Ador Fontech Ltd Directors Report.
To the Members,
The Directors are delighted to present the 44th Annual Report on the business operations of the Company and the financial statements for the year ended March 31, 2019.
|Earnings before interest, tax and depreciation||2,283||1,728||1,972||1,534|
|Write-off of old stock inventories||-||(84)||-||(84)|
|Profit before tax||2,007||1,342||1,629||1,089|
|Profit after tax||1,382||898||1,099||695|
|Opening balance of profit||3,049||2,251||2,571||1,976|
|Transfer to General reserve||(200)||(100)||(200)||(100)|
|Dividend including distribution tax||(630)||-||(632)||-|
|Closing balance of profit||3,601||3,049||2,838||2,571|
|Total comprehensive income||1,440||943||1,158||740|
The Board of Directors is pleased to recommend a dividend of ?. 3.50/- (Rupees three and paise fifty only) per equity share of the face value of ?. 2/- each, being one hundred and seventy five percent, which is inclusive of a special dividend of twenty five percent, to commemorate the 40 th year of business operations in to life enhancement of industrial components.
The outflow on account of dividend and distribution tax envisaged is ?. 739 lakhs comprising ?. 613 lakhs and ?. 126 lakhs respectively. The pay out towards the same will be from the Reserves of the Company. Dividend shall be paid to those Shareholders whose names appear in the Register of Members as on the date of the book closure.
REVIEW OF BUSINESS OPERATIONS
The Company showed significant growth during the financial year 2018-19. The total income increased by ?. 3,249 lakhs from ?. 15,474 lakhs (2017-18) to ?. 18,723 lakhs (201819), being a growth of 21% and the profit before tax (PBT) also registered an increase of 50% from ?. 1,342 lakhs (2017-18) to ?. 2,007 lakhs (2018-19).
The growth is an outcome of congenial economic and industrial environment, exemplary contribution by the employees, process improvements, product rationalisation and thriving performance of all business verticals/strategic business units.
Going forward, the Company would continue to remain focused on (i) The Service sector in terms of repairs and refurbishment operations (ii) Transplantation of case studies (iii) Performance management system and training (iv) Focused working capital management.
3D Future Technologies Private Limited (3DFT) registered a growth in revenue of ?. 83 lakhs from ?. 128 lakhs to ?. 211 lakhs. There were 376 certified Orthodontists associated with the Company and jointly 737 aligner cases have been successfully delivered. During the year, the manufacturing hub of the Company shifted from Mumbai to Pune, as it was felt it would provide an effective operational base. The total investment in equity stood at ?. 850 lakhs as on March 31, 2019 of which ?. 200 lakhs was funded by Ador Fontech Limited during the financial year 2018-19. The Company has also provided lien mark on its investments to the extent of ?. 500 lakhs to facilitate 3DFT to manage its working capital and remain self-sustaining.
FINANCE AND ACCOUNTS
As mandated by the Ministry of Corporate Affairs, the financial statements for the year ended March 31, 2019 have been prepared in accordance with the Indian Accounting Standards (Ind-AS) notified under Section 133 of the Companies Act, 2013 (hereinafter referred to as the Act) read with the Companies (Accounts) Rules, 2014 as amended from time to time. The estimates and judgements relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Companys state of affairs, profits and cash flows for the year ended March 31, 2019.
The paid-up Equity Share Capital as on March 31, 2019 was ?. 350 lakhs divided in to 175 lakhs equity shares of ?. 2/- each. During the year under review, there was no change in the capital structure. Further, as on March 31, 2019 none of the Directors of the Company held any instrument convertible in to equity shares of the Company.
TRANSFER TO RESERVES
The Directors propose to transfer rupees two crores, (previous year: rupees one crore only) to the General Reserve.
BOARD AND ITS COMPOSITION
The Company had an appropriate mix of Executive, NonExecutive and Independent Directors with distinctiveness in the functions of governance and management. At the end of fiscal year 2018-19, the Company had two Executive Directors and four Non-Executive-Directors, out of whom three of them were Independent Directors.
The Board had met four times during the year and so did the Committees of the Board, details of which are provided in the Corporate Governance Report, that forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As required under the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, the Company has adopted optimum policies for Directors appointment and remuneration.
