Mar 31, 2018
Dear Members,
The Board of Directors (hereinafter referred to as âthe Boardâ) hereby submit the report of the business and operations of the Company (hereinafter referred to as âthe Reportâ) along with the Audited Financial Statements of the Company for the Financial Year (FY) ended March 31, 2018. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
Financial Results and Highlights of Performance
The Companyâs performance, as per Indian Accounting Standards (IND AS), during the Financial Year under review is summarized as follows:
Rs. in Million
Particulars |
Standalone |
Consolidated |
||
FY 17-18 |
FY 16-17 |
FY 17-18 |
FY 16-17 |
|
Revenue and Other Income (Total Income) from Continuing Operations |
3049.79 |
2971.78 |
28577.52 |
30 750.04 |
Earnings before Finance Cost, Depreciation, Exceptional Item & Tax |
657.56 |
517.62 |
1590.80 |
1580.00 |
Profit / (Loss) after Finance, Depreciation and before Exceptional Items & Tax |
460.70 |
334.35 |
(135.25) |
129.36 |
Exceptional Items - Income/(Expense) |
- |
112.04 |
- |
822.07 |
Profit before Tax (PBT) from Continuing Operations |
460.70 |
446.39 |
(135.25) |
951.45 |
Profit after Tax (PAT) from Continuing Operations |
409.00 |
496.58 |
(416.16) |
706.97 |
Profit after Tax (PAT) from Discontinuing Operations |
- |
469.53 |
- |
- |
Share of Net Profit of joint ventures |
- |
- |
94.07 |
186.48 |
Profit/(loss) for the year |
409.00 |
966.11 |
(322.09) |
893.45 |
Other Comprehensive Income/(Loss) |
0.27 |
(4.37) |
271.90 |
100.18 |
Total Comprehensive Income |
409.27 |
961.74 |
(50.19) |
993.63 |
Earnings Per Share - Basic and Diluted (Rs.) |
31.71 |
74.90 |
(25.30) |
70.17 |
Note: The above figures are extracted from Standalone and Consolidated Financial Statements as per Indian Accounting Standard (âIND ASâ) and are prepared in accordance with the principles stated therein as prescribed by the Ministry of Corporate Affairs under Section 133 of the Companies Act, 2013 (âthe Actâ) read with relevant Rules framed therein.
Significant and Material Orders Passed By the Regulators or Courts
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
Directors and Key Managerial Personnel
As per provisions of Section 152(6) of the Act, Mr. Jai Mavani is due to retire by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board of Directors recommend his re-appointment as Director of the Company.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed both under the Act and SEBI (LODR), 2015 and there has been no change in the circumstances which may affect their status as Independent Directors during the year.
Independent Directors are familiarized with their roles, rights and responsibilities in the Company through induction programmes at the time of their appointment as Directors and through presentations made to them from time to time. The details of familiarization programmes conducted have been hosted on the website of the Company and can be accessed at www.forbes.co.in
Audit Committee of the Board of Directors
The details pertaining to the composition of the Audit Committee of the Board of Directors are included in the Corporate Governance Report which forms part of this report.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Obligations and Disclosure Requirements) Regulation, 2015 (SEBI LODR), 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 and Remuneration, Stakeholdersâ Relationship Committees.
The performance of the Board was evaluated by the Board after seeking feedback from all the Directors on the basis of the parameters/ criteria, such as, degree of fulfillment of key responsibility by the Board, Board Structures and Composition, establishment and delineation of responsibilities to the Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics and, Quality of relationship between the Board and the Management.
The performance ofthe committees viz. Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility and Stakeholders Relationship Committee was evaluated by the Board after seeking feedback from Committee members on the basis of parameters/criteria such as degree of fulfillment of key responsibilities, adequacy of committee composition, effectiveness of meetings, committee dynamics and, quality of relationship of the committee with the Board and the Management.
The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of self- assessment questionnaire and feedback/inputs from other Directors (without the concerned director being present).
In a separate meeting of Independent Directors, performance of Non-Independent Directors of the Board as a whole and the performance of the Chairman were evaluated.
Remuneration Policy
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, senior management personnel and their remuneration. Remuneration Policy of the Company acts as a guideline for determining, inter alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and senior managerial personnel. Nomination and Remuneration Policy is annexed as Annexure âVâ to this report.
Disclosure as required under Section 197 (12) of Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure âVIâ to this Report.
Meetings of the Board
The Board met at least once in each quarter and 6 meetings of the Board were held during the year and the maximum time gap between two Board meetings did not exceed the time limit prescribed in the Act. The details have been provided in the Corporate Governance Report.
Directorsâ Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Act, the Directors, based on the representations received from the operating management, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) 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 and of the profit or loss of the Company for that period;
(iii) 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 this Act, for safeguarding the assets of the Company and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) 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; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Auditors and Audit Report Statutory Auditors
Pursuant to the provisions of section 139 of the Act, read with the Companies (Audit and Auditors) Rules, 2014, Price Waterhouse Chartered Accountants LLP (PWC)(ICAI Firm Registration No.012754N/N500016) were appointed as the Statutory Auditors of the Company for a term of 5 years till the conclusion of 103rd Annual General Meeting of the Company.
The Audit Report forms part of the Annual Report. The Auditors have referred to certain matters in their report on Financial Statements to the shareholders, which read with relevant notes forming part of the accounts, is self - explanatory.
Cost Auditors
As per the requirements of Section 148 of the Act read with The Companies (Cost Records and Audit) Rules, 2014, the cost accounts of the Engineering Division and Project Vicinia of the Company are required to be audited by a CostAccountant. The Board of Directors of the Company have, on the recommendation of the Audit Committee, appointed Kishore Bhatia & Associates, Cost Accountants, as Cost Auditors for the FY 2018-19 on a remuneration of Rs.0.44 million plus out of pocket expenses. As required under the Companies Act, 2013, necessary resolution seeking membersâ ratification for the remuneration to the Cost Auditor is included in the Notice convening the Ninety Ninth Annual General Meeting of the Company.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Makarand M. Joshi & Co, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial
Auditor is annexed herewith as Annexure âVIIâ. There was a delay in processing of one of the transmission request where the legal heirs had requested for waiver of specified documents and the amount involved was substantial. The delay was due to time taken by Registrar & Transfer Agents to reasonably satisfy itself about genuineness before processing transmission.
Human Resources Development and Industrial Relations
The major focus for Human Resources (HR) partnered closely with Engineering business for several important initiatives and imperatives.
Talent infusion and augmentation in the respective Business is a major focus area and was managed effectively in a highly competitive talent acquisition scenario. Performance and potential assessment with focus on career and succession planning continue and middle level leadership transitions were achieved successfully.
Continuing movement towards automation & digitisation, eg. HR processes like, the Performance Management System (PMS) and Leave Management System (LMS) were completely automated. The migration to SAP Payroll has also commenced.
The employee relations continued to be cordial and productive with several significant changes boosting capacity utilisation, efficiency and productivity in the plants
Particulars of Employees and Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
(a) The information required pursuant to Section 197 of the Act 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, excluding the information on employeesâ particulars which is available for inspection by the Members at the Registered Office of the Company during the business hours on working days of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as Annexure âVIIIâ.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure âIXâ and forms part of this Report.
Business Responsibility Report
A separate section on Business Responsibility Report forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI LODR.
Cautionary Statement
Statements in the Boardâs Report and the Management Discussion & Analysis describing the Companyâs objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply, input costs, availability, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
Acknowledgements
Your Directors acknowledge and thank all stakeholders of the Company viz. Government, customers, members, employees, dealers, vendors, banks and other business partners for their valuable sustained support and encouragement. Your Directors look forward to positive support and encouragement from all stakeholders in the years ahead.
For and on behalf of the Board
Shapoor P. Mistry
Chairman
Mumbai, May 28, 2018
Mar 31, 2017
Dear Members,
The Board of Directors hereby submit the report of the business and operations of the Company along with the Audited Financial Statements of the Company for the Financial Year (FY) ended March 31, 2017. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
Financial Results and Highlights of Performance
The Company''s performance, as per Indian Accounting Standards (IND AS), during the Financial Year under review is summarized as follows:
Rs. in Millions
Particulars |
Standalone |
Consolidated |
||
FY 16-17 |
FY 15-16 |
FY 16-17 |
FY 15-16 |
|
Revenue and Other Income (Total Income) from Continuing Operations |
2971.78 |
2090.56 |
30768.06 |
32929.19 |
Earnings before Finance Cost, Depreciation, Exceptional Item & Tax |
517.62 |
190.31 |
1580.62 |
1932.35 |
Profit / (Loss) after Finance, Depreciation and before Exceptional Items & Tax |
334.35 |
(50.27) |
129.37 |
114.84 |
Exceptional Items - Income/(Expense) |
112.04 |
155.28 |
822.07 |
(209.03) |
Profit before Tax (PBT) from Continuing Operations |
446.39 |
105.01 |
951.44 |
(94.19) |
Profit after Tax (PAT) from Continuing Operations |
496.58 |
105.01 |
712.22 |
(492.65) |
Profit before Tax (PBT) from Discontinuing Operations |
482.58 |
(73.47) |
- |
- |
Profit after Tax (PAT) from Discontinuing Operations |
469.53 |
(73.47) |
- |
- |
Share of Net Profit of joint ventures |
- |
- |
186.48 |
12.77 |
Profit/(loss) for the year |
966.11 |
31.54 |
898.70 |
(479.88) |
Other Comprehensive Income/(Loss) |
(4.37) |
3.75 |
100.08 |
26.01 |
Total Comprehensive Income |
961.74 |
35.29 |
998.78 |
(453.88) |
Earnings Per Share - Basic and Diluted (Rs.) |
74.90 |
2.44 |
70.58 |
(37.69) |
Note: The above figures are extracted from Standalone and Consolidated Financial Statements as per IND AS. For the purpose of transitioning to IND AS, the Company has followed guidance prescribed in IND AS 101, First Time Adoption of Indian Accounting Standards, with effect from April 1, 2015, as the transition date.
Management Discussion & Analysis of Financial Conditions, Results of Operations and State of Company Affairs Outlook
The Indian economy ended the fiscal year 2016-17 with a moderate growth. The current financial year was a rather eventful year. Against the backdrop of robust macro-economic stability, the year was marked by two major domestic policy developments, the passage of the Constitutional Amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the two highest denomination currency notes.
The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of India''s cooperative federalism. Demonetization has had short-term costs but holds the potential for long term benefits. Prompt actions allow growth to return to trend in 2017-18, following a temporary blip in activity in second half of FY 2016-17. This in the long run is expected to result in significant benefits in the form of transition towards a cashless economy, expansion of digital financial systems and extension of the tax net.
Looking further ahead, societal shift in ideas and narratives will be needed to overcome three long-standing meta-challenges: inefficient redistribution, ambivalence about the private sector and property rights, and improving but still-challenged state capacity. In the aftermath of demonetization, and at a time of gathering gloom about globalization, articulating and embracing those ideational shifts will be critical to ensuring that India''s sweet spot is enduring not evanescent.
Coming back to Indian economy, this was a year of moderate growth with a decline in the industrial sector growth, even as the agrarian and rural sector benefited from a good monsoon after two successive failed monsoons. Industrial activity picked up pace in January''2017 with industrial production registering growth on account of improvement in the manufacturing and capital goods sector output.
The FY 2017-18 is expected to be a good year for the Indian economy. The benefits of the important reforms to be implemented during FY 2017-18 will be seen during the year. The Union Budget for FY 2017-18 provides for development in infrastructure, housing, rural sector and a boost to the overall investment climate. The performance of the global economy is also expected to improve with the International Monitory Fund forecasting a rise in global GDP growth from 3.1 % in 2016 to 3.4% in 2017 and 3.6% in 2018.
Business Review Precision Tools Group (PTG)
Flagship brand of Precision Tools Group is Totem which is being re-positioned as a High Quality Performance Tool Manufacturer to compete against multi-nationals in India and overseas markets. High Performance Tool revenue streams have shown decent growth. We have done relevant significant investment in strengthening, Innovation, Design & Development and Quality assurance function by high end software and latest equipment.
Inspite of challenging market scenarios in automotive sector which is a major market segment for PTG and de-monetization, PTG managed a profitable top-line growth of 6%.
PTG continued efforts to introduce new products to the market in Carbide Raw Material, Expansion of High Performance Taps product portfolio, introduction of Solid Carbide Long Series Drills and expansion of HSS drill range.
New dealers introduction, a strong initiative taken in FY 2016-17, has been made across the country and continues to be an ongoing process to expand reach and growth in the business. This is an investment in the channel and will yield good results in the current year. Efforts to improve revenue share from export market has shown Year on Year (YoY) growth of 23%. Middle East, South East Asia, Europe and Latin America have been focus markets.
Introduction of New Technologies in the field of Heat Treatment, Geometric measurements and Edge preparation in manufacturing has led to product quality enhancement to compete against best in class.
Substantial investments were made in Waluj Facility and we hope to continue the investment trend in this business in the current financial year, thereby ensuring that we consolidate our operations and hope to achieve better synergies and efficiencies in all the activities in Waluj in the time to come.
Innovation, Speed of Change, Product Development along with People Skill Enhancement, Training & Development are the main focus for business requirement which has been implemented on an on-going basis.
Coding Business Group (CBG)
Though low in volume presently, CBG has shown 46% YoY growth with significant growth in profit margins. FY 2016-17 was the year of consolidation for automation business.
CBG introduced integrated marking solutions with software, coding & decoding, scanning/ Vision systems. During this year, we were able to provide automation system as an Import substitute to one of the leading two-wheeler manufacturer and achieved success by exporting a fully integrated system to Egypt, which was also a first for us.
CBG started assembly of laser optics in Waluj Factory with its own system controls. Industry 4.0 solution was implemented for automotive industry which is going to be one of the future revenue stream.
CBG has executed Automation projects and going forward will be a major revenue source. CBG has built capabilities in industry 3.0 and 4.0 solutions. Currently Coding business has capabilities of marking and traceability, material handling, RFID, Lasers for Metal & Non-metal and Integrated solutions.
The division continued with its ''Adapt, Change, Excel (ACE) program- to be nimble and swift in business execution from product selling company to solution provider. Employee engagement program for nurturing talent and succession planning is also being put in place.
Project Vicinia, Chandivali
As per the terms of out-of-court settlement of the dispute set out in consent terms filed with Hon''ble Bombay High Court relating to development of plot of land at Chandivali, the Company and Videocon Realty and Infrastructure Limited (Videocon), each, are entitled to 50% of the saleable area of Project. Videocon has been allocated 50% of the rights in the permissible Floor Space Index (FSI) of the specified land to be developed by Company, as two independent projects of Company and Videocon concurrently with a specific flatwise allocation of built up area of apartments. The Company has received bookings for 102 flats for its share. The Project is expected to be fully executed and sold by June'' 2021.
Investment in Subsidiaries/Joint Ventures
During FY 2016-17, Lux Professional GmbH, Lux Osterreich Professional GmbH, Lux Aqua Paraguay SA, Lux Aqua Czech s.r.o, Lux Waterline GmbH and Brightclean (Spain) S.L were incorporated / have become wholly owned subsidiaries of Lux Professional International GmbH.
Subsidiaries/ Associates /Joint Ventures
During FY 2016-17 the following companies have become or ceased to be subsidiaries, joint ventures or associates.
Name of Company |
Nature of Relationship |
Lux Waterline GmbH |
A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from April 29, 2016 |
Lux Aqua Czech s.r.o |
Incorporated as a wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from May 6, 2016 |
Brightyclean (Spain) S.L |
A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from August 10, 2016 |
Forbes Container Line Pte Ltd., Singapore |
Under Creditors Winding up since May'' 2016. |
Forbes Bumi Armada Offshore Limited |
Ceased to be a subsidiary company with effect from October 12, 2016 |
Lux Aqua Paraguay SA |
A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from December 1, 2016 |
Lux Osterreich Professional GmbH |
A wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from December 15, 2016 |
Lux Professional GmbH |
Incorporated as a wholly owned subsidiary of Lux Professional International GmbH (a step down subsidiary of Eureka Forbes Limited) with effect from December 22, 2016 |
Forbes Edumetry Limited |
Under Voluntary Winding up |
Details of subsidiaries, associate companies and joint venture companies are set out in the statement in Form AOC-1, pursuant to Section 129 of the Companies Act, 2013 (âActâ) and, is attached, herewith, as Annexure âIâ. Financial Statements of these subsidiaries are available for inspection at the registered office of the Company and that of the subsidiary company concerned and the same would be also available on the website of the Company, www.forbes.co.in
Eureka Forbes Limited & its Subsidiaries (Collectively ''EFL Group'')
âI can''t change the direction of the wind, but I can adjust my sails to always reach my destinationâ, said Jimmy Dean and this is characteristic of EFL Group.
A year that held ''change'' as the mantra for the corporate and the nation at large, a year which experienced digitization of businesses and a way to connect with consumers driven by none other than the Government of India, ''demonetization'' was the word that swayed the fortunes of corporations and the sentiments of the consuming class. While the year saw the changing political landscape in India, the approach to development, the new growth opportunities thanks to SMART Cities, Digital India and our role as a nation in the emerging world order led to our turn to transform.
EFL has its presence across the country in various products/segments such as water purifiers, vacuum cleaners, air purifiers and home security solutions with the brands such as Aquaguard, AquaSure, EuroClean, Aeroguard and EuroVigil. EFL has its presence in European, ASEAN and UAE countries under the brand Lux.
The complexion of the business within EFL is changing and moving towards the retail sale and digital through the web from a direct selling business. This evolution from Direct Sales to Retail Sale and Sale on a digital platform over the last few years has been brought with successfully and by retaining or even improving our own addressable market share. In the last three-four years competition in the water purifier space has increased and a number of players of international repute have entered the market. EFL has taken an aggressive target of regaining and retaining the market share of electric water purifiers. This entails a significant investment in the market in the form of advertisement and sales promotion which resulted in regaining a 12% market share in the financial year 2015-16 taking EFL market share to 67% and retaining the same in the financial year 2016-17.
During the year, EFL had set key priorities in terms of (a) Project Everest: Leading the water purification market to dominate with 67% share, (b) Enhance focus on Air, Cleaning & Security to build a 2nd category, (c) Build digital capability for a greater connect with employees and customers, (d) Measure & Build Customer loyalty and leverage the brand value of EFL and brands and (e) Diversity of people and businesses to build a future proof EFL. And in each one of them, as a team dedicated to building a ''tandarust'' - healthy organization, EFL rose to the occasion.
