of the Directorship of the Company.

Mr. Ravindra Prakash Sehgal (DIN:00119477) was appointed as the Managing Director of the Company for a period of five years with effect from 1.9.2010. The Board of Directors at its meeting held on 12th February, 2015 approved the re-appointment of Mr. Ravindra Prakash Sehgal for a further period of five years with effect from 1.9.2015. Mr. Sehgal is subject to retirement by rotation.

Mr. Suvobrata Saha (DIN: 00131180) was appointed as the Jt. Managing Director of the Company for a period of five years with effect from 1.9.2010. The Board of Directors at its meeting held on 12th February, 2015 approved the reappointment of Mr. Suvobrata Saha for a further period of five years with effect from 1.9.2015. Mr. Saha is subject to retirement by rotation.

The Board of Directors of the Company has appointed Mr. Biplab Ganguly as Chief Financial Officer of the Company at its Board Meeting held on 13.8.2014.

None of the Directors of the Company are disqualified for being appointed/re-appointed as Directors, as specified in Section 164 of the Companies Act, 2013.

The Board recommends the appointment/re-appointment of the above Directors with a view to avail their valuable advices and wise counsel. A brief profile of the above Directors seeking appointment/ re-appointment required under Clause 49 of the Listing Agreement, is given in the Notice of AGM.

DECLARATION OF INDEPENDENCE

Your Company has received declaration from the Independent Directors as prescribed under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as provided in Section 149(6) of the Act read with Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement.

FAMILIARIZATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS

The Independent Directors are familiarised with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. On appointment, the Independent Director is issued a Letter of Appointment setting out in detail, the terms of appointment, duties and responsibilities.

ANNUAL EVALUATION OF BOARD'S PERFORMANCE

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual Directors.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Non Independent Directors and Board as a whole was also carried out by the Independent Directors.

The Directors expressed their satisfaction over the evaluation process and results thereof.

NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

During the Financial Year, four meetings of the Board of Directors and seven meetings of the Audit Committee of the Company were held, the details of which are given in the Corporate Governance report which forms a part of this report. The intervening gap between the Board meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement.

AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.

NOMINATION AND REMUNERATION COMMITTEE

The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

STAKEHOLDERS' RELATIONSHIP COMMITTEE

The composition and terms of reference of the Share transfer cum Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

MEETING OF INDEPENDENT DIRECTORS

During the year under review, a meeting of Independent Directors was held on 27th March, 2015 wherein the performance of the Non-Independent Directors and the Board as a whole was reviewed. The Independent Directors at their meeting also assessed the quality, quantity and timeliness of low of information between the Company's management and the Board of Directors of the Company.

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:

i) In the 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 to the Companies Act, 2013 have been followed and there are no material departures from the same;

ii) The Directors 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 as at March 31,2015 and of the profit of the Company for the year ended on that date;

iii) The Directors have taken proper and sufficient care 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;

iv) The Directors have prepared the annual accounts of the Company on a "going concern" basis;

v) Proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and are operating effectively; and

vi) Proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

TRANSFER TO RESERVES

The Company did not transfer any amount to reserves.

PUBLIC DEPOSITS

During the financial year 2014-15, your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

CHANGES IN SHARE CAPITAL

There was no change in the share capital of the Company for the F.Y. 2014-2015.

MATERIAL CHANGES AND COMMITMENTS AFTER THE BALANCE SHEET DATE

There have been no material changes and commitments, affecting the financial position of the company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

CORPORATE GOVERNANCE

Your Company complies with the provisions relating to Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance along with the Auditors Certificate thereon form part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

A business Responsibility Report as per Clause 55 of the Listing Agreement, detailing the various initiatives of your Company forms an integral part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND RESEARCH AND DEVELOPMENT

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo to be disclosed under the Act, are provided in "Annexure - A" to this report.