In accordance with the provisions of Section 152(6) of the Companies Act, 2013 read with relevant provisions of the Articles of Association of the Company, Mrs. N Malkani Nagpal, Non-Executive/Woman Director is liable to retire by rotation and being eligible has offered her candidature for reappointment.
The tenure of the two Independent Directors,
Mr. N S Marshall and Mr. Santosh Janakiram would elapse on August 19, 2019. The Board evaluated their performance and based on their skill levels, expertise in legal and business management, have recommended for their reappointment.
Further all Independent Directors have submitted declaration of independence as stipulated under the Companies Act, 2013 and SEBI (LODR) Regulations (including Section 149(6) and Regulation 25(8) of the said enactments), besides compliance in terms of the Guidance Note issued by the Institute of company Secretaries of India.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements of Sections 134(3)(c) and 134(5) of the Companies Act, with respect to the Directors Responsibility Statement, it is hereby confirmed:
In the preparation of the annual accounts for the year ended March 31, 2019; the applicable accounting standards read with requirements as set out under Schedule III to the Act, have been followed and there are no material departures from the same.
The Directors have selected accounting policies and applied them consistently, made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profits for the year ended on that date.
The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud(s) and other irregularities.
The Directors have prepared the annual accounts on a going concern basis.
The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate & operating effectively and
The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws.
DETAILS OF CHANGES IN DIRECTORS AND/OR KEY MANAGERIAL PERSONNEL
The Board has appointed Mr. P Gopa Kumar as the Chief Financial Officer (CFO) of the Company at its meeting held on May 17, 2019.
Mr. P Gopa Kumar has extensive experience of over 40 years in Finance, Accounts and Administration. He has worked with Ador Fontech Limited in a range of roles starting from an Accountant to Senior General Manager.
His previous employment was with Carter Wallace Limited.
There were no changes in the Board during the financial year 2018-19.
AUDIT COMMITTEE RECOMMENDATIONS
The Board has accepted all the recommendations of the Audit Committee and hence no further explanations have been provided for in this Report.
(i) The Board
The Company has, during the year, conducted an evaluation of the Board as a whole, its committees and individual Directors (including Independent Directors) as stipulated in the Nomination and Remuneration Policy adopted by the Company and as per the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (LODR) Regulations, 2015. The evaluation was carried out on the basis of the below set targets:
Performance of products
Committee wise reviews
Other parameters of evaluation comprised level of participation, integrity, independence, knowledge, impact and influence on the Board. The Independent Directors of the Company also convened a separate meeting on February 6, 2019 and evaluated the performance of the Board, Non-Independent-Directors and the Chairman. The Board is confident that collectively and individually best possible efforts have been made.
(ii) Staff members
While the Company has adopted Performance Management System (PMS) to facilitate employee engagement and compensation, during the year 2018-19 it facilitated a half yearly review which provided requisite feedback mechanism to the employees to introspect their performance. The employees in general also expressed their satisfaction on the system being followed and the collective efforts to improvise the same.
COMMITTEES OF THE BOARD
In consonance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 the Company has the following four committees:
Management Development, Nomination and Remuneration Committee
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the Corporate Governance Report.
INTERNAL CONTROL SYSTEMS
The Company has in place an effective internal control system commensurate with its size and complexity of business. It believes that such systems provide an assurance that all material transactions are carried out with authorisations of the Management and are properly recorded in the financial statements resulting in an efficient conduct of business, safeguarding of assets, prevention/detection of frauds and errors. Such internal control system is further supported through an extensive quarterly internal audit and periodic review by the Audit Committee. Further, the Statutory Auditors have also carried out an audit and their report on internal financial controls forms part of the Annual Report.
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor have reported to the Audit Committee under Section 143(12) of the Companies Act, 2013 any instance of fraud committed against the Company by its officers or employees, the details of which need to be mentioned in the Boards report.
In respect of the financial year 2018-19, there were no qualification(s) or reservation(s) or adverse remark(s) or disclaimer(s) specified in the audit reports. Hence explanations or comments on the same do not become applicable.
The Company has complied with all the applicable provisions of Secretarial Standards and the Secretarial Audit Report for the financial year 2018-19 forms part of this Report.
The Company maintains cost accounting records and has cost control measures in place. As per best practices, the Company suo motto ensures conduct of cost audit.
