forbes company ltd share price Directors report

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REPORT OF MANAGEMENT DISCUSSION AND ANALYSIS

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, 2023. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

Financial Results and Highlights of Performance

The Companys performance, as per Indian Accounting Standards (IND AS), during the Financial Year under review is summarized as follows:

Rs in Lakhs

Particulars	Standalone		Consolidated
	FY 22-23 *	FY 21-22	FY 22-23 *	FY 21-22 *
Revenue and Other Income (Total Income)	46,174	24,875	71,011	54,917
Earnings before Finance Cost, Depreciation, Share of Net Profit of Joint ventures Exceptional Item & Tax	23,997	4,687	24,894	8,388
Share of Net Profit of joint venture	-	-	296	1,204
Profit / (Loss) after Finance Cost, Depreciation, Share of Net profit of Joint ventures and before Exceptional Items & Tax	21,817	2,144	20,710	1,250
Exceptional Items - Income/(Expense)	2,905	4,10,091	1,202	(34,641)
Profit before Tax (PBT)	24,722	4,12,235	21,912	(33,391)
Profit/(loss) after tax for the year from continuing operations	23,859	4,13,294	19,133	(32,361)
Profit/(loss) before tax from discontinued operations	-	-	69	4,57,306
Tax Expense	863	(1059)	(20)	(2,080)
Profit/(loss) for the year from discontinued operations	-	-	49	4,55,226
Profit/(Loss) for the year	23,859	4,13,294	19,182	4,22,865
Other Comprehensive Income (net of tax)/(Loss)	1,308	22	(3,222)	6,499
Total Comprehensive Income	25,167	4,13,316	15,960	4,29,364
Earnings Per Share - Basic and Diluted (?) (Continuing operation)	184.95	3203.83	150.38	(253.34)
Earnings Per Share - Basic and Diluted (?) (Discontinued operations)	-	-	0.39	3,575.39

Note: The above figures are extracted from Standalone and Consolidated Financial Statements as per Indian Accounting Standard (‘IND AS") 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 ("Act") read with relevant rules issued therein.

* The results are not comparable because of the effect of a) sale of 3.804 acres of land at Chandivali at a profit of Rs 206.84 Crores and has been recognized as Other income in the financial results. b) Sale of entire equity shareholding in Forbes Facility Services Private Limited (FFSPL), at a gain of Rs 32.00 crores is recognised as an exceptional gain. c) the Composite Scheme of Arrangement between Aquaignis Technologies Private Limited, Euro Forbes Financial Services Limited, Eureka Forbes Limited, Forbes & Company Limited and their respective Shareholders and simultaneous demerger of Health, Hygiene, Safety Products and Services Undertaking with effect from February 1, 2022. The Health, Hygiene, Safety Products and Services Undertaking is considered as discontinued business for the period April 1, 2021 to January 31, 2022 for the purpose of this reporting in line with Ind AS requirements.

Management Discussion & Analysis of Financial Conditions,

Results of Operations and State of Company Affairs

General Performance and Outlook

The financial year in discussion had its own share of surprises. The Indian economy has moved on after its encounter with the pandemic and FY 2022-2023 was a year of several challenges to growth, which India faced and withstood them better than most economies. Measures taken by the government and RBI have managed to rein in inflation while continuing to support economic growth. As inflation rates accelerated, many countries faced severe economic stress. During this difficult period and uncertainty, India became the worlds fifth largest economy, measured in current dollars in the year 2022. According to the Economic Survey 2023 presented by the government, in real terms the GDP growth for 2023 -24 has been predicted to be 6.5 % and growth in range of 6 % and 6.8%, depending on the direction of global economic and political development. While the efforts of India overall were stupendous in the global environment, the challenges itself continue to prevail and the policy making bodies and the industry itself has to remain alert to these challenges. Overall, the outlook for the Indian economy remains positive.

Performance and outlook

During the year under consideration, your Company has seen many actions of consolidation and these are discussed hereunder followed by the discussion on results. This allows your Company to focus on the core and growth oriented businesses, namely Precision Tools, Industrial Automation and Real Estate. The Company has a tradition of excellence and total customer delight as its singular aim. During the year, major actions have been taken in various areas and the key points are being summarized hereunder for the better understanding of all its stakeholders.

