Dear Shareholders,
The Directors have pleasure in presenting the 32nd Annual Report together with Audited Financial Statements for the year ended 31st March, 2018. The Financial Statements have been prepared after giving accounting effect to the demerger of the business of CHANDNI TEXTILES ENGINEERING INDUSTRIES LIMITED (i.e. Engineering Division) along with a wholly-owned subsidiary company of your company CHANDNI MACHINES PRIVATE LIMITED. The Financial Results of the Company have been summarized and given below:
FINANCIAL PERFORMANCE
(Rs. In Lacs)
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2017-2018
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2016-2017
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Revenue from operations
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4904.35
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5393.79
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Other Income
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107.81
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88.10
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Total Revenue
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5021.16
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5481.89
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Profit before depreciation, finance costs & tax
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259.52
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114.42
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Less: Depreciation
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57.77
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50.62
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Finance Costs
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3.68
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3.70
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Profit before tax
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198.07
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60.10
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Tax Expense
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Current tax
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40.61
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10.24
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Deferred tax
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15.65
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5.76
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Wealth tax
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0.00
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0.00
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Profit after tax
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141.81
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44.10
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Balance brought forward from previous year
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53.09
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8.99
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Less: Profit of demerged undertaking from appointed date (01/04/2016 to 31/03/2017) transferred to CMPL
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(55.02)
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-
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Balance carried to balance sheet
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139.88
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53.09
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FINANCIAL HIGHLIGHTS
During the year under review, the turnover of the company has decreased from 5393.78 lacs as compared to previous year to 4904.35 lacs in the current year. The Profit before tax has increased from 60.10 lacs in the previous year to 198.07 lacs in the current year. The Net Profit increased from 44.10 lacs in the previous year to 141.82 lacs in the current year.
DIVIDEND
In order to conserve the resources of Company, your Directors do not recommend any dividend.
SCHEME OF ARRANGEMENT / DEMERGER
Scheme of Arrangement (“Scheme”) between Chandni Textiles Engineering Industries Limited (“Demerged Company”) and Chandni Machines Limited (“Resulting Company”) and their respective shareholders. Pursuant to the Scheme of Arrangement under section 230 to 232 read with Section 52 and 66 of the Companies Act, 2013 as sanctioned by the Hon’ble National Company Law Tribunal bench at Mumbai on 21st January, 2018, the Demerged Company i.e. Engineering Division of Chandni Textiles Engineering Industries Limited has been transferred and vested in the Resulting Company on a going concern basis with effect from July 01, 2016 i.e. the appointed date under the Scheme.
The Scheme of Arrangement became effective on 24th January, 2018, being the last date on which all the conditions and approvals referred to in the Scheme have been fulfilled / obtained and therefore, the effect of the Scheme was considered in the financial statements of the company for the year ended 31st March, 2018. In terms of the Scheme, the business and transactions of demerged undertaking were carried on and held by the Demerged Company in trust for and on account of the Resulting Company from the appointed date till the Scheme became effective. Pursuant thereto, all assets and liabilities have been transferred to the Resulting Company at their respective book values on the appointed date and duly adjusted by subsequent transactions carried on in trust.
Also, the profit or income accruing or expenditure or loss arising or incurred relating to the business of demerged undertaking from the appointed date are treated as the profit or income or expenditure or loss, as the case may be, of the Resulting Company. The Scheme has accordingly been given effect to in the accounts for the current year. As per the Scheme, the Resulting Company will issue equity shares in the ratio of 1:5 to the shareholders of the Demerged Company.
REORGANISATION OF SHARE CAPITAL
As per the Scheme of Arrangement the Securities Premium Account of the Demerged Company will be reduced from Rs. 3, 22, 74,330 divided into 32, 27, 433 equity shares of Rs. 10/- each in the ratio of 1:5 i.e. 1 equity shares of Chandni Machines Limited (CML) of Rs. 10/- each fully paid up for every 5 equity shares of Chandni Textiles Engineering Industries Limited (CTEIL) of Rs. 10/- each fully paid up on the Record date of 20th August, 2018.