RELATED PARTY TRANSACTIONS

During the financial year 2014-15, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definition Details) Rules, 2014 which are in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013. During the financial year 2014-15, there were no transactions with related party which qualify as material transactions under the Listing Agreement. The details of the related party transactions as required under Accounting Standard - 18 are set out in Other Notes (28-xii) which is forming part of the Annual Report.

The particulars of every contract entered into by the company with Related Parties referred to in Section 188(1) of the Companies Act, 2013 as prescribed under the Companies (Accounts) Rules, 2014 is appended as "Annexure - B" hereto and forms part of this Report.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULAR OF EMPLOYEE

In accordance with Section 178 and other applicable provisions, if any, of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on 13th November, 2014 formulated the Remuneration Policy of the Company. The salient aspects of the Remuneration Policy, on the appointment and remuneration of the Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report. The remuneration policy of the Company is being set out as "Annexure - C" to this report and has also been uploaded on the website : www.carnationindustries. com of the Company.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out as "Annexure - D" to this report.

Disclosure under Rule 5(2) of the Companies (Appointment & Remuneration) Rules, 2014 is not applicable to your Company as none of the employees are drawing salary more than the limit prescribed under the aforesaid Rules.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 are set out herewith as "Annexure - E" to the Report.

STATUTORY AUDITORS

The Auditors M/s. Jain & Bagaria, Chartered Accountants, Statutory Auditors of the Company, were appointed at the 31st AGM to hold office till the conclusion of the 34th AGM. The Board in terms of Section 139 of the Act, on the recommendation of the Audit Committee, has recommended for the ratification of the Members the appointment of M/s Jain & Bagaria from the conclusion of the ensuing AGM till the conclusion of the 33rd AGM. Appropriate resolution in respect of the above is appearing in the Notice convening the 32nd AGM of the Company.

In this regard, the Company has received a certificate from the auditors to the effect that if they are re-appointed, it would be accordance with the provisions of Section 141 of the Companies Act, 2013.

COST AUDITOR

In compliance with the Central Government's Order your Board had appointed Mr. Deep Narayan Bandhyopadhyay, Cost Accountant, to carry out the Cost Audit of the Company for F.Y. 2014- 2015. However, Ministry of Corporate Affairs came out with a notification on 31.12.2014 under the Companies (Cost Records and Audit) Amendment Rules, 2014 wherein your Company, being an export oriented company, has been excluded from the purview of Cost Audit from F.Y. 2015-2016. Therefore Cost Audit is no more applicable to the Company.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Manoj Kumar Banthia, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure-F" to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

LOANS, GUARANTEE AND INVESTMENTS

The Company has not lent out any money or made any investment or provided any guarantee during the year under review.

SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS /COURT

There are no significant material orders passed by the regulator/court which would impact the going concern status of the Company and its future operations.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is not applicable to your Company pursuant to Section 135 of the Companies Act, 2013.

VIGIL MECHANISM

Your Company has formulated a Whistle Blower Policy pursuant to the provisions of Section 177(10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby employees can raise their issue against any kind of harassment, victimization or any other unfair practice being adopted against them. The Whistle Blower Policy has been uploaded on the website : www.carnationindustries.com of the Company.

STOCK EXCHANGE

The Equity Shares of the Company are listed with BSE Limited and The Calcutta Stock Exchange Limited.

POLICY ON PREVENTION OF SEXUAL HARASSMENT

The Company has adopted a policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31st March, 2015 the Company has not received any Complaints pertaining to Sexual Harassment.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation and thanks to the Banks, Financial Institutions, various Government Authorities for their valuable assistance and co-operation for the trust and confidence reposed in the Company by the Customers and Shareholders.

Your Directors also thank the Executives, Staff and Workforce of the Company for their efficient and dedicated services.

On Behalf of the Board of Director

R. P. Sehgal (Managing Director)

Place: Kolkata Suvobrata Saha Date: 12th August, 2015 (Jt. Managing Director)






Mar 31, 2014

Dear Members,

The Directors are pleased to present the 31st Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2014.

