Hardcastle & Waud Mfg Co Ltd Directors Report.

#MDStart#

MANAGEMENT DISCUSSION AND ANALYSIS

Your Directors have pleasure in placing before you the Seventy-fifth Annual Report of the Company together with its Audited Financial Statements for the year ended March 31, 2021 and Management Discussion and Analysis.

1. FINANCIAL RESULTS AND APPROPRIATIONS:

Particulars Year Ended March 31, 2021 Year Ended March 31, 2020
(Rs Lakhs) (Rs Lakhs)
Profit before Interest, Depreciation & Amortisation Exps 103.80 164.15
Interest 0.06 0.05
Depreciation & Amortisation Exps 47.41 40.45
Profit before Taxation 56.33 123.65
Provision for Taxation 11.57 15.13
Deferred Tax 43.85 21.72
Income Tax for earlier years (0.01) (3.33)
Net Profit after Taxation 0.92 90.13
Other Comprehensive Income (20.06) (261.14)
Total Comprehensive Income for the year (19.14) (171.01)
Balance b/f from previous year (1,044.24) (873.23)
Total Available (1,063.38 ) (1044.24)
Transferred to General Reserve - -
Carried Forward (1,063.38) (1044.24)

In view of accumulated loss no dividend is being recommended.

2. OPERATIONS:

The Company has registered a turnover of Rs 319.08 lakhs this year as against Rs 352.00 lakhs during the previous year. The overall revenue from operations of the Company for the current year declined marginally. The revenue from operations is mainly from sale of traded goods and leasing activities.

The Total Income for the year ended March 31, 2021 was at Rs 332.73 lakhs as compared to Rs 368.51 lakhs in the previous year. Profit before tax for the current year stood at Rs 56.33 lakhs as against Rs 123.65 lakhs during the previous year.

The Companys business activity currently consists of Industrial Chemicals, Investments and Leasing. During the year under review, revenue from industrial segment was Rs 154.77 lakhs compared to Rs 115.03 lakhs in the previous year, revenue from investment activity was Rs 10.36 lakhs in comparison to Rs 12.14 lakhs in the previous year, while leasing activity yielded a revenue of Rs 153.94 lakhs as compared to Rs 224.83 lakhs in the previous year.

3. MANAGEMENT DISCUSSION AND ANALYSIS:

The outbreak of the deadly COVID-19 virus and the lockdown imposed across the country affected most business operations. COVID-19 is an unprecedented challenge. The lockdown gave India time to make a concerted effort to flatten the outbreak curve. However, towards later part of the year consequent to significant opening of the economic activity across the nation the demand picked up compared to that during the initial period of COVID-19. The Companys activity pertaining to sale of traded goods fetched greater income in comparison to the previous year. The Companys Investments and Leasing activities have been impacted. However, this has no impact on the cash flows of the Company.

The changed economic, social, environmental, and political expectations are expected to play an even greater role in shaping the future. A critical aspect of dealing with this disruption may be understanding which customer behaviours are temporary versus those that are permanent, as recovery will likely be uneven across end markets and geographies. Companies can address this uncertainty by revisiting their product portfolio and conducting robust scenario planning that includes the unknowns.

The Company has in place internal financial control systems, commensurate with its size and the nature of its operations to ensure proper recording of financial and operational transactions / information and compliance of various internal controls and other regulatory and statutory compliances. The internal auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company. The observations arising out of the internal audits are periodically reviewed at appropriate level and summaries along with corrective actions plans, if any, are submitted to the management and Audit Committee for review, comments and directions. The concerned persons undertake corrective action in their respective areas and thereby strengthen the controls.

The Company did not enter into any transaction(s) with any person(s) or entity belonging to the promoter / promoter group who hold 10% or more shareholding in the Company. Information pertaining to financial performance forms part of this Report.

There were no material developments in the Companys Human Resource Capital except appointment of Chief Financial Officer effective 1st February, 2021.

RATIOS

Key Financial Ratios

1. Return on Net Worth decreased to -0.55% during the current year in comparison to -4.87% in the previous year mainly due to impact of Fair Value measurements of investments, during the current year.

2. Inventory Turnover Ratio is Nil during the current year in comparison to 4.36 in the previous year, as there was no stock of finished goods at the end of current year.

3. Current Ratio is 1.58 during the current year in comparison to 0.91 in the previous. The increase in the current ratio in the current year is mainly due to increase in current assets.

4. Operating Profit Margin (OPM) is 16.93% during the current year in comparison to 33.55% in previous year. The decrease in OPM in the current year is mainly due to decrease in operating income.

