Garg Furnace Ltd Directors Report.

The Members of Garg Furnace Limited

The Directors of your company have pleasure in presenting the 47th Annual Report on the affair of the company together with the Audited Accounts for the year ending 31st March, 2020.

FINANCIAL RESULTS

(Rupees in Lacs)
2019-20 2018-19
Operating Income 9852.22 11183.05
Profit before depreciation, Interest & tax (489.48) (431.00)
Interest & Financial Expenses 112.19 67.74
Profit before depreciation & tax (601.67) (498.74)
Depreciation 131.66 126.73
Profit before tax & Exceptional items (733.33) (625.47)
Exceptional Items 1091.61 1137.67
Profit before tax 358.28 512.20
Provision for tax -Current Tax 0.00 0.00
-tax related to earlier years (1.65)
-Deferred Tax Asset 0.00 0.00
Less : Mat Credit Entitlement 0.00 0.00
Profit after Tax 358.28 510.55
Prior year Tax adjustments / Depreciation to Reverse as per
0.00 0.00
Schedule II
Re-measurement of define benefit liability 27.59 (1.06)
Balance brought forward -1953.01 -2462.50
APPROPRIATIONS
Transfer to General Reserve 0.00 0.00
Balance carried over to Balance Sheet 385.87 509.49

DIVIDEND

The Board of Directors does not recommend payment of dividend for the year under review.

SHARE CAPITAL

There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares nor has it granted any stock options.

OPERATIONS

Detailed information on the operations of the different business lines of the Company and details on the state of affairs of the Company are covered in the Management Discussion and Analysis Report

EXTRACT OF ANNUAL RETURN

The extract of annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report.

NUMBER OF MEETINGS OF THE BOARD

There were 6 meetings of the Board held during the year 30/05/2019, 14/08/2019, 02/09/2019, 15/11/2019, 07/02/2020 and 14/02/2020 detailed information is given in the Corporate Governance Report, annexed hereto as part of Board Report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under clause (c) of sub-section (3) of section 134 of Companies Act, 2013 directors, to the best of their knowledge and belief, state that -

a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) the directors had 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 and loss of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

The independent directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section (6).

DIRECTORS REMUNERATION POLICY AND CRITERIA FOR MATTERS UNDER SECTION 178

Information regarding Directors Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the Financial Statements.

RELATED PARTY TRANSACTIONS

There are related party transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of section 188 of Companies Act, 2013. There being ‘material related party transactions as defined under regulation as applicable of SEBI (LO&DR) Regulations 2016, there are details to be disclosed in Form AOC-2 in that regard.

During the year 2019-20, pursuant to section 177 of the Companies Act, 2013 regulation as applicable of SEBI (LO&DR) Regulations 2016, all RPTs were placed before Audit Committee for its prior/omnibus approval as well as shareholders approval has been taken in this regard.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo as required under Section 134 (3)(m) of The Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014 is annexed and forms part of this report.

RISK MANAGEMENT POLICY

Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk which in the opinion of the Board may threaten the existence of the Company is given in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

Provisions of section 135 of the Companies Act, 2013 are not applicable to Company.

FORMAL ANNUAL EVALUATION OF THE RFORMANCE OF BOARD, ITS COMMITTEES AND DIRECTORS

Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report.

SUBSIDIARIES AND JOINT VENTURE

Company has no subsidiary, associate and Company in Joint Venture

DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. In light of the provisions of the Companies Act, 2013, Mr. DEVINDER GARG (DIN: 01665456 ) Managing Director of the Company, retires from the Board by rotation this year and being eligible, offers himself for re-appointment.

b.The information as required to be disclosed a per regulation as applicable of SEBI (LO&DR) Regulations 2016 in case of reappointment of the director is provided in the Notice of the ensuing annual general meeting.

c. Mr. Manjeet Singh (DIN: 08592748) was appointed as an Additional Independent Director of the Company by the Board on the recommendation of Nomination & Remuneration Committee in their meeting held on 15th November 2019, with effect from 15th November, 2019. In accordance with provisions of section 161 of the Companies Act, 2013 and applicable SEBI (LODR) Regulation, 2015, he will hold office upto the date of the Annual General Meeting of the Company.

Mr. Manjeet Singh is not disqualified from being appointed as Directors in terms of Section 164 of the Act. As per the recommendation of Nomination and Remuneration Committee and based on the performance evaluation, the Board is considering the regularization of appointment of Mr. Manjeet Singh (DIN: 08592748) from Additional Independent Director to Independent Director of the Company for a period of five years w.e.f 30th September, 2020.