FINANCIAL PERFORMANCE

(Rs. in Lakhs) For Year ended For Year ended 31.03.2014 31.03.2013

Revenue from operation and other operating revenue:

Export Sales (Net of Freight) 8970.96 8164.37

Domestic Sales (Net of Central 207.31 390.93 Excise and Vat)

Export Incentives 482.38 405.53

Other Income 172.81 209.81

9833.46 9170.64

Profit before Finance Costs, 1022.24 902.38

Depreciation & Amortisation, and Tax Finance Costs 558.53 560.02

Depreciation & Amortisation 180.20 205.66

Profit/(Loss) before Tax 283.51 136.70

Provision for Tax

- Current 58.40 30.00

- Deferred (13.81) (827)

- Tax for Earlier Years 0.76 0.00

Profit/(Loss) after Tax 238.16 114.97

Surplus brought forward from 84.78 (592) previous year

Available Surplus/ (Deficit) 322.94 109.05 for Appropriation

Proposed Dividend 27.66 20.74

Dividend Distribution Tax 4.70 3.53

Surplus/(Deficit) carried to Balance Sheet 290.58 84.78

FINANCIAL REVIEW

During the financial year ended 31st March, 2014 the Company achieved total revenue (net) from operations of Rs.9833.46 lacs against Rs.9170.64 lacs in the previous year. The profit before Finance Cost, Depreciation & Amortisation and Tax was Rs.1022.24 lacs against Rs.902.38 lacs in the previous year recording an increase of approx 13%. The profit before tax was Rs.283.51 lacs against Rs.136.70 lacs in 2012-2013. The profit after tax was Rs.238.16 lacs against Rs.114.97 lakhs in 2012-2013.

FINANCE

Cash generation from operation was at a lower level than the previous year due to increase in sundry debtors. The refund of input tax credit is better but still slow which has compounded the liquidity problem. The management has taken appropriate steps to ensure expeditious realization of the input tax credit and the export proceeds.

DIVIDEND

Your Directors have recommended a dividend of 8% (Re. 0.80 per Equity Share of Rs.10 each) for the financial year ended March 31, 2014 subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. The dividend together with the dividend tax will entail a cash outlay of Rs.32.36 lakhs. The dividend will be paid to members whose names appear in the Register of Members as on 22nd September, 2014 in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

POLLUTION CONTROL MEASURES

The pollution control measures installed in the units of the Company are in full operation as required under the statutes.

SUBSIDIARY COMPANIES

The Company does not have any Subsidiary Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and as per the Articles of Association of the Company Mr. Suvobrata Saha, Joint Managing Director, will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

The Companies Act, 2013 provides for appointment of Independent Directors. Section 149 of the Act (effective from April 1, 2014) provides that Independent Directors shall not hold office for more than two consecutive terms of upto five years each provided that the Director is re-appointed by passing a special resolution on completion of his first term. Independent Directors are no longer liable to retire by rotation. Further as per explanation provided under Section 149 of the Act, any term of an Independent Director on the date of commencement of this Section, i.e., April 1, 2014 shall not be counted as a term.

Accordingly, the Board of Directors in their meeting held on 23rd May, 2014 has proposed the appointment of Mr. R. C. Jha (DIN:01538982), Mr. Manoj Bose (DIN: 06645209) and Mr. Debajyoti Chakrabarti (DIN: 06655796), all existing Independent directors of the Company, as Independent Directors of the Company and shall hold office from the date of this Annual General Meeting till 31st March, 2019. They shall not, henceforth, be liable to determination by retirement of directors by rotation.

None of the Directors of the Company are disqualified for being appointed as Directors, as specified in Section 164 of the Companies Act, 2013.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

The Board recommends the appointment of the above directors with a view to avail their valuable advices and wise counsel. A brief profile of the above Directors seeking appointment/re-appointment required under Clause 49 of the Listing Agreement, is given in the Notice of AGM.

