Simplex Castings Ltd Directors Report.
Your Directors have pleasure in presenting the 39th Annual Report on the business & operations of the Company together with the Standalone and Consolidated Audited Financial Statement for the year ended 31st March 2019.
Financial results are presented in the table below: (Rs in Lacs)
|31st March, 2019||31st March, 2018||31st March, 2019|
|Revenue from Operations (Gross)||18297.82||22442.04||21313.00|
|Earnings Before Interest, Taxes, Depreciation and Amortization||396.11||2735.70||387.05|
|Less: Finance Costs||1371.93||1163.14||1372.05|
|Less: Depreciation and amortization expenses||1518.34||1244.58||1518.34|
|Profit Before Tax||(2494.16)||327.97||(2503.34)|
|Less: Tax Expense||(911.98)||(7.50)||(911.98)|
|Profit After Tax||(1582.18)||335.47||(1591.36)|
|Other Comprehensive Income||55.93||(103.08)||55.93|
|Total Comprehensive Income||(1526.25)||232.40||(1535.43)|
PERFORMANCE OF THE COMPANY
The Financial Year 2018-19 was yet another challenging year in view of US-China trade dispute and slowing international prices. The business sentiments and demand also had an impact during year under review in view of State and Central Government elections leading to slow down in the consumption and lower GDP growth. The steel prices remained volatile during the year.
During the year ended 31 March, 2019, the Company had registered a revenue from operations of Rs 18297.82 Lacs as against Rs 22442.04 Lacs during the year 2017-18.The
Profit Before Tax (PBT) and Profit After Tax (PAT) for the year 2018-19 were Rs (2494.16) Lacs and Rs (1582.18) Lacs respectively, as against Rs 327.97 Lacs and Rs 335.47 respectively during the previous year ended 31 March, 2018.
On a Consolidated basis, the total revenue from operations for the year 2018-19, was Rs 21313.00 Lacs . The PBT and PAT for the year 2018-19 were Rs (2503.34) Lacs and Rs (1591.36) Lacs.
The Directors do not recommend any dividend on Equity shares on account of loss incurred during the financial year ended 31st March , 2019.
TRANSFER TO RESERVES
There is no amount proposed to be transferred to reserves.
SUBSIDIARY, JOINT VENTURE (JV) AND ASSOCIATE COMPANIES
The Company has incorporated one Wholly owned Subsidiary Company named Simplex Castings International Pte Limited in Singapore on 12th September, 2018.The Company does not have any associate or joint venture company.
Your Company does not have any material subsidiary as per the thresholds laid down under the Listing Regulations, 2015. The Board of Directors of the Company has approved a Policy for determining material subsidiaries which is in line with the Listing Regulations,2015 as amended from time to time. The Policy has been uploaded on the Companys website viz www.simplexcastings.com.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company are prepared in accordance with relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and forms an integral part of this Report.
Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing silent features of the financial statements of Subsidiaries is given in Form AOC-1 which forms an integral part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed report on the Management Discussion and Analysis in terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided as a separate chapter in the annual report.
MATERIAL CHANGES AND COMMITEMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
The Board of Directors of the Company, at its meeting held on 26th April , 2019 approved to sell / dispose off its Steel Castings Foundry situated at Urla ,Industrial Estate, Raipur, Chhattisgarh -493221 to Texmaco Rail and Engineering Limited on a slump sale basis as a going concern for consideration of Rs. 87.50 crores (Rupees Eighty Seven Crores and Fifty Lacs only). In this relation ,the Company has entered into a Business Transfer Agreement with Texmaco Rail and Engineering Limited on 26th April,2019.
The Company is in significant debt and the objective of the sale of the Steel Castings Foundry would be reduce the debt burden of the Company. Texmaco Rail and Engineering Limited is a reputed house having experience in Steel and Rail Business and have shown interest in buying the Steel Castings Foundry. The net proceeds from the sale of the Steel Castings Foundry will be utilized to repay the existing loans and reduce interest burden, or enhancement of working capital of the Company for general business purposes.
The Consent of the Members have been received through Extra Ordinary General Meeting held on 29th May, 2019.
The Companys financial disciple and Prudence is reflected in the strong credit ratings ascribed rating agencies as given below:
During the year under review, your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with Companies (Acceptance of Deposits )Rules, 2014 (including any statutory Modification(s) or re-enactment(s) for the time being in force).