• Your Company has transferred, by sale, its entire equity shareholding in Forbes Facility Services Private Limited (FFSPL), a wholly owned subsidiary of the Company, to SILA Solutions Private Limited (SILA) and pursuant to Share Purchase Agreement dated May 20, 2022 (SPA). The Company has received the closing date sale consideration of Rs 39.60 crores and post-closing sale consideration of Rs 2.40 crores are subject to realization of receivables under litigation by FFSPL as per the terms of the SPA. The net consideration after carrying amount of investment and expenses incurred on the sale transaction an amount of Rs 32.00 crores is recognised as an exceptional gain. •

• Your Company has entered into a Sale Deed dated June 3, 2022 with Equinix India Private Limited for sale of 3.804 acres of land at Chandivali at a total consideration of Rs 235 crores. The Company has received entire consideration of Rs 235 crores. The difference between the net disposal proceeds and the carrying amount of the land amounting to Rs 206.84 crores has been recognized as gain on disposal and reflected in other income in the financial results.

• Shapoorji Pallonji Forbes Shipping Limited (SPFSL), a subsidiary of your Company, sold its last owned vessel on April 4, 2022 consequently there were no business operations left in the SPFSL. As such, your Company sold its entire equity and preference shareholding in SPFSL to M/s G.S Enterprises, a related party, vide Share Purchase Agreement dated June 22, 2022, for an aggregate purchase consideration of Rs 29 crores basis valuation report by an independent valuer. The net carrying value of the investments in associate as at the date of sale was Rs 28.02 crores and hence the Company has recognised an exceptional gain of Rs 0.98 crores in the financial results.

• Your Company and MACSA ID, S.A., have entered into a 50:50 Joint Venture Agreement on December 5, 2022 (JVA) for providing innovative laser marking and traceability solutions for the entire range of materials metal and non-metals. Pursuant to the terms of the JVA, a joint venture company viz., Forbes Macsa Private Limited (JVC) has been incorporated on December 9, 2022. The JV partners have infused equity and preference shares capital to the tune Rs 2.5 Crores each in the JVC and the full amount was converted into Equity and Preference Shares at the beginning of the year 2023-24. The JVC and shareholders have executed the technology and trademark license agreement and brand and technology licensing agreement with respect to their respective brands. The operations of JVC started from March 1, 2023.

• Your Company has approved the Scheme of Arrangement ("Scheme") between the Company ("FCL" or the "Demerged Company") and Forbes Precision Tools and Machine Parts Limited ("FPTL" or the "Resulting Company") and their respective shareholders under Section 230 to 232 of the Companies Act, 2013 and other applicable provisions and the Rules framed thereunder. This Scheme is a Scheme of Arrangement involving demerger of Precision Tools business of the Company into Forbes Precision Tools and Machine Parts Limited. The Scheme is subject to necessary approvals by the Stock Exchanges, Securities and Exchange Board of India, Shareholders and Creditors of the Company, as may be applicable, Jurisdictional Bench of National Company Law Tribunal ("NCLT") and such other statutory and regulatory approvals as may be required. The relevant documents for obtaining approval under Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI LODR] are submitted to the BSE Ltd.

FPTL has been incorporated on August 30, 2022 as a wholly owned subsidiary of the Company for carryout the Precision Tools business after implementation of the Scheme. Subsequently to all relevant approvals, it will be listed on BSE Limited.

• Your Company has paid Special interim dividend of Rs 65 per fully paid equity share of Rs 10 each for the financial year 2022-23. With a view to preserve resources, this shall be the final dividend too and there shall be no further distribution of dividend for the current financial year.

• The operations of Forbes Technosys Limited (FTL), a 100% subsidiary, has been substantially rationalised and all the external loans from Banks have been fully repaid which are funded by your Company by way of investment in FTL either as equity or as Inter Company Deposits (ICDs). The earlier loans of FTL were guaranteed by your Company and FTL, given its liquidity position, FTL was unable to meet its obligations and were hence supported by your Company.

The National Company Law Tribunal (NCLT) have approved Composite Scheme of Arrangement for merger of Forbes Campbell Services Limited ("FCSL") into FTL and reduction in the share capital of FTL on September 24, 2022. The appointed date of the Scheme was October 1, 2021 and the Scheme has been effective from September 29, 2022.

Consequent to the above rationalisation and relevant developments/actions, your Company now can better focus to handle and address the key areas - namely Engineering business (Precision Tools), Industrial Automation and Real Estate business. The above actions enable your Company to take challenging targets to leverage on the competencies and the capabilities created with the new situation.

Engineering Division

The engineering business including Precision Tool Group and the Industrial Automation group delivered 12% YoY growth. The focus this year was on investing in the future in new product lines and capacities to enable future growth.

Our focus on excellence and Customer Delight helped the Totem Cutting Tools Brand bag the best Metal Cutting Tool Brand Award by Times Group for 3rd consecutive year.