STATUTORY AUDITORS

M/s. Jain & Bagaria, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The members are requested to consider their appointment as the Statutory Auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the Thirty Fourth (34th) Annual General Meeting of the Company on such remuneration as approved by the members.

The Company has received a letter dated May 21, 2014 from them to the effect that their re- appointment, if made, would be within the limits prescribed under Section 142 of the Companies Act, 2013, and that they are not disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013.

The observations of the Auditors, together with the notes to Accounts referred to in the Auditors'' Report, are self-explanatory and do not call for any further explanation from the Directors.

COST AUDITOR

The Company has appointed Mr. Deep Narayan Bandhyopadhyay, Cost Accountant, to carry out the Cost Audit of the Company for the F.Y. 2014-2015.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND RESEARCH AND DEVELOPMENT

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is appended as Annexure A and forms part of this Report.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975 as amended from time to time is not applicable as none of the employees are drawing salary more than the limit prescribed under the aforesaid Rules.

PUBLIC DEPOSITS

The Company has not taken any Public Deposits during the year.

STOCK EXCHANGE

The Equity Shares of the Company are listed with Bombay Stock Exchange Limited and The Calcutta Stock Exchange Limited.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance and Management Discussion and Analysis Report form part of the Annual Report alongwith the Auditors Certificate on its compliance.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards read with the requirements set out under Schedule VI to the Companies Act, 1956 have been followed and there are no material departures from the same;

ii) the Directors 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 as at March 31, 2014 and of the profit of the Company for the year ended on that date;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts of the Company on a "going concern" basis.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation and thanks to the Banks, Financial Institutions, various Government Authorities for their valuable assistance and co-operation for the trust and confidence reposed in the Company by the Customers and Shareholders.

Your Directors also thank the Executives, Staff and Workforce of the Company for their efficient and dedicated services.

On Behalf of the Board of Director

R. P. Sehgal (Managing Director)

Place: Kolkata Arun Kumar Bose Date : 13th August, 2014 (Whole time Director)


Mar 31, 2013

The Directors are pleased to present the 30th Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2013.

FINANCIAL PERFORMANCE

(Rs. in Lakhs)

For Year ended For Year ended 31.3.2013 31.03.2012

Revenue from operation and other operating revenue:

Export Sales (Net of Freight) 8164.37 8222.18

Domestic Sales( Net of Central 390.93 470.66

Excise and Vat)

Export Incentives 405.53 473.95

Other Income 209.81 69.46

9170.64 9236.25

Profit before Finance Costs, 902.38 823.22 Depreciation & Amortization, and Tax

Finance Costs 560.02 510.85

Depreciation & Amortization 205.66 178.23

Profit/(Loss) before Tax 136.70 134.14 Provision for Tax

- Current 30.00 29.44

- Deferred (8.27) 14.19

- Tax for Earlier Years - (2.93)

Profit/(Loss) after Tax 114.97 93.44

Surplus brought forward from (5.92) (75.26) previous year

Available Surplus/ (Deficit) 109.05 18.18 for Appropriation

Proposed Dividend 20.74 20.74

Dividend Distribution Tax 3.53 3.36

Surplus/(Deficit) carried to Balance Sheet 84.78 (5.92)

FINANCIAL REVIEW

During the financial year ended 31st March, 2013 the Company achieved total revenue (net), from operations, of Rs.9170.64 lacs against Rs. 9236.25 lacs in the previous year. The profit before Finance Cost, Depreciation & Amortization and Tax was Rs.902.38 lacs against Rs.823.22 lacs in the previous year, recording an increase of approx 10%. The profit before tax was Rs.136.70 lacs against Rs.134.14 lacs in 2011-2012. The profit after tax was Rs.114.97 lacs against Rs.93.44 lakhs in 2011-2012.

