Hardcastle & Waud Mfg Co Ltd Directors Report.

DIRECTORS’ REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

Your Directors have pleasure in placing before you the Seventy-third Annual Report together with the Audited Financial Statements of the Company for the year ended March 31, 2019 and Management Discussion and Analysis.

1. FINANCIAL RESULTS AND APPROPRIATIONS:

Particulars Year Ended March 31, 2019 Previous Year March 31, 2018
(Rs Lakhs) (Rs Lakhs)
Profit before Interest, and Depreciation 56.78 169.64
Interest 0.31 -
Depreciation 37.74 39.33
Profit before Taxation 18.73 130.31
Provision for Taxation - 17.17
Deferred Tax 6.23 2.60
Income Tax for earlier years 0.52 1.42
Net Profit after Taxation 11.98 109.12
Other Comprehensive Income (8.61) 4.78
Total Comprehensive Income for the year 3.37 113.90
Balance b/f from previous year -876.61 -990.51
Total Available -873.24 -876.61
Transferred to General Reserve - -
Carried Forward -873.24 -876.61

In view of accumulated loss no dividend is being recommended.

2. OPERATIONS:

The Company has registered a turnover of र: 288.64 Lakhs this year as against र: 421.43 Lakhs during the previous year. The significant of 46.01% is due to lower revenue through investment activities. The Total Income for the year ended March 31, 2019 was at र: 308.61 Lakhs as compared to र: 434.13 Lakhs in the last year. Consequently, profit after tax for the current year stood at Rs 11.98 lakhs as againstर: 109.12 lakhs during the previous year. The Company hopes to perform better in the future.

3. MANAGEMENT DISCUSSION AND ANALYSIS:

The Company’s business activity currently consists of Industrial Chemicals, Investments and Leasing. During the year under review, revenue from industrial segment was र: 150.51 lakhs compared to र: 167.68 lakhs in the previous year, revenue from investments was र: 7.14 lakhs in comparison to र: 128.32 lakhs in the previous year, while leasing activity yielded a revenue of र: 130.99 lakhs as compared to र: 125.43 lakhs in the earlier year. Decrease in income from investment activity has affected overall performance of the Company.

The Company is focusing on increase in revenue and reduction in costs. Efforts are also continuously being made in looking out for other business opportunities. 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 departments 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 Company’s Human Resource Capital except superannuation of the Chief Financial Officer effective 1st January, 2019. Industrial relations continue to be cordial.

RATIOS

Key Financial Ratios

1. Interest Coverage Ratio was 61 which indicates strong financial health and capability of meeting interest obligations. During the earlier year (2017-18) there was no interest outgo due to NIL borrowing.

2. Similarly, Debt Equity Ratio was at 0.01 as compared to the previous year’s 0.00. The extremely low debt to equity ratio is indicative of strong ability to repay debt obligations.

3. Return on Net Worth decreased from 3.10% in 2017-18 to 0.09 during the current year due to decrease in profit after tax from र: 114 lakhs to र: 3 lakhs due to Fair Value measurements during the current year apart from fall in earnings from investment activity.

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a) At the 72nd Annual General Meeting (AGM) held on 27.09.2018, Mr Om Prakash Adukia (DIN: 00017001) was re-appointed as a director of the Company.

b) Also, members’ approval was accorded for continuation of appointment of Mr Om Prakash Adukia (DIN: 00017001) as a non-executive director of the Company, pursuant to regulation 17 (1A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

c) Mr Govind Prasad Goyal (DIN: 00017294) and Mrs Smita Jatia (DIN: 03165703) resigned as directors of the Company w.e.f. 11.07.2018.

("CFO") of the Company d) Duringtheyear,MrNarendraAbhichandani,ChiefFinancialOfficer retired effective from close of 31.12.2018.

Ms Shivani Bhargava has since been appointed in place of Mr Abhichandani as CFO of the Company w.e.f. 22nd April, 2019.

e) Mr Om Prakash Adukia (DIN: 00017001) retires by rotation at the ensuing AGM but being eligible offers himself for re-appointment.

Since Mr Adukia has already crossed age of 75 years a Special Resolution for his continued appointment as a non executive director of the Company is being proposed for consideration of the members at the ensuing Annual General Meeting of the Company in compliance with the requirement of Regulation 17 (1A) of the Listing Regulations.

f) 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.

g) Board Evaluation:

Pursuant to 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 Committee 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.

h) Meetings:

During the year 6 board meetings were convened and held.

5. AUDIT COMMITTEE:

Composition of the Audit Committee is given in the Corporate Governance Report, which forms part of this Report.

Board of Directors of the Company has accepted all recommendations of its Audit Committee during Financial Year 2018 2019. 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 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 and other employees, etc.

The Policy is available on the Company’s website www.hawcoindia.in under the section ‘Policies’.

7. RISK MANAGEMENT:

In the Boards’ perception, there are no foreseeable risks which could threaten the existance 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 Company’s 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 is 78 and 9650 respectively.

During the year no request for exchange of shares has been received by the Company.

The voting rights on these unclaimed shares 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 Company’s Agent.

9. AUDITORS:

The term of appointment of M/s GMJ & Co., Chartered Accountants, Statutory Auditors shall come to an end on conclusion of the forthcoming AGM.

In accordance with provisions of Section 139 of the Act, M/s GMJ & Co. are proposed to be re-appointed as statutory auditors of the Company for a further period of 5 years commencing from conclusion of the ensuing AGM till conclusion of the 78th AGM of the Company.

M/s GMJ & Co. have provided their consent to act as statutory auditors of the Company and have confirmed that their re-appointment, if made, will be in accordance with Section 139 read with Section 141 of the Act and applicable rules made there under.

Members are requested to re-appoint M/s GMJ & Co. as statutory auditors of the Company for a further period of 5 years and grant requisite authorization to fix their remuneration.

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, 2019 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 arm’s length basis.

During the year, the Company did not enter into any materially significant transactions Company.

14. FOREIGN EXCHANGE EARNINGS AND OUTGO:

There were no foreign earnings during the year, whereas the foreign exchange outgo was of र: 7,34,276.

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. EXTRACT OF ANNUAL RETURN:

An extract of the Company’s annual return for the year ended 31st March, 2019 in Form MGT-9 is annexed hereto as ‘Annexure III’. The same is also 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 stipulated in SEBI’s Listing Regulations is annexed to this Report as ‘Annexure IV’.

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

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

ACKNOWLEDGEMENTS:

The Board sincerely thanks all stakeholders for their continued support.

For and on behalf of the Board

Banwari Lal Jatia Om Prakash Adukia
Managing Director Director
Dated: 6th August, 2019 (DIN: 00016823) (DIN: 00017001)