Improvement across supply chain, including customer deliveries helped us to grow channel sales by 22% YoY by strengthening supply chain initiatives. Engineering business strengthened its capabilities in product development building capacities & improving efficiencies of operation. The key challenges were seen in export market, where we saw a limited growth in markets like European Union and Israel, degrowth in Russia lower and slower offtake from the North Americas.

Our efforts to making workplace safe & green too started paying off and the Engineering Business has been awarded with Safety Award by CII for Good Safety Practices.

Precision Tools Group (PTG)

PTG business grew by 16% YoY even after geopolitical crisis of Russia and Ukraine which impacted our Companys business to Russia and a less than anticipated demand from USA. On the other hand, some of our product portfolio (e.g. Taps, Dies, Rotary Burs), inspite of the international challenges have grown 20%. We see this situation continuing into the new financial year, but we also see the opportunity of developing our own unique product portfolio, which will provide us with the growth we aspire.

Challenges in the supply chain with shortages of raw materials & increased prices and input cost puts pressure on profitability of business. The overall impact was around 2-3% on the margins. We have expanded capacities in Hand Tools, HSS Drills, Tungsten carbide Rotary Burrs, Spring washers portfolio & Introduced Vacuum Heat treatment technology for High-Speed steel, Drag Finish Edge Preparation technology for application in specific Carbide Drills. We have also invested in establishing and upgrading Metallurgical Laboratory to enable new product development at a greater speed.

Our efforts in building brand and promoting products through domestic & international exhibitions helped us to attract new customers and opened gates for new geographies. Engineering Business participated in Regional & International exhibitions Viz. IMTEX Bangalore, IMTS USA, Mach Auto, Hand Tools Expo. Economic Times group recognition for Best Metal cutting Brand, 3rd year in row helped us to improve our image from standard tools company to High performance tools company.

PTG portfolio had remarkable success in making inroads to Key account & Development of Key Channel Partners for future growth requirement. Our cutting tools portfolio is now well accepted with multiple customers in Aerospace, Defense & Die & Mould, valve Industries and auto component manufacturing sectors.

International market growth is another element of business growth strategy & Forbes continued its business development in focused geographies which include Europe, Gulf Cooperation Council (GCC), Southeast Asia, America & Far East. We have acquired three big accounts which will contributes 50% of revenue of international sales in the near future. We are strengthening our presence in International geographies to specifically achieve higher penetration in South East Asia and GCC countries.

The Company continued to invest in selective new processes and technologies to make product better and efficient in line with Companys vision of empowering customer through innovative products. PTG will continue to invest in capacity augmentation to meet increased market demand. Given the objectives, the Company has also undertaken some initiatives to improve the supply chain efficiency and embarked on some projects which will yield long term supply chain efficiencies.

Industrial Automation and Coding Business Group (CBG)

CBG business is still under transformation and growth stage moving from purely marking business to Special Purpose Machine, Automated Traceability Solution & Industry 4.0 Solutions. After carving out Laser technology as separate JV company, the Industrial Business is building scales in Dot Peen technology and Conventional marking elements. Though presently small, these two product lines have grown YoY & are profitable and are growing. The Company is now focusing on growth in the areas of building Special Purpose Machines & engaging in Automation project to expand the business and achieve scale and volume to be able to operate more efficiently. Focus is also on building up sales capacities for this line of business. Geographic coverage by appointment of distributors will help product growth.

One more exciting opportunity being explored is to expand the market of medical products which the Company is pursuing and will aggressively take it up after it achieves the US FDA certification of its first product which is presently under certification. We are fairly confident of obtaining the certification in due course, post which we will put in marketing efforts to distribute the said products.

"If a things worth doing, its worth doing well." To ensure that things are done well, Quality is the only way ahead and for that one has to have focus on high class processes and its sustainability. The focus of your Company in this area is commendable and is demonstrated from the fact that the following initiatives were successfully undertaken during the year:

a. IATF 16949 - Certification for Auto Sector;

b. ISO 9001-2015 for PTG & Industrial Automation and medical devices;

c. AS 9100 - Certification for Aerospace sector in Solid Carbide tools.

d. CDSCO approvals for mechanical & ICU ventilators

e. ISO 13485 /2016 - Certification for medical devices

Project Vicinia, Chandivali

The Company has completed the construction of Phase 1 of the project containing Towers A, B, C, D, & F which has been made available for hand over to the customers. Phase 2 containing Towers E, G & H are expected to be completed in near next few quarters. The Company has sold entire flat inventory except 8 flats in the total project.