The Company has taken the requisite steps to comply with the recommendations concerning Corporate Governance. A separate statement on Corporate Governance together regardingwith a certificate compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There was no change in the nature of business of the Company during the Financial Year ended 31st March, 2019.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Cessation of Directorships
During the year due to Health issue, Mr. Kisan Ratilal Choksey(DIN: 00190931) and Mr Rajendra A Shah (DIN: 00266630) , Independent Directors of the Company, have resigned from the position of Board & from the position of Independent Director of the Company with effect from 4th October, 2018 and 9th February,2019. The Board appreciated the valuable services rendered by them during their tenure.
During the year, Mr. G Gopalswamy (DIN: 02101651) and Mr Piyush P Shah (DIN: 00199205) , Executive Directors of the Company, have resigned from the position of Board with effect from 16th October, 2018 and 31st December ,2018. The Board appreciated the valuable services rendered by them during their tenure.
Retirement of director by rotation
In accordance with the provisions of Section 152 of the Act and the Companys Articles of Association, Mr Ketan M Shah (DIN:00312343), Director retires by rotation at the forthcoming Annual General Meeting and, being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the forthcoming Annual General Meeting.
Brief profile of Mr Ketan M Shah has been given in the
Notice convening the Annual General Meeting.
Appointment of Directors
During the year under review, on the recommendation of Nomination and Remuneration Committee the Board of Directors in their meeting held on 9th February,2019 has appointed Mrs S M Swathi as an Additional Independent Director of the Company. The said appointment is till the ensuing Annual General Meeting. The Directors has proposed to appoint Mrs S M Swathi as Independent
Director the Company for a term of 5 (five) consecutive years which is subject to approval of Shareholders of the Company.
During the year under review, the Board of Directors on recommendation of the Nomination and Remuneration Committee reappointed Mrs Ushma Khabaria as an Independent Director on the Board of Directors of the Company in accordance with Section 149(4) of the Act, with effect from 1st October, 2019 to hold office for a second term of 5 (five) consecutive years subject to approval of members at the ensuing 39th Annual General Meeting. During the year under review, the Board of Directors on recommendation of the Nomination and Remuneration Committee reappointed Mrs Sangeeta K Shah as Managing
Director of the Company for a further period of five years with effect from October 1, 2019, subject to approval of members at the ensuing 39th Annual General Meeting. During the year under review, the Board of Directors on recommendation of the Nomination and Remuneration Committee appointed Mr Om Prakash Patel as Additional Director of the Company with effect from 14th December, 2018. The said appointment is till the ensuing Annual General Meeting. The Directors has proposed to appoint Mr Om Prakash Patel as Whole Time Director of the
Company for a term of 5 (five) consecutive years which is subject to approval of Shareholders of the Company.
KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel of the Company:
1. Mrs Sangeeta K Shah: Managing Director
2. Mr. J Suryam : Chief Financial Officer
3. Mrs D Meena : Company Secretary
During the year , Mr Avinash Hariharno has resigned from the position of Chief Financial Officer and in his place, the Board has approved the appointment of Mr J Suryam as Chief Financial officer of the Company with effect from 2nd November,2018.
Meeting the requirements of the statute and considering Board Performance Evaluation as an important step for a Board to transit to a higher level of performance, the Nomination and Remuneration Committee has laid down a comprehensive framework for carrying out the evaluations prescribed in the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The framework was developed to give all Board members an opportunity to evaluate and discuss the Boards performance openly from multiple perspectives and enhance governance practices within the Board. The framework describes the evaluation coverage and the process thereof.
A structured questionnaire each for evaluation was prepared and a separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board.
The performance evaluation of the Independent Directors was also carried by the entire Board. The performance evaluation of the Chairman, Managing Director & Executive Directors was carried out by the Independent Directors at its separate meeting held on 9th February, 2019. The Directors expressed their satisfaction with the evaluation process.