5. Net Profit Margin (NPM) is 0.28% during the current year in comparison to 24.45% in the previous year. The decrease in NPM is mainly due to decrease in net profit during the current year.

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a) At the 74th Annual General Meeting of the Company held on 22.09.2020:

Mr Sunil Kantilal Trivedi (DIN: 00387797) and Mrs Rekha Abhishek Pacheria (DIN: 07415573) were re-appointed as independent directors of the Company for a second term of further period of five years w.e.f 30.5.2021. Mr Vimal Chand Kothari (DIN: 00056003) was appointed as an independent director of the Company w.e.f 22.09.2020.

Also the appointment of Mr Piyushkumar Mehta (DIN: 08772311) as a non-executive director of the Company was confirmed.

In the opinion of the Board, all the above mentioned independent directors possess requisite expertise, integrity and experience.

b) Mr Piyushkumar Mehta (DIN: 08772311) retires by rotation at the ensuing Annual General Meeting of the Company and being eligible offers himself for re-appointment.

c) Ms Shivani Bhargava, Chief Financial Officer (CFO) of the Company has resigned from the post of CFO with effect from 16.12.2020 due to personal reason. Mr Pravedkumar Dubey has been appointed as CFO of the Company w.e.f. 01.02.2021.

d) Requisite declarations have been received from the independent directors of the Company under Section 149(7) of the Companies Act, 2013 (the Act) regarding meeting the criteria of independence laid down in Section 149 (6) of the Act and also under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (Listing Regulations).

e) Board Evaluation:

Pursuant to provisions of the Act and the Listing Regulations the Board has carried out an annual performance evaluation of its own performance, of the Directors individually, as well as the evaluation of working of its Audit, Nomination and Remuneration and other Committees of the Board. The performance of Non-Independent Directors and the Board as a whole was carried out by the Independent Directors at their separate meeting. Evaluation of performance of Independent Directors was carried out by the entire Board of Directors, excluding the director being evaluated. The directors expressed satisfaction with the evaluation process and the results thereof.

f) Meetings:

During the year 5 board meetings were convened and held.

5. AUDIT COMMITTEE:

The present composition of the Audit Committee of the Company is as under:

1. Mr Vimal Chand Kothari Chairman

2. Mr Sunil Kantilal Trivedi

3. Mrs Rekha Pacheria

4. Mr Banwari Lal Jatia

Board of Directors of the Company has accepted all recommendations of its Audit Committee during Financial Year 2020 2021. The Company has in place a vigil mechanism for directors and employees, to report genuine concerns about any wrongful act and any unethical conduct with respect to the Company or its business affairs to the Audit Committee which oversees functioning of the said mechanism.

6. NOMINATION AND REMUNERATION COMMITTEE (NRC):

The NRC comprises of three members of which two including the Chairperson are Independent Directors.

Salient features of the Nomination and Remuneration policy include, having an appropriate mix of executive, non - executive and independent directors primarily to maintain independence. NRC assesses independence of directors at time of appointment / re-appointment as well as annually. NRC takes into consideration various factors as specified in the policy while considering any remuneration to be paid to directors, key managerial personnel and other employees, etc.

The Policy is available on the Companys website www.hawcoindia.in under the section ‘Policies.

7. RISK MANAGEMENT:

In the Boards perception, there are no foreseeable risks which could threaten the existence of the Company.

8. UNCLAIMED SHARE CERTIFICATES:

As reported earlier, the Company had in accordance with the Listing Regulations transferred on 27.5.2016 to a separate demat account in the Companys name 9778 unclaimed shares of the Company belonging to 79 shareholders who had failed to exchange their old certificates for new certificates in the Company allotted to members pursuant to a Scheme of Arrangement between the Company and Vesna Agencies Pvt Ltd (Hawcoplast Chemicals Ltd) even after many reminders by the Company. At end of the year, the number of shareholders and the outstanding shares lying in the suspense account were 77 and 9,447 respectively.

The Company has sent further reminders to those shareholders whose 657 shares (in total) remained unclaimed and were required to be transferred to the unclaimed share suspense account. Since no response was received from any of the concerned shareholders, the said 657 shares have been consolidated in the name of Hardcastle and Waud Mfg. Co. Ltd. Unclaimed Shares Suspense Account and shall be dematerialized in due course of time. Accordingly in aggregate 10,104 shares shall remain in Unclaimed Shares Suspense Account.

