Uni Abex Alloy Products Ltd Directors Report.

To,

The Members

The Directors have pleasure in presenting herewith their Forty Sixth Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2019.

OPERATIONS AND FINANCIAL RESULTS

SUMMARY OF FINANCIAL RESULTS AS PER IND-AS

(Figures in Rs. Lakhs)

Particulars 2018-19 2017-18
Gross Sales 8986.07 8234.35
Less: Excise Duty - 136.84
Net Sales 8986.07 8097.51
Add: Other income 77.63 223.14
Total income 9063.70 8320.65
Profit before Depreciation 1315.09 661.40
Less: Depreciation 467.14 498.02
Profit before Tax 847.95 163.38
Less: Exceptional items - -
Less: Income Tax for Current Year - -
Less: Income Tax adjustment for previous years - 26.47
Less: Deferred Tax adjustment (92.99) -
Less: Other Comprehensive Loss 3.13 0.69
Profit After Tax 937.81 136.22
Balance brought forward 2105.92 2005.36
Profit Available for Appropriation 3043.73 2141.58
Proposed Dividend on Equity Shares 138.25 29.63
Dividend Tax on the above 28.42 6.03
Transferred to General Reserve NIL NIL

DIVIDEND / RESERVES

Your Directors recommend a dividend of Rs. 7.50/- per Equity share of nominal value of Rs. 10 each (i.e. 75 %) for the year ended March 31, 2019 as against Rs. 1.50/- (i.e. 15%) paid for the previous year. The total outgo towards dividend on equity shares together with dividend tax amounts to Rs. 166.67 Lakhs.

OPERATIONS

The capital goods sector showed some recovery during the year. However the OEM segment showed remarkable growth of 29% during the year under review. Your Company achieved its highest ever order booking in its history as also for the non OEM segments. Your Company has established itself in the MRO business in the domestic segment and going forward the Company is making efforts to make inroads in the global markets as well. A significantgrowth was witnessed in both domestic and export market segments. Despite the pressure of rising material prices, your Company could mitigate the cost impact by effective capacity utilization, cost reduction initiatives and better product mix. PBIDT for the year under review is Rs. 16.97 Crs as against Rs. 9.43 Crs of the previous year.

Your Company reported a profit after tax ofRs. 9.38 Crs in the current fiscal as againstRs. 1.35 Crs during the last year.

WORKING CAPITAL MANAGEMENT: ratios of the Company include Net Working Capital to Sale of 33.50% (PY 21.44%), Inventory Thesignificant to Sales of 26.23% (PY 20.71%), Receivables to Sales of 26.14% (PY 25.49%)

Debtors Turnover was 4.04, Inventory Turnover was 1.72, Interest Coverage was 3.21, Current Ratio 1.10, Debt Equity was 0.60. Significant improvement in Opeating Profit Margin which was 19% and Net Profit Margin was 10% as against previous year 9% and 2% respectively.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an adequate system of internal controls in all spheres of its operations which are commensurate with the size and the nature of its business. Your Company has in place adequate controls on resource utilization, and provision of accurate and speedy financial statements. Your Company ensures compliance with policies and procedures and other statutory and legal obligations on an ongoing basis. Your Companys Internal Financial Controls on its entire processes have been vetted by the Statutory Auditors. Internal control is supplemented by effective and independent internal audit. Management regularly reviews the findings of the Internal Auditors and ensures effective implementation of suggestions/observations of the Internal Auditors. In addition, the Audit Committee of the Board regularly addresses significant issues raised by the Internal and the StatutoryAuditors.

PROSPECTS

The Company during the year was successful in developing some new customers and products in Europe and expects to expand its portfolio in both domestic and exports market for its future growth. The Company is looking forward for an improvement in the domestic demand due to several infrastructure projects expected to be undertaken by the new Government. This will revive industrial growth in the capital goods sector and benefit us. The Company plans to target new product addition, new customer acquisitions and extended geographical reach.

QUALITY MANAGEMENT

The Company has set high benchmarks on quality and on time delivery, providing competitive edge in current business scenario. The Companys operations continued to be certified to ISO 9001:2015.