The Company has also received a declaration from Mr. Manjeet Singh declaring that he meets the criteria of independence as provided under Section 146(9) of the Companies Act, 2013.

In the opinion of the Board, Mr. Manjeet Singh fulfills the conditions required to be fulfilled for being appointed as an Independent Director of the Company as per the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015.

d. Mr. Dharam Chand (DIN: 08592773) was appointed as an Additional Independent Director of the Company by the Board on the recommendation of Nomination & Remuneration Committee in their meeting held on 15th November 2019, with effect from 15th November, 2019. In accordance with provisions of section 161 of the Companies Act, 2013 and applicable SEBI (LODR) Regulation, 2015, he will hold office upto the date of the Annual General Meeting of the Company.

Mr. Dharam Chand is not disqualified from being appointed as Directors in terms of Section 164 of the Act. As per the recommendation of Nomination and Remuneration Committee and based on the performance evaluation, the Board is considering the regularization of appointment of Mr. Dharam Chand (DIN: 08592773) from Additional Independent Director to Independent Director of the Company for a period of five years w.e.f 30th September, 2020.

The Company has also received a declaration from Mr. Dharam Chand declaring that he meets the criteria of independence as provided under Section 146(9) of the Companies Act, 2013

In the opinion of the Board, Mr. Dharam Chand fulfills the conditions required to be fulfilled for being appointed as an Independent Director of the Company as per the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015.

e. During the year under review, Mr. Pawan Kumar tendered his resignation as the Independent Director of the Company with effect from the close of business hours on November 15, 2019. The Board places on record its appreciation for his invaluable contribution and guidance.

f. During the year under review, Mrs. Chandni Jain was appointed as Whole Time Company Secretary of the company w.e.f. August 02, 2019

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future, however the accounts of the company were declared by the banks as Non-Performing Assets (NPA) and thereafter the bank has taken symbolic possession of assets of the company u/s 13(4) of THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 in 2018, the action of the bank has been challenged by the company before the Concerned Debt Recovery Tribunal (DRT). Further the management was under negotiation with the bank for one time settlement (OTS) of account. The bank has approved the One Time Settlement (OTS) proposal of the company vide its letter dated 13/08/2019 , which has taken on record by board of directions in its meeting held on 14/08/2019, and authorised Managing Director to negotiate further and give acceptance of said OTS proposal on behalf of company. The company has accepted the said OTS proposal and Instalments in this regard are being deposited with Bank regularly.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Internal financial controls with reference to the financial statements were adequate and Operating effectively.

PRESENTATION OF FINANCIAL RESULTS

The financial results of the Company for the year ended 31 March, 2020 have been disclosed as per Schedule III to the Companies Act, 2013. The same are placed on the Companys website.

STATUTORY DISCLOSURES

As Company has no subsidiaries and joint ventures Company, the summary of the key financials of the Companys (Form AOC-1) is not applicable to comply.

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the prescribed particulars are set out in an annexure to the Directors Report. As per provisions of section 136(1) of the said Act, these particulars will be made available to shareholder on request.

A Cash Flow Statement for the year 2019-20 is attached to the Balance Sheet.

Pursuant to the legislation Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013 introduced by the Government of India, which came into effect from 9 December 2013, the Company has framed a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy.

CORPORATE GOVERNANCE

However the company is exempted under regulation 15 (2) (a) of Securities and Exchange Board of India (listing obligations and Disclosure Requirements) Regulations, 2015, to comply with Regulation 17, 18, 19, 20, 21,22, 23, 24, 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and para C , D and E of Schedule V, as the listed entity having paid up equity share capital not exceeding rupees ten crore and net worth not exceeding rupees twenty five crore, as on the last day of the previous financial year, The company has put in place a system of Corporate Governance. A Separate report on Corporate Governance forming part of the Annual Report is annexed hereto.

Particulars of Employees

Information as per Section 197 of the Companies Act, 2013 (the ‘Act) read with the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report is NIL .However salary being paid to whole time directors is mentioned in Corporate Governance Report.

Annual Performance Evaluation by Board

Pursuant to the provisions of the Companies Act, 2013 and regulation as applicable of SEBI (LO&DR) Regulations 2016, 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 the Committees.

Risk Management

The Board of Directors of your Company has adopted a policy on Risk Management of the Company. The broad terms of same provided at website of the Company.