The voting rights on these unclaimed shares shall remain frozen till the rightful owner(s) claim(s) the shares.

Members who have not yet collected / claimed their share certificates can still do so through the Companys Registrars and Share Transfer Agent.

9. AUDITORS:

Messrs GMJ & Co., Chartered Accountants (FRN: 103429W), were appointed as Statutory Auditors of the Company for 5 years from the conclusion of its 73rd AGM.

The requirement of ratification of appointment of the Statutory Auditors at every AGM has been dispensed with. Accordingly, no such item has been placed for approval of the members at this AGM.

Messrs GMJ & Co., have confirmed that they are eligible for continuing to act as statutory auditors of the Company and no proceeding against the firm or any partner of the firm is pending with respect to professional matters of conduct.

10. AUDITORS REPORT:

The Auditors Report does not contain any reservation, qualification or adverse remark.

11. SECRETARIAL AUDIT:

A Secretarial Audit Report for the financial year ended 31st March, 2021 is annexed hereto as ‘Annexure I.

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

12. LOANS, GUARANTEES OR INVESTMENTS:

Details of investments made appear in notes to the financial statements. No loan was given and no guarantee or security was provided by the Company on behalf of others during the year.

13. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions entered into by the Company during the financial year with related parties were in ordinary course of business and on arms length basis.

During the year, the Company did not enter into any materially significant transactions that may have potential conflict with interest of the Company.

14. FOREIGN EXCHANGE EARNINGS AND OUTGO:

There were no foreign earnings and outgo during the year.

15. CORPORATE SOCIAL REPONSIBILITY (CSR):

None of the three criteria specified in Section 135(1) of the Act relating to CSR is applicable to the Company.

16. SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES:

The Company does not have any subsidiary, joint venture or associate.

17. PARTICULARS OF EMPLOYEES:

a. Required particulars of employees under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as ‘Annexure II to this report.

b. There are no employees covered by Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

18. ANNUAL RETURN:

The annual return of the Company for the year ended 31st March, 2021 in the prescribed format is available on the website of the Company at www.hawcoindia.in under the section ‘Disclosures.

19. CORPORATE GOVERNANCE:

A report on Corporate Governance as stipulated under Schedule V of the Listing Regulations has been attached to this Annual Report.

A certificate from Mr Shailesh Kachalia, a practicing Company Secretary, regarding compliance with conditions of Corporate Governance as stipulated in SEBIs Listing Regulations is annexed to this Report as ‘Annexure III.

20. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 134(3)(c) read with Section 134(5) of the Act, your directors state that:

(a) In preparation of the annual accounts, applicable accounting standards have been followed alongwith proper explanations relating to material departures;

(b) Accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at end of the financial year and of its profit for that period;

(c) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with provisions of the Act for safeguarding assets of the Company and for preventing and detecting frauds and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) Internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and operating effectively; and

(f) Proper systems have been devised to ensure compliance with provisions of all applicable laws and such systems are adequate and operating effectively.

21. MAINTENANCE OF COST RECORDS:

The Government of India has not prescribed maintenance of cost records under sub-section (1) of Section 148 of the Act for any activities of the Company, thus the Company is not required to maintain cost records.

22. SECRETARIAL STANDARDS OF ICSI:

The Company is in compliance with the Secretarial Standards on Meetings of Board of Directors (SS - 1) and General Meetings (SS - 2) issued by The Institute of Company Secretaries of India.

23. GENERAL:

Your directors state that no disclosure or reporting is required for the following as there were no transactions of the types covered thereby, during the year;

i. Details relating to Deposits covered under Chapter V of the Act;

ii. Issue of equity shares with differential rights as to dividend, voting or otherwise;

iii. Issue of shares (including sweat equity shares) to employees of the Company under any scheme;

iv. No significant or material orders were passed by Regulators or Courts or Tribunals which impact the Companys going concern status and operations in the future;

v. No material changes and commitments have occurred after close of the year till the date of this report, which might affect the financial position of the Company;

vi. No fraud is reported by auditors under Section 143(12) of the Act;

vii. There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016; and

viii. There was no instance of one-time settlement with any Bank or Financial Institution.

Your directors further state that, the Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review there were no complaints filed under the said Act.

24. ACKNOWLEDGEMENTS:

The Board sincerely thanks all stakeholders for their continued support.

For and on behalf of the Board
Banwari Lal Jatia Piyushkumar Mehta
Managing Director Director
Dated: 12th August, 2021 (DIN: 00016823) (DIN: 08772311)