While the demonetization, though a highly well-intentioned move for the medium to long run, created an impact in the market with the last 4 month off take reducing by 20-30% vis-a-vis the corresponding year for EFL as well as competing brands, however, EFL was able to retain the 67% (value) share of the domestic electric water purification market in-spite of the drop in sales. The year also witnessed the business composition change where the Retail Channel (Consumer Division) and Partner Channels (Franchise Direct Operators & Franchise Business Partners in Direct Sales) grew while the one time core business of Customer Response Centre (CRC business of Direct Sales) de-grew marginally vis-a-vis last year, this was mainly due to unbudgeted increase in wage bill.
On the second priority, the first ''Made in India for the world'' Air Purifier Aero guard 4S was launched. The category grew to over 42% of the domestic market and EFL plans focusing on this growing segment in the years ahead. In cleaning the indomitable 79% share of the market remained untouched with a refreshed product portfolio.
The focus on digitization resulted in fruits with over 350,000 validated leads and Rs.1000 Millions turnover from digital platform resulted in a quantum growth over previous year. Unlike the e-com wave of discounts EFL held the price and strategic partnership with ''Google'' helped EFL dominate in the space with over 70% Share of Voice in the categories EFL has been present in. Additionally mobility both in Sales & Service began to show early benefits.
The Employee diversity ratio moved from 7% to 12% with Direct Sales leading the way with 16% Lady Eurochamps. EFL was also able to improve the retention in performers by 10% over the previous year.
One of the significant achievements by the EFL team was the improvement in the NPS (Net Promoter Score) - measured across 5 touch points in the relationship of a customer with EFL. Across all the five touch points the team registered more than 25% improvement over the previous financial year with post sales service team topping the charts in both mandatory service as well as complaint management.
Consolidation of manufacturing facilities has improved productivity at factories.
The social initiative of Eureka Forbes, Jal Daan resulted in an unprecedented 32,00,000 pledges and massive interactions on the Social Media thereby over 22 plants benefiting over 20,00,000 individuals who otherwise lacked access to safe drinking water. The result, one amongst, 6 Honourees'' in the World and the 1st Indian, Mr. Suresh L. Goklaney of Eureka Forbes was honoured with the ''Rotary Responsible Business Award 2016'' by Rotary International on Rotary Day at the United Nations (UN), November 12, 2016.
The institutional business, Forbes Pro, to transition from products to services with integration of sales and service. Key Account Management System and a digital push would enable growth in this business.
On the international front, opening of business to business segment, new channels i.e. Retail, e-tail and party plans together with opening of 10 new markets, re-organization of operations, cost-optimization drive, elimination of non value adding services, focus on core business and a new category of mattresses had been the thrust during year gone by.
A positive growth of 4% over the previous year and retaining the profitability therefore in a tormentors year was a respectable performance by EFL. EFL plans to introduce newer technologies that would give an edge for EFL in the market place to improve the business.
Forbes Technosys Limited (FTL)
During the year under review FTL continued its growth across multiple sectors and dimensions, albeit with pressures on revenue growth.
The FY 2016-17 was a year of consolidation for FTL across its business verticals and product range in a challenging business environment. The FY 2015-16 and the current Financial Year proved to be a difficult one for the ATM, Cash deposit and Recycler, Sorter and Coin Vending business segment as Banks had put on hold procurement plans due to the withdrawal of subsidies by RBI in the first half of FY 2016-17. The subsidy which was introduced in the previous year incentivized and partially reimbursed banks for purchasing and deploying these machines. This withdrawal negatively impacted the sale volumes of these products and thereby profitability of the company.
The second half of FY 2016-17 was impacted by the Demonetization drive of the Government. FTLâs major customer being Banks, this impacted the sale of all banking equipment and given the predominance of banking in FTLâs business portfolio, this caused a sharp impact on sales during the second half of the year as FTLâs key customers were focused on addressing the public needs arising out of Demonetization. Demonetization, a well-intentioned move for the medium to long run as the Government is trying to move directly to pure digital channels by reducing cash, though cash usage cannot be fully eliminated, this itself has created different set of opportunities which are being evaluated. Consequently, as cash is gradually returning into the ecosystem, there is also a realization that intermediate cash deposit mechanisms will continue to play an important part in the near future along with other opportunities being identified. In the long term, FTL''s business is well poised to capitalize on this opportunity.
Sales of Forbes Xpress offerings were also adversely affected due to non/limited availability of cash during the months from November'' 2016 to March'' 2017. The entry of a major telecom player, who offered free services from October'' 2016 to March'' 2017, impacted other Telecom players whose prepaid pack business was impacted and therefore FTL''s business was impacted with them.
All the above factors not only impacted FTL''s performance but also of its competitors in the same industry, in addition to causing a sudden reduction in overall demand.
Therefore, FTL had to shift focus on generating margins from Services, as other revenue streams were impacted. Services showed over 100% increase in revenues over the previous year and helped improve profitability.
FTL also had an impressive foray into the Insurance sector, with the introduction of self-service solutions for the same. New services via Forbes Xpress are also being planned for insurance and micro-loans.
FTL''s âBill Payments businessâ case study has been ranked amongst the top 10 cases in the âISB-Ivey Global Case Competition 2016â (http://www.isb.edu/isb-ivey-global-case-competition-2016). This case study was related to the transformation of FTL''s Bill Payments business from a Capex/Opex intensive business model to a highly scalable Low Capex/Low Opex model. This case study competition is conducted jointly by Indian School of Business (ISB) and Ivey Business School, Western University, Ontario, Canada. The competition''s objective is to identify and publish the best India-centric business cases from around the world. The response to this year''s ISB-Ivey Global Case Competition was overwhelming with intents to participate coming in from across the globe. Besides most major business schools in India, participants from institutions in Malaysia, Botswana, the United Arab Emirates, Canada, the Netherlands, and the United States also evinced interest in the competition.
FTL was awarded the Solution of the year 2016 by Posiflex, a global leader in POS solutions, for Airport Retailing Solution which comprised of E-POS Solution at Duty Free Shops of 15 International Airports in India.
FTL continues to make investments in new services such as Domestic Money Transfer, infrastructure creation, expansion of office and service network, new product development and exports. These investments will help us in addressing emerging opportunities in domestic and international markets in the near future.
The year saw continued growth of the Domestic Money Transfer Business of Forbes Xpress, which operates through a network of franchisees who also provide other services like Recharge, Bill Payments and Ticketing.
Future plans and strategy includes the creation of new products and solutions for long term profitable growth such as:
-Account opening/eKYC kiosks: For Banking, Telecom and Insurance segments;
-7/12 ATM: Installed at collectorate offices, this kiosk provides information pertaining to land ownership records to citizens for a nominal fee. This enables transparent and instant access to land record information to all citizens. This kiosk is the first of its kind in the world;
-SIM & Card Dispensing kiosks;
-Internet of Things: Remote Management Solutions for non-kiosk devices and equipment; and
-Integration with Bharat Bill Payment System, being piloted by National Payments Corporation of India.
In the long term FTL will benefit from Government programs such as digitalization of payment systems, Digital India and Make in India, Smart Cities etc. which are expected to create demand for industry and for the company''s specialized products and services.
FTL also undertakes periodic review of the existing business models in the context of current business/market/regulatory/technology environments and make necessary course corrections to adapt to the changing environment as required.
Shapoorji Pallonji Forbes Shipping Limited (SPFSL, formerly SCI Forbes Limited)
With a fleet of four ships and a total capacity of 52000 DWT, SPFSL is one of the largest chemical tanker owners in India. SPFSL is committed to the safe and efficient transport of chemical cargoes for all its customers and partners. All the four vessels maintain qualification of atleast five Oil Majors including Shell, Exxon, Chevron, BP and Total for carrying their products. The ship operations are handled through a pool.
Earnings in FY 2016-17 were affected adversely due to increase in supply of ships and increase in fuel prices. A total of 190 new build ships joined the chemical tanker fleet in the year 2016. The increase in fuel oil prices resulted in reduction in the net voyage earnings.
The average earnings per day per ship were down to USD 9,992 as compared to USD 10,493 per day per ship during previous year. The average down time for the year has been 1.75 days per ship.
Seaborne chemicals trade grew by about 4% YoY in 2016 but the freight rates remained subdued due to increase in supply. As per an estimate, about 190 new building ships joined the chemical tanker fleet in 2016.
The effect of Brexit was clearly visible by slowdown in Europe. After a lacklustre 2016, the global economic activity is set to pick up from mid 2018. Advanced economies are projected to make small steps while growth in emerging market and developing economies continue to drive the global growth projections.
The widely-expected continuation of the low energy price environment in the short-term is expected to support healthy expansion in seaborne chemical trade, although subdued economic growth in some regions could hold back the pace of demand growth. Nevertheless, growth in chemicals tonne-mile trade is expected to outpace expansion in supply this year, partly driven by firm growth in long-haul US-Far East trade, particularly in methanol. Middle Eastern petrochemical capacity is also expected to increase, which should support exports from the region in coming years. However, growing Middle Eastern demand may limit the extent of this expansion to some extent. Meanwhile, rising chemical demand in Asia is expected to be a key driver of global demand growth going forward
Forbes Bumi Armada Limited (FBAL)
FBAL has successfully established their manning services in India. FBAL is currently providing specialized manning services to FPSO''s located in Mumbai High.
Restructuring of Portfolio
In sync with the long term strategy of the Company to exit those businesses which were not a strategic fit with the long term vision of Company and in a manner that optimizes value, the Company has during the FY 2016-17, exited its Container Freight Stations and Logistics businesses and received a consideration ofRs. 963 millions.
The Company also sold its entire shareholding (50.001%) in Forbes Bumi Armada Offshore Limited, a joint venture with Bumi Armada Berhad to Shapoorji Pallonji Oil and Gas Private Limited at a consideration of Rs. 125 millions.
Assets of The Svadeshi Mills Company Limited (Svadeshi)
The Assets of Svadeshi continue to be in the hands of the Official Liquidator, High Court, Bombay. The Company had filed a Review Petition against the dismissal of Special Leave Petition before the Hon''ble Supreme Court (SC) which has been dismissed. The Company is exploring options available.
Dividend & Transfer to Reserves
Your Directors are pleased to recommend for the approval of the Members a dividend of Rs. 2.50 per equity shares (previous year: Nil). The dividend, if approved by the Members would involve a cash outflow of Rs. 38.8 millions including dividend tax. In accordance with SEBI (Listing Obligations and Disclosure Regulations), 2015, the Board of Directors of the Company has adopted a Dividend Distribution Policy, which is annexed as Annexure âIIâ. The policy is also available on the website of the Company, www.forbes.co.in
The Company proposes to retain the entire balance amount of Rs. 417.3 millions (Previous Year Rs. (544.5) millions) in the Profit & Loss Account.
Share Capital
The paid up Equity Share Capital of the Company as on March 31, 2017 was Rs.128.99 millions. During the year under review, the Company has not issued any shares with differential voting rights or ''sweat equity shares'' and has not granted any stock options. As on March 31, 2017 none of the Directors of the Company hold shares or convertible instruments of the Company.
Finance
The Company continues to focus on judicious management of its working capital. Relentless focus on receivables, inventories, strict cost control and, use of alternative borrowing instruments has helped in keeping the borrowings and effective interest cost under control.
-Redeemable Non-convertible Debentures
The Non- Convertible Redeemable Debentures (NCDs) aggregating to Rs.1000 millions were outstanding during the year ended March 31, 2017.
-Deposits
The Company has not accepted deposits from public falling within the ambit of Section 73 of the Act and The Companies (Acceptance of Deposits) Rules, 2014. Unclaimed matured deposits were transferred to Investor Education and Protection Fund as per the provisions of the Companies Act, 1956 / 2013.
Particulars of loans, guarantees and investments
Particulars of Loans, Guarantees and Investments covered under provisions of section 186 of the Act are given in the notes to the Financial Statements.
Related Party Transactions
All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of business. There were no material related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of a foreseen and repetitive nature. The transactions entered pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis.
Form AOC-2 is annexed as Annexure ''III'' to this report, pursuant to Section 188 of the Act. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.
Vigil Mechanism/Whistle Blower Policy
The Company has Whistle Blower Policy/Vigil Mechanism to deal with instances of fraud and mismanagement, if any. The Policy is also available on the website of the Company.
Internal Controls and Systems
The Company has an internal control system, which ensures that all transactions are recorded satisfactorily and reported and that all assets are protected against loss from unauthorized use or otherwise. The internal control systems are supplemented by an internal audit system carried out by a team under the direct supervision of the Head of Internal Audit. The findings of such internal audits are periodically reviewed by the management and suitable actions taken to address the gaps, if any. The Audit Committee of the Board meets at regular intervals and addresses significant issues raised by both the Internal Auditors and the Statutory Auditors. The process of internal control and systems, statutory compliance, information technology, risk analysis and risk management are inter-woven to provide a meaningful support to the management of the business.
Deloitte Haskins & Sells LLP, the statutory auditors of the Company has audited the financial statements included in this annual report and has issued a report on our internal financial controls over financial reporting as defined in Section 143 of the Act.
Statutory Compliances
The Company ensures compliance of applicable laws. The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules there under for prevention and redressal of complaints of sexual harassment at workplace. During FY 2016-17, no complaints on sexual harassment were received.
Corporate Governance and Management Discussion and Analysis
The guiding principle of the Code of Corporate Governance is ''harmony'' i.e. balancing the need for transparency with the need to protect the interest of the Company and balancing the need for empowerment at all levels with the need for accountability. A detailed report on Corporate Governance forms part of Annual Report. The ''Management Discussion and Analysis'' forms part of this report.
Corporate Social Responsibility (CSR)
The Company is committed to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical.
The provisions of the Act relating to Corporate Social Responsibility were not applicable to the Company for the FY 2016-17. The Board of Directors of the Company has, however, voluntarily constituted a Corporate Social Responsibility Committee in compliance with Section 135 of the Act.
The Company is committed to inclusive, sustainable development and contributing to building and sustaining economic, social and environmental capital and to pursue CSR projects, as and when required, that are replicable, scalable and sustainable with a significant multiplier impact on sustainable livelihood creation and environmental replenishment.
Risk Management
Risk management process includes identification of risk, its underlying dynamics, mitigation mechanism, prioritization of risk, measurement of key indicators and establishing a monitoring system. A Company-wide awareness of risk management policies and practices are being inculcated to minimize the adverse effect of risks on the operating results and the subject of management of risks is being approached in a planned and coordinated manner. Elucidation of role clarity, understanding of level of authority and reporting system is expected to help this process significantly. It is realized that this is a continuous process, requiring continued updating, based on changing business conditions and that risk management and performance improvement will go hand in hand.
Significant and Material Orders Passed By the Regulators or Courts
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
Directors and Key Managerial Personnel
As per provisions of Section 152(6) of the Act, Mr. Shapoor P. Mistry is due to retire by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board of Directors recommend his re-appointment as Director of the Company.
Mr. Ashok Barat ceased to be director and Managing Director of the Company with effect from April 27, 2016. Ms. Ameeta Chatteijee, Mr. T. R. Doongaji, and Mr. Kannan Dasaratharaman, Independent Directors of the Company resigned due to other personal and professional commitments with effect from April 1, 2016, May 4, 2016 and May 6, 2016 respectively. Ms. Sunetra Ganesan resigned as Chief Financial Officer of the Company with effect from April 30, 2016.
The Board of Directors place on record their sincere appreciation for the valuable services rendered by Ms. Ameeta Chatterjee, Mr. T. R. Doongaji, Mr. Kannan Dasaratharaman and Mr. Ashok Barat to the Board and to the Company and Ms. Sunetra Ganesan as Chief Financial Officer of the Company.
Ms. Aslesha Gowariker was appointed as an Additional Director of the Company w.e.f. June 30, 2016. She was appointed as an Independent Director of the Company for a term of 5 (five) consecutive years with effect from June 30, 2016 by the shareholders of the Company at the AGM held on August 24, 2016.
Mr. Mahesh Tahilyani was appointed as Managing Director of the Company with effect from April 28, 2016. Mr. Nirmal Jagawat was appointed Chief Financial Officer of the Company with effect from September 30, 2016.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed both under the Act and SEBI (LODR), 2015 and there has been no change in the circumstances which may affect their status as Independent Directors during the year.
Independent Directors are familiarized with their roles, rights and responsibilities in the Company through induction programmes at the time of their appointment as Directors and through presentations made to them from time to time. The details of familiarization programmes conducted have been hosted on the website of the Company and can be accessed at www.forbes.co.in
Audit Committee of the Board of Directors
The details pertaining to the composition of the Audit Committee of the Board of Directors are included in the Corporate Governance Report which forms part of this report.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR), 2015, 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 and Remuneration, Stakeholders'' Relationship Committees.
The performance of the Board was evaluated by the Board after seeking feedback from all the Directors on the basis of the parameters/criteria, such as, degree of fulfillment of key responsibility by the Board, Board Structures and Composition, establishment and delineation of responsibilities to the Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics and, Quality of relationship between the Board and the Management.
The performance of the committees viz. Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee was evaluated by the Board after seeking feedback from Committee members on the basis of parameters/criteria such as degree of fulfillment of key responsibilities, adequacy of committee composition, effectiveness of meetings, committee dynamics and, quality of relationship of the committee with the Board and the Management.
The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of self assessment questionnaire and feedback/inputs from other Directors (without the concerned director being present).
In a separate meeting of Independent Directors, performance of Non-Independent Directors of the Board as a whole and the performance of the Chairman were evaluated.
Remuneration Policy
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, senior management personnel and their remuneration. Remuneration Policy of the Company acts as a guideline for determining, inter alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and senior managerial personnel. Nomination and Remuneration Policy is annexed as Annexure âIVâ to this report.
Disclosure as required under Section 197 (12) of Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure ''V'' to this Report.
Meetings of the Board
The Board met at least once in each quarter and 10 meetings of the Board were held during the year and the maximum time gap between two Board meetings did not exceed the time limit prescribed in the Act. The details have been provided in the Corporate Governance Report.
Directors'' Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Act, the Directors, based on the representations received from the operating management, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) 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 and of the profit or loss of the Company for that period;
(iii) 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 this Act, for safeguarding the assets of the Company and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) 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; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Auditors and Audit Report
Statutory Auditors
The existing statutory auditors, Deloitte Haskins & Sells LLP (DHS) will retire upon the conclusion of the forthcoming Annual General Meeting of the Company, in compliance with the provisions relating to mandatory rotation of Auditors under the Companies Act, 2013.
The Audit Report of the retiring auditors, Deloitte Haskins & Sells LLP forms part of the Annual Report. The Auditors have referred to certain matters in their report on Consolidated Financial Statements to the shareholders, which read with relevant note Nos. 57,53 and 40(C)(c) in the notes forming part of the accounts, is self - explanatory.