Overall completion of the project is delayed consequently, there have been some financial impact on the project cost which were beyond the control of the operational team. Seven dissatisfied customers have filed complaints with the MahaRera and these are being handled in conformance with the provisions of the law. The management is of the opinion that there will be no material impact due to these demands, most of them exaggerated beyond the interpretation of the contracts and are hopeful that these parties will seek an amicable resolution soon to mutual satisfaction of both parties.

Lux Group (including post balance sheet date events):

The year 2022 under review was the second full year after the outbreak of the pandemic. While the situation following COVID19 normalized in more or less all of Lux Group national sales organizations, the outbreak of the war in Ukraine heavily affected the European markets. Further threats were the FX - rate fluctuations, inflation rates, interest rates for commercial financing and changing costs of raw materials & transportation. For 2022, While the global aggregated Net Sales in EUR decreased by -6% (excluding Latin America: only -4%) compared to previous year, the number of main units delivered to Third Parties shrunk by -15%. Lux Group for FY 2022 reported a consolidated net loss amounting to 5.74 mn EUR. The overall situation of Lux Group is quite challenging. Various actions were pursued by the subsidiaries Board, which mainly included adapting the model of moving to a distributor model, in lieu of operating each of these companies as a subsidiary. The local management expected the business to be more asset light for the companies giving it a better chance of improvement.

On April 11, 2023, Forbes Lux International AG, Lux International AG, and Lux Schweiz AG, all subsidiaries of your Company, submitted a combined request for provisional debt restructuring moratorium with the Insolvency court in summary proceedings at Wallissellen, Switzerland. The said court has granted a provisional moratorium for 4 months and also appointed a Provisional Administrator, as per the rules defined for this purpose. The moratorium cannot exceed a period of 4 months and may be extended by another 4 months in exceptional situations, by which time, the companies have to provide a revival plan within this defined period. We will provide all the stakeholders the updated information on a periodic basis. It is however important to state that the investment in Lux group is all provided for and hence there is no impact on the standalone financials of your company as on date.

Forbes Technosys Limited (FTL)

The year under review has been quite a challenging year for FTL. The company had a limited pipeline of orders entering FY 202223 as the company exited the loss making/ low margin businesses. FTL continued with its endeavor to right size the organization and rationalize costs.

FTL has shown losses of Rs 33.85 crores, which include provision for old debts and inventories Rs 14.1 crores, Intangible write off Rs 5.0 crores, Interest Rs 3.8 crores and Depreciation of Rs 4.2 crores during the year under review, including cash and non-cash losses. Cash losses were primarily because of the companys inability to procure orders or lower service revenue business.

Forbes Bumi Armada Limited (FBAL)

The gross revenue from operations for the financial year ended March 31, 2023 stood at Rs 57. 8 crores compared to Rs 55.6 crores for the financial year ended March 31, 2022. Total Comprehensive income is at Rs 3.05 crores as against Rs 2.07 crores in the previous year.

FBAL maintains qualified and experienced manpower which continues to provide quality manning services for Operation and Maintenance of Floating Production Storage Offload "FPSO" Vessels. It provides the best manning services in the field of FPSO Units. The provided manpower companies have achieved award of International Safety Award for demonstrating a strong commitment to good health and safety management during FY 2022-2023 by British Safety Council. FBAL has completed the year 2022-23 with zero complaint of client. FBAL continues providing Operations and Management manning services to two (2) FPSO and new venture came in the year 2022-23 to render the services of Armada Sterling V. Manpower resources of FBAL are delivering international standard services while maintaining top level Health Safety and Environment track records.

FBAL has duly complied with ISO 9001, 14001 & 45001 and OSHA 18001 to ISO 45001 certifications, which are valid till January 17, 2024 and ISO 27001 (Cyber Security) is valid till July 27, 2023. All the compliances in terms of renewal of certification, licenses and other imperative regulations are regularly renewed and fully complied by the company without any delay. During the year under review, there has been no change in the nature of business and share capital of the Company.

Forbes Macsa Private Limited

The Company and MACSA ID, S.A., have entered into a 50:50 Joint Venture Agreement on December 5, 2022 (JVA) for providing innovative laser marking and traceability solutions for the entire range of materials metal and non-metals. Pursuant to the terms of the JVA, a joint venture company viz., Forbes Macsa Private Limited has been incorporated on December 9, 2022. The business has incurred a small loss at Total Comprehensive Income level of Rs 13.5 lakhs.

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 as on March 31,2023. An application pursuant to the provisions of section 466 of the Companies Act, 1956 has been filed by Grand View Estates Private Limited before the Honble Bombay High Court to stay the winding up proceedings and bring Svadeshi out of liquidation.

Financial Performance

The Consolidated Financial Statements of the Company and its subsidiaries, its joint ventures and associate companies are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act. The Notes to Consolidated Financial Statements are disclosed and forms part of the Consolidated Financial Statements.