STATEMENT ON DECLARATION BY INDEPENDENT DIRECTOR:
All Independent Directors of the Company have given declarations as required under the provisions of Section 149 (7) of the Companies Act, 2013 stating that they meet the eligibility criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
FAMILIARISATION PROGRAMME OF INDEPENDENT DIRECTORS
The Company conducts Familiarization Programme for the Independent Directors to provide them an opportunity to familiarize with the Company, its Management and its operations so as to gain a clear understanding of their roles, rights and responsibilities and contribute significantly towards the growth of the Company. The initiatives undertaken by the Company in this respect has been disclosed on the website of the Company and can be accessed through the following link http://www. simplexcastings.com/ investors/notice announcements/ docs/ notices/2018-19/Familirisation-Programme-held- on-9th Feb, 2019.pdf
NOMINATION AND REMUNERATION POLICY
The remuneration paid to the Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force). The silent aspects covered in the Nomination and Remuneration Policy has been outlined in the Corporate Governance Report which forms part of this report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required under Section 197 of the Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force is set out in the Annexure-I to this report.
The Company does not have any employee, whose particulars are required to be given pursuant to the provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) &(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement containing the names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the aforementioned Rules are available for inspection at the Registered Office of the Company during business hours on any working day of the Company up to the date of 39th AGM.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) and Section 134(5) of the Companies Act, 2013 (including any statutory modifications or re-enactments thereof for the time being in force), the
Directors of the Company confirm that: a. in the preparation of the annual accounts for the financial year ended 31st March, 2019, the applicable Accounting Standards and Schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same; b. the Directors 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 as at 31st March, 2019 and of the profit and loss of the Company for the financial year ended 31st March, 2019; c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the Annual Accounts have been prepared on a going concern basis; e. proper internal financial controls laid down by the
Directors were followed by the Company and that such internal financial controls are adequate and operating effectively; and f. proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems are adequate and operating effectively.
MEETING OF BOARD AND COMMITTEES
The details of the meetings of the Board of Directors and its Committees, convened during the financial Year 2018-19 are given in the Corporate Governance Report which forms a part of Annual Report.
STATUTORY AUDITORS AND THEIR REPORT
M/s O P Singhania & Co, Chartered Accountants (Firm Registration No. 002172C), were reappointed as the Statutory Auditors of the Company for a period of 5 years in 38th Annual General Meeting on 21st September,2018 on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditors. Their appointment was subject to ratification by the Members at every subsequent
AGM held after the AGM held on 21st September,2018. Pursuant to the amendments made to Section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 effective from May 7, 2018, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn from the Statute.
Hence the resolution seeking ratification of the Members for continuance of their appointment at this AGM is not being sought.
Emphasis of Matter
During the year, the Company has started implementing the new accounting software i.e SAP but due to technical issues in the software and first year of implementation , the reconciliation of Bank Accounts was pending in SAP, however the management has ensured that there would not be any material impact on the balances after reconciliation.
The Company has implemented SAP-Hana, a leading ERP solution with effect from 1st April,2018 by switching over from existing customer ERP system. Posting of Reconciliation of Accounts in system were in progress as on 31st March,2019 due to first year of implementation and certain technical issue. Subsequently all the reconciliation were posted in the system and no material impact have been ascertain therein .
Observations and matters other than above made by the Statutory Auditors in their report for the Financial year ended 31st March, 2019 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under section 134(3) of the Companies Act, 2013.
COST AUDITOR AND THEIR REPORT
Pursuant to Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, your Company is required to get its cost accounting records audited by a Cost Auditor. Accordingly, the Board, at its meeting held on May 29, 2019, has on the recommendation of the Audit Committee, re-appointed M/s Arindam & Associates, Cost Accountants to conduct the audit of the cost accounting records of the Company for F.Y. 2019-20 on a remuneration of Rs 0.70 lacs plus taxes as applicable and out-of-pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification.
SECRETARIAL AUDITOR AND THEIR REPORT
In terms of Section 204 of the Companies Act, 2013, the Board of Directors of the Company at their meeting held on 29th May, 2019 has reappointed Satish Batra & Associates,
Practicing Company Secretary (Certificate of Practice No. 2875), as the Secretarial Auditor to conduct an audit of the secretarial records, for the financial year 2019-20. The Secretarial Audit Report for the financial year ended 31st March, 2019 is annexed herewith as Annexure II to this report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
The Statutory Auditors, Cost Auditor or Secretarial Auditor of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act, 2013, including rules made thereunder.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as on March 31, 2019 in the prescribed Form No. MGT-9, pursuant to Section 92 of the Companies Act, 2013 is appended as Annexure-III to this Annual Report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into by the Company during the year under review were on arms length basis and were in the ordinary course of business thus a Disclosure in Form AOC-2 in terms of Section 134 of the Act is not required. There are no materially significant related party transactions made by the Company with promoters, directors, key managerial personnel or related parties which may have a potential conflict with the interest of the Company at large.