Cost Auditors
As per the requirements of Section 148 of the Act read with The Companies (Cost Records and Audit) Rules, 2014, the cost accounts of the Engineering Division and Project Vicinia of the Company are required to be audited by a Cost Accountant. The Board of Directors of the Company have, on the recommendation of the Audit Committee, appointed Kishore Bhatia & Associates, Cost Accountants, as Cost Auditors for the FY 2017 - 2018 on a remuneration of Rs. 0.44 million plus out of pocket expenses. As required under the Companies Act, 2013, necessary resolution seeking members'' ratification for the remuneration to the Cost Auditor is included in the Notice convening the Ninety Eighth Annual General Meeting of the Company.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Makarand M. Joshi & Co, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure ''VI''.
Human Resources Development and Industrial Relations
The year saw a major rationalization of manpower on account of divestment of Logistics & Shipping and Container Freight Station Businesses. The same was handled professionally and compassionately with reasonable compensation through Voluntary Retirement Scheme and/or ex-gratia payments. Post divestment, consolidation of various functions was undertaken for a leaner and an effective organization. On the Human Resource Front, we continue with the implementation of Performance Management System, capturing Key Result Areas and Key Performance Indicators for linking reward to performance and variable pay.
HR function continues to partner the business for talent infusion, learning and development, leadership development and talent management. A major intervention/training pertaining to ''Value Selling'' was done for all sales and marketing personnel of Engineering business. The training and development interventions for the identified ''Talent Pool'' of executives continued in collaboration with CII (Confederation of Indian Industries).Employee engagement and moral was kept high through various cultural and other events including participation in social causes such as Daan Utsav/Joy of Giving week which the Company has been doing for the last few years. Industrial Relations, by and large, with the unit unions continued to be cordial.
Particulars of Employees and Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
(a) The information required pursuant to Section 197 of the Act 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, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during the business hours on working days of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as Annexure ''VII''.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure ''VIII'' and forms part of this Report.
Business Responsibility Report
A separate section on Business Responsibility Report forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.
Cautionary Statement
Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply, input costs, availability, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
Acknowledgements
Your Directors acknowledge and thank all stakeholders of the Company viz. customers, members, employees, dealers, vendors, banks and other business partners for their valuable sustained support and encouragement. Your Directors look forward to receiving similar support and encouragement from all stakeholders in the years ahead.
For and on behalf of the Board of Directors
Shapoor P. Mistry
Chairman
Mumbai, May 25, 2017
Mar 31, 2016
Dear Members,
The Board of Directors hereby submit the report of the business and
operations of the Company along with the Audited Financial Statements
of the Company for the Financial Year (FY) ended March 31, 2016. The
consolidated performance of the Company and its subsidiaries has been
referred to wherever required.
Financial Results and Highlights of Performance
The Company''s performance during the financial year under review is
summarized as follows:
Rs. in Crores
Particulars Standalone Consolidated
FY 15-16 FY 14-15 FY 15-16 FY 14-15
Revenue from Operations
and Other Income (Total
Revenues) 261.06 293.41 3,852.65 3,603.41
Earnings before
Interest, Depreciation
& Tax (EBIDT) 29.54 25.36 180.61 193.60
Profit / (Loss) after
Interest and before
Depreciation & Tax 10.57 6.57 82.70 102.40
Depreciation 8.35 7.15 75.38 21.62
Profit / (Loss)
after Depreciation
and Tax 2.22 (0.58) (32.33) 37.04
Exceptional items -
Income/(Expense) 16.00 9.84 (20.90) (10.10)
Profit before tax (PBT) 2.22 (0.58) 7.32 80.78
Profit after tax (PAT) 2.22 (0.58) (32.33) 37.04
On a consolidated basis, Total Revenues for the FY 2015-16 were at Rs.
3852.65 crores, higher by 6.92% over the previous year. Consolidated
EBIDT was Rs. 180.61 for the financial as compared to Rs. 193.60 crores
in the previous year.
Management Discussion & Analysis of Financial Conditions, Results of
Operations and State of Company Affairs
Outlook
During the year under review, there were considerable changes in the
external working environment. While commodity costs and inflation
continued to come down in India, two successive failed monsoons and
rural drought resulted in a distressed demand in the sectors we serve
in India. The below par performance of the global economy was reflected
in a growth deceleration in most emerging and developing economies,
driven by low commodity prices, weaker capital flows and subdued global
trade. The global economy remained subdued with world output slowing
down to 3.2%. Emerging markets and developing economies grew by 4%.
In this scenario, your Company remained focused on delivering
profitability led growth.
The recovery is projected to strengthen in FY 2016-17, driven primarily
by emerging markets and developing economies. While emerging markets
and developing economies will still account for the lion''s share of
world growth, prospects across countries remain uneven and generally
weaker than over the past two decades.
According to IMF World Economic Outlook Update, Indian economy is
expected to grow by more than 7% during FY 2016-17, despite the
uncertainties in the global market, which should help your Company
(including its subsidiaries) to grow.
The Government initiatives like the "Make in India" initiative, with an
aim to boost the manufacturing sector of Indian economy, is expected to
increase the purchasing power of an average Indian consumer, which
would further boost demand, and hence spur development, in addition to
benefiting investors. Besides, the Government has also come up with
Digital India initiative, which focuses on three core components;:
creation of digital infrastructure, delivering services digitally and
increasing digital literacy. Your Company (including its subsidiaries)
are expected to be beneficiaries from the benefits arising from these
initiatives.
Precision Tools Group (PTG)
Totem, as a brand, strengthened its position as a leading brand in the
domestic market and made good strides in the global space. High
performance Taps led the way with success in China for application on
super alloys and difficult-to-machine materials. Solid Carbide end
mills found their niche in Eastern Europe and the progress continues.
The focus was on profitability through value-added products.
Low oil prices have helped ease inflation in India but international
markets have failed to cheer up. In spite of challenging market
scenario, PTG managed a profitable topline growth of 6%.
A series of product extensions and new business areas were tapped.
Launch of Solid Carbide Rods, and High Speed Steel drills for
construction, concrete, granite, hammer etc., would open up avenues in
the ever expanding infrastructure business. Spring Lock Washers won a
certification from the Power Grid Corporation of India, paving the way
for entry in the power sector.
The focus on addressing the needs of end-user consumers continued. A
close understanding of channel partners was undertaken through annual
dealer''s conference during the year. A concept of key account manager
was initiated to have an understanding of key end-user consumers. A
team of sales engineer was appointed for the South-East Asian market,
as a precursor for venturing in to wide geographies.
The division continued with its ''Adapt, Change, Excel'' (ACE) program -
to be nimble and swift in business execution. Employee Engagement
program for nurturing internal talent and succession planning is also
being put in place.
Coding Business Group (CBG)
Coding business group had adequate success with significant ''above-
budget'' operating profit and a topline growth of 8%. Enhancement in the
in-house facility, with addition of laser markers and testing equipment
in the factory helped better service to Original Equipment Manufacturer
(OEMs).
The launch of Bradma lasers with variants of Fiber, Carbon Dioxide
(CO2) had good acceptance in the Indian market. In process are more
product variants, notably, Ultra Violet (UV) & Diode Pump technology.
Bradma can claim to be pioneers in development for marking &
traceability on components for leading two-wheeler manufacturers in
India. CBG also started catering to the valve and heavy engineering
industry.
Venturing into the Marking Software space, Bradma developed the
interface for SAP integration with the user''s marking assembly for one
of the leading two-wheeler manufacturers in India.
Bradma has added Automation in its product portfolio and executed
projects successfully across different industries. Bradma will strive
to increase its market share in the traceability and identification
businesses.
Container Freight Stations (CFS) and Logistics Business
During the financial year the Company decided to exit CFS and Logistics
businesses. The Company executed the definitive agreements with TG
Terminals Private Limited for sale of its CFS businesses and with
Transworld Global Logistics Solutions (India) Private Limited for sale
of its Logistics business, for a value not less than Rs. 93.50 crores.
The Company, on April 18, 2016 completed the sale of Mundra CFS to TG
Terminals Private Limited and sale of assets pertaining to its
logistics business to Transworld Global Logistics Solutions (India)
Private Limited and received a consideration of Rs. 53.5 crores. The
transaction for Veshvi CFS is likely to be completed in the second
quarter of the FY 2016-17.
Realty Development of Plot of Land at Chandivali - (Project VICINIA)
As per the terms of out-of-court settlement of the dispute set out in
consents terms filed with Hon''ble Bombay High Court relating to the
sale of plot of land at Chandivali, the Company and Videocon Realty and
Infrastructure Limited (Videocon) are jointly developing their
respective share (50% each) on the plot of land at Chandivali through a
specific flatwise allocation of built up area of apartments. The
Company has received bookings for 54 flats pertaining to its share as
at end of March, 2016. The Project is expected to be fully executed by
December''2019.
Investment in Subsidiaries/Joint Ventures
During FY 2015-16, Lux Aqua GMBH, Switzerland and Lux Aqua (HU) Hungary
were incorporated as wholly owned subsidiaries of Lux International AG
and Lux Aqua GMBH respectively.
Subsidiaries/ Associates /Joint Ventures
During FY 2015-16 the following companies have become or ceased to be
subsidiaries, joint ventures or associates.
Name of Company Nature of Relationship
Eurolife Regen Private Ceased to be a Joint Venture of Eureka
Limited Forbes Limited with effect from April 1,2016.
LuxAqua Gmbh, Incorporated as a wholly owned
Switzerland subsidiary of Lux International AG (a step
down subsidiary of Eureka Forbes Limited)
with effect from September 21, 2015
Lux Aqua (HU) Hungary Incorporated as a wholly owned subsidiary
of Lux Aqua Gmbh, Switzerland with effect
from November 27, 2015
Radiant Energy Systems Amalgamated with Forbes Enviro
Private Limited Solutions Limited (a wholly owned subsidiary
of Eureka Forbes Limited) with effect from
February 10, 2016
Waterwings Equipments Amalgamated with Forbes Enviro
Private Ltd Solutions Limited (a wholly owned
subsidiary of Eureka Forbes Limited) with
effect from February 10, 2016
Technext E- Payments & Incorporated on July 14, 2015 and ceased
Services Limited to be a subsidiary of Forbes Technosys
Limited (a wholly owned subsidiary of the
Company) with effect from March 28, 2016
Forbes Edumetry Limited Under Voluntary Winding up
Edumetry Inc. Wound up with effect from October 28,2015
Details of subsidiaries, associate companies and joint venture
companies set out in the statement in Form AOC-1, pursuant to Section
129 of the Companies Act, 2013 and, is attached, herewith, as Annexure
"I". Financial Statements of these subsidiaries are available for
inspection at the registered office of the Company and that of the
subsidiary company concerned and the same would be also available on
the website of the Company, www. forbes.co.in.
Eureka Forbes Limited & its Subsidiaries (Collectively ''EFL'')
In FY 2015-16, EFL, as one dominating force, expanded its markets,
executed its strategies, evolved as individuals and excelled in
performance, to make EFL a Global Multi-National Corporation. Despite
weak global outlook, EFL persevered and posted a strong growth of 15%
over the previous year with gross a turnover of Rs.1912.39 and profit
after tax ofRs. 31.19 Crores.
The Direct Sales Division once again proved it''s mettle to stay ahead
of the game with ''Category First'' initiatives like - Paani-ka-Doctor
clinics (Smaller offices to improve visibility and expand reach) and
rental sales. EFL has taken bold steps of restructuring its core brands
in water to maintain its pole position in the market by introducing
''Dr. Aquaguard'' as its flag-ship brand in Direct Sales with
cutting-edge products and a state-of-the-art training and demo
programs. This has enabled EFL to move '' Aquaguard'' in retail segment
to fight competition on a common platform.
The Superbrand Euroclean has also reached new heights thanks to a
year-long ''below the line'''' marketing activities. Foreseeing a major
market shake-up, EFL has reinvented its range of Air Purifiers under
the brand ''Aeroguard''. There will be a special focus to drive this
sunrise category and capture a significant market share.
To ensure that EFL reaches maximum people, the three new sales channels
- TV Shopping, e-Commerce and Tele-Sales Engine, are taking shape and
have started giving positive indications of demand.
The year gone by has been challenging due to slow economic growth in
India and also total inertia in projects. With the orders and prospects
on hand and the economy likely to open up, Forbes Pro is planning to
grow significantly this financial year.
Strategic Initiatives:
- Forbes Pro Clean Technology Solutions has been rebranded as Forbes
Pro Cleaning Solutions with a fresh new logo to reposition the company
with the new range of products with EFL brand name assembled from
multiple suppliers, thereby reducing dependability from any single
supplier.
- Eureka Forbes Limited and Process Research Ortech, Canada, join hands
in bringing a unique technology of Automated Variable Filtration (AVF)
technology to India for high quality water filtration thereby reducing
costs in an environment friendly manner.
Water Pride Points:
- Infosys will provide Aquaguard safe drinking water at the Global
Education Center of Infosys, at Mysore which accommodates up to 13,500
campus recruits.
- With an aim to provide safe drinking water at public places, Water
Products will be supplied to about 150 railway stations under the IRCTC
partnership.
- Four Water ATMs have been set up in Varanasi, the Parliamentary
Constituency of Hon''ble Prime Minister under the Swachh Bharat Abhiyan
as part of Oil & Natural Gas Corporation Limited''s (ONGC) Corporate
Social Responsibility activity.
- Won an order for 110 community water treatment plants in Karnataka
which are under installation and would be on a sustainable social
business model.
Cleaning:
- Towards building a healthier India, Cleaning Solutions has supplied
Scrubber Dryers and High Pressure Jets to 405 Government Schools across
Delhi and with this initiative EFL will be providing Swachh environment
to 6 lakh students in Delhi.
- Forbes Facility started maintenance of the Heritage Structure of ''The
Asiatic Society ofMumbai'' along with the Rotary Club.
- Forbes Facility made a successful entry into the ''Offshore Business''
of housekeeping and catering with Forbes Bumi Armada Offshore Limited.
The Human Resources (HR) Function has significantly supported the
business requirements to fuel organization growth. Talent acquisition
has been at its all-time high during FY 2015-16, wherein over 8800
Eurochamps have been hired during the course of the year with
retention, too, improving marginally over the previous year. Over 7500
Eurochamps have been trained during the course of the year on
behavioral and functional skills. EFL''s 360 degree employee engagement
program comprising of Health and Wellness initiatives, Picnics, Sports
Day, etc. has been implemented successfully with participation by over
6000 Eurochamps.
The HR Function has instituted leadership development and growth
initiatives across various levels in the organization, and has
successfully carried out programs like the Young Leaders Development
Program (YLDP) comprising of over 200 leaders at junior levels and
Building Leadership pipeline comprising of over 140 leaders at the
middle management level. Key Retains Program comprising of 23 senior
leaders is now into its fifth year wherein the high potential leaders
are required to contribute to the organization through Action Learning
Projects (Dream Team Projects).
The HR Function introduced a Manager as a Coach program wherein 83
leaders were trained in coaching skills and were enrolled into an
internship program for a span of 9 months, wherein, each of them had to
coach two of their team members, under the guidance ofthe facilitator.
The HR Function introduced the EFL climate barometer, based on the
Gallop 12 questions, eliciting employee satisfaction in areas of basic
needs, management support, teamwork and growth. EFL scored an overall 4
in this survey on a scale of 1 to 5, with 5 being the highest.
Eurosmile, EFL''s customer service division established a wide service
network and exceeded 10 million customer visits during the year,
catering to 15 million installation bases in India. The division has
implemented mobile application in 6 cities for customer facing teams to
bring visibility in real time and improve turnaround time for service
request to within 9 hours, leading to customer delight
The new initiatives vertical has been restructured to include security
solutions, packaged drinking water, Fast Moving Consumer Durables
(FMCD) and other projects which will help reach the aspirational $1
Billion target.
The Aquasure Packaged Drinking Water (PDW) brand became available in
over 24,000 outlets in 32 cities through 36 franchisees dispensing 41
million litres of water. The brand is now available across prestigious
clients - Air India, Bombay Gymkhana, Hyatt Regency, Breach Candy
Hospital and 33 SP Group Companies.
The Eurovigil security systems brand secured prestigious multi-
locational orders from clients like the MRF, ITC Wills Life Style and
ITC Classmate for IntrusionAlarm and Surveillance Systems (CCTV).
With such excitement in all the categories, EFL is poised to go to the
next level and it hopes to make it a beacon of success for many more
years to come.
Forbes Pro Clean Technology solutions have been involved actively in
the Swachh Bharat movement by joining hands with institutions and
heritage sites to provide cleaning operations and demonstrating the
impact of clean environment. There has been a significant switch from
selling products to installing solutions and adding value to the
customers. Forbes Facilities has moved into property management in
prestigious clubs like Bombay Gymkhana and Bombay Presidency Golf club.
They have also entered into facility management in the oil and gas
sector. The water projects team made a foray into desalination plants
by bagging and executing the first diesel plant order from Toshiba,
Japan for a power plant in Philippines. Besides this, considering lack
of movement of projects in India, they executed many export orders to
Africa, Vietnam, Thailand and Philippines; this will stand in good
stead in future. The Forbes Pro water team has signed with ''Blue Star''
for cobranding with them on coolers cum purifiers. Water Solutions and
Community Fulfilment installed the first completely solar powered 1000
liters per hour water treatment plant in a Kolkata urban slum which is
the first of it''s kind in India without wastage of any water in the
process. The Water Solutions Division has also made a significant
impact in realty segment for providing water treatment and waste water
treatment plants and also developed a complete solution for swimming
pools in a prestigious residential complex with 68 plunge pools and one
big swimming pool. The year gone by has, however, been challenging due
to slow growth in India. With the orders and prospects on hand and the
economy likely to open up, Forbes Pro is planning to grow significantly
this year.
As in the past, during the current year too, EFL and its subsidiaries
received various awards and recognitions, some of which are as follows-
- Water Company of the Year 2015 by CMO - Asia Water Leadership Award,
Singapore;
- Water Champion Award to Executive Vice Chairman by CMO - Asia Water
Leadership Award, Singapore;
- Water Company of the Year 2015 - Asia Water Leadership Award, Dubai;
- Water Champion Award to Executive Vice Chairman - Asia Water
Leadership Award, Dubai;
- Eureka Forbes : Selected Business Superbrand India 2015 : Aquaguard
(5th time) & Euroclean (3rd time);
- Green'' Recognition by Hon. PM Mr. Narendra Modi and cited by the
French Govt. - ''Delhi to Paris: Corporate Vision on Climate Change
-Reinforcing India''s Commitment'';
- Reader''s Digest : Trusted BrandAwards 2015: Aquaguard (9th time)
(Gold Category);
- Reader''s Digest : Trusted Brand Awards 2015: Euroclean (5th time)
(Platinum Category);
- The Economic Times Best Brands 2015 : Aquaguard ;
- Forbes Facility has awarded ISO 22000 : HACCP (Food Safety) for its
Quality Management System ;
- Frost & Sullivan Award : India Water Purifiers Market Leadership
Award 2015;
- Procurement Excellence Award conferred to Aquamall: Consumer Durables
Category;
- Design prestigious "Plus X Award" awarded for a product Lux New home
cleaning system S115;
- Forbes Lux ranked No. 34 in DSN Global 100 2015 rankings;
- Won prestigious UNESCO-Water Digest Award for the 9th time:
- Best Complete Domestic Water Solutions Provider: ''Drinking'';
- Best Water technology ofthe year -Aquaguard Geneus;
- Best Domestic Water Purifier (Best RO UV UF): Aquaguard Enhance
RO UV UF;
- Best Domestic Water Purifier -UV/UF/Nano Silver - Dr. Aquaguard
Eterniti; and
- Best Domestic Water Purifier: RO: Dr. Aquaguard Magna Green RO.
