To,
The Members of EMCO Limited,
The Directors present the 51st Annual Report on the business and operations of the Company together with the Consolidated and Standalone Audited Financial Statements for the year ended 31st March 2016.
Financial Summary/Highlights
During the year under review, the financial performance of the Company is as under:
(Amounts in Rs, Lakhs)
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Particulars
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Standalone
|
|
2015-16
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2014-15
|
|
Total Income
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80,683.94
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91,243.29
|
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Profit / (loss) Before Taxation
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(3,671.31)
|
607.02
|
|
Less: Provision for Tax - Current
|
|
179.57
|
|
Deferred Tax
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(1,131.73)
|
263.31
|
|
Earlier Year Tax
|
|
18.26
|
|
MAT Credit Entitlement
|
|
(179.57)
|
|
Profit After Taxation
|
(2,539.58)
|
325.45
|
|
Add: Balance brought forward from previous year
|
21,209.02
|
20,964.91
|
|
Profit Available For Appropriation
|
18,669.44
|
21,290.36
|
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APPROPRIATIONS:
|
|
|
|
Proposed Dividend
|
|
67.58
|
|
Tax on Proposed Dividend
|
|
13.76
|
|
Balance carried to Balance Sheet
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18,669.44
|
21,209.02
|
|
TOTAL APPROPRIATION:
|
18,669.44
|
21,290.36
|
Overview of Company's Financial Performance
During the year under review, Income from Sales and Services of the Company was stood at Rs, 80,684 Lakhs against Rs, 91,243 Lakhs in the previous financial year.
The Company has incurred a net Loss of Rs, 2,540 Lakhs in the current financial year against the net profit of Rs, 325 Lakhs in the previous financial year.
Transfer to reserves
During the financial year under review, the Company did not transfer any amount to reserve.
Dividend
Considering the loss incurred during the year under review, your Directors have not recommended any dividend.
Share Capital
The paid up equity shares capital of the Company is Rs, 13,51,51,770/- divided in to 6,75,75,885 shares of face value of Rs, 2/- per share. During the year under review, the Company has not allotted any shares to directors and employees of the Company and therefore disclosure under Section 67(3)(c) of the Companies Act, 2013 ("Act") in respect of voting rights not exercised directly by the employees of the Company is not required.
Update on Scheme of Arrangement
During the year under review, in accordance with the direction of the Hon'ble High Court of Bombay vide its order dated 16th October, 2015, the Members of the Company at the Court Convened Meeting held on 17th November, 2015 approved the Scheme of Arrangement between EMCO Limited and its wholly owned subsidiary Company EMCO Infrastructure Ltd ("EIL") and their respective shareholders and creditors providing for sale and transfer of the Infrastructure Undertaking of the EMCO Limited to EIL. However, on account of change in market conditions related to Infrastructure business and lack of interest shown by investors in Infrastructure Sector globally and particularly in India, the Board of Directors of the Company at their meeting held on 9th February, 2016 withdrew the said Scheme of Arrangement. In view thereof, the Hon'ble High Court on 1st of April, 2016 passed the order as the Scheme withdrawn.
Change in the nature of business
There was no change in the nature of business of the Company during the financial year under review.
Public Deposits
During the financial year 2015-16, your Company has not accepted any deposit within the meaning of Section 73 and Section 74 of the Act read together with the Companies (Acceptance of Deposits) Rules, 2014 and any amendment thereof.
Subsidiaries and Joint venture Companies
As per the provisions of Section 136 of the Act, the Annual Audited Financial Statement of each of the subsidiaries of the Company are displayed on the website of the Company. If any Member of the Company so desires, the Company will be happy to make available the Annual Audited Accounts of the subsidiaries to him/her on request. The physical copy of the said documents will also be available at the Company's registered office for inspection, during normal business hours on all working days, excluding Saturdays.
During the year under review, the Company incorporated a wholly owned subsidiary in UAE in the name of 'EMCO Global DMCC'. The said wholly owned subsidiary is likely to start its activities in the year to come.
Consolidated Accounts
The performance and financial position of each of the Subsidiaries, Associates and Joint venture companies are detailed in Statement containing salient features of the financial statement of subsidiaries/ associate companies/ Joint Ventures" in form AOC- I which is prepared pursuant to Section 129 of the Act and annexed herewith as Annexure- A.