ENVIRONMENT, HEALTH AND SAFETY

As part of its commitment towards environment, the Company has developed an Environmental Management System along with workplace practices to ensure high level of safety, health and environmental standards. The Companys operations continued to be certified to ISO 14001:2015 & OHSAS 18001:2007.

HUMAN RESOURCE MANAGEMENT

Skill development and training both behavioral and domain based are ongoing exercises through focused HR processes. Relations between employees and the management continue to remain cordial.

MATERIAL DEVELOPMENTS ON HUMAN RESOURCES INCLUDING NUMBER OF PEOPLE EMPLOYED

As on 31st March 2019, the total numbers of permanent employees on the payrolls of the Company at all the locations were 100. The ratio of the remuneration of each Director to the median employees remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as under:

PARTICULARS OF EMPLOYEES:

1. Name of the Employee K. K. Tamhaney
2. Designation of the Employee Chief Executive Officer
3. Remuneration received 70,87,060
4. Nature of employment Full time
5. Qualifications and Experience of the employee B. Tech, (Metallurgical Engineering)
6. Date of commencement of employment 10.09.2009
7. The age of employee 56
8. The last employment held by such employee before joining the Company GM – Operations - Mahindra Hinoday Industries Limited
9. The percentage of equity shares held by the employee in the Company NIL
10. Whether any such employee is a relative of any director or manager of the Company NIL

PARTICULARS OF DIRECTORS REMUNERATION:

The ratio of the remuneration of each director to the median remuneration of the employees

Name of Director/ KMP and Designation Remuneration of Director/ KMP for financial year 2018-19. Previous years Remuneration includes sitting Fees % increase/ decrease in Remuneration in the Financial year 2017-18 Ratio of Remuneration of each Director to median remuneration of employees Comparison of the remuneration of the KMP against the performance of the Company
1 F. D. Neterwala – Chairman 400000 450000 -11.11% 0.77 : 1.0 -
2 R. B. Mehta – Director 120000 260000 -53.85% 0.23 : 1.0 -
3 A. F. Neterwala – Director 200000 150000 33.33% 0.38 : 1.0 -
4 P. F. Neterwala – Director 100000 200000 -50.00% 0.19 : 1.0 -
5 M. K. Fondekar – Director 200000 250000 -20.00% 0.38 : 1.0 -
6 H. R. Prasad – Director 430000 520000 -17.31% 0.82 : 1.0 -
7 F. K. Banatwalla – Director 430000 520000 -17.31% 0.82 : 1.0 -
8 M. P. Bharucha* – Director 50000 150000 -66.67% 0.10 : 1.0 -
9 Jimmy Parakh – Director 410000 410000 NIL% 0.79: 1.0 -

*Mr. M. P. Bharucha resigned as a Director wef 21.11.2018.

The sitting fees for attending the Board Meeting of Rs. 50, 000/- For attending Audit Committee Rs. 50,000/-. For attending all the Committee Meetings is Rs. 10,000/- (except Stakeholders Relationship Committee – NIL).

PARTICULARS OF DIRECTORS REMUNERATION:

The percentage increase in remuneration of:
Chief Executive Officer 13.02%
Chief Financial Officer 12.05%
Company Secretary 10.00 %
Median remuneration of employees 5.26Lakhs
Number of permanent employees on the rolls of company 100
Explanation on the relationship between average increase in remuneration and company performance The average increase in median remuneration was in line with the increase of salary in the industry.
Comparison of the remuneration of the Key Managerial personnel against the performance of the company Sales and Operating Income for the year ended March 31, 2019 is Rs. 90.63 Crore and PBIDT is Rs. 16.97 Crore.
Detailsof%increaseofKMPhasbeenstatedabove.Increase in the remuneration of KMP is in line with prevailing scales for similar positions in the industry and commensurate with the operating income and & performance of the Company under severe constraints.
Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year earnings ratio of the Company as at March 31, 2019 and as Percentage increase/decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer The market capitalization as on March 31, 2019 was Rs. 85.9125 Crore (Rs. 117.11 Crore as on March 31, 2018) price at March 31, 2018 was 9.13 and 86.19 respectively. The Company has not made any public issue or rights issue of securities in the recent past, so comparison have not been made of current share price with public offer price.
Average percentage increase made in the salaries of employees other than the key managerial personnel in the last financial year i.e. 2018-19. The Companys shares are listed on the BSE Limited. 11.7 %
Average percentage increase in the managerial remuneration compared to average percentage increase in average salary of other employees. Not Applicable as there is No Executive Director.
Justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration Not Applicable as there is No Executive Director.
The key parameters for any variable component of remuneration availed by the Directors There are no variable component of remuneration availed by the Directors.
The ratio of the remuneration of the highest paid Director to that of the employees who are not Not applicable
Directors but receive remuneration in excess of the highest paid Director during the year remuneration Affirmation is as per the remuneration policy of the company It is hereby affirmed that the remuneration paid is as per the remuneration policy for Directors, Key Managerial Personnel and other employees.