Forbes Technosys Limited (FTL)
During FY 2015-16, FTL continued its growth across multiple sectors and
dimensions, albeit with some challenges. The FY 2015-16 was a year of
consolidation for FTL across its business verticals and product range
in a challenging business environment particularly for the ATM, Cash
Deposit and Recycler, Sorter and Coin Vending business segment as Banks
had put procurement plans on a hold due to the withdrawal of subsidies
by the Reserve Bank of India, in June ''2015. Earlier, the subsidies
which were introduced in the previous year incentivized and partially
reimbursed banks for purchasing and deploying these machines. This
withdrawal impacted the sales volume of these products negatively and
consequently the profitability of FTL which had in previous years been
the main contributor to the Company''s profit margins. Despite the
setback, FTL continued to establish leadership in e-lobbies, Passbook
Printing Kiosks and Automatic Ticket Vending Machines.
FTL received and executed a large order for Passbook Printing Kiosks
from the State Bank of India; the, largest single deployment of
Passbook Printing Kiosks in a single year in India so far.
FTL also got major orders from the Corporation Bank and, the Union Bank
of India who, using hardware manufactured by FTL, set up fully
electronic Self Service Branches called e-lobbies to enhance their
services to customers.
FTL had an impressive foray into the Transportation segment and
received significant orders from the Indian Railways across the country
for over 1000 ATVMs (Automatic Ticket Vending Machines) including Cash
basedATVMs.
FTL received many more awards and recognition which included The
Innovation Excellence Award for (Innovation in Banking - for its patent
pending - Multi-function ATM), at the Innovative India Summit 2020
organized by the ASSOCHAM and co-sponsored by the Department of
Scientific and Industrial Research - (DSIR), Ministry of Comm. & IT and
National Innovation Foundation of India.
FTL continues to make investments in new services such as Domestic
Money Transfer, infrastructure creation, expansion of offices, service
network, new product development and exports. These investments will
help FTL in addressing emerging opportunities in domestic and
international markets in the near future.
The FY 2015-16 saw the successful launch of the Domestic Money
Transfer business of Forbes Xpress which operates through a network of
franchisees that also provide other services like recharging, bill
payments and ticketing.
Future plans and strategy include the creation of new products and
solutions for long term profitable growth, such as:
- Specialized Solutions for Payment Banks and Small Banks;
- Next Generation Cash Deposit Kiosk; and
- Cash Recyclers
Shapoorji Pallonji Forbes Shipping Limited [(SPFSL, formerly SCI Forbes
Limited)]
Generally, improved freight rates, good financial management and
tighter expenditure control resulted in a significant improvement in
performance of SPFSL and it was able to service the debt, with ease and
partially prepaid USD 3.0 million to its lender, in March ''2016.
Earnings enhanced mainly due to improved freight rates, lower fuel
prices, and better fuel management and steady contracts of
affreightment. The chemical markets performed better in the FY 2015- 16
as compared to the earlier year which were reflected in the higher
yields.
The four tankers were well maintained and operated efficiently. All the
vessels enjoy at least five oil major ''approvals'' including approval by
Shell. The average down time for the year has been just 0.42 days per
ship, significantly better than the industry average.
During the year, all the vessels continued to trade east of the Suez
Canal. The general route was West Asia Gulf (WAG) to India. The ships
remained in the MARIDA POOL which had a fleet of eighteen vessels but
now has 7 ships because Nordic AS Tankers and Clipper have sold all
their small sized tankers and left the MARIDA Pool.
The chemical markets improved marginally this year and the bottom line
improved significantly owing to low fuel prices.
The Pool has three ''Contracts of Affreightment'' to lift regular cargoes
out of Saudi Arabia, Qatar and Oman. This not only helps fill up the
vessels substantially but also permits an opportunity to attract small
spot parcels of chemicals from the load ports.
Forbes Bumi Armada Offshore Limited (FBAOL)
FBAOL was earlier awarded a 7 year contract by the Oil & Natural Gas
Corporation Limited (ONGC) for providing a Floating Production Supply
and Offloading Vessel (FPSO) on Charter Hire, including its Operation &
Maintenance. FBAOL has mobilized and deployed the FPSO Armada Sterling
facility along with its crew in the D1 field of ONGC against the said
contract.
FPSO Armada Sterling completed its third year of operations without
Lost Time Injury (LTI) on April 22, 2016. Uptime of FPSO during the FY
2015-16 was nearly 100%.
The gross revenue from operations for the financial year ended March
31, 2016 stood at Rs. 526.47 crores compared to Rs. 492.41 crores for
the financial year ended March 31, 2015.However, the profits were
significantly impacted due to major increase in operational expenditure
for replacement of two gas turbine generators amounting to Rs. 25.30
crores, which is part of the expenditure over the life cycle of the
assets.
Forbes Bumi Armada Limited (FBAL)
FBAL commenced provision of manning services after receiving
Recruitment and Placement Services License from the Director General of
Shipping. The gross revenue from operations for the financial year
ended March 31, 2016 stood at Rs. 54.61 crores compared to Rs. 26.85
crores for the financial year ended March 31, 2015.
Assets of The Svadeshi Mills Company Limited (Svadeshi)
The Assets of Svadeshi continue to be in the hands of the Official
Liquidator, High Court, Bombay. An application to get Svadeshi out of
liquidation had been filed with the Hon''ble High Court, Bombay which
was dismissed and the Official Liquidator was directed to proceed
expeditiously for winding up Svadeshi. The Company filed an appeal
before the Hon''ble Division Bench, High Court, Bombay, which was
dismissed.
The Company filed a Special Leave Petition before the Hon''ble Supreme
Court (SC) which was also dismissed. Thereafter a Review Petition has
been filed before the SC and the same is pending hearing.
The Company, being a secured creditor, with adjudicated dues by the
Official Liquidator, expects to receive the dues along with a nominal
interest thereon.
Dividend and Transfer to Reserves
Though the Company had made marginal profits on standalone basis, in
view of the funding requirements for existing businesses of the
Company, the Directors regret their inability to recommend any
dividend. No amount has been transferred to the reserves during the
year.
Share Capital
The paid up Equity Share Capital of the Company as on March 31, 2016
was Rs.1289.86 lakhs. During the year under review, the Company has not
issued any shares with differential voting rights or ''sweat equity
shares'' and has not granted any stock options. As on March 31, 2016
none of the Directors of the Company hold shares or convertible
instruments of the Company.
Finance
The Company continues to focus on judicious management of its working
capital. Relentless focus on receivables, inventories, strict cost
control and, use of alternative borrowing instruments has helped in
keeping the borrowings and effective interest cost under control.
- Redeemable Non-convertible Debentures
The Non- Convertible Redeemable Debentures (NCDs) aggregating to Rs.
100 crores were outstanding during the year ended March 31, 2016. NCDs
aggregating to Rs. 40 crores were redeemed onApril 27, 2016.
- Deposits
The Company has not accepted deposits from public falling within the
ambit of Section 73 of the Companies Act, 2013 (Act) and The Companies
(Acceptance of Deposits) Rules, 2014. Unclaimed matured deposits were
transferred to Investor Education and Protection Fund as per the
provisions of the Companies Act, 1956.
Particulars of loans, guarantees and investments
Particulars of Loans, Guarantees or Investments covered under
provisions of Section 186 of the Act are given in the notes to the
Financial Statements.
Related Party Transactions
All related party transactions that were entered into during the
financial year were on arm''s length basis and were in the ordinary
course of business. There were no material related party transactions
made by the Company with Promoters, Directors, Key Managerial Personnel
or other designated persons which may have a potential conflict with
the interest ofthe Company at large.
All related party transactions are placed before the Audit Committee
for approval. Prior omnibus approval of the Audit Committee is obtained
for transactions which are of a foreseen and repetitive nature. The
transactions entered pursuant to the omnibus approval so granted are
placed before the Audit Committee on a quarterly basis.
Form AOC-2 is annexed as Annexure ''II'' to this report, pursuant to
Section 188 of the Act. The policy on Related Party Transactions as
approved by the Board is uploaded on the Company''s website.
Vigil Mechanism/Whistle Blower Policy
The Company has Whistle Blower Policy/Vigil Mechanism to deal with
instances of fraud and mismanagement, if any. The Policy is also
available on the website ofthe Company.
Internal Control Systems and Adequacy
The Company has an internal control system, which ensures that all
transactions are recorded satisfactorily and reported and that all
assets are protected against loss from unauthorized use or otherwise.
The internal control systems are supplemented by an internal audit
system carried out by a team under the direct supervision of the Head
of Internal Audit. The findings of such internal audits are
periodically reviewed by the management and suitable actions taken to
address the gaps, if any. The Audit Committee of the Board meets at
regular intervals and addresses significant issues raised by both the
Internal Auditors and the Statutory Auditors. The process of internal
control and systems, statutory compliance, information technology, risk
analysis and risk management are inter-woven to provide a meaningful
support to the management of the business.
Deloitte Haskins & Sells LLP, the statutory auditors of the Company has
audited the financial statements included in this annual report and has
issued a report on our internal financial controls over financial
reporting as defined in Section 143 oftheAct.
Statutory Compliances
The Company ensures compliance of applicable laws. The Company has zero
tolerance for sexual harassment at workplace and has adopted a policy
on prevention, prohibition and redressal of sexual harassment at
workplace in line with the provisions of the Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the
rules thereunder for prevention and redressal of complaints of sexual
harassment at workplace. During FY 2015-16, no complaints on sexual
harassment were received.
Corporate Governance and Management Discussion and Analysis
The guiding principle of the Code of Corporate Governance is ''harmony''
i.e. balancing the need for transparency with the need to protect the
interest of the Company and balancing the need for empowerment at all
levels with the need for accountability. A detailed report on Corporate
Governance is attached. The ''Management Discussion and Analysis'' forms
part of this report.
Corporate Social Responsibility (CSR)
The Company is committed to its stakeholders to conduct business in an
economically, socially and environmentally sustainable manner that is
transparent and ethical.
The Board of Directors of the Company has voluntarily constituted a
Corporate Social Responsibility Committee in compliance with Section
135 of the Act. However under the provisions of the Act, the Company is
not required to undertake any project. The Corporate Social
Responsibility Policy adopted by the Board aims to focus on areas of
Health, Education, Environment Preservation, Rehabilitation of families
affected by natural calamities and General Improvement in quality of
life.
The Company is committed to inclusive, sustainable development and
contributing to building and sustaining economic, social and
environmental capital and to pursue CSR projects, as and when required,
that are replicable, scalable and sustainable with a significant
multiplier impact on sustainable livelihood creation and environmental
replenishment.
Risk Management
Risk management process includes identification of risk, its underlying
dynamics, mitigation mechanism, prioritization of risk, measurement of
key indicators and establishing a monitoring system. A Company-wide
awareness of risk management policies and practices are being
inculcated to minimize the adverse effect of risks on the operating
results and the subject of management of risks is being approached in a
planned and co-ordinated manner. Elucidation of role clarity,
understanding of level of authority and reporting system is expected to
help this process significantly. It is realized that this is a
continuous process, requiring continued updating, based on changing
business conditions and that risk management and performance
improvement will go hand in hand.
Significant and Material Orders Passed By the Regulators or Courts
There are no significant material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations.
Directors and Key Managerial Personnel
As per provisions of Section 152(6) of the Act, Mr. Jai Mavani is due
to retire by rotation at the ensuing Annual General Meeting and being
eligible, seeks re-appointment. The Board of Directors recommend his
re-appointment as Director of the Company.
As per the retirement policy of the Company, Mr. Ashok Barat was due
for retirement in December ''2016. However, to facilitate completion of
transition, Mr. Barat vacated the Board position as a Member and
Managing Director of the Company from the close of business hours of
April 27, 2016. He would however, continue to be on the rolls of the
Company as an employee till June 30, 2016.
Mr. Mahesh C. Tahilyani was appointed as an Additional Director and
subject to the approval of the shareholders, Managing Director of the
Company with effect from April 28, 2016.
Ms. Ameeta Chatterjee, Mr. T.R. Doongaji, and Mr. Kannan
Dasaratharaman, Independent Directors of the Company resigned due to
other personal and professional commitments with effect from April 1,
2016, May 4, 2016 and May 6, 2016 respectively.
Ms. Sunetra Ganesan resigned as Chief Financial Officer of the Company
with effect from April 30, 2016.
The Board of Directors place on record their sincere appreciation for
the valuable services rendered by Ms. Ameeta Chatterjee, Mr. T R
Doongaji, Mr. Kannan Dasaratharaman and Mr. Ashok Barat to the Board
and to the Company and Ms. Sunetra Ganesan as Chief Financial Officer
of the Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet with the criteria of
Independence as prescribed both under the Act and SEBI (LODR), 2015 and
there has been no change in the circumstances which may affect their
status as Independent Directors during the year.
Independent Directors are familiarized with their roles, rights and
responsibilities in the Company through induction programmes at the
time of their appointment as Directors and through presentations made
to them from time to time. The details of familiarization programmes
conducted have been hosted on the website of the Company and can be
accessed at www.forbes.co.in
Audit Committee of the Board of Directors
The details pertaining to the composition of the Audit Committee of the
Board of Directors are included in the Corporate Governance Report
which forms part of this report.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR),
2015, 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 and Remuneration, Stakeholders''
Relationship Committees.
The performance of the Board was evaluated by the Board after seeking
feedback from all the Directors on the basis of the
parameters/criteria, such as, degree of fulfillment of key
responsibility by the Board, Board Structures and Composition,
establishment and delineation of responsibilities to the Committees,
effectiveness of Board processes, information and functioning, Board
culture and dynamics and, Quality of relationship between the Board and
the Management.
The performance of the committees viz. Audit Committee, Nomination &
Remuneration Committee, and Stakeholders Relationship Committee was
evaluated by the Board after seeking feedback from Committee members on
the basis of parameters/criteria such as degree of fulfillment of key
responsibilities, adequacy of committee composition, effectiveness of
meetings, committee dynamics and, quality of relationship of the
committee with the Board and the Management.
The Board and the Nomination and Remuneration Committee reviewed the
performance of the individual Directors on the basis of self-
assessment questionnaire and feedback/inputs from other Directors
(without the concerned director being present).
In a separate meeting of Independent Directors, performance of Non-
Independent Directors of the Board as a whole and the performance of
the Chairman were evaluated.
Remuneration Policy
The Board has, on the recommendation of the Nomination and Remuneration
Committee, framed a policy for selection and appointment of Directors,
senior management personnel and their remuneration. Remuneration Policy
of the Company acts as a guideline for determining, inter alia,
qualification, positive attributes and independence of a Director,
matters relating to the remuneration, appointment, removal and
evaluation of the performance of the Director, Key Managerial Personnel
and senior managerial personnel. Nomination and Remuneration Policy is
annexed as Annexure "III" to this report.
Disclosure as required under Section 197 (12) of Act read with Rule 5
of The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 are annexed as Annexure ''IV'' to this Report.
Meetings of the Board
The Board met at least once in each quarter and 7 meetings of the Board
were held during the year and the maximum time gap between two Board
meetings did not exceed the time limit prescribed in the Act. The
details have been provided in the Corporate Governance Report.
Directors'' Responsibility Statement
Pursuant to the provisions of Section 134(5) of the Act, the Directors,
based on the representations received from the operating management,
confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) 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 and of the profit or loss
of the Company for that period;
(iii) 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 this Act, for safeguarding
the assets of the Company and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) 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; and
(vi) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate
and operating effectively.
Auditors and Audit Report Statutory Auditors
Members are requested to re-appoint Deloitte Haskins & Sells LLP (DHS)
as the Statutory Auditors of the Company to hold office from the
conclusion of the forthcoming Annual General Meeting of the Company
till the next Annual General Meeting of the Company and authorize the
Board to fix their remuneration. DHS has confirmed their eligibility
under Section 141 of the Act and the Rules framed thereunder, for re-
appointment as Auditors of the Company. As required under Regulation 33
(d) of the SEBI (LODR), 2015, 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.
The Audit Report forms part of the Annual Report. The Auditors have
referred to certain matters in their report on Consolidated Financial
Statements to the shareholders, which read with relevant note No.s
31(c), 31(j), 42 and 48 in the notes forming part of the accounts, is
self - explanatory.
Cost Auditors
As per the requirements of Section 148 of the Act read with The
Companies (Cost Records and Audit) Rules, 2014, the cost accounts of
the Engineering Division and Project Vicinia of the Company are
required to be audited by a Cost Accountant. The Board of Directors of
the Company have, on the recommendation of the Audit Committee,
appointed Kishore Bhatia & Associates, Cost Accountants, as Cost
Auditors for the FY 2016 - 2017 on a remuneration of Rs. 4.35 Lakhs
plus out of pocket expenses. As required under the Companies Act, 2013,
necessary resolution seeking members'' ratification for the remuneration
to the Cost Auditor is included in the Notice convening the Ninety
Seventh Annual General Meeting of the Company.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Company has appointed Makarand M. Joshi & Co, a firm of Company
Secretaries in Practice, to undertake the Secretarial Audit of the
Company. The Report of the Secretarial Auditor is annexed herewith as
Annexure ''V''.
Human Resources Development and Industrial Relations
The major focus during the year continued to be partnering with
businesses & divisions with a view to enabling the businesses through
focus on systems & processes, talent acquisition and development.
Performance Management System was strengthened with specific Key Result
Areas/Key Performance Indicators and linkage of performance to Variable
Pay. Human Resources partnered in a major way to drive the
transformational initiative of Engineering Division called ACE (Adapt,
Change & Excel) which redefined the vision and mission of the Division.