FINANCE

Internal cash generation was lower, on account of increase in debtors. Finance costs during the year under review were higher than the previous year, based on higher trade receivables. The refund of input tax credit was better but still slow. This level of increase in working capital required additional fund and non fund based borrowing which resulted in the higher finance cost. The Management has taken appropriate steps to ensure expeditious realization of the input tax credit and the export proceeds.

MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENT

There has been a global slowdown in the iron and steel industry, however the foundry industry has remained steady. India is passing through a phase of economic slump but there are signs of large expansion in projects of infrastructure, automobile and other manufacturing and housing coming up in the near future. The demand of castings is expected to go up in the coming year.

OPPORTUNITIES AND THREAT

A strong US Dollar gives your Company an opportunity to grow further in the export markets coupled with this is the strong signs of good infrastructure growth in the Gulf Region.

Weak infrastructure and shortages of trained labour are the major threat to the industry and in-house training and retention of the skilled persons remains the strength of your Company.

Rising prices of Electricity, Diesel and Coal continue to put pressure on costs and for which, these need to be controlled inter-alia, through a process of cost price matching. The only positive factor is that the raw materials prices remained steady over a range, and the strong foreign currency made up for the increase in the costs.

SEGMENT-WISE PERFORMANCE

The Management reviewed the disclosure requirement of segment wise reporting and is of the view that since the company manufactures Castings & M.S. products which are subject to same risk and returns and hence there is one primary segment in terms of AS-17, a separate disclosure on reporting by business segments is not required. The analysis of geographical segments is based on the areas in which the Company operates.

FUTURE OUTLOOK

In the current fiscal year we expect to strengthen our presence in the UK and Gulf markets by addition of newer products. We also have plans to do major business in the domestic market. This should bring an additional growth in the turnover. The US Dollar and Euro are expected to remain strong and market volumes are expected to improve compared to the previous year.

RISKS AND CONCERN

Being predominantly in export, your Company''s revenue is always subject to risks of exchange fluctuations. The Company has adopted a comprehensive risk management review system wherein it factitively hedges its foreign exchange exposures within defined parameters, through use of hedging instruments such as forward contracts. The matter of concern however remains shortage of skilled labour resulting in higher labour cost. In order to overcome this problem your Company is laying stress on in-house training and skill development, besides retention of the skilled workers.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has an adequate system of internal control commensurate with the size and nature of its business which ensures that all transactions are recorded, authorized and correctly reported apart from safeguarding its assets against loss from wastage, unauthorized use and removal. The internal audit process strives to ensure compliance of internal control systems through submission of detailed internal audit reports periodically to the Management and the Audit Committee. The Audit Committee reviews the adequacy of internal controls based on such reports and provides guidelines for improvement of the same.

Your Company''s Statutory Auditors have in their report confirmed the adequacy of the internal control procedures.

EXPANSION AND NEW PROJECT

Your Company continues to upgrade its process and products. In the current year the management plans to consolidate on all the production facilities and develop more value-added products bringing in better realization.

At the Ductile Plant the new molding machine and the furnace are in operation now. This would enable the Company to add volumes to the sale of castings both in the domestic and export market.

HUMAN RESOURCES DEVELOPMENT

Your Company continued to have cordial and harmonious relations with its employees at all levels during the period under review. The operations of the Company across functions have been strengthened through induction of appropriately qualified and experienced personnel. Management of your Company strongly focuses on the performance of the managers. The Board acknowledges its thanks to all the shop floor personnel and other employees for making significant contribution to your Company.

Your Company has conducted several training programs for its employees to improve the working. Besides this the training programs have been conducted for improving safety and health standards of the employees.