Vigil Mechanism

Your Company has an effective Vigil Mechanism system which is embedded in its Code of Conduct. The Code of Conduct of your Company serves as a guide for daily business interactions, reflecting your Companys standard for appropriate behavior and living Corporate Values. The Code of Conduct applies to all GFL People, including Directors, Officers, and all employees of the Company. Even your Company vendors and suppliers are also subject to these requirements as adherence to the Code is a prerequisite for conducting business with your Company.

Nomination & Remuneration Policy

The Board of Directors of your Company has, on recommendation of the Nomination & Remuneration Committee, framed and adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. The contents of the policy are stated in the Corporate Governance Report.

AUDITORS

STATUTORY AUDITOR

M/s R.K. Chadha & Co., Chartered Accountants, (Firm Registration No: 003513N), who were appointed as the Auditors of the company for a term of five years subject to ratification at Annual General Meeting every year has given a resignation dated 17th July, 2020. And in order to fill the casual vacancy the based on recommendation of Audit Committee Board has appointed M/s Ashwani & Associates, Chartered Accountants, Ludhiana (Registration No. 000497N) to hold office till the ensuing Annual General Meeting.

Based on the eligibility under Section 141 of the Companies Act, 2013, as recommended by Audit Committee the Board of Directors recommend to Appoint M/s Ashwani & Associates, Chartered Accountants, Ludhiana (Registration No. 000497N) as the Statutory Auditors of the company for five to hold the office from the conclusion of this Annual General Meeting till the conclusion of 22nd Annual General Meeting at such remuneration as may be fixed by the Board of Directors of the company in consultation with M/s Ashwani & Associates, Chartered Accountants, Ludhiana (Registration No. 000497N)

Reply to remarks in Statutory Audit Report

Emphasis of Matter

As mentioned in Emphasis of Matter in para a which are Self-explanatory, however in context with related parties transaction, company was constrained to do such transactions, because due to weak financial position in previous years the suppliers and buyers not shown interest to deal with the company directly, but company has taken all approvals in this regards as per applicable laws.

Basis for Qualified Opinion

i. Because of huge losses suffered during last two financial years the organization structure is also forced to become unshaped, but Management is looking for a competent person to appoint him as Internal auditor, even the candidates interviewed for such offices have not shown their interest to join the company due to weak financial position of the company, after offering good remunerations.

ii. Provision in respect of impairment /loss on assets is not require as management has view that due to slump & cut throat competition in iron industries / market is temporally and hope will recover soon.

iii. Management is in process to confirm/reconcile balances with the concerned parties.

SECRETARIAL AUDITOR

Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made thereunder the Company has appointed, Divyam Parbhakar & Associates, (membership number: 52667) Company Secretaries in Practice, to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2019-20 given by Divyam Parbhakar & Associates in the prescribed form MR-3 is annexed to this Report. The Secretarial Audit Report for the year under review given some observations.

Para wise replay of said observations are given hereunder

1. Because of huge losses suffered during last two financial years the organization structure is also forced to become unshaped, but Management is looking for a competent person to appoint him as Internal auditor and Company Secretary, even the candidates interviewed for such offices have not shown their interest to join the company due to weak financial position of the company, even after offering good remunerations.

2. The Company is in process of updating the same.

3. The Company has not received information from vendors/service providers regarding their status under Micro, small and Medium Enterprises Development Act,2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/ payable under this act has not been given.

4. Company has taken all approvals of members of the company/Audit Committee/board of Directors in respect of related parties transaction made during the year.

5. The company is in process of updating the same.

6. Self - Explanatory

COST AUDITOR

Pursuant to section 148 of the Companies Act, 2013 and Rules made thereunder, Board of Directors had, on the recommendation of the Audit Committee, appointed M/s Meenu & Associates, (firm registration number: FRN: 100729) Cost Accountants, to audit the cost accounts of the Company for the financial year 2020-21 at a remuneration of 20000.00 plus service tax, out-of pocket and travel and living expenses, subject to ratification by the shareholders at annual general meeting.

Accordingly, a resolution seeking members ratification for the remuneration payable to cost auditor is included in the Notice convening the annual general meeting.

INDUSTRIAL RELATIONS

The Industrial relations remained cordial through out the year and have resulted in sustained growth of the company.

ACKNOWLEDGEMENT

The Directors wish to extend their sincere thanks to the Punjab & Sind Bank, Punjab State Power Corporation Limited, Container Corporation of India, other State & Central Government Agencies, Suppliers and Customers for their continued support and cooperation.

The Directors also wish to place on record their deep appreciation for the services rendered by the workers & staff at all levels.