Directors and Key Managerial Personnel
Pursuant to the provisions of Section 152 of the Act, and in accordance with the Articles of Association of the Company, Mr. Shailesh S. Jain (DIN:00006180), Non Executive Director designated as Vice-Chairman of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
During the year under review, Mr. S. V. Deo (DIN: 00210554), Mr. Bherulal Choudhary (DIN:00011905) and Mr. Sanjay Bhatnagar (DIN: 00867848), Independent Directors of the Company completed their first term of appointment and they were appointed as Independent Directors of the Company for their second term for a period of five years by members of the Company by passing special resolution for each of them at the 50th Annual General Meeting held on 25th September, 2015.
Similarly, Mrs. Priyamvada Bhumkar (DIN:00726135) was regularized as Director and appointed as Independent (Woman) Director for her first term of five years at the 50th Annual General Meeting held on 25th September, 2015
Declaration by Independent Directors
The Company has received declaration of Independence under Section 149(7) of the Act, that he/she meets the criteria of Independence laid down in Section 149(6) of the Act, and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future
During the financial year under review, there were no such orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future.
Adequacy of Internal Financial Control
The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding the assets, the prevention and detention of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosure.
Composition of Audit Committee
The Audit Committee comprises of four Non-Executive Directors and all are independent Directors. The Chairman and other Members of the Committee are having ability to read and understand financial statement. All members have knowledge of finance, accounting and law. Composition of the Audit Committee during the financial year 2015-16 is as follows:
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Sr. No.
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Name of the Committee Members
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Designation
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|
1.
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Mr. Sanjay Bhatnagar
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Chairman
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2.
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Mr. S. V. Deo
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Member
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3.
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Mr. Bherulal Choudhary
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Member
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|
4.
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Mrs. Priyamvada Bhumkar
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Member
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There were no matters during the financial year 2015-16 wherein the Board did not accept recommendations given by the Audit Committee.
Establishment of Vigil Mechanism
The Company has established and adopted Vigil Mechanism and the policy thereof for directors and employees of the Company in accordance with the provisions of the Act as well as the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the year under review, no personnel of the Company approached the Audit Committee on any issue falling under the said policy.
The vigil mechanism policy is available on the website of the Company at link: http://www.emco.co.in/pdf/policy/Vigil%20 Mechanism%20Policy.pdf
Particulars of remuneration to Directors and Employees
Pursuant to Section 197(12) of the Act read along with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the particulars of remuneration to the Directors and Employees of the Company are annexed with the report as Annexure- B.
Management Discussion and Analysis
The Management Discussion and Analysis forms part of the Directors' Report is annexed herewith as Annexure C.
AUDITORS a) Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the Companies (Audit & Auditors ) Rules, 2014, M/s. P. Raj & Co.(FRN: 108310W) and M/s. Chaturvedi & Shah (FRN: 101720W), practicing Chartered Accountants, Joint Statutory Auditors of the Company were appointed for their second term for the period of 2 years and 5 years respectively at the 50th Annual General Meeting held on 25th September, 2015. However, their appointment as Statutory Auditors of the Company shall be required to be ratified by the Members at the ensuing Annual General Meeting. The Company has received confirmation certificate from them that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company.
b) Secretarial Auditors
M/s. Makarand M. Joshi & Co. Practicing Company Secretaries, had been appointed as Secretarial Auditor of the Company to conduct Secretarial audit for Financial Year 2015-16, as required under Section 204 of the Act and rules made there under. Secretarial Audit Report issued by M/s. Makarand M. Joshi in form of MR-3 for Financial Year 2015-16 annexed herewith as Annexure- D.
c) Cost Auditors
Pursuant to the provisions of Section 148(1) of the Act, the Company maintains Cost records. M/s. Kishore Bhatia & Associates (FRN: 00294), Cost Accountants, were appointed as Cost Auditors of the Company for the financial year ended 31st March, 2017 at a remuneration of ' 2,25,000/- per annum plus service tax and reimbursement of out of pocket expenses that may be incurred. The Cost Audit Report or Compliance certificate in this regard to be obtained from Cost Accountants for the year ended 31st March, 2016. Your Directors recommend to ratify remuneration payable to him for the year ended on 31st March, 2017
d) Internal Auditors
Based on recommendation made by the Audit Committee, M/s. Rahul Birla & Company (FRN: 122589W), Chartered Accountants were appointed as Internal Auditors of the Company for financial year 2016-17.
Explanations by the Board on qualifications, reservation or adverse remark or disclaimer made by the Auditors in their report
- Auditors in their report
There were no qualification, reservation, disclaimer and adverse remarks made by the Auditors of the Company in their audit report.