Segment wise performance

The summarized performance of segment revenues and segment results is as under:

Rs in Lakhs

Particulars	Segment Revenue
	FY 22-23	FY 21-22
Health, Hygiene, Safety Products and its services	18,986	22,404
Engineering	22,987	20,631
Real Estate	1,943	2,972
IT Enabled Services and Products	312	1,066
Shipping and Logistics Services	0	4,443
Others	8	29
Total	44,236	51,545
Less: Inter Segment Revenue	(38)	(72)
Total Income from operations (net)	44,198	51,473

 

Particulars	Segment Results
	FY 22-23	FY 21-22
Health, Hygiene, Safety Products and its services	4,486	(31,941)
Engineering	2,477	2,969
Real Estate	124	753
IT Enabled Services and Products	(3,011)	(2,179)
Shipping and Logistics Services	0	926
Others	0	(15)
Total segment results	4,076	(29,487)
Add: Share of profit of joint ventures and associates accounted for using equity method	296	1,204
Add: Exceptional items	(816)	(230)
Less: Finance Costs	(1760)	(4,198)
Balance	1796	(32,711)
Add: Unallocable income/(expenses)	20,116	(680)
Profit /(Loss) from continuing activities before tax	21,912	(33,391)
Profit from discontinued operations	69	4,57,306
Profit /(Loss) before tax from continuing and discontinued operation	21,981	4,23,915

Key Financial performance, Operational Information and Ratio Analysis

Key Ratios/ Indicators	Standalone		Explanation for change of 25% or more
	FY 22-23	FY 21-22
Debtors Turnover (in days)	43	49	This is an improvement mainly on account of increased in sales of Engineering division during year and better receivable management
Interest Coverage Ratio	28	3	The available liquidity permitted us to repay all major outstanding and combined with profitability, the coverage ratio shows substantial improvement.
Operating Profit Margin %	91%	14%	Improvement is mainly on account of increased income in Current Year on account of sale of Chandivali land which is non-recurring.
Return on Net Worth	101%	82%	Improved mainly on account of increased income in Current Year on account of sale of Chandivali land, which is non-recurring

 

Key Ratios / Indicators	Consolidated		Explanation for change of 25% or more
	FY 22-23	FY 21-22
Debtors Turnover (in days)	68	81	This is an improvement mainly on account of increased in sales of Engineering division during year and better receivable management
Operating Profit Margin %	50%	8%	Improvement is mainly on account of increased income in Current Year on account of sale of Chandivali land which is non-recurring.
Net Profit Margin %	43%	822%	Both years include exceptional items of a high magnitude. Exceptional items mainly includes the adjustment entries passed for Composite Scheme of Arrangement in previous year and include exceptional gains in the current year.
Return on Net Worth	89%	15%	Improved mainly on account of increased income in Current Year on account of sale of Chandivali land, which is non-recurring

Revenue

During the year Company has achieved total standalone revenue (Including other income) of Rs 46,174 lakhs (previous year Rs 24,875 lakhs), The increased is mainly on account of sale of 3.804 acres of land at Chandivali at a profit of Rs 20,684 lakhs and has been recognized as Other income in the financial statements.

During the year Company achieved consolidated revenue (including other income) of Rs 71,011 lakhs (previous year Rs 54,917 lakhs), Earnings Before Interest, Depreciation, Taxation and Amortization ("EBIDTA") (excluding Exceptional item) Standalone EBIDTA is Rs 23,997 lakhs (previous year Rs 4,687 lakhs) while Consolidated EBIDTA is Rs 24,894 lakhs (previousyear Rs 8,388 lakhs), both significant increased mainly on account of sale of 3.804 acres of land at Chandivali at a profit of Rs 20,684 lakhs and some items amounting to Rs 2905 lakhs has been recognized as income in financial statement and due to lower losses in subsidiaries.

Profit/(Loss) Before Tax ("PBT")

Consequent to the above, during the year standalone PBT is Rs 24,722 lakhs (previousyear Rs 4,12,235 Lakhs) Consolidated profit of Rs 21,912 lakhs (previous year loss Rs 33,391) lakhs is mainly on account of sale of 3.804 acres of land at Chandivali at a profit of Rs 20,684 lakhs and has been recognized as other income in financial statement as against impairment of goodwill and investment of Rs 337.67 crores in previous FY 2021 -22.

Fixed Assets

During the year standalone Gross Block is Rs 14,422 lakhs (previous year Rs 14,241 lakhs) on account of investment in plant & machinery for Engineering business.Consolidated Gross Block is Rs 17,190 lakhs (previous year Rs 16,731 lakhs), the increase is mainly on account of investment in Plant & Machinery.