M/s. Srinivas & Subbalakshmi, Chartered Accountants (Firm Registration No. 011350S), having office at No. 237, 2nd cross, Cambridge Layout, Halasuru, Bengaluru 560 008 have been appointed as the Statutory Auditors for a term of five years, which will conclude at the end of the 47 th Annual General Meeting. The Company has received communication from the Auditors to the effect that their appointment will be in accordance with the provisions of Section 141 of the Companies Act, 2013.
The Board has appointed Ms. Manjula Narayan, Company Secretary in Practice (ACS Membership No. 28374 & COP No.10150), having office at No.22/A, 4th Cross, Venkateshwara Theatre Road, Devasandra, Krishnarajapuram, Bengaluru - 560 036 as the Secretarial Auditor of the Company for the financial year 2019-20.
M/s. Rao, Murthy and Associates, Cost Accountants (Firm Registration No. 000065) having office at 23/33
Surveyors Street, Basavanagudi, Bengaluru 560 004 have been appointed as the Cost Auditor and resolution for approval/ratification of remuneration have been placed before the Members.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return for the year 2018-19 in form MGT-9 and MGT-7 in respect of the previous year have been uploaded on the website of the Company at http://www.adorfon.com/mgt9.html and a brief summary of the same forms part of this report.
TRANSFER OF UNCLAIMED DIVIDEND & SHARES TO IEPF
Pursuant to the provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules) notified by the Ministry of Corporate Affairs, unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund, as per the Rules specified therein.
Further, the shares on which dividends have not been paid or claimed by the Shareholders for seven consecutive years or more, will also have to be transferred to the demat account of the IEPF Authority.
Accordingly, the Company has transferred, dividends amounting to ?. 10,13,323/- (Rupees ten lakhs, thirteen thousand, three hundred and twenty three only) and 34,000 equity shares of ?. 2/- each to the Investor Education and Protection Fund. The details of the same have been hosted on the website of the Company.
JOINT VENTURE AND SUBSIDIARY
As at December 31, 2018 the Balance Sheet of the Joint Venture was completely written off with only capital subsisting. Parleys are on with the Malaysian Venture Partner (M/s Dualrank Fontech (M) Sdn. Bhd) for closure of the entity as per Malaysian laws.
While the subsidiary, 3D Future Technologies Private Limited continued to incur losses, it may be pertinent to note that the Company is operating on a minimal capital base, with the holding company providing intermittent contributions each year. While the current target of the Subsidiary is to skim the market, it is opined that it will take a couple of years to get in to profits. Every effort is being consistently made to raise the performance levels with the available limited resources, given the adopted scale of business operations.
The Companys products are manufactured to international standards with adherence to quality systems and marketed under Registered Trademarks.
Further, the primary logo of the Company, Ador Fontech is a registered mark under Class 6,7,37 and 40 of the Trademarks Act.
PARTICULARS OF LOANS, GUARANTEE & INVESTMENTS
During the financial year 2018-19, the Company made an equity investment of rupees two crores in its wholly owned subsidiary-3D Future Technologies Pvt. Ltd.
Further, Inter-corporate-deposit (ICD) to Ador Powertron Limited (APL) was facilitated, of which principal along with interest were duly repaid.
The reckoning of interest was a clear three point seven five percent, above the bank rate and safety of investment was covered through legal documentation, entailing rights over the assets of APL next only to their bankers charge. Details of ICD were duly filed with the Registrar of Companies/Ministry of Corporate Affairs vide SRN G83766147 dated April 16, 2018.
It may be pertinent to state that APL is in to digital electronics. They are a leading manufacturer of high voltage rectifier, transformer sets, power solution provider and design customised equipment. The Company has been in operation since 1995. The purpose for which APL had requested for ICD was to bridge finance their short term working capital requirements.
Note: Aggregate of investments and loans provided are within the powers and limits specified under Section 179, 185 and 186 of the Companies Act, 2013.
The Company has spent ?. 115 lakhs in aggregate towards ERM (Enterprise Resource Management) which is held under capital work-in-progress. The same will be capitalised on successful implementation.
The Company has not accepted any deposits from the public and as such, no amount on account of principal or interest on deposits from the public was outstanding as on the date of the Balance Sheet.
CORPORATE SOCIAL RESPONSIBILITY
During the financial year 2018-19, the Company has spent more than the requisite amount to be defrayed as per the Companies Act, in the discharge of its Corporate Social Responsibility.