Learning and development interventions, pertaining to both domain and
soft skills were done in the Divisions & Corporate Functions. From a
Leadership Development perspective, identified high potential employees
from across divisions were nominated to SP Group Talent Development
Programs ''Shikhar'' and ''Udaan''. Employee Engagement levels were kept
high through various cultural and other functions including
participation in the social causes through Daan Utsav/Joy of Giving
Week. Employee relations at large and relations with all the unit
unions continued to be cordial with focus on productivity and
efficiency.
Particulars of Employees and Energy Conservation, Technology Absorption
and Foreign Exchange Earnings and Outgo
(a) The information required pursuant to Section 197 of the Act 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, excluding
the information on employees'' particulars which is available for
inspection by the Members at the Registered Office of the Company
during the business hours on working days of the Company. Any member
interested in obtaining such particulars may write to the Company
Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo stipulated under
Section 134(3)(m) of the Act read with Rule 8 of The Companies
(Accounts) Rules, 2014 is annexed herewith as Annexure ''VI''.
Extract of Annual Report
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as Annexure ''VII'' and forms part of this
Report.
Cautionary Statement
Statements in the Board''s Report and the Management Discussion &
Analysis describing the Company''s objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company''s operations include global and domestic demand and supply,
input costs, availability, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
Acknowledgements
Your Director acknowledge and thank all stakeholders of the Company
viz. customers, members, employees, dealers, vendors, banks and other
business partners for their valuable sustained support and
encouragement. Your Directors look forward to receiving similar support
and encouragement from all stakeholders in the years ahead.
For and on behalf of the Board of Directors
Shapoor P. Mistry
Chairman
Mumbai, May 30, 2016.
Mar 31, 2015
Dear Members,
The Directors are pleased to present their Report and the Audited
Financial Statements of the Company for the Financial Year (FY) ended
March 31, 2015.
Financial Results and Highlights of Performance
The Company's performance during the year under review is summarized as
follows:
Rs. in Crores
Particulars Standalone
FY 14-15 FY 13-14
Revenue from Operations and
Other Income (Total Revenues) 293.55 293.46
Earnings before Interest,
Depreciation & Taxation (EBIDT) 15.47 16.12
Profit/(Loss) after Interest
and before Depreciation (3.27) (2.43)
Depreciation 7.15 13.27
Profit/(Loss) after
Depreciation (10.42) (15.70)
Exceptional items 9.84 (14.01)
Profit before tax (PBT) (0.58) (29.71)
Profit after tax (PAT) (0.58) (29.71)
Particulars Consolidated
FY 14-15 FY 13-14
Revenue from Operations and
Other Income (Total Revenues) 3605.23 3131.72
Earnings before Interest,
Depreciation & Taxation (EBIDT) 203.65 217.56
Profit/(Loss) after Interest
and before Depreciation 112.50 138.28
Depreciation 21.62 54.15
Profit/(Loss) after
Depreciation 90.88 84.13
Exceptional items (10.10) (12.12)
Profit before tax (PBT) 80.78 72.01
Profit after tax (PAT) 37.05 50.45
On a consolidated basis, Total Revenues for the FY 2014-15 were at Rs.
3605.23 crores, higher by 15.12% over the previous year. Consolidated
EBIDT was Rs. 203.65 for the financial as compared to Rs. 217.56 Crores
in the previous year. Consolidated PAT for the financial year was Rs.
37.05 Crores as compared to Rs. 50.45 Crores in the previous year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per Companies Act, 2013, Mr. J. J. Parakh is due to retire by
rotation at the ensuing AGM and being eligible seeks for
re-appointment. The Board of Directors recommends his re-appointment as
Director of the Company.
The Company has received declarations from all the Independent
Directors of the Company viz. Mr. T. R. Doongaji, Mr. Kaiwan D.
Kalyaniwalla, Mr. D. Sivanandhan, Ms. Ameeta Chatterjee and Mr. Kannan
Dasaratharaman confirming that they meet with the criteria of
Independence as prescribed both under sub-section (6) of Section 149 of
the Companies Act, 2013 and under Clause 49 of the Listing Agreement
with the Stock Exchanges.
Independent Directors are familiarized with their roles, rights and
responsibilities in the Company through induction programmes at the
time of their appointment as Directors and through presentations made
to them from time to time. The details of familiarization programme
have been hosted on the website of the Company and can be accessed at
www.forbes.co.in
Ms. Sunetra Ganesan was appointed as Chief Financial Officer of the
Company with effect from May 27, 2014.
Audit Committee of the Board of Directors
The details pertaining to the composition of the Audit Committee of the
Board of Directors are included in the Corporate Governance Report
which forms part of this report.
Board Evaluation
Pursuant to the provisions of the Act and Clause 49 of 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,
Stakeholder Relationship and Corporate Social Responsibility
Committees.
The performance of the Board was evaluated by the Board after seeking
feedback from all the Directors on the basis of the parameters/criteria
such as degree of fulfillment of key responsibility by the Board, Board
Structures and Composition, establishment and delineation of
responsibilities to the Committees, effectiveness of board processes,
information and functioning, Board culture and dynamics, quality of
relationship between the Board and the Management.
The performance of the committees viz. Audit Committee, Nomination &
Remuneration Committee, Corporate Social Responsibility Committee and
Stakeholders Relationship Committee was evaluated by the Board after
seeking feedback from committee members on the basis of
parameters/criteria such as degree of fulfillment of key
responsibilities, adequacy of committee composition, effectiveness of
meetings, committee dynamics, quality of relationship of the committee
with the Board and the Management.
The Board and the Nomination & Remuneration Committee reviewed the
performance of the individual directors on the basis of self-
assessment questionnaire and feedback/inputs from other directors
(without the concerned director being present).
In a separate meeting of Independent Directors, performance of Non-
Independent Directors of the Board as a whole and the performance of
the Chairman were evaluated.
Remuneration Policy
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. Remuneration Policy of the
Company acts as a guideline for determining, inter alia, qualification,
positive attributes and independence of a Director, matters relating to
the remuneration, appointment, removal and evaluation of the
performance of the Director, Key Managerial Personnel and Senior
Managerial Personnel. Nomination & Remuneration Policy is annexed as
Annexure 'III' to this report.
Disclosure as required under section 197 (12) of the Companies Act,
2013 (Act) read with Rule 5 of The Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 are annexed as
Annexure 'IV' to this Report.
Meetings of the Board
The Board met at least once in each quarter and 6 meetings of the Board
were held during the year and the maximum time gap between two Board
meetings did not exceed the time limit prescribed in the Act. The
details are given in the Corporate Governance Report.
Directors' Responsibility Statement
Pursuant to the provisions of section 134(5) of the Act, the Directors,
based on the representations received from the operating management,
confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) that 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 at the end of the financial year and of the
profit or loss of the Company for that period;
(iii) that 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 this Act, for safeguarding
the assets of the Company and detecting fraud and other irregularities;
(iv) that the directors have prepared the annual accounts on a going
concern basis.
(v) that the directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively.
(vi) that the directors have devised proper systems to ensure
compliance with the provisions of all applicable laws and that such
systems are adequate and operating effectively.
Auditors and Audit Report
Statutory Auditors
Members are requested to re-appoint Messrs. Deloitte Haskins & Sells
LLP (DHS) as the Statutory Auditors of the Company to hold office from
the conclusion of the forthcoming Annual General Meeting of the Company
till the next Annual General Meeting of the Company and authorise the
Board to fix their remuneration. DHS has confirmed their eligibility
under section 141 of the Companies Act, 2013 and the Rules framed
thereunder for re-appointment as Auditors of the Company. As required
under Clause 49 of 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.
The Audit Report forms a part of the Annual Report. The Auditors have
referred to certain matters in their report on Standalone and
Consolidated Financial Statements to the shareholders, which read with
relevant notes in the Financial Statements are self-explanatory.
Cost Auditors
As per the requirements of section 148 of the Companies Act, 2013 read
with The Companies (Cost Records and Audit) Rules, 2014, the cost
accounts of the Engineering Division of the Company are required to be
audited by a Cost Accountant. The Board of Directors of the Company
have, on the recommendation of the Audit Committee appointed Kishore
Bhatia & Associates, Cost Accountants, as Cost Auditors for the
financial year 2015 - 2016 on a remuneration of Rs.2.60 Lacs plus out
of pocket expenses. As required under the Companies Act, 2013,
necessary resolution seeking members' ratification for the remuneration
to the Cost Auditor is included in the Notice convening the Ninety
Sixth Annual General Meeting of the Company.
Secretarial Audit
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 Makarand M. Joshi &
Co, a firm of Company Secretaries in Practice, to undertake the
Secretarial Audit of the Company. The Report of the Secretarial Auditor
is annexed herewith as Annexure 'V'.
Human Resources Development and Industrial Relations
The major focus during the year was partnering with Businesses &
Divisions with a view to making HR an integral Business Driver.
Towards this, the Performance Management System which was introduced on
the principle of Balance Score Card was entrenched across the
Divisions. Specific learning and development interventions, pertaining
to both domain and soft skills were done in Engineering and Shipping &
Logistics Divisions. From a Leadership Development perspective,
identified high potential employees from across divisions were
nominated to SP Group Talent Development Programs 'Shikhar' and
'Udaan'. Strong employee induction processes were introduced to
integrate and assimilate new entrants and enable them to become
effective in a short span of time. HR partnered with Engineering
Division in a critical business improvement intervention titled 'Adapt,
Change, Excel' (ACE) which was rolled out across the Division.
Employee Engagement levels were kept high through various cultural and
other functions, also including participation in various sports events
in the 150 years Celebration of SP Group where Forbes was a proud
winner of several team and individual medals. Employee relations at
large and relations with all the unit unions continued to be productive
and cordial. Productivity and efficiency continued to be the focus
areas in Manufacturing Operations.
Particulars of Employees and Energy Conservation, Technology Absorption
and Foreign Exchange Earnings and Outgo
(a) 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, excluding the information on
employees' particulars which is available for inspection by the Members
at the Registered Office of the Company during the business hours on
working days of the Company. Any member interested in obtaining such
particulars may write to the Company Secretary at the Registered Office
of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo stipulated under
Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The
Companies (Accounts) Rules, 2014 is annexed herewith as Annexure 'VI'.
Extract of Annual Report
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as Annexure 'VII' and forms part of this
Report.
Cautionary Statement
Statements in the Board's Report and the Management Discussion &
Analysis describing the Company's objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company's operations include global and domestic demand and supply,
input costs, availability, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
Acknowledgement
Your Director acknowledge and thank all stakeholders of the Company
viz. customers, members, employees, dealers, vendors, banks and other
business partners for their valuable sustained support and
encouragement. Your Directors look forward to receiving similar support
and encouragement from all stakeholders in the years ahead.
For and on behalf of the Board of Directors
Shapoor P. Mistry
Chairman
Mumbai, May 26, 2015.
Mar 31, 2013
To, The Shareholders,
The Directors submit their Report and the Audited Accounts of the
Company for the year ended March 31, 2013.
1. FINANCIAL RESULTS:
The results for the current year and those for the previous year are
set out in this paragraph:
Rs. in Crores
For the year ended For the year ended
March 31, 2013 March 31, 2012
Revenue from Operations and
Other Income 321.26 286.94
Less: Expenses 309.26 271.62
Profit after Interest and
before Depreciation 12.00 15.32
Less: Depreciation 13.17 12.12
Profit/(Loss) after
Depreciation and before
exceptional items (1.17) 3.20
Add: Exceptional items 37.31 1.53
Profit before tax 36.14 4.73
Less: Tax Expenses/(benefit)
-Current tax expense 5.45 -
-Excess provision for tax
relating to prior years (0.66) 4.79 - -
Profit after tax for the year 31.35 4.73
2. DIVIDEND:
The Company has earned net profit after tax of Rs. 31.35 crores. As per
the provisions of the Companies Act, 1956, the Company is required to
set off losses of the earlier years, before declaring any dividend for
the year; the accumulated losses to be set off exceed the current
year''s profit. However, the Board of Directors have proposed payment
of dividend out of reserves at the maximum permissible rate of 5%
(Previous year - 10%).
3. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:
3.1 Details of these companies are set out in the statement, pursuant
to Section 212 of the Companies Act 1956. Full accounts of these
subsidiaries are available for inspection to the shareholders of the
holding company and other investors on request and are also available
for inspection at the Registered Office of the Company and that of the
subsidiary company concerned.
3.2 Eureka Forbes Limited (EFL)
During the year, the global economy improved slowly, but was short on
expectations. Deceleration in industrial output and exports weakened
India''s economic growth significantly. The year proved to be a
challenging year amidst global economic uncertainties and disturbances
in many parts of the world.
Despite these constraints and challenging environment, EFL has
performed well with a growth in revenue by 6.73% over previous year
i.e. from Rs. 1234.50 crores in previous year to Rs. 1317.54 crores in
current year and an increase in net profit after tax by 8.41% over
previous year i.e. from Rs. 32.22 crores in previous year to Rs. 34.93
crores in current year.
Transformation truly was the mantra in Direct Sales which evolved to
focus on the ''digital medium'' becoming very active on the ''social
media'', improving word of mouth and making access to consumers easier
with the ''click to call'' facility both on the website as well as
print advertisements. Strong focus on bringing down the ''Cost per
Unit'' and steps to manage the customer database better with ''Data
Validation'', productivity increase and movement to high value selling
made Direct Sales succeed in its endeavor during this tough year.
EFLalso invested in developing the Partner Channel bringing in
tremendous growth opportunities for the future.
In the consumer division, the Packaged Drinking Water (PDW) business
was further strengthened, with 26 franchisees going live and
collectively dispensing 49 million litres of AquaSure PDW water.
EFL also strengthened its international retail business in the Middle
East and Africa by launching new products and expanding the width and
depth of distribution. Retail business in new geographies of Sri Lanka
and Mauritius were also started.
To strengthen the infrastructure and product availability, the IT and
the supply chain process were streamlined leading to optimization of
the resources and improving operating efficiencies.
Towards its brand building exercise, EFL took a number of new
initiatives right from new communication, product development and
working on its digital presence to build stronger bonds with customers.
EFL also has worked on improving its award winning service to
customers.
EFL received various awards and recognition, as in previous years, in
the current year also some of which are -
- Golden Peacock Award for Corporate Social Responsibility - 2013
- Golden Peacock Eco-Innovation Award for Aquaguard Green RO
- Euroclean elevated as Reader''s Digest Trusted Brand - Platinum
category (Household Products - Vacuum Cleaner) for the first (1st) time
- elevated from Gold category
- Aquaguard chosen as Reader''s Digest Trusted Brand - Platinum
category (Household Products - Water Purifier) for the seventh (7th)
time
- Once more featured in DSN Global 100: The Top Direct Sales
Companies in the World - Rank: 40
- Recognised as Asian MAKE Winner for the fourth (4th) time and also
entered the 2012 MAKE Hall of Fame by being one of just 10
organisations that were Asian MAKE Finalists in each of the past five
annual studies
- Bombay Chamber of Commerce & Industry conferred Good Corporate
Citizen Award in the Large Corporate category
- Picked as Best Franchisor in Customer Service by Franchisee India
magazine once more
- Aquaguard saluted as winner in the Most Popular Safe Water
Equipment category of the Child Best Awards (inaugural edition) from
Child India magazine
- EuroAble selected for NCPEDP-Shell Helen Keller Award in Category
C: Role Model Organisations for its work promoting employment
opportunities for people with disabilities - award was given on the eve
of the World Disability Day, December 2, 2012
- Bagged the S. P. Jain Institute of Management and Research (SPJIMR)
Marketing Impact Awards 2013 at the Bharti Vidya Bhavan''s SPJIMR
Academic Conclave for community fulfillment initiatives
- Picked up 2012 Indian MAKE Award for the 7th time
- Harvard Case Study became a graphic Photonovel with the Eurochamp
as its hero
- Prestigious (6th time) UNESCO-Water Digest Awards in the following
categories:
- Best Complete Domestic Water Solutions Provider
- Best Domestic UV Water Purifier (Aquaguard Enhance UV)
- Best Domestic RO Water Purifier (Aquaguard Enhance Green RO)
- Distinguished Water R&D and Technological Breakthrough (Aquaguard
Geneus)
- Your Directors are confident that, barring unforeseen
circumstances, in the ensuing year EFL shall maintain the growth
momentum.
3.3 Forbes Technosys Limited (FTL)
During the last one year FTL has made great strides in multiple
dimensions:
- There has been a sharp increase (83%) in FTL''s turnover to Rs.
166.84 crores (previous year Rs. 91.19 crores). Growth was witnessed
across business verticals and product range, specifically Kiosks and
Recharge Business.
- Against a loss of Rs. 8.83 crores in the previous year, FTL has
reported profit after taxation of Rs. 0.26 crores.
- Customer confidence in FTL''s solutions has grown significantly
and, during the year, FTL has witnessed strong order booking -and
successful execution thereof- from Punjab National Bank, State Bank of
India and associate banks, TATA Motor Finance, United Bank of India,
Central Bank of India, Andhra Bank, Central Railways, Maharashtra
Tourism, TATA Starbucks, etc.
- During the year, FTL has established leadership in e-lobbies, Cash
Deposit Kiosks, Passbook Printing Kiosks, Ticket Vending Kiosks and
Information Kiosks and also made a successful entry into Enterprise
mobility, Q Management, Currency Sorters and Coin Vending Machines. FTL
has also received orders from Tanzania and Nepal.
- FTL continues to receive National and International recognitions in
the form of several awards including iCMG Global Excellence Award for
Cloud Technologies, e-world Award for Use of ICT in PSUs, Stars of the
Industry Awards for Manufacturing Excellence, e-India Awards for
Judicial Franking in Bihar, nomination in Top 30 Rural Innovations for
NABARD (National Bank for Agricultural & Rural Development) Award and
the AIMA (All India Management Association) Award for Breakthrough
Innovations.
- AIMA has published the case study of FTL''s "Cloud based
e-distribution for e-services" in a book titled "Breakthrough
Innovations"-Innovative Practices across India. The Megabanker and
the Nanobanker,two of the products targeted at the Banking Industry,
received the prestigious India Design Mark.
- FTL''s new manufacturing facility for manufacture of Kiosks and
ATMs was set up in Kalher, Thane and production of kiosks and ATMs
increased by 300% over the previous year. Further expansion of the
facility is in progress to cater to the increasing demand.
- To create a platform for long - term profitable growth, FTL
continues to follow a five point strategy which consists of the
following:
- Create and target profitable business opportunities
- Cutting the bleed in non-productive areas/activities
- Enhancing and improving Customer experience
- Proactive Cash Flow Management
- Implement Sustainable and environment friendly processes
3.4 Forbes Container Line Pte. Limited (FCL)
During the year, the gross revenues of FCL have improved by 13% from S
$16 mn. to S $ 18 mn. despite the subdued global shipping market.