Total Comprehensive Income / (Loss)

During the year standalone profit after other Comprehensive income of Rs 25,167 lakhs (previous year Rs 4,13,316 ) out of which Rs 20,684 lakhs profit on sale of Chandivali land & Rs 2,905 lakhs are on account of exceptional items mainly includes Profit on sale of Investment in FFSPL.

Consolidated Profit after Other Comprehensive Income of Rs 15,960 lakhs (previous year Rs 429,364 lakhs)

Borrowing

Total standalone borrowing is Rs 1,256 lakhs, (previous year Rs 10,169 Lakhs) reduced by Rs 8,913 lakhs on account of repayment of shortterm borrowings and term loans.

The Companys consolidated borrowing is Rs 5,128 lakhs (previous year Rs 27,132 lakhs), has gone down on account of repayment of short-term borrowing & term loans.

OPPORTUNITIES & RISKS

Our success as an organization depends on our ability to identify opportunities and leverage them while mitigating the risks that arise while conducting our business. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Some of the opportunities and key risks, anticipated impact on the Company and mitigation strategy is as follows:

Market Development

Your Company monitors external market trends and collates consumer insights to develop category and brand strategies.

The Company actively searches for ways to translate the trends in consumer preference and taste into new technologies for incorporation into future products. We develop product ideas both in-house and with selected partners to enable us to respond to rapidly changing consumer trends with speed.

The Company is dedicated to ensuring that its vendors, suppliers, contractors etc work in a healthy and safe environment while delivering on the expected standard.

Given our dependency on Automotive sector, one more aspect of risk is the way the development of this industry will evolve due to the Electric initiatives of the sector. The trends of this industry moving to different fuel options will impact the demand of the consumer and we will have to align ourselves and remain abreast of the happenings to be able to have an important share in contributing to this aspect.

Political and Global Uncertainty

Political uncertainty or volatile economic uncertainty may adversely affect the reduced demand and could restrict revenue growth opportunities.

The Company has broad based diversified businesses catering to various industry segments and diverse markets and hence may not get affected by such uncertainty.

Legal and Regulatory

Compliance with laws and regulations is an essential part of your Companys business operations. We are subject to laws and regulations in diverse areas as product safety, product claims, trademarks, copyright, patents, competition, employee health and safety, the environment, Water and Air Pollution, corporate governance, listing and disclosure, employment, and taxes. Frequent changes in legal and regulatory regime and introduction of newer regulations with multiple authorities regulating same areas lead to complexity in compliance. We closely monitor and review our practices to ensure that we remain complaint with relevant laws and legal obligations.

Systems and Information

Your Companys operations are increasingly dependent on IT systems and the management of information.

Increasing digital interactions with customers, suppliers and consumers place even greater emphasis on the need for secure and reliable IT systems and infrastructure, and careful management of the information that is in our possession.

The cyber-attack threat of unauthorized access and misuse of sensitive information or disruption to operations continues to increase.

To reduce the impact of external cyber-attacks impacting our business, we have sufficient security measures including firewalls and threat monitoring systems in place, complete with immediate response capabilities to mitigate identified threats. Our employees are trained to understand these requirements.

Energy Management

The Companys factories consume power for the manufacturing and for the purpose of air cooling. The Company identifies it as a critical resource and gives it due attention to optimize its use including using green source like solar power etc. The Company has initiated over the year installation of solar system within its factory. Though this has met only partial demand, attempts have been made to look at the opportunity and enlarge the scope of such coverage.

Internal control systems and their 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.

M/s Sharp & Tannan Associates, 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.

Material Development in Human Resources and Industrial Relations

The fiscal year 2022-23 started with promising business results across all the Product Categories. The focus of Human Resources Function was in the areas of Safety, Health & wellbeing of the employees, Talent Acquisition, Performance Management, Capability

Development for making future ready organization. New joinees have undergone the induction program for their integration with the culture, values systems of the Company. Performance Management System workshop was conducted for aligning functional Key Result Areas and Performance Indicators in line with annual business plan. People Capability Development programs were organized to strengthen employee competence and improve productivity. The Leadership Development Program for the some Leaders & Managers was conducted to strengthen competence in Change Management, Collaborative working, Customer Centricity & Driving Execution. In addition, Value Selling and Customer Centricity training program was also conducted for the sales professionals for the competency development in value selling and Channel Management.