DIRECTORS

(i) In terms of the provisions of Sections 149, 150, 152 and other applicable provisions of the Companies Act, 2013 and the Rules made thereunder, Mr. H. R. Prasad, Mr. M. P. Bharucha, and Mr. F. K. Banatwalla (Independent Directors) have been appointed at the 41st Annual General Meeting of the Company held on 20th August, 2014, to hold office as Independent Directors of the Company for a period of 5 years i.e. upto 31 st March, 2019. Mr. M. P. Bharucha resigned as a Director of the Company with effect from 21.11.2018 citing his personal reasons. Mr. H. R. Prasad and Mr. F. K. Banatwalla (Independent Directors) were reappointed as Independent Directors for 2nd term of 5 years commencing from 01.04.2019 to 31.03.2024 by passing a Special Resolution approved by the Members of the Company Postal Ballot.

Mr. J. J. Parakh (Independent Director) was appointed in the 44th Annual General Meeting of the Company held on 4th August, 2017, to hold office as Independent Director of the Company for a period of 5 years i.e. upto 31st March, 2022

(ii) Pursuant to the provisions of Section 152 (6) of the Companies Act, 2013 and the Rules made thereunder, Mr. A. F. Neterwala (DIN: 01418744) and Mr. R. B. Mehta (DIN: 00057570) retire by rotation at the ensuing Annual General Meeting.

(iii) Pursuant Section 149 (6) and all other applicable provisions of the Companies Act, 2013 and the rules made thereunder, Mr. M. K. Fondekar (DIN: 01089689) who was appointed as a Professional Director of the Company on 20th August, 2015 who was liable to retire by rotation; meets the criteria for being appointed as an Independent Director of the Company for a period of 5 years commencing from 08.08.2019 to 07.08.2024 subject to approval of the Members of the Company at the ensuing General Meeting.

COMMITTEES OF THE BOARD

In terms of the Provision of the Companies Act, 2013 as applicable to Listed Companies, the following Committees of the Board have been duly constituted

I. Audit Committee:

The Audit Committee Members as at March 31, 2019 comprised of:

Name of Director Category
Mr. F. K. Banatwalla Chairman & Independent Director
Mr. F. D. Neterwala Promoter – Non Executive Director
Mr. H. R. Prasad Independent Director
Mr. Jimmy Parakh Independent Director

The information generally provided to the Committee for its consideration and approvals include:

- Quarterly, half yearly and annual financial results of the Company and performance report on its business segments;

- annual budget and performance targets;

- appointment of statutory and internal auditors;

- appointment of key managerial personnel;

- review of foreign exchange exposures and exchange rate movement, if material;

- contracts in which Director(s) are interested or deemed to be interested;

- Defaults in payment of statutory dues, if any;

- compliance of various laws and Indian Accounting Standards – IND-AS;

- Any remarks/ observances/ findings made by the Statutory and InternalAuditors of the Company;

- Making of loans and investment of surplus funds;

- whistle blower policy /vigil mechanism

During the Financial Year 2018-19, 4 Meetings of the Audit Committee were held.

II. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee as at March 31, 2019 comprised of:

Name of Director Category
Mr. H. R. Prasad Chairman & Independent Director
Mr. R. B. Mehta Promoter – Non Executive Director
Mr. F. K. Bamnatwalla Independent Director

The Committee frames the Remuneration Policy and recommends remuneration / revision / merit increment and related matters of the Executive Director, Chief Executive Officer, Chief Financial Officer, Company Secretary and Senior Executives.

During the year 2018-2019, 2 Meeting of the Nomination and Remuneration Committee were held.