Members may refer to Note No 38 to the financialstatement which sets out related party disclosures pursuant to Ind AS.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the Financial Year ended 31st March, 2019, no Loans and Guarantees under section 186 of the Companies Act, 2013 was made by the Company. Details of Loan, Guarantees and Investments are given in the notes to the financial statements.
The Company has alloted 1,47,000 Equity Shares to non promoters on 28th January,2019 subsequent to conversion of Convertible warrants issued on preferential basis on 28th March, 2018.The paid up Equity Share Capital as on 31st March , 2019 is Rs 613.12 Lacs.
Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; and does not have any ESOP Scheme for its employees/Directors. As on March 31, 2019, none of the Directors of the Company hold instruments convertible into Equity Shares of the Company.
LISTING OF SHARES
Presently the Companys shares are listed on Bombay Stock Exchange. The listing and Trading approval of 1,47,000 Equity shares has been received from Bombay Stock exchange on 11th April, 2019 and 29th May, 2019 respectively.
The Delisting application is pending before delisting Committee at Delhi Stock Exchange. The Company is also listed on Calcutta Stock Exchange but trading is suspended.
The Company has in place comprehensive risk assessment and minimization procedures, which are reviewed by the Board periodically. The Company has been addressing various risks impacting the Company.
DISCLOSURE ON AUDIT COMMITTEE
The Audit Committee as on 31st March, 2019 comprises of the following Independent Directors: Mr Champak K Dedhia (Chairman), Ms Ushma Nitin Khabaria and Mrs S. M Swathi as Members.
The Board has accepted all recommendations made by the Audit Committee during the year.
A Vigil Mechanism Policy for Directors and employees of the Company is constituted, to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on rising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.
All employees of the Company have access to the Chairman of the Audit Committee in case they want to report any concern. The Policy on Vigil Mechanism is available on your Company website.
During the year under review, the Company has not received any complaints under the Mechanism.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the Corporate Social Responsibility (CSR) Policy of the company and the initiatives undertaken by the company on CSR activities during the year are set out in Annexure IV of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014.
The Policy is available on the website of the Company i.e www.simplexcastings.com.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo required to be given pursuant to Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure - V to this report.
INTERNAL FINANCIAL CONTROL
Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitized and embedded in the business processes.
Assurance on the effectiveness of internal financial controls is obtained through management reviews, control self-assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS
There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its operation in future.
TRANSFER OF UNPAID OR UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND
During the year, dividend amounting to Rs 4.73 lacs that had not been claimed by the shareholders for the year ended 31stMarch, 2011, was transferred to the credit of Investor Education and Protection Fund as required under Act. As on 31st March, 2019, dividend amounting to Rs 14.37 lacs has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrar, Link Intime India Pvt Ltd., for unclaimed dividend. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on 21st September , 2018 (date of the last Annual
General Meeting) on the website of the Company, www. simplexcastings.com.
The list of equity shareholders whose shares are transferred to IEPF can be accessed on the website of the Company at below mentioned link: http://www.simplexcastings.com/investors/shareholders-information.
The Company has sent notices to respective shareholders who have not claimed dividend for 7 (seven) consecutive years and whose shares are liable to be transferred to
IEPF. During the financial year 2019-20. The newspaper advertisement stating the same has also been published in the newspapers. The list of equity shareholders whose shares are liable to be transferred to IEPF can be accessed on the website of the Company at below mentioned link: http://www.simplexcastings.com/investors/shareholders-information.
HUMAN RESOURCE AND INDUSTRIAL RELATIONS
Your Company believes that its employees are one of the most valuable assets of the Company. During the year under review, the Company organised various training programs at all level to enhance skill of the employees. The employees are deeply committed to the growth of the Company.
COMPLIANCE OF SECRETARIAL STANDARD:
Your Company have complied with all Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by Central Government from time to time.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
During the year under review, there was no complaint received pursuant to the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companys executives, staff and workers.
|Ketan M Shah||For and on behalf of the Board of Directors|
|Chairman||Sangeeta K Shah|
|Place : Raipur||DIN:05322039|
|Date : 12.08.2019|