- Company secretary in practice in his secretarial report
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Sr.
No.
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Observation
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Reply to the observation
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|
1.
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The Company has made delay in filing of Form -APR with respect to Overseas Direct Investment.
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The delay in filing of Form - APR was inadvertent on the part of the Company.
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Employees Stock Option Scheme (ESOS)
Human Resource is the essential resource for the growth of the Company and man power is the strength for achieving mission of the Company. Based on this view, your Company has framed following Employee Stock Option Schemes for the financial growth of employees of the Company.
1) Employees Stock Option Scheme, 2006
2) Employee Stock Option Scheme, 2011
3) Employee Stock Option Scheme, 2015
Pursuant to provisions of the SEBI ( Share Based Employee Benefits) Regulations, 2014 the detail statement of above mentioned options Schemes as on 31st March, 2016 are as given below:
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Sr No.
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Particulars
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ESOS 2006
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ESOS 2011
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|
a.
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Option Granted
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3,99,850 options
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25,90,000 options
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b.
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Pricing Formula
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Options have been granted at the closing market price of the equity shares of the Company one day prior to the date of grant.
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Options have been granted at the closing market price of the equity shares of the Company one day prior to the date of grant.
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|
c.
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Option vested
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16,000 options
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3,50,000 options
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|
d.
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Option exercised
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38,000 options
|
-
|
|
e.
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Total number of ordinary shares arising out of the Options
|
1,90,000 Shares
|
-
|
|
f.
|
Options lapsed
|
3,51,170 options
|
16,09,900 options
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|
g.
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Variation of terms of Options
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N.A.
|
N.A.
|
|
h.
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Money realized by exercise of the options
|
Rs,171 Lakhs
|
-
|
|
i.
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Total number of options in force
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10,680 options
|
17,80,100 options
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|
j.
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(i) Detail of option granted to senior management personnel
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Name of employees are not disclosed in view of sensitivity involved
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Name of employees are not disclosed in view of sensitivity involved
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| |
(ii) Any employee who receive in any one year of grant of options amounting to 5% or more of options granted during the year
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N.A.
|
N.A.
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| |
(iii) Employees who were granted options during any -one year, equal to or exceeding 1% of the issued capital of the Company at the time of the grant
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|
|
k.
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Diluted EPS calculated in accordance with -Accounting Standard 20 issued by ICAI for the year ended 31st March, 2016
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|
|
l.
|
(i) Method of calculation of employee compensation Cost.
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Intrinsic Value
|
Intrinsic Value
|
| |
(ii) Difference between the employee compensation cost so compared at (i) above and the employee compensation cost that shall have been recognized if fair value of options had been used.
|
N.A.
|
N.A.
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| |
(iii) The impact of the difference on profits and EPS of the Company for the year ended 31st March, 2016 had fair value of options had been used for accounting employee Options.
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N.A.
|
N.A.
|
|
m
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Weighted average exercise price and weighted average fair value of options granted during the year whose exercise price equals market price of stock on the grant date.
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|
|
| |
(there are no options granted whose exercise price either exceeds or less than the market price of the stock on the date of grant)
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N.A.
|
N.A.
|
|
n
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A description of the method and significant assumption used to estimate the fair values of options, including the following weighted average information:
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|
|
| |
i. Risk Free Interest Rate
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|
|
| |
ii. Expected Life
|
|
|
| |
iii. Expected volatility
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|
|
| |
iv. Expected Dividends
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|
|
| |
The price of the underlying share in market at the time of option granted
|
N.A.
|
|
Note: in view of the Sub division of the shares and in terms with the relevant provisions of ESOS- 2006 the options stand adjusted along with entitlement to apply for 5 equity shares of Rs,2 each instead of one Equity shares of Rs,10 each.
The Employee Stock Option Scheme 2015 was approved by the Members of the Company at their Extra Ordinary General Meeting held on 22nd January, 2015. However, the Board of the Company is yet to grant options out of the said Scheme.
Extract of Annual Return
Pursuant to Section 134(3) (a) of the Act, the details of an extract of Annual Return in Form No. MGT-9 is annexed herewith as Annexure E to the Board's report.
Number of Meetings of the Board
During the year under review, 5 (Five) Board Meetings and 5(Five) Audit Committee Meetings were held. The details of which is given in the Corporate Governance Report contain the part of Annual Report.