III. Stakeholders Relationship Committee

The composition of the Stakeholders Relationship Committee as at March 31, 2019 is as under:

Name of the Director Category
Mr. F. D. Neterwala Non-Executive Director
Mr. R. B. Mehta Non-Executive Director
Mr. A. F. Neterwala Non-Executive Director
Mr. Jimmy Parakh Non-Executive Independent Director
(appointed on 13.11.2018)

The Committee meets as often as necessary. In accordance with the authority granted by the Board/Share Transfer Committee, deals with the following matters concerning shareholders, on fortnightly basis.

- Transfer/Transmission/Deletion/Name change of physical shares

- Split/Sub-division, consolidation and duplicate share certificates of physical shares as approved by the Board.

Re-materialisation of Shares.

IV. Corporate Social Responsibility Committee (CSR):

Pursuant to the provisions of the Section 135 of the Companies Act, 2013 and the rules made thereunder regarding Corporate Social Responsibility became applicable to the Company. The composition of the CSR Committee as at March 31, 2019 is as under:

Name of the Director Category
Mr. F. D. Neterwala Non-Executive Director
Mr. H. R. Prasad Independent Director
Mr. A. F. Neterwala Non-Executive Director

The Committee frames the CSR Policy of the Company; identifiesthe projects which the Company can undertake towards the CSR initiatives and recommends the same to the Board of Directors for their approval. Mr. M. S. Ashar, Company Secretary functions as the Secretary to all the above Committees.

BOARD MEETINGS:

During the period from 1st April, 2018 to 31st March, 2019, Four Meetings of the Board were held as under:

- 23rd May, 2018

- 13th August, 2018

- 13th November, 2018

- 11th February, 2019

BOARD EVALUATION:

The formal evaluation procedure for evaluation by the Board of its own performance and that of its Committee and Individual Directors was done The meeting of the Independent Directors of the Company was held on 28th May, 2019.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Directors, based on the representations received from the Operating Management, confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) In consultation with the Statutory Auditors, appropriate accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit for year ended on that date;

(c) To the best of their knowledge and ability, proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the applicable provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, if any;

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

(e) The Directors have laid down internal financial controls in respect of policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to the Companys policies, the safe guarding of its assets, the accuracy and completeness of the accounting records and timely preparation of reliable financial information and such internal controls are adequate and are operating effectively.

(f) The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

ABSTRACT OF ANNUAL RETURN:

Pursuant to the provision of Section 134 (3) (a) of the Companies Act, 2013 an abstract of the Annual Return for 2018-19 in the prescribed formation is attached (Annexure I) and forms an integral part of the Report.

DECLARATION BY INDEPENDENT DIRECTORS:

Pursuant to Section 149 (7) of the Companies Act, 2013 each of the Independent Director of the Company, has given a declaration at the Board Meeting of the Company held on 28th May, 2019 (being the first Board Meeting of the financial year 2019-20) to the effect that he meets the criteria of Independence as provided in Section 149 (b) of the Companies Act, 2013.

COMPANYS POLICY ON DIRECTORS APPOINTMENT, REMUNERATION ETC:

The Nomination and Remuneration Committee of the Board is evolving a policy on appointment and remuneration and other matters as provided in Section 178 (3) of the Companies Act, 2013. Any further appointment of Executive Directors and his remuneration or appointment of an Independent Director would be based on the policy that is being evolved.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

The Company has not provided any loans or given any guarantee / security to any person.

Details of Working Capital facilities and Term Loans obtained by the Company are provided in the Notes no. 22 and 19 in the Notes to financial statement. Details of investment made by the Company are provided in Note no 7 in the Notes to Financial Statements, under Investment Schedule. These Investments are made by the Company in ordinary course of business, out of the surplus funds presently available with the Company, with a view to get an effective return.

PARTICULARS OF CONTRACTS AND ARRANGEMENTS COVERED UNDER SECTION 188 OF THE COMPANIES ACT, 2013:

Your Company has formulated a policy on related party transactions. This policy deals with the review and approval of related party transactions. The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arms length. All related party transactions are placed before the Audit Committee for review and approval.

All related party transactions entered during the Financial Year were in ordinary course of the business and on arms length basis. No material related party transactions were entered during the Financial Year by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company.