Investment in Subsidiaries/Joint Ventures

The Company has made new equity investments in Subsidiaries/ Joint Ventures in FY 2022-23 as follows:

Name of the Company	Rs in Lakhs
Forbes Macsa Private Limited	Rs 0.50 Equity Capital and Share Application money - Equity - 124.50 Share Application money-Preference- 125.00
Forbes Precision Tools and Machine Parts Limited	Rs 5.00 Equity Capital

Subsidiaries/ Associates /Joint Ventures

During FY 2022-23 the following company(s) have become or ceased to be subsidiaries, joint ventures or associates.

Name of Company	Nature of Relationship
Forbes Campbell Services Limited	Ceased to be subsidiary with effect from September 30, 2022 consequent upon amalgamation with Forbes Technosys Limited
Forbes Facility Services Private Limited	Ceased to be subsidiary with effect from June 22, 2022 consequent upon divestment of shareholding in the company.
Lux del Paraguay SA	Ceased to be a subsidiary of Lux International AG with effect from November 30, 2022
Forbes Precision Tools and Machine Parts Limited	Incorporated as a wholly owned subsidiary with effect from August 30, 2022
Forbes Macsa Private Limited	Incorporated as a Joint Venture Company with effect from December 9, 2022

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 Act 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/

Dividend & Transfer to Reserves

Your Company has paid Special interim dividend of Rs 65 per fully paid equity share of Rs 10 each for the financial year 2022-23. With a view to preserve resources, there shall be no further distribution of dividend for the current year in discussion.

In accordance with SEBI LODR, the Board of Directors of the Company has adopted a Dividend Distribution Policy, which is available on the website of the Company, www.forbes.co.in/ 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, 2023 was 1,289.86 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 31,2023 only one Director of the Company holds 1352 equity shares in the Company. None of the other Directors hold shares of the Company.

Finance

The Board is pleased to inform the stakeholders that the Company is now Net Debt Free as on March 31, 2023. 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, where possible, and the sale of assets has helped in keeping the borrowings and effective interest cost under control.

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.

Particular of loans, guarantees and investments

Particular 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 arms 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.

The policy on Related Party Transactions as approved by the Board is uploaded on the Companys 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.

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 "II" to this report.

Business Responsibility and Substainability Report

The requirements under Regulation 34 (2)(f) and the proviso thereof of the SEBI (Listing Obligations and Disclosure Requirements), 2015 is not applicable to the Company as the Company was not in the list of top 1000 listed entities based on market capitalization as on March 31, 2022 and March 31, 2023.

Internal Complaints Committee

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 as per 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. Internal Compliant Committee (ICC) has been setup to redress complaints received regarding sexual harassment as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the ICC includes external member. During FY 2022-23, 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 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.

The total amount to be spent during the financial year 2022-23 was Rs 28.05 Lakhs.

The Report on CSR activities, in terms of Section 135 of the Act, is annexed as Annexure III to this report.

Risk Management

The Board of Directors of the Company has formed a Risk Management Committee for identification, evaluation and mitigation of external and internal material risks. The Committee has established a framework for the companys risk management process and ensures its implementation. The Committee periodically reviews the risk management processes and practices of the Company and establish and amends procedures to mitigate risks on a continuing basis.

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 recommends 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 and there has been no change in the circumstances which may affect their status as Independent Directors during the year.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, Commission and reimbursement of expenses incurred by them for the purpose of attending meetings of Board/Committee of the Company. One of the Directors holds 1352 Equity shares of the Company and is entitled to all rights and obligations as of other shareholders.

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/

Pursuant to the provisions of section 203 of the Act, Mr. M. C. Tahilyani, Managing Director, Mr. Nirmal Jagawat, Chief Financial Officer and Ms. Rupa Khanna, Company Secretary & Compliance Officer are the Key Managerial Personnel of the Company as on March 31, 2023.

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 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, Stakeholders Relationship Committees.

The performance of the Board was evaluated by the Board after seeking feedback from all the Directors based on 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, Corporate Social Responsibility and Stakeholders Relationship Committee was evaluated by the Board after seeking feedback from Committee members based on 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 based on selfassessment 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.

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 8(eight) 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.

Audit Report

On a Standalone basis, there are no qualifications stated in the audit report and hence there is nothing specific to comment on the Standalone Audit Report, other than the comments mentioned in the report itself, which are self-explanatory.

As regards, the Consolidated Financial Statements, the Statutory Auditors have given a disclaimer and has expressed their inability to provide an opinion on the state of affairs of the Consolidated financials of the Company. There are two points for which the Statutory auditor have expressed an opinion of disclaimer. In connection with these points, the response are given hereunder:

With respect to Lux International AG for non-availability of audited accounts -

The reporting of the entity Lux International AG (LIAG) is periodic and based on the information from the subsidiary for consolidation purposes. The information related to the company, LIAG has been provided to the component auditor and the review was conducted, with unsigned draft reports being available, but the final signed audit report, with their stated opinion, has not been issued by the component auditor. The Management certified accounts as shared by the management of LIAG with the component auditors has been included in the consolidated accounts.