The year 2012-13 was relatively a bad year for global shipping which
has affected FCL''s performance also. During the year, many shipping
lines deployed their newly -built Very Large Container Carriers (VLCC)
with capacities of 14000 TEUs to 18000 TEUs. This resulted in excess
capacity and had a big impact on the global sea freight market due to
unhealthy competition among the mainline operators. Since most of these
vessels were deployed in the Asia - Europe and Asia - USA trade, the
freight rates to short sea routes in Asia where FCL is active has
suffered very heavily, especially on the China- South-East Asia to
India routes and India to Gulf routes. The freight rates in India -
Dubai sector have fallen from a peak of US $ 300/TEU to US $ 40/TEU and
have not improved during the major part of the year. Due to these
factors, profitability of FCL did not increase commensurately with the
increase in gross revenue.
FCL has plans to increase volumes by on-hiring and buying new
containers during FY 2013-14. FCL also plans to enter the specialised
market segment of refrigerated cargo and improve the freight forwarding
activity by opening a new office in Dubai.
FCL has set up a company in Dubai in the name ''Forbes Shipping and
Services LLC" which will operate as an independent shipping agency
and logistics provider in the UAE. It will also have freight forwarding
as one of its core activities. The operations are expected to commence
from shortly. This will provide FCL an opportunity to improve its
freight forwarding activity from Singapore and China and enter into the
African market also which is a developing market.
3.5 SCI Forbes Limited (SCIF):
During the year under review, all the four ships of SCIF were employed
in the MARIDA Pool, where 21 ships of similar size form the pool. Most
of the MARIDA Pool ships trade in the West and only 5 ships are
deployed in the East. The Pool''s performance reflected slowdown of
the markets in chemical trading, during the year. European Union (EU)
region and Trans Atlantic business suffered due to slowdown in trade
and EU region woes.
During the year, MT. ASAVARI had to be laid up for repairs for an
extended period to recoat the cargo tanks since the damage to the
coating caused an expensive cargo contamination claim. The vessel
suffered loss of earnings due to a prolonged delay in repairs and thus
the overall earnings for the year came down.
The Chemical markets showed signs of improvement in the second half of
the year, but the markets in Europe and America have dampened the
overall earnings. The Clean Petroleum Product market was buoyant at the
beginning of year 2013, which supported chemical rates for a brief
period of 2 months.
SCIF had a default in fulfilling some loan covenants that caused the
lenders to declare an "Event of Default". The Shareholders of SCIF
are working with the lenders to arrive at an acceptable resolution.
In the coming year the Chemical markets are expected to be marginally
better, compared to FY 2012-13.
3.6 Forbes Bumi Armada Offshore Limited (FBOL)
As advised in the previous year, FBOL was awarded by ONGC a 7-year
contract for providing a Floating Production Supply and Offloading
vessel (FPSO) on Charter Hire including its Operation & Maintenance.
The Company has mobilised and deployed the FPSO "Armada Sterling"
along with crew in D1 field of ONGC. The FPSO had reached the location
on January 27, 2013. After completion of subsea installation and
pre-startup activities, safe startup of FPSO was accomplished and
received first quantity of oil from the wells on April 7, 2013.
As per the conditions of the contract with ONGC, the test run was
completed and final acceptance received from ONGC with effect from
April 22, 2013. The oil is produced and stored in the crude storage
tanks on FPSO. First batch of the crude was offloaded to the ONGC
designated buyer on May 14, 2013.
3.7 Assets of the Svadeshi Mills Company Limited (Svadeshi) continue to
be in the hands of the Official Liquidator, High Court, Bombay. An
application to get Svadeshi out of liquidation had been filed with the
Hon''ble High Court, Bombay, inter alia, praying for permanent stay on
the Order passed by the High Court ordering winding up of Svadeshi and,
to hand over to the applicants the entire undertaking of Svadeshi. The
High Court had dismissed the application and directed the Official
Liquidator to proceed expeditiously for winding up of Svadeshi. The
Company had filed an appeal before the Division Bench against the Order
of the High Court. The matter came up for hearing and arguments on
behalf of the Appellants, the recognized and representative union, have
been completed. The arguments of aggrieved parties are pending. The
appeal is yet to be disposed off.
Your Company, being a secured creditor, with adjudicated dues by the
Official Liquidator, expects to receive the dues along with nominal
interest thereon, when the matter is ultimately disposed off.
5. DIRECTORS:
i) Mr. D. B. Engineer and Mr. R. N. Jha, who retire by rotation, are
not seeking re-appointment in view of their other professional
commitments. The Board of Directors has decided to accept their
requests with deep regret.
Mr. Engineer was invited, during 1975, to join the Board of Directors
of the erstwhile, Forbes Forbes Campbell & Co. Ltd., which position he
continued to hold until 1992, when Forbes Forbes Campbell & Co. Ltd.,
amalgamated with the Company. In 1992, Mr. Engineer was invited to join
the newly constituted Board of Directors of the amalgamated Company and
has been a Director of the Company, since then. Mr. Engineer has been a
member of the Audit Committee since 2001 and its Chairman since 2010.
Mr. Jha was invited, during 1998, to join the Board of Directors of the
Company at the instance of Life Insurance Corporation of India (LIC),
as one of the major shareholders of the Company, which position he
continued to hold until 2004, when LIC decided to withdraw its
representation on the Board of Directors of the Company. However, Mr.
Jha was invited to join the Board of Directors of the Company,
immediately thereafter, as an Independent Director and has been a
Director of the Company, since then. Mr. Jha has been a member of the
Audit Committee since 2003, Remuneration Committee since 2002 and
Shareholders'' Committee since 2010.
The Board of Directors places on record their sincere appreciation for
the valuable services rendered by, both, Mr. D. B. Engineer and Mr. R.
N. Jha to the Board and to the Company during their tenure as Directors
of the Company.
ii) Mr. T. R. Doongaji is due to retire by rotation and the Board of
Directors commends his re-appointment as Director of the Company.
6. INTERNAL CONTROLS AND SYSTEMS:
The Company has an internal control system, which ensures that all
transactions are satisfactorily recorded and reported and all assets
are protected against loss from unauthorized use or otherwise. The
Internal Control Systems are supplemented by an internal audit system
carried out by a team under the direct supervision of the Head of
Internal Audit. The findings of such internal audits are periodically
reviewed by the management and suitable actions taken to address the
gaps, if any, noted arising from such audits. The Audit Committee of
the Board meets at regular intervals and addresses significant issues
raised by both the Internal Auditors and the Statutory Auditors. The
process of internal control and systems, statutory compliance,
information technology, risk analysis and risk management are
inter-woven, to provide a meaningful support to the management of the
business.
7. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:
The guiding principle of the Code of Corporate Governance is
''harmony'' i.e. balancing the need for transparency with the need to
protect the interest of the Company and balancing the need for
empowerment at all levels with the need for accountability. A detailed
report on Corporate Governance is attached. The ''Management
Discussion and Analysis'' forms part of this report.
8. DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors, based on the representation received from the
operating management, confirm -
a. that in the preparation of the annual accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departures;
b. that they have selected such accounting policies and applied them
consistently and made judgment 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 and of the profit or loss
of the Company for that period;
c. that 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 Act for safeguarding
the assets of the Company and for preventing and detecting fraud and
other irregularities;
d. that they have prepared the annual accounts on a going concern
basis.
9. AUDITORS AND AUDIT REPORT:
You are requested to appoint Auditors for the current year and
authorise the Board to fix their remuneration. It is proposed to
re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as
the Statutory Auditors of the Company to hold office from the
conclusion of the forthcoming Annual General Meeting of the Company to
the following Annual General Meeting of the Company.
The Audit Report forms a part of the Annual Report. The Auditors have
referred to certain matters in their report to the shareholders, which
are self-explanatory.
Consequent to the issue of Order No. 52/26/CAB-2010 dated June 30, 2011
and January 24, 2012 by the Central Government, the cost accounts of
the Engineering Division of the Company for the financial year 2011 -
2012 onwards are required to be audited by a Cost Accountant. For the
Financial year 2011 -2012 the cost audit report was filed with the
Central Government on December 12, 2012 The Central Government has
approved appointment of Kishore Bhatia & Associates, Cost Accountants,
as Cost Auditors for the financial year 2012-2013.
10. CORPORATE SOCIAL RESPONSIBILITY:
The Company continued to support causes of public utility both directly
and indirectly in the field of education, medical relief, relief of
poverty and promotion of sports and art.
11. CONCERNS AND RISK MANAGEMENT:
Risk management process includes identification of risk, its underlying
dynamics, mitigation mechanism, prioritization of risk, measurement of
key indicators and monitoring system. A Company-wide awareness of risk
management policies and practices are being inculcated to minimize the
adverse effect of risks on the operating results and the subject of
management of risks is being approached in a planned and co-ordinated
manner. Elucidation of role clarity, understanding of level of
authority and reporting system is expected to help this process
significantly. It is realized that this is a continuous process,
requiring continued updating, based on changing business conditions and
that, risk management and performance improvement will go hand in hand.
12. HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:
In continuation with the earlier Organisational Development initiative
a "Development Centre" for top leaders, and the next level of
management was undertaken to build second level leadership pipeline and
develop middle level leaders. This will also be used for planning
succession and drawing career path for potential performers.
A major initiative was undertaken to recruit professionals with domain
knowledge in a time bound plan so as to strengthen businesses to
deliver performance as per stipulated business plans.
Industrial Relations
The relations with various Unions continued to be cordial which helped
in encouraging and boosting the productivity. Long-term agreements
with the Chandivali Labour Union and Head office union were signed in a
healthy atmosphere. There was no loss of man hours and production due
to industrial unrest.
13. PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT 1956:
Following statements are attached and form a part of this report -
(a) The particulars of employees as required under Section 217(2A) read
with the Companies (Particulars of Employees) Rules 1975, as amended
forms part of the Report. Having regard to the provisions of Section
219(1)
(b)(iv) of the Companies Act, 1956, the Report and Accounts are being
sent to the shareholders excluding the statement of particulars of
employees under Section 217(2A) of the Companies Act, 1956. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption and under Section 217(2A) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
14. ACKNOWLEDGEMENT:
Your Company continues to occupy a place of respect amongst the many
stakeholders it is associated with, most of all our valued customers.
The Directors commend the continued commitment and dedication of
employees at all levels. The Directors also wish to acknowledge and
thank all other stakeholders for their valuable sustained support and
encouragement. Your Directors look forward to receiving similar support
and encouragement from all stakeholders in the years ahead.
For and on behalf of the
Board of Directors
Shapoor P. Mistry
Chairman
Mumbai, July 1, 2013.
Mar 31, 2012
The Directors submit their Report and the Audited Accounts of the
Company for the year ended 31st March, 2012.
1. FINANCIAL RESULTS:
The results for the current year and those for the previous year are
set out in this paragraph.
Rs. in Crores
For the year ended For the year ended
31st March, 2012 31st March, 2011
Revenue from Operations
and Other Income 286.94 251.65
Less: Expenses 271.62 245.43
Profit /(Loss) after
Interest and before Depreciation 15.32 6.22
Less: Depreciation 12.12 13.62
Profit/(Loss) after
Depreciation and before
exceptional items 3.20 (7.40)
Add: Exceptional items 1.53 4.89
Profit/(Loss) before tax 4.73 (2.51)
Less: Tax expense/ (credit)
-Current tax relating to
previous year - (0.10)
Profit/(Loss) from
continuing operations 4.73 (2.41)
Add : Profit for the year
from discontinuing operations - 2.99
Profit for the year 4.73 0.58
Add : Balance brought forward
from previous year (43.37) (43.95)
Balance carried to Balance Sheet (38.64) (43.37)
2. The Company has earned net profit after tax of Rs. 4.73 crores. As
per the provisions of the Companies Act, 1956, the Company is required
to set off losses of the earlier years, before declaring any dividend
for the year; the accumulated losses to be set off exceed the current
year's profit. However, the Board of Directors, encouraged by the
performance of the Company, have proposed payment of dividend out of
reserves at the maximum permissible rate of 10% (Previous year - Nil)
5. DIRECTORS:
i) Mr. Pallonji S. Mistry, Chairman Emeritus, retired from the Board of
Directors of the Company with effect from 21st February, 2012. Mr.
Pallonji S. Mistry had been a member of the Board since 20th February,
2002. Board places on record their sincere appreciation of the valuable
guidance provided by Mr. Pallonji S. Mistry to the Board and the
Company management over the period of his association with the Company.
ii) Mr. Cyrus P. Mistry decided to step down as a Director of the
Company with effect from 9th December, 2011 upon his appointment as the
Deputy Chairman of Tata Sons Limited. Mr. Cyrus P. Mistry had been a
member of the Board since 23rd June, 2003 and over the period of his
association with the Company he had made valuable contribution to the
deliberations at the Board Meetings. Board places on record their
sincere appreciation of the services rendered by Mr. Cyrus P. Mistry to
the Board and the Company over the period of his association with the
Company.
iii) Mr. S. L. Goklaney is due to retire by rotation and the Board of
Directors commends his re-appointment as Director of the Company.
iv) Mr. N. D. Khurody, who also retires by rotation, is not seeking
re-appointment in view of his advancing years. The Board of Directors
has decided to accept his request with deep regret. Mr. Khurody joined
the Board of Directors of the Company on 17th March, 2004. During his
tenure as the Director of the Company, Mr. Khurody has rendered
valuable services to the Company and the Board of Directors of the
Company. Board places on record their sincere appreciation for the
same.
Board of Directors has decided, for the time being, not to make new
appointment in the resultant vacancy on the Board of Directors.
v) Mr. D. Sivanandhan, Mr. Jimmy J. Parakh and Mr. Jai L. Mavani were
appointed Additional Directors on the Board of Directors of the
Company. They hold office upto the date of the ensuing Annual General
Meeting and items regarding their appointment are included in the
Notice convening the Annual General Meeting. The Board of Directors
commends their appointment as Directors of the Company.
6. LATE MR. D. S. SOMAN:
Mr. D. S. Soman, a former Director of the Company, passed away on 9th
October, 2011.
Mr. D. S. Soman was invited to the Board of Directors of the erstwhile,
Forbes Forbes Campbell & Co. Ltd., in 1988. He was invited to the newly
constituted Board of Directors of the Company, after amalgamation of
Forbes Forbes Campbell & Co. Ltd., with the Company, in 1992 and since
then, he had been a Director of the Company till his retirement on 22nd
September, 2010, when he decided to retire in view of his advancing
years. Mr. Soman was also the Chairman of Audit Committee of Board of
Directors of the Company. The Board places on record their heartfelt
condolences for the sad demise of Mr. Soman.
7. INTERNAL CONTROLS AND SYSTEMS:
The Company has an internal control system, which ensures that all
transactions are satisfactorily recorded and reported and all assets
are protected against loss from unauthorized use or otherwise. The
Internal Control Systems are supplemented by an internal audit system
carried out by a team under the direct supervision of the Head of
Internal Audit. The findings of such internal audits are periodically
reviewed by the management and suitable actions taken to address the
gaps, if any, noted arising from such audits. The Audit Committee of
the Board meets at regular intervals and addresses significant issues
raised by both the Internal Auditors and the Statutory Auditors. The
process of internal control and systems, statutory compliance,
information technology, risk analysis and risk management are
inter-woven to provide a meaningful support to the management of the
business.
8. CORPORATE GOVERNANCE:
The guiding principle of the Code of Corporate Governance is 'harmony'
i.e. balancing the need for transparency with the need to protect the
interest of the Company and balancing the need for empowerment at all
levels with the need for accountability. A detailed report on
Corporate Governance is attached; the 'Management Discussion and
Analysis of Results of Operation' forms a part of this report and is
not again repeated in the Corporate Governance Report.
9. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors, based on the representation received from the
operating management, confirm -
a. that in the preparation of the annual accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departures;
b. that they have selected such accounting policies and applied them
consistently and made judgment 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 and of the profit or loss
of the Company for that period;
c. that 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 Act for safeguarding
the assets of the Company and for preventing and detecting fraud and
other irregularities;
d. that they have prepared the annual accounts on a going concern
basis.
10. AUDITORS AND AUDIT REPORT:
You are requested to appoint Auditors for the current year and
authorise the Board to fix their remuneration. It is proposed to re-
appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as the
Statutory Auditors of the Company to hold office from the conclusion of
the forthcoming Annual General Meeting of the Company to the following
Annual General Meeting of the Company. The Audit Report forms a part of
the Annual Report.
The Auditors have referred to certain matters in their report to the
shareholders, which are self-explanatory.
Consequent to the issue of Order No. 52/26/CAB-2010 dated 30th June,
2011 and 24th January, 2012 by the Central Government, the cost
accounts of the Engineering Division of the Company for the financial
year 2011 - 2012 onwards are required to be audited by a Cost
Accountant. For the financial year 2011 - 2012, the Central Government
has approved the appointment of Kishore Bhatia & Associates, Cost
Accountants, who have commenced the audit.
11. CORPORATE SOCIAL RESPONSIBILITY:
The Company continued to support causes of public utility both directly
and indirectly in the field of education, medical relief, relief of
poverty and promotion of sports and art.
12. CONCERNS AND RISK MANAGEMENT:
Risk management process includes identification of risk, its underlying
dynamics, mitigation mechanism, prioritization of risk, measurement of
key indicators and monitoring system. A Company-wide awareness of risk
management policies and practices are being inculcated to minimize the
adverse effect of risks on the operating results and the subject of
management of risks is being approached in a planned and co-ordinated
manner. Elucidation of role clarity, understanding of level of
authority and reporting system is expected to help this process
significantly. It is realized that this is a continuous process,
requiring continued updating, based on changing business conditions and
that, risk management and performance improvement will go hand in hand.
13. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:
A new Organisational Development initiative "Development Centre" was
carried out for top 8 leaders. This exercise was undertaken to build
leadership pipeline and develop senior leaders in order to enable them
to run businesses more efficiently. This exercise will also be used for
planning succession and drawing career paths for potential performers.
Recruitment - a major initiative was undertaken to recruit
professionals with domain knowledge in a time bound plan so as to
strengthen businesses to deliver performance as per stipulated Business
plans.
Industrial Relations
Maintained cordial relations with various Unions and helped in
encouraging and boosting the productivity. No man-hours and production
were lost due to industrial unrest.
General
Participated in HR Surveys in order to abreast our knowledge regarding
various trends in the Industry.
14. PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT 1956:
Following statements are attached and form a part of this report-
(a) The particulars of employees as required under Section 217(2A) read
with the Companies (Particulars of Employees) Rules 1975, as amended
forms part of the Report. Having regard to the provisions of Section
219(1) (b)(iv) of the Companies Act, 1956, the Report and Accounts are
being sent to the shareholders excluding the statement of particulars
of employees under Section 217(2A) of the Companies Act, 1956. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption and under Section 217(2A) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
15. ACKNOWLEDGEMENT:
Your Company continues to occupy a place of respect amongst the many
stakeholders it is associated with, most of all our valued customers.