There are nosignificantrelated materially 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.

Members may refer to note no. 36 to the financial statement which sets out related party disclosures pursuant to IND- AS - 24.

CONSERVATION OF ENERGY, TECHNOLOGY & FOREIGN EXCHANGE EARNINGS AND OUTGO.

The particulars required to be disclosed pursuant to Section 134 (3) of the Companies Act, 2013 read with rule 8 of the Companies (Accounts) Rule, 2014 are given in Annexure II, and is an integral part of this Report.

RISK MANAGEMENT POLICY:

The Board of Directors has identified and mitigated risks that may arise. However the executive Management has an adequately defined framework for risk management. The Company, like all business in the country, is exposed to business and economic risk arising out of market conditions and vagaries of monsoon.

CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

The Company has formed a Committee of the Board of Directors which have been entrusted with the powers to identify the CSR activities. The Committee has shortlisted certain projects. Due to the loss in the in FY 2015-16, 2016-17, and profit after tax of Rs. 1.35 Crore in FY 17-18; provisions of Section 135 of the Companies Act, 2013 are not applicable to the Company and hence the Company has not incurred any expenditure towards the CSR activity.

CORPORATE GOVERNANCE:

As per circular No. CIR/CFD/POLICY/CELL/7/2014 dated 15th September, 2014, the compliance with the provisions of Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements), 2015 is not mandatory for the Company. Nevertheless the Company has been complying the provisions on voluntary basis.

The Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the SEBI (Listing Obligation & Disclosure Requirements), 2015 of the Bombay Stock Exchange Limited with which the Company is listed are complied with. A separate report on Corporate Governance is attached as a part of the Annual Report along with the Auditors statement on its compliance.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

The Board of Directors of the Company has established a robust vigil mechanism process and to govern the same well defined whistle blower policy has been adopted by the Company.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti-Sexual Harassment Policy since 2009 as per the Supreme Court Guidelines which is in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2018-19.

- No of complaints received: NIL

- No of complaints disposed off: N.A.

STATUTORY AUDITORS:

As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, The Members of the Company at the 44th Annual General Meeting of the Company held on 4th August, 2017 had appointed Messrs. Walker Chandiok and Company, LLP (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company, to hold office for a period of 5 (Five) consecutive financial years, from the conclusion of the Forty Fourth Annual General Meeting of the Company until the conclusion of the Forty Ninth Annual General Meeting of the Company. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder.

The Report given by Messrs. Walker Chandiok and Company, LLP (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company on the financial statement of the Company for the year 2018-19 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.

During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

INTERNAL AUDITORS:

M/s. Engineer & Mehta, Chartered Accountants, Mumbai are the Internal Auditors of the Company. In a year they carry out 3 Internal Audit Runs which are is commensurate with the size of the Company, and nature of its business.

SECRETARIAL AUDIT:

The Company had appointed M/s. Kaushik M. Jhaveri & Co., a firm of Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the FY 2018 – 19 is annexed herewith as "Annexure III There are no reservations or qualifications made in the

The Company has obtained a Secretarial Compliance Report pursuant to Regulation 24A of SEBI (Listing Obligation and Disclosure requirement) Regulation, 2015 for FY 2018-19 is annexed herewith as Annexure IV. There are no reservations or qualification made in this report.

The Company has obtained certificate pursuant to Regulation 34(3) and schedule V para C clause 10(i) of SEBI(Listing Obligation and Disclosure requirement) Regulation, 2015 for certifying that none of the Directors of the Company are debarred or disqualified for being appointed as a Director for the Financial yera ending 31st March, 2019 is annexed here with as Annexure V.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. P. Naithani & Associates, a firm of Practicing Company Secretaries to undertake the SecretarialAudit of the Company for FY 2019-20.

APPRECIATION:

Your Directors place on record their appreciation of the continued support and co-operation extended to the Company by the Central and State Government agencies, and by our Shareholders, Customers, Suppliers, Bankers, Employees at all levels, Employees Union and other Business Associates.

CAUTIONARY NOTE:

Certain statements in the Directors Report and Management & Discussion Analysis section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.

On Behalf of the Board of Directors
Place: Mumbai F. D. Neterwala
Date: 28th May, 2019. Chairman