While on the subject, it is pertinent to note that before the finalisation of the report, the company, LIAG along with Forbes Lux International AG, and Lux Schweiz AG filed an application for Debt restructuring moratorium with the Competent court in Switzerland, on April 11, 2023 and the procedure was granted by a court order on April 17 2023. Accordingly, an Administrator has been nominated, to whom the Chief Executive Officer of the company has to report, and this procedure leads to a strict and limited release of payments by the Administrator, to protect the legitimate interests of the creditors, including the payment to these auditors. The component auditors have made it clear to the management of LIAG and have expressed their inability to release the signed report unless their settlements happened. The opinion of disclaimer made by the Statutory Auditors is for the formal non-coverage of this entity i.e., LIAG, though all information required to be included in consolidated, has been considered and disclosed, except for the formal signed audited accounts. The situation will get remedied when the component auditors issue their formal report, after the matter is raised with the Administrator and the issue resolved.

It is also important to note that the results for the first 9 months (from Jan 2022 to Sept 2022) were made available by the component auditor as part of the limited review and these have been included in the consolidated accounts, quarter to quarter and now for the full year too. We believe that the risk of error for the full year unaudited accounts is therefore minimal or non-existent.

It is also pertinent to note that the full investment value has been provided in the standalone accounts of the Company in the FY 202122 itself and this has therefore no risk or consequences, except for the reporting of the Consolidated Accounts for the year. On the commercial side the local management is exploring revival plans and Board of your Company shall take a final call on the evaluation in the next few Quarters.

The Auditor views arise from the situation of the business and for non-availability of the formal signed financials and Audit report for LIAG. While we believe that all financial reporting is in order as the certified management accounts of LIAG has been considered, we conclude that the accounts of LIAG are complete and there are no material deviations as at March 31, 2023.

With respect to Forbes Lux International AG on going concern matter:

The component Auditor has issued as adverse opinion on Forbes Lux International AG (FLIAG). This was due to fact that the liabilities exceeded its assets by Rs 45,869 lakhs as on December 31, 2022. The component Auditors believe that the available liquidity is not sufficient to cover over indebtedness and future expected losses. Since this impacted the solvency of the company, the Auditors expressed their adverse opinion in this matter and were of the view that the accounts should not be prepared under the going concern assumption. The management of the FLIAG is of the opinion that they are exploring options to improve the liquidity through some manner by which funds could be infused and there by overcome the current crisis. As mentioned for the earlier period qualification too, the Board of your Company shall take a final call based on the proposal brought by the board of FLIAG and the decision on the final evaluation shall be made accordingly. Therefore, it may be appropriate to continue to prepare the accounts on going concern assumption till the matter is decided and concluded in next few quarters.

As regards FLIAG, on the matter of treating FLIAG as going concern, we noted that the business in its subsidiaries still operate, albeit the volume of business needs to be larger. As mentioned earlier, this business decision will be taken in the next few quarters after considering how its key subsidiaries are able to revive their own operation. Till then it would be fair and proper to treat it as going concern.

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, M/s Sharp & Tannan Associates (ICAI Firm Registration No.109983W) are Statutory Auditors of the Company till the conclusion of 108th 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 Cost Accountant. The Board of Directors of the Company have, on the recommendation of the Audit Committee, appointed M/s. Kishore Bhatia & Associates, Cost Accountants, as Cost Auditors for the FY 2023-24 on a remuneration of Rs 4 lakhs plus applicable taxes and out of pocket expenses.

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.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer.

The Secretarial Audit Report of material subsidiaries, Forbes Bumi Armada Limited and Forbes Campbell Finance Limited is also annexed herewith as Annexure ‘VI & VII respectively.

Secretarial Standards

The Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.

Particular 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 ‘VUI.

Annual Return

Pursuant to section 92(3) read with section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the website of the Company viz. www.forbes.co.in/

Insolvency and Bankruptcy Code 2016

During the financial year, neither any application nor any preceding is initiated against the Campany under the Insolvency and Bankruptcy Code 2016.

Settlement with Banker or Financial Institutions

During the financial year no settlements were made by the Company with any Banks or Financial Institutions.

Cautionary Statement

Statements in the Boards Report and the Management Discussion & Analysis describing the Companys 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 Companys 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

Shapoor P. Mistry

Chairman

DIN: 00010114

Mumbai, May 26, 2023