Directors' Responsibility Statement
Pursuant to the requirement of Section 134(3)(c) of the Act with respect to the Directors' Responsibility Statement, it is hereby confirmed:
(i) that in the preparation of the accounts for the financial year ended on 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit/ loss of the Company for the year ended on that date;
(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors had prepared the accounts for the financial year ended on 31st March, 2016 on a 'going concern' basis.
(v) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
(vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Details in respect of fraud reported by Auditors
Pursuant to Section 143 (12) of the Act, there were no such frauds reported by the Auditors of the Company during the year under review.
Policy on directors' appointment and remuneration
Pursuant to Section 178 (3) of the Act, policy for selection and appointment of directors and their remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted by the Board of the Company and contain part of the Corporate Governance Report.
Particulars of loans, guarantees or investments under Section 186
Your company is engaged in providing infrastructure facilities and therefore the provisions of Section 186 of the Act, related to loan made, guarantee given or security provided is exempted and not applicable to the Company. Whereas investment made during the year has been disclosed in notes to accounts of the Financial Statement.
Particulars of contracts or arrangements with related parties
During the year under review, the Company has appointed Ms. Meenakshi Jain as President- Corporate Affairs with the approval of members in 50th Annual General Meeting of the Company held on 25th September, 2015. The particulars of every contract or arrangements entered into by the Company with related parties referred to in Section 188 of the Act, in Form No. AOC -II is forming part of Board's Report and annexed herewith as Annexure F.
Corporate Governance Report
As required under the provisions of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, a report on Corporate Governance and a certificate confirming compliance with the requirements of Corporate Governance forms part of this Annual Report.
Training to Independent Directors
The Company had arranged a presentation on rights, duties and responsibilities of Independent Directors brought by the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Material changes and commitments affecting financial position between the end of the financial year and date of report
There are no material changes and commitments affecting financial position between the end of the financial year and date of report.
Conservation and Energy, Technology Absorption and Foreign Exchange Earnings & Outgo
The particulars as prescribed under Sub-section 3(m) of Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are annexed herewith as Annexure G.
Risk Management Policy
The Company has formulated a Risk Management Policy, which reflects the overall risk management philosophy, the Company's overall approach to risk management and the role and responsibilities for risk management.
The Company is mainly engaged in Transformers and Engineering Procurement and Construction (EPC) of Transmission line and sub-station projects. The Company continuously identifies and mitigates the risks through a robust risk identification and management system.
Details of some of the risks involved in the business are discuss below:
1) Commodity Risk
The Company deals with various commodities, such as steel, zinc, copper and aluminum. Fixed price contracts can have a negative impact if input costs rise, if it is not appropriately hedged in time. By adding price escalation clause in most of the contracts, the Company passes off such negative impacts to its client, partially or completely.
2) Currency Risk
The Company is exposed to the risk of currency fluctuations, if any exposure remains open. The Company believes in keeping its currency exposures hedged. It measures and manages these risks centrally and carries out periodic reviews of these risks; whenever required external experts are also consulted.
3) Execution Risk
Execution delay may results in cost overruns and may also negatively impact company's reputation. EPC projects could face delays due to external factors like Right of Way issues, manpower shortages, etc. The Company deploys a well defined standard operating procedure (SOP) - from project planning to completion. It keeps a close watch and review these risks periodically and take timely course corrections.
Corporate Social Responsibility (CSR)
Pursuant to the provisions of Section 134 of the Act, and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 Detailed Information as required is annexed herewith as Annexure H forming part of this report.
Report on Prevention of Sexual Harassment of Women
Detailed Report on cases filed & their disposal under the Sexual harassment of women at workplace (prevention, prohibition & redressal) Act, 2013 for the period ended December, 2015 are as under:
Number of complaints of sexual harassment received: NIL
Number of complaints disposed off: N. A.
Board Evaluation
Pursuant to the provisions of the Act and erstwhile Clause 49 of the Listing Agreement, 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 its Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Insurance
All the assets of the Company are adequately insured.
Acknowledgment
Your Directors would like to express their grateful appreciation for the assistance, support and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review. Your Directors would also like to take this opportunity to express their appreciation to the dedicated and committed EMCOites for the contribution in trying to achieve the Company's vision to "To Build A World Class Company Through Reliability and Be A Great Place To Work".
On behalf of the Board of Directors
For EMCO LIMITED
Sd/-
Place: Mumbai Rajesh S. Jain
Date: May 30, 2016 Chairman
(DIN:00005829)
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