The Directors commend the continued commitment and dedication of
employees at all levels. The Directors also wish to acknowledge and
thank all other stakeholders for their valuable sustained support and
encouragement. Your Directors look forward to receiving similar support
and encouragement from all stakeholders in the years ahead.
For and on behalf of the
Board of Directors
SHAPOOR P. MISTRY
Chairman
Mumbai, 29th May, 2012
Mar 31, 2011
The Shareholders,
The Directors submit their Report and the Audited Accounts of the
Company for the year ended 31st March, 2011.
1. FINANCIAL RESULTS:
The results for the current year and those for the previous year are
set out in this paragraph.
Rupees in Crores
For the year
ended For the year ended
31st March, 2011 31st March, 2010
Sales, Services and Other Income 264.24 219.91
Less: Expenditure 250.00 216.05
Profit /(Loss) after Interest and
before Depreciation 14.24 3.86
Less: Depreciation 13.64 16.54
Profit/(Loss) after Depreciation 0.60 (12.68)
Add: Profit for the year ended 31.3.2009
in respect of Shipping Agency
Division of Volkart Fleming Shipping &
Services Ltd., pursuant to
Scheme of Arrangement for Demerger and
transfer à 2.46
Profit/(Loss) before taxation 0.60 (10.22)
Less: Provision for Taxation
- (Reversal)/Provision relating to previous
year for Taxation (Net) (0.10) 1.91
- for Wealth tax 0.12 0.13
Profit/(Loss) after Taxation 0.58 (12.26)
Add: Balance brought forward (43.95) (31.69)
Balance Carried to Balance Sheet (43.37) (43.95)
2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS:
2.1. ENGINEERING:
Precision Tools: During the year, the Precision Tools business has
shown a significant improvement in its performance. Despite
recessionary conditions prevailing in major international markets,
exports increased substantially. International sourcing of some high
growth products started during the year, which will help your Company
to address demand and grow its market share. Various initiatives are
currently underway to improve the entire supply chain, that include,
strategic sourcing, expanding current product portfolios, re-layout of
production lines, discontinuance of non-performing products/SKU's,
implementing a replenishment based ordering for the channel trade. The
initiatives to reduce the dependence on the automobile sector (a sector
adversely impacted by the global financial crisis with a consequent
impact on this product group) by also developing customers in select
non-auto sectors like Defence and Aerospace have shown good progress.
Energy Solutions Group à The business model was changed from being an
agent of an overseas principal for Drive Turbines to becoming Value
Added Resellers (VAR). Other Steam and Drive Turbines were added to the
product portfolio. The Company was successful in establishing its
presence as a vendor for supply of Steam Turbines and Blower Packages
bagging orders from extremely demanding customers. During the year a
new team (with many experienced engineers from the Power sector) was
set up with a focus on building own capability for servicing of
turbines and turnkey execution of projects; these efforts have borne
fruit. As on date, the Company has a confirmed
order book aggregating Rs. 75 crores of which a significant portion
will be executed during the current year. During the year, the Company
successfully completed erection and commissioning at 7 sites which
included prestigious clients like Bharat Petroleum, Bharat Oman
Refinery and Saurashtra Chemicals.
The Company secured three orders valued at Rs. 34 crores for execution
on a turnkey basis.
The turbine refurbishing facility being set up at Waluj, Aurangabad is
expected to be ready by July, 2011, post which the Company will have
the capability to service turbines upto 30 MW capacity in-house.
2.2. LOGISTICS, CONTAINER FREIGHT STATIONS AND SHIPPING RELATED
ACTIVITY:
During the year, the division consolidated its position within the
industry and restructured its operations according to the market
requirement by developing full-fledged Freight Forwarding and Door-
to-Door Logistics capabilities instead of just being a liner agent.
With this the division is now engaged in three activities viz.
Container Freight Stations, Freight Forwarding and in a limited way as
agents of shipping lines.
Container Freight Stations:The Company's Station at Mundra witnessed an
upsurge in volumes due to focused marketing efforts; new customers were
added at the Veshvi Station (near JNPT). The thrust remains on
aggressive marketing, profitable customer acquisition and improvement
of operational efficiencies. Downturn in the US and European economies,
increased number of CFS competing for a nearly stagnant business and
poor infrastructure in and around the ports continue to hamper growth.
Freight Forwarding: The Company expanded its capabilities to provide
all types of logistics and supply chain services like ExportÃImport,
Sea Freight, Air Freight, Cross Trade, Custom Clearance and
Transportation etc. on all India basis and will soon be providing
Warehousing and Distribution services also. Tie-ups with freight
forwarders in 175 countries worldwide would enable the Company to
provide door-to-door services to customers. The Company is now
registered with the Federal Maritime Commission (FMC), USA that enables
handling of exports to USA.
Along with major ports and cities the Company is now targeting select
hinterland locations. In order to expand the client base and reach, the
Company regularly participates in Trade Fairs and Exhibitions and
organizes customer meets at various locations. Some of the esteemed
clients include the Aditya Birla Group, L& T, Bombay Dyeing etc.
Overall whilst the Shipping and Logistics division has shown a
tremendous growth this year compared to last year; the focus on
increasing margins, getting operational excellence and delivering
excellent service at a competitive cost continues.
Post implementation of a new Enterprise Resource Planning software in
April 2010, issues were noted in the divisional accounts in terms of
balances reflecting in various accounts. Appropriate measures to
reconcile the accounts have commenced; whilst sizeable progress has
been made, the task is not yet complete.
2.3. OTHERS:
The Company continues its efforts to monetise the value of its real
estate (through rentals and otherwise) in order to get long- term
benefits.
Last 2 years has seen the Company making substantial investments in IT
infrastructure & applications to support business. These investments
have significantly helped the management in having a better control
over its operations through online availability of real time
information. They have also resulted in significant savings in the cost
of executive time and travel.
2.4. FINANCE AND CORPORATE:
Over the past three years, the business portfolio, financial, fiscal
and legal restructuring undertaken at the Company has resulted in a
situation where the Company has reduced its losses from Rs. 46.47
crores in FY2008-2009 to Rs. 10.22 crores in FY 2009-2010 and this year
has been a small but significant milestone in terms of a profit of Rs.
0.60 crores. This has been achieved despite, over the past 3 years, the
Company having to bear cash losses of Rs. 28.40 crores incurred on a
standby charter arrangement which devolved on the Company as a part of
a debt covenant in SCI Forbes (a JV company) and the infusion of funds
in various JV's and subsidiaries.
The Company has also through a mix of measures like relentless focus on
working capital, liquidation of investments, disposal of real estate
holdings (not required for business) generated cash which has been used
to, apart from funding the investments as above, also been used to
bring down its debt level significantly from Rs. 148.94 crores in March
2009 to Rs. 105.05 crores in March 2011 which resulted in a reduction
in interest costs, despite a period of increasing interest rates, from
Rs. 14.67 crores in 2009 to Rs. 11.93 crores in 2011.
Consequently, the Company's credit rating from both CRISIL and ICRA has
steadily improved every year from A (Stable) in 2009, to AA- (Stable)
in 2010 by CRISIL and equivalent by ICRA; it is expected that the
current review will improve it further.
A share buy back was done by two of the Company's 100% subsidiaries,
namely Eureka Forbes Ltd (Value Rs. 17.98 crores, previous year à Rs.
18 crores) and Volkart Fleming Shipping & Services Limited (Value Rs.
0.75 crores) which helped to bolster your Company's profits and
finances.
2.5. OUTLOOK FOR FUTURE AND POST BALANCE SHEET EVENTS:
The company's businesses continue to grow with the engineering
division, on a standalone basis, making profits whilst the shipping
division is nearing break even for the first few months of the current
financial year. It is expected that this momentum will continue though
with the continued inflation and RBI's expected rate hikes will have
some impact on the automobile sector and consequently on the Company's
performance. The management is working actively to contain the same.
Several initiatives are underway to also bolster the performance and
profitability of the CFS and Freight Forwarding business.
The Standby Charter covenant of SCI Forbes (SCIF) has been negotiated
with the banks who have agreed to keep the same suspended à this has
been implemented w.e.f. 1st July 2011; consequently the cash losses
through the Company's P&L (Rs 5.5 crores in JQ 2011 and Rs 22 crores
per year on an annualized basis) stop from that date. The lenders to
SCIF have been informed that a partial pre-payment of the loan will be
made to them with the August instalment; this will be done using the
cash collateral currently lying in a dollar fixed deposit; this will
help to reduce the interest and debt repayment burden of SCIF, which in
turn will ease the quantum of burden on the promoters of SCIF,
including the Company, for making good any cash deficits in SCIF to
meet all its obligations to the lenders and others.
An application has been made by the Company as the Promoter Shareholder
of the Svadeshi Mills Company Limited (Svadeshi Mills) currently under
liquidation to the Hon'ble High Court, Bombay seeking permission to get
Svadeshi Mills out of liquidation. Your Company had advanced loans, as
a promoter shareholder under the BIFR directions, aggregating Rs. 43.71
crores to Svadeshi Mills and is a secured creditor. The dues from
Svadeshi Mills till 27th February, 2006 were adjudicated by the
Liquidator at Rs. 57.39 crores. The Company is hopeful to receive the
amount finally settled, the timing of which will be depending on
receiving the permission from Hon'ble High Court, Bombay.
3. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:
3.1 Details of these companies are set out in the statement, pursuant
to Section 212 of the Companies Act 1956. Full accounts of these
subsidiaries are available to the shareholders of the holding company
and other investors at any point of time on request. These are also
available for inspection to any investor, at the registered office of
the Company and that of the subsidiary company concerned.
3.2 Eureka Forbes Limited, a wholly-owned subsidiary of the Company,
has performed commendably well with a growth in revenue by 10% over
previous year in spite of inflation at highest level in recent times
though the increased competition with many new aggressive players has
resulted in a significant pressure on
its margins. Its Subsidiaries, Joint ventures and Associate companies
have also reported satisfactory results.
During the year, Aquamall Water Solutions Ltd., a wholly-owned
subsidiary of Eureka Forbes Ltd., has developed and added various new
models of Water Purifier to the company's range of models. This year
saw the introduction of a new generation product for water purification
in storage water category. This new product used an innovative
technology that does not use any chemicals in the disinfection process.
Eureka Forbes Ltd. and its products received awards and recognition, as
in previous years, in the current year also.
As mentioned earlier, Eureka Forbes Ltd. bought-back 2,27,000 shares
i.e. 5.74 % of its share capital. During the year, Eureka Forbes Ltd.
added one more wholly owned subsidiary, namely, EFL Mauritius Ltd. and
alongwith that company, has executed a Share Purchase Agreement with
the promoters of Lux International AG for acquiring 25% stake in Lux
International AG, Switzerland.
Eureka Forbes Ltd. is also in the process of consolidating various
business entities operating as its Subsidiaries, Joint ventures and
Associate companies to have a leaner business structure and give
related benefits in terms of cash flows, financial structure and fiscal
optimisation
3.3 Forbes Technosys Ltd. (FTL), a wholly-owned subsidiary of the
Company, posted a significant increase in turnover (48.86%) over the
previous year, which resulted in a better operating performance (there
was a 5.13% reduction on a percentage basis in loss compared with the
previous year on account of higher revenues and changes in the product
mix).
FTL has successfully executed a large contract for deployment of kiosks
at a value of over Rs. 5 crores. It also secured an order of over Rs. 3
crores per annum from a leading nationalized bank for providing Managed
Services for Kiosks and has established a state-of-the-art NNOCC
(National Network Operations and Control Centre) that will serve as a
backend for Transaction Kiosks and ATMs. FTL also got and executed its
first order from Indonesia marking its foray into international
markets, which will be developed further in the years ahead.
The Company is rapidly expanding its manufacturing operations and there
has been a multi-fold increase in the production, deployment and sale
of kiosks over the previous year.
FTL continues to invest in the development of new products, developing
its own IP and Patents in the process, for an entry into related but
new markets segments.
Cheque Truncation à FTL is the first company in India to get an ISO
9001:2008 certification from Image Service Bureau for its Cheque
Truncation system. Apart from the centre in New Delhi, it has already
established a new CTS Centre in Chennai (to capture the market from the
next pilot of Reserve Bank of India) and has moved into a leadership
position signing contracts with 28 banks in Chennai. These include
both outright solution sales and also multi-year contracts for cheque
processing.
Payment Systems - The payment systems landscape in the country is
expected to undergo radical changes in the next 3-4 years and FTL is
well positioned to take advantage of these changes by providing a
variety of solutions including Kiosks, ATMs, Solutions for Financial
Inclusion and Cheque Truncation Systems. FTL has developed its own
innovative products and services suitable to the Indian context that
can enable it to become a market leader in each of these product
categories.
Transaction Automation - FTL has developed a range of solutions for
enterprise mobility, Point of Sale devices, UID Kits, Any Time Payment
Systems, ATMs and Kiosks to address existing and emerging opportunities
in Transaction Automation.
Services - During the year, FTL recorded growth in its Kiosk based
transaction network and also launched the franchisee based services
network in Chennai. The transaction network will see a rapid
geographical expansion in the coming years along with new electronic
delivery services, which will be added to the portfolio.
3.4 Forbes Container Line Pte. Limited, Singapore, a wholly- owned
subsidiary of the Company, entered into its fourth year of operation.
The performance for the financial year saw an improvement with it
posting a marginal profit after having been affected by the global
financial meltdown, which affected adversely the fortunes of shipping
companies.
3.5 SCI Forbes Limited, a joint venture company with The Shipping
Corporation of India Limited (SCI) and Sterling Investment Corporation
Pvt. Ltd. had acquired three chemical tankers during the financial year
2009-2010. The fourth ship added to its fleet during the year. During
the year under review, all the four ships were fully operational.
Of the four tankers, 2 vessels were on charter to The Shipping
Corporation of India Limited whilst the other 2 were time- chartered to
Forbes & Company Ltd till 30th June 2011 under a standby charter
agreement (exercise of a debt covenant by the lenders to SCI Forbes
Ltd.). This agreement, as mentioned earlier, has been suspended w.e.f.
1st July 2011 and the vessels are now being operated by SCI Forbes Ltd.
itself.
These vessels are deployed through a Pooling arrangement (specializing
in the chemical tanker trade) which markets the tankers in West Asia-&
Far East regions.
In 2010-11, the chemical trade passed through difficult times as it had
not fully recovered from the financial crisis in the West. Further,
the market was affected by an oversupply of tonnage, which kept the
freight rates at lower levels. The market did show some signs of
improvement in the beginning of 2010. But the improvement did not
sustain due to shut down of chemical plants for maintenance in West
Asia Gulf (WAG) and China during April & May, 2010 and lack of demand.
Overall the effect of excess tonnage and a negative trade bias in the
EU region has kept earnings low. The earnings and profitability were
also affected due to rising fuel prices as also the costs associated
with increasing piracy in the Arabian Sea and Indian Ocean.
3.6 Forbes Bumi Armada Limited, a joint venture company with Bumi
Armada Berhad, Malaysia, did not have any significant operations during
the year.
3.7 Forbes Bumi Armada Offshore Limited , another joint venture Company
with Bumi Armada Berhad, Malaysia was incorporated on 29th October,
2010, with the specific objective of meeting bidding criteria of oil
production companies like ONGC. The Company is pleased to inform the
shareholders that this company has been awarded a 7-year contract by
ONGC for providing and operating a Floating, Production Storage and
Off-loading vessel (FPSO) to ONGC.
3.8 Assets of the Svadeshi Mills Company Limited continue to be in the
hands of the Official Liquidator, High Court, Bombay. As mentioned
earlier, an application to get the company out of liquidation has been
filed with the Hon'ble High Court, Bombay.
4. DIRECTORS:
i) Mr. Shapoor P. Mistry, Mr. D. B. Engineer and Mr. Cyrus P. Mistry
are due to retire by rotation and the Board of Directors commend their
reappointment as Directors of the Company.
ii) Mr. Kaiwan D. Kalyaniwalla was appointed as an Additional Director
of the Company on 29th October, 2010. He holds office upto the date of
the ensuing Annual General Meeting and an item regarding his
appointment is included in the Notice convening the Annual General
Meeting. The Board of Directors commends his appointment as Director of
the Company.
5. INTERNAL CONTROLS AND SYSTEMS:
The Company has an internal control system, which ensures that all
transactions are satisfactorily recorded and reported and all assets
are protected against loss from unauthorized use or otherwise. The
Internal Control Systems are supplemented by an internal audit system
carried out by a team under the direct supervision of the Head of
Internal Audit. The findings of such internal audits are periodically
reviewed by the management and suitable actions taken to address the
gaps, if any, noted arising from such audits. The Audit Committee of
the Board meets at regular intervals and addresses significant issues
raised by both the Internal Auditors and the Statutory Auditors. The
process of internal control and systems, statutory compliance,
information technology, risk analysis and risk management are woven
together, to provide a meaningful support to the management of the
business.
6. CORPORATE GOVERNANCE:
The guiding principle of the Code of Corporate Governance is 'harmony'
i.e. balancing the need for transparency with the need to protect the
interest of the Company and balancing the need for empowerment at all
levels with the need for accountability. A detailed report on
Corporate Governance is attached; the 'Management Discussion and
Analysis of Results of Operation' forms a part of this report and is
not again repeated in the Corporate Governance Report. The Company
voluntarily replaced its earlier "Code of Ethics" and adopted the more
comprehensive "Code of Ethics" which was adopted by the Bombay Chamber
of Commerce and Industry. The Company has also voluntarily put in place
a "Whistle Blower" policy, which enables any stakeholder to raise
issues of any concern in a safe and secure manner without any fear of
repercussion on them.
7. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors, based on the representation received from the
operating management, confirm -
a. that in the preparation of the annual accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departures;
b. that they have selected such accounting policies and applied them
consistently and made judgment 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 and of the profit or loss
of the Company for that period;
c. that 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 Act for safeguarding
the assets of the Company and for preventing and detecting fraud and
other irregularities;
d. that they have prepared the annual accounts on a going concern
basis.
8. AUDITORS AND AUDIT REPORT:
You are requested to appoint Auditors for the current year and
authorise the Board to fix their remuneration. It is proposed to
re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as
the Statutory Auditors of the Company to hold office from the
conclusion of the forthcoming Annual General Meeting of the Company to
the following Annual General Meeting of the Company. The Audit Report
forms a part of the Annual Report.
9. CORPORATE SOCIAL RESPONSIBILITY:
The Company continued to support causes of public utility both directly
and indirectly in the field of education, medical relief, relief of
poverty and promotion of sports and art.