DIVIDEND

Your Directors have recommended a dividend of 6% (Re. 0.60 per Equity Share of Rs.10 each) for the financial year ended March 31, 2013 subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. The dividend together with the dividend tax will entail a cash outlay of Rs.24.27 lakhs. The dividend will be paid to members whose names appear in the Register of Members as on 20th September, 2013; in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

POLLUTION CONTROL MEASURES

The pollution control measures installed in the units of the Company are in full operation as required under the statutes. The Company has taken immediate steps to rectify the Pollution Control devices wherever minor variations were noticed by the management during the year under review.

DIRECTORS

In 2012-2013 Mr. Shekhar Chatterjee resigned as Chairman and Director of the Company.

In 2013-2014 Mr. Bijay Krishna Datta resigned as Director of the Company.

The Board placed on record its appreciation for the valuable contribution made by Mr. Chatterjee and Mr. Datta.

In terms of Section 256 of the Companies Act, 1956, Mr. Ramesh Chandra Jha retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. Manoj Bose and Mr. Debajyoti Chakrabarti were appointed as Additional Directors in the Board Meeting held on 5.8.2013. The members are requested to consider the appointment of Mr. Manoj Bose and Mr. Debajyoti Chakrabarti at the ensuing Annual General Meeting.

Mr. Arun Kumar Bose was appointed as a Whole-time Director of the Company for a period of two years with effect from 5.9.2011 and his term of office expires on 5.9.2013. The Board of Directors in its meeting held on 5.8.2013, have approved the re-appointment of Mr. Arun Kumar Bose for a further period of three years w.e.f. 6.9.2013. The members are requested to consider the re- appointment of Mr. Arun Kumar Bose at the ensuing Annual General Meeting.

STATUTORY AUDITORS

M/s. Jain & Bagaria, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter dated May 15, 2013 from them to the effect that their re- appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Companies Act, 1956.

The observations of the Auditors, together with the notes to Accounts referred to in the Auditors'' Report, are self-explanatory and do not call for any further explanation from the Directors.

COST AUDITOR

In compliance with the Central Government''s Order your Board has appointed Mr. Deep Narayan Bandhyopadhyay, Cost Accountant, to carry out the Cost Audit of the Company. This appointment has to be made in each financial year and based on the application of your Company, the Central Government has approved the re-appointment of the Cost Auditor for F. Y. 2013-2014.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND RESEARCH AND DEVELOPMENT

The particulars in respect of energy conservation as per Companies (Disclosure of Particulars) Rules, 1988 is not required to be provided by your Company as it is not the industry included in the Schedule to the Rules. The Company has however taken measures for conservation of energy. The Company has installed a Divided Blast Cupola in the unit at Liluah which has significantly reduced the coke consumption. Further a new Cupola has been installed at the Uluberia unit of the Company which will significantly reduce the energy consumption by the above unit. The company has a quality cell which ensures the quality of the product before being sent to the customers.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975 as amended from time to time is not applicable as none of the employees are drawing salary more than the limit prescribed under the aforesaid Rules.

PUBLIC DEPOSITS

The Company has not taken any Public Deposits during the year.

STOCK EXCHANGE

The Equity Shares of the Company are listed with Bombay Stock Exchange Limited and The Calcutta Stock Exchange Limited.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance and Management Discussion and Analysis Report form part of the Annual Report along with the Auditors Certificate on its compliance.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards read with the requirements set out under Schedule VI to the Companies Act, 1956 have been followed and there are no material departures from the same;

ii) the Directors 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 as at March 31, 2013 and of the profit of the Company for the year ended on that date;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts of the Company on a "going concern" basis. ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation and thanks to the Banks, Financial Institutions, various Government Authorities for their valuable assistance and co-operation for the trust and confidence reposed in the Company by the Customers and Shareholders.

Your Directors also thank the Executives, Staff and Workforce of the Company for their efficient and dedicated services.

On Behalf of the Board of Director

R. P. Sehgal

(Managing Director)

Place: Kolkata Arun Kumar Bose

Date : 5th August, 2013 (Whole time Director)

 
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