MATERIAL CHANGES, COMMITMENTS & ORDERS
There has been no significant material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report. There were no significant orders passed against the Company, by the Regulators or Courts or Tribunals, impacting the going concern status and Companys operations in the future.
EMPLOYEES AND WORKPLACE CULTURE
The Company recognises the significance of human capital and remains focused to hire and retain the best brains of the industry. The Company organises various training programmes and seminars throughout the country for effective development of employee talent and efficiency. The Company is committed to provide equal opportunity to all its employees without any bias on the basis of caste, gender, creed, religion or nationality.
The Company has a strong vigil mechanism (whistleblower) policy and all employees have access to the Chairman of the Audit Committee, to report any of their concerns.
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company believes in providing a safe work environment to its employees. To ensure such environment, the Company has adopted Anti-Sexual- Harassment policy which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder.
An internal complaints committee has been specially constituted to redress complaints under sexual harassment. During the fiscal year 2018-19, there were no complaints received under this category.
HEALTH AND SAFETY
The Company has adopted various measures to create a healthy and illness free atmosphere across the Company. The Health of employees is monitored through pre-medical check-ups and health camps organised from time to time.
Further, in respect of the factories/business units, the Company has appointed the Chief Operating Officer (COO) and Plant-in-charge(s)/Unit head(s) to ensure industrial and safety law compliance(s). The Company makes available necessary health and safety equipment to its employees and there are no let or hindrance whatsoever on this account.
The Company has also mandated for employees to adhere to the highest standards of ethical and legal conduct of business operations, besides adherence to safety standards during the course of employment, be it in the work area or at external premises.
The Company has been bestowed with ISO 9001, 14001 and OHSAS 18001 Management System Certificates by DNV-GL-Business Assurance.
The Company has adopted Risk Management Policy to identify, assess, monitor and mitigate various risks which may impact the Companys business. The Company has an adequate framework to curtail any adverse impact on its core operations. The Board of Directors and Management are committed towards identifying major risks exposed to the business and means to mitigate the same.
The Company has sufficient insurance coverage encompassing (i) Assets (ii) Inventories (iii) Transit of materials during the course of shipment etc.
The Company has also covered employees under Personnel accident, Workmen compensation policy, Employees deposit linked insurance scheme etc. in order to safeguard their interests.
NOMINATION AND REMUNERATION POLICIES
As required under the provisions of Section 178(3) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Company had adopted policy for Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors etc. Details on remuneration policy are explained in the Corporate Governance Report.
(i) Related party transactions
All transactions entered in to with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the SEBI (LODR) Regulations, 2015 during the financial year, were in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no material significant transactions with related parties, during the financial year which were in conflict with the interest of the Company. Suitable disclosures as required by the Accounting Standards have been provided in the notes to the Standalone and Consolidated Financial Statements. The approved policy on Related Party Transactions has been made available on the website of the Company.
(ii) Insider trading
The Company has adopted Code of Conduct for prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company.
(iii) Details of fees paid to the Statutory Auditors
The total fees for all services paid by Ador Fontech Limited and its subsidiary on a consolidated basis to M/s Srinivas & Subbalakshmi, Statutory Auditors, for the year ended March 31, 2019, are as follows:
|Rupees In Lakhs|
(iv) Details of utilisation of funds raised through preferential allotment or qualified institutional placement as specified under Regulation 32
There were no funds raised by the Company through preferential allotment or qualified institutional placement during the financial year 2018-19.
(v) Certificate on nondisqualification of Directors
A Certificate from the Practicing Company Secretary has been received by the Company stating that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or to continue as Directors.
(vi) Other disclosures
The following reports have been annexed/appended and forms part of the Directors Report:
Management discussion and analysis report
Corporate governance report
Report on CSR activities
Conservation of energy, technology absorption, foreign exchange earnings & outgo
Particulars of arrangements/transactions made with related parties
Particulars of employees
Details of Subsidiary, Associates and Joint venture
(vii) Web link
All requisite policies and documents have been uploaded on the website of the Company www.adorfon.com.
The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. These fundamental ethos and integrity will continue to transcend in the years to come.
The Board wishes to place on record its deep sense of appreciation to the contributions made by employees at all levels for enabling the Companys consistent growth over the years and in particular during the financial year 2018-19. It also extends special thanks to all the stakeholders who have been associated with the Company through the last four decades.
|For ADOR FONTECH LIMITED|
|A T MALKANI|
|May 17, 2019||DIN:01585637|