10. CONCERNS AND RISK MANAGEMENT:
Risk management process includes identification of risk, its underlying
dynamics, mitigation mechanism, prioritization of risk, measurement of
key indicators and monitoring system. A Company wide awareness of risk
management policies and practices are being inculcated to minimize the
adverse effect of risks on the operating results and the subject of
management of risks is being approached in a planned and co-ordinated
manner. Elucidation of role clarity, understanding of level of
authority and reporting system is expected to help this process
significantly. It is realized that this is a continuous process,
requiring continued updating, based on changing business conditions and
that, risk management and performance improvement will go hand in hand.
11-. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:
i) Human Resource Development
a) Learnings - An exercise on the theme Bigger, Better, Faster, and
Organization Development Initiative continued during the entire year
covering all the management employees. A total of 5 workshops were
conducted during 1st April, 2010 and 31st March, 2011. These workshops
were conducted by faculty from Indian Institute of Management,
Bangalore (IIMB) who undertook this exercise.
b) Recruitment - In order to bridge the gap between knowledge and skill
and thus to strengthen the businesses, a number of professionals were
hired from leading Companies.
ii. Industrial Relations
Cordial relationship which has helped in boosting productivity
continues to be maintained with various Unions and there has been no
loss of man hours due to industrial unrest.
iii. General
In order to ensure uniform functioning and smooth administration a
Shared Services in respect of Accounts function have been created.
12. PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT 1956:
Following statements are attached and form a part of this report Ã
(a) The particulars of employees as required under Section 217(2A) read
with the Companies (Particulars of Employees) Rules 1975, as amended
forms part of the Report. Having regard to the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are
being sent to the shareholders excluding the
statement of particulars of employees under Section 217(2A) of the
Companies Act, 1956. Any shareholder interested in obtaining a copy of
the said statement may write to the Company Secretary at the Registered
Office of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption and under Section 217(2A) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
(c) Information relating to SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 Ã the information about the entities
constituting "Group" is given in the statement annexed to this report.
13. ACKNOWLEDGEMENT:
Your Company continues to occupy a place of respect amongst the many
stakeholders it is associated with, most of all our
valued customers. The Directors commend the continued commitment and
dedication of employees at all levels. The Directors also wish to
acknowledge and thank all other stakeholders for their valuable
sustained support and encouragement. Your Directors look forward to
receiving similar support and encouragement from all stakeholders in
the years ahead.
For and on behalf of the
Board of Directors
SHAPOOR P. MISTRY
CHAIRMAN
Mumbai, 19th July, 2011
Mar 31, 2010
The Directors submit their Report and the Audited Accounts of the
Company for the year ended 31st March, 2010.
1. FINANCIAL RESULTS:
The results for the current year and those for the previous year are
set out in this paragraph.
Rupees in Crores
For the year ended For the year ended
31st March, 2010 31st March, 2009
Sales, Services and Other Income 217.06 211.95
Less: Expenditure 212.65 241.75
Profit /(Loss) after Interest
and before Depreciation 4.41 (29.80)
Less: Depreciation 16.54 11.99
Profit/(Loss) after Depreciation (12.13) (41.79)
Less: Provision for Doubtful
Loans & Advances
and for diminution in value of
investments 0.55 4.68
(12.68) (46.47)
Add: Profit for the year ended
31.3.2009 in respect of Shipping
Agency Division of Volkart
Fleming Shipping and Services Ltd.,
pursuant to Scheme of Demerger and
transfer 2.46 -
Profit/(Loss) before taxation (10.22) (46.47)
Less: Provision for Taxation
- (Reversal)/Provision relating
to previous year 1.91 0.12
- for Fringe Benefit Tax - 0.81
- for Wealth tax 0.13 0.15
- for Deferred tax - (0.06)
Profit/(Loss) after Taxation (12.26) (47.49)
Add: Balance brought forward (31.68) 15.81
Balance Carried to
Balance Sheet (43.94) (31.68)
2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS: Comments are set out in the following paragraphs.
2.1 ENGINEERING:
The performance of Engineering Solutions Group was impacted, mainly due
to downturn in Automobile industry during the second half of the year.
However, the situation had improved towards end of the year. In
response, the Engineering Division restructured its businesses into two
main groups viz., Engineering Solutions Group and Energy Solutions
Group (ESG) to bring synergy and offer value-added solutions to the
customers.
Various initiatives are underway, these include, product augmentation,
re-layout of production lines, closure of non-performing products and
outsourced supplies of standard products. Initiative to enter non-auto
sectors, like Defence and Aerospace, have also commenced.
Energy Solutions Group (ESG) changed its business model from
representing Dresser-Rand, USA and Gardner Denver, USA to becoming
Value Added Reseller (VAR) and has been successful in establishing its
presence as a vendor for supply of Steam Turbine and Blower Packages
for extremely demanding customers like BHEL, Ingersoll Rand, L&T, etc.
ESG could also undertake the erection and commissioning activities for
its major customers like HPCL, Vizag and IOCL, Panipat sites. Going
forward, ESG has envisaged forays into hitherto unchartered territories
like ÃEngineering Procurement and Construction (EPC) contracting for
small and medium power projects, ÃRefurbishing and Modernisation (R&M)
activities and putting up Ãgrid-connected biomass-based power plants
on BOOT basis. ESG has planned to put up a modern facility for turbine
refurbishing at Waluj, Aurangabad and this facility will be ready by
the end of 2010.
2.2 LOGISTICS SOLUTIONS AND SHIPPING RELATED ACTIVITY:
The impact of recession on the Shipping industry continued during FY
2009-10, which had an impact on the Container Freight Station (CFS)
business. The year saw a huge decline in throughput of container
volumes in JNPT (Nhava Sheva Port) as MLOs (Main Line Operators)
curtailed / consolidated their services to JNPT. Our main customer NYK
Line stopped their ICX service, which was nominated to our CFS. This
had a direct adverse effect on our volumes at CFS-Veshvi, which saw
more than 80% decline in import volumes. Even though NYK resumed
operations in Veshvi from January, 2010 with a different service, our
earnings in CFS - Veshvi were impacted due to reduced ground rent
income and stiff cost pressures.
In Mundra, we succeeded in getting nominations from two reputed MLOs -
Hapag Lloyd and CSAV, which started operations in August, 2009 and
November, 2009 respectively. Even though import volumes increased, but
here, too, like Veshvi, our earnings were strained due to lower
operating margins. In CFS - Mundra large chunk of business comes from
Cotton Exporters. Cotton export from Mundra did show signs of recovery
initially but it was not sustained mid à season, since the cargo was
diverted to the port of Pipavav. We, therefore, did not earn the
expected revenue from exports.
In Logistics, we introduced end-to-end freight forwarding solution,
with an outsourced model. During the year, we provided services to our
Group companies, which created learning -base and the platform for us
to expand aggressively in the market place in the year 2010-11.
In our Agency business, we faced severe pressures on our revenue and
margins due to dropping freight rates. However, we managed to keep our
Principals satisfied and met their expectations.
2.3 UPMARKET BRANDS:
After a review, the Company had decided to exit the business as it had
no strategic fit. The Company was holding the licence from a foreign
brand. Our efforts to sub-license it, were not successful. It was,
therefore, decided to surrender it after a negotiated settlement with
the licensor.
2.4 OTHERS:
The Company has a number of assets in the form of real estate in
Mumbai, Chennai, Kolkata and Delhi. Regular efforts are being made to
monetise their value or engage them gainfully in order to get long-term
benefits.
At the same time, Branch offices at different locations are being
consolidated in order to improve efficiency as well as minimise costs.
Last year, operations in Chennai were consolidated. This year
operations in Kolkata and Bangalore were consolidated.
2.5 FINANCE AND CORPORATE:
The Company continued to face liquidity crunch. Despite this, the
Company was able to bring down its overall borrowings by Rs. 5422.71
lakhs and net interest cost by Rs. 46.51 lakhs. This was a result of
continued monitoring and better working capital management, disposing
off assets, which were not likely to be employed gainfully, curtailing
the activities, which were not remunerative or viable, transferring
businesses within the group with strategic fit, replacing high-cost
borrowings with low-cost borrowings, sale of non-core investments,
etc. Eureka Forbes Ltd., and Latham India Ltd. (now known as Forbes
Campbell Finance Ltd.), the wholly-owned subsidiaries of the Company,
decided to buy-back a portion of their share capital, which also helped
improve liquidity and reduce borrowings.
2.6 OUTLOOK FOR FUTURE AND POST BALANCE SHEET EVENTS:
The restructuring of the business portfolio including exiting of
non-core business verticals, segments and investing in selectively
chosen ones will continue into 2010-2011; this is expected to lay the
foundation and shape the organisation into a focussed one for the
future. SAP was rolled out, enterprise-wide and information is now
available on a real-time basis for effective decision making.
The company would continue its focus on Shipping, Logistics,
Engineering and Energy. It will also invest in the Business and
Financial Automation Business and Services through its wholly owned
subsidiary Forbes Technosys Ltd. The shipping and offshore business as
housed in SCI Forbes Ltd., and Forbes Bumi Armada Ltd., would continue
to be in an investment mode for the next few years.
An exercise to rationalise the legal structure including investments
and businesses of the Company and its subsidiaries was continued during
the year. The highlights were:
- Completion of the merger of 5 group companies into another company
w.e.f. 1st April, 2008.
- Completion of demerger of Business Automation Group in a subsidiary
company.
- Disposal of the shareholding in Next Gen Publishing Ltd.
- Disposal of Optionally Convertible Preference Shares held in Forbes
Infotainment Ltd.
3. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:
3.1 Details of these companies are set out in the statement, pursuant
to Section 212 of the Companies Act 1956. Full accounts of these
subsidiaries are available to the shareholders of the holding company
and other investors at any point of time on request. These are also
available for inspection to any investor, at the registered office of
the Company and that of the subsidiary company concerned.
3.2. Eureka Forbes Ltd., and its subsidiaries performed reasonably well
even though their margins and performance, are under pressure due to
changing nature of trade and with increasing competition from the
well-established names in the industry. It introduced new models of
water purifiers to face the competition. Its subsidiary company, which
is engaged in industrial cleaning business, received contracts from
Indian Railway. During the year, Eureka Forbes Ltd., bought-back
3,05,000 shares i.e. 7.16 % of its share capital. During the year,
Eureka Forbes Ltd., added two more subsidiaries, namely, Radiant Energy
Systems Pvt. Ltd. and Waterwings Equipments Pvt. Ltd.
3.3 Forbes Technosys Ltd. (FTL) Ã The business related to the Business
Automation Group (BAG) of Forbes & Company Ltd. was transferred to
FTL, as a part of strategic transfer of businesses within the Group.
As a result, there had been a significant increase in the turnover of
FTL. There was also a significant reduction in loss compared to
previous year due to higher revenues and changes in the product-mix.
FTL secured a large contract from State Bank of India for deployment
of kiosks. It is expanding its manufacturing operations, which got
ISO 9001:2008 certification during the year. The Company has fully
deployed and made operational its kiosks for payment collection for
PSEB (Punjab State Electricity Board) and several other Electricity
Boards, TATA Indicom, BSNL and TATA Power. The Company continues to
invest in the development of new products and entry into new market
segments. It has launched several new models of Kiosks and has a
strong order book for deployment of kiosks on a transaction fee
model.
3.4 Forbes Container Line Pte. Ltd., Singapore entered into its third
year of operations. While the performance for the financial year saw a
drop, both, in volume and freight earnings due to global recession,
there are signs of revival and the Company expects improved performance
in the current year.
3.5 SCI Forbes Ltd., is a joint venture of The Shipping Corporation of
India Ltd., (SCI) and Shapoorji Pallonji Group. It acquired three
vessels during the financial year 2009-2010.
The first vessel MT. Asavari was delivered on 5th August, 2009.
Subsequently MT. Bhairavi and MT. Neelambari were added to
the Companys fleet on 30th October, 2009 and 17th March, 2010,
respectively.
All the three vessels are time-chartered to the promoters, of
which, MT. Asavari and MT. Neelambari are time-chartered to
The Shipping Corporation of India Ltd., and MT. Bhairavi is
time-chartered to Forbes & Company Ltd.
The promoters had sub-chartered the respective vessels to the
Yamuna Pool Inc., which is a part of the WOMAR Pool.
The WOMAR Pool specialises in chemical trade and markets
the vessels in West Asia-Far East region.
The Company has paid cash-collateral of about US$ 26.21
Million to the Lenders, due to decrease in the asset values, to
comply with the value maintenance clause of the loan agreement.
The Company intends to utilise the cash collateral to procure
one vessel, which will improve the cash position of the Company.
3.6 Forbes Bumi Armada Limited had a successful year. It, successfully,
completed execution of the contract with British Gas for an offshore
vessel. During the year, it signed a contract with Larsen & Toubro
Limited for an offshore vessel for their prestigious Maersk Oil Qatar
project. The Company is actively participating in tenders related to
offshore projects.
The company declared a maiden dividend of 8% for the year under review.
3.7 The Company has decided to curtail its exposure to Forbes Edumetry
Ltd. and Edumetry Inc. U.S.A., and has fully impaired its investments
in these companies. The future of the company is currently under
review.
3.8 Forbes Infotainment Ltd., underwent financial restructuring and the
future strategy for the company is under review.
3.9 Assets of the Svadeshi Mills Company Ltd. continue to be in the
hands of the Official Liquidator, High Court, Bombay. The Company will
do everything possible to realise loans of Rs. 44 crores advanced to
this company (fully provided for in the Accounts of the Company).
3.10 The process of demerging Shipping Agency business of Volkart
Fleming Shipping & Services Ltd., into the parent company was
completed. This will enable consolidation of the Agency business under
one legal entity.
4. DIRECTORS:
Mr. Pallonji S. Mistry and Mr. R. N. Jha retire by rotation. The Board
of Directors commend their re-appointment as Directors of the Company.
Mr. D. S. Soman also retires by rotation. In view of his advancing
years, he has not offered himself for re-appointment. The Board of
Directors has decided to accept his request with deep regret. Mr.
Soman was invited, during 1988, to join the Board of Directors of the
erstwhile, Forbes Forbes Campbell & Co. Ltd., as an Alternate Director
to Mr. F. H. Kemple. In 1992, Mr. Soman was invited to join the
newly-constituted Board of Directors of the Company after the
amalgamation of Forbes Forbes Campbell & Co. Ltd., with the Company and
has been a Director of the Company, since then. The Board of Directors
places on record their sincere appreciation for the valuable services
rendered by Mr. Soman to the Board and to the Company during his tenure
as a Director of the Company. Board of Directors has decided, for the
time being, not to make new appointment in the resultant vacancy on the
Board of Directors.
5. INTERNAL CONTROLS AND SYSTEMS:
The Company has an internal control system which ensures that all
transactions are satisfactorily recorded and reported and all assets
are protected against loss from unauthorised use or otherwise. The
Internal Control Systems are supplemented by an internal audit system
carried out by independent firms of Chartered Accountants and a
periodical review by the management. The Audit Committee of the Board
meets at regular intervals and addresses significant issues raised by
both the Internal Auditors and the Statutory Auditors. The process of
internal control and systems, statutory compliance, risk analysis and
its management and information technology are woven together, to
provide a meaningful support to the managerial process.
6. CORPORATE GOVERNANCE:
The guiding principle of the Code of Corporate Governance is Ãharmony
i.e. balancing the need for transparency with the need to protect the
interest of the Company and balancing the need for empowerment at all
levels with the need for accountability. A detailed report on
Corporate Governance is attached; the ÃManagement Discussion and
Analysis of Results of Operation forms a part of this report and is
not again repeated in the Corporate Governance Report.
7. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors, based on the representation received from the
operating management, confirm -
a. that in the preparation of the annual accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departures;
b. that they have selected such accounting policies and applied them
consistently and made judgment 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 and of the profit or
loss of the Company for that period;
c. that 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 Act for safeguarding
the assets of the Company and for preventing and detecting fraud and
other irregularities;
d. that they have prepared the annual accounts on a going concern
basis.
8. AUDITORS AND AUDIT REPORT:
You are requested to appoint Auditors for the current year and
authorise the Board to fix their remuneration. It is proposed to
re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as
the Statutory Auditors of the Company to hold office from the
conclusion of the forthcoming Annual General Meeting of the Company to
the following Annual General Meeting of the Company.
9. CORPORATE SOCIAL RESPONSIBILITY:
The Company continued to support causes of public utility, both,
directly and indirectly, in the field of education, medical relief,
relief of poverty and promotion of sports and art.
10. CONCERNS AND RISK MANAGEMENT:
Risk management process includes identification of risk, its underlying
dynamics, mitigation mechanism, prioritisation of risk, measurement of
key indicators and monitoring system. A Company wide awareness of risk
management policies and practices is being inculcated to minimise the
adverse effect of risks on the operating results and the subject of
management of risks is being approached in a planned and co-ordinated
manner. Elucidation of role clarity, understanding of level of
authority and reporting system are expected to help this process
significantly. It is realised that this is a continuous process,
requiring continued updating, based on changing business conditions and
that, risk management and performance improvement will go hand in hand.
11. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:
As a sequel to the theme of ÃFixing the Business, an exercise for
becoming ÃBigger, Better, Faster has been undertaken. In order to do
this, two workshops were conducted with the help of Indian Institute of
Management, Bangalore, (IIM- B) which has been engaged to carry out
various Organisational Development initiatives.
In order to strengthen the businesses, few leadership positions have
been filled by appointing professionals who bring in knowledge and
skills from reputed companies.
On Industrial Relations front, after a prolonged negotiations, an
orderly exit was worked out for Hosur Unit, which was into
manufacturing of Motors, since the same was most unproductive and
unviable.
12. PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT 1956:
Following statements are attached and form a part of this reportÃ
(a) The particulars of employees as required under Section 217(2A) read
with the Companies (Particulars of Employees) Rules 1975, as amended,
forms part of the Report. Having regard to the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are
being sent to the shareholders excluding the statement of particulars
of employees under Section 217(2A) of the Companies Act, 1956. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Office of the Company.
(b) Information relating to the Conservation of Energy, Technology
Absorption as required under 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.
(c) Information relating to SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 Ã the information about the entities
constituting "Group" is given in the statement annexed to this report.
13. ACKNOWLEDGEMENT:
Your Company continues to occupy a place of respect amongst the many
stakeholders it is associated with, most of all our valued customers.
The Directors commend the continued commitment and dedication of
employees at all levels. The Directors also wish to acknowledge and
thank all other stakeholders for their valuable sustained support and
encouragement. Your Directors look forward to receiving similar support
and encouragement from all stakeholders in the years ahead.
For and on behalf of the
Board of Directors
SHAPOOR P. MISTRY
Chairman
Mumbai, 13th August, 2010