ALLOTMENT OF SHARES BY THE RESULTING COMPANY
Chandni Machines Limited (CML), the Resulting Company will allot and issue to the shareholders of Chandni Textiles Engineering Industries Limited (CTEIL), the Demerged Company 1 (One) Equity Shares of Rs. 10/each fully paid up for every 5 (Five) Equity Shares of Rs. 10/- each held by the shareholders of the record date. Accordingly, 32,27,433 equity shares of Rs. 10/- will be allotted and issued by Chandni Machines Limited which will be adjusted from Securities Premium Account as per the Scheme of Arrangement and after rounding off the fraction to the nearest integer.
The existing Equity Share capital for an amount of Rs. 1, 00, 000/- represented by 10,000 Equity Shares of Rs. 10/- each held by Chandni Textiles Engineering Industries Limited in Chandni Machines Limited (Formerly known as “Chandni Machines Private Limited”), will be cancelled and shareholders holding 10,000 Equity Shares of Rs. 10/- each of the Resulting Company on the effective date shall not be issued or allotted any new shares by the Resulting Company or by the Demerged Company against such shares upon such cancellation. Consequently, Chandni Machines Limited will cease to be the Wholly Owned Subsidiary Company of Chandni Textiles Engineering Industries Limited.
TRANSFER TO RESERVES
An amount of Rs. 139.88 lacs is proposed to be retained in the Profit & Loss Account.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the Management Discussion & Analysis forms part of the Annual Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION
There are no material changes and commitments affecting the financial position of the Company, except transfer of assets and liabilities for giving effect to the order from National Company Law Tribunal, Division Bench, Mumbai was recorded after Demerger pursuant to the Scheme of Arrangement to the close of the Financial Year.
PUBLIC DEPOSITS
The Company has not accepted any public deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the year under review and there are no outstanding deposits which are pending for repayment.
CORPORATE GOVERNANCE
In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently.
A separate section is given on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance with conditions of Corporate Governance, as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which forms part of this Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Amita Jayesh Mehta, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The Board of Directors recommends her re-appointment.
None of the Directors is disqualified for appointment/ re-appointment under Section 164 of the Companies Act, 2013. As required by law, this position is also reflected in the Auditor’s Report.
All the Independent Directors on the Board have given a declaration of their independence to the Company as required under Section 149(6) of the Companies Act, 2013.
Ms. Gayatri Valan resigned as Company Secretary & Compliance Officer of the company with effect from 14th December, 2017.
Ms. Khushboo Shah was appointed as Company Secretary and Compliance Officer of the company in its Board Meeting held on 11th January, 2018.
The Composition of the Board, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in the Annual Report.
As required under Section 203 of the Companies Act, 2013, the Company has noted that Mr. Jayesh Ramniklal Mehta, Managing Director; Mr. Shailesh Pandurang Sankav, Chief Financial Officer and Ms. Khushboo Shah, Company Secretary are the Key Managerial Personnel of the Company.
EVALUATION OF BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, Independent Directors at their meeting without participation of Non-Independent Directors and management considered and evaluated the Boards’ performance, performance of the Directors.
The Board has carried out an annual evaluation of its own performance and performance of the individual Directors as well as the Committee of Directors.
FAMILIARIZATION PROGRAMME
The details of programs for familiarization of Independent Directors with the Company, their roles, responsibilities in the Company and related matters are put up on the website of the company at the link http://www.cteil.com/ pdf/Familiarization%20Program%20of%20Independent%20Directors.pdf
POLICY ON NOMINATION AND REMUNERATION COMMITTEE
The objective of the Policy:
(a) To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.
(b) To determine remuneration based on the Company’s size and financial position and trends and practices on remuneration prevailing in peer companies.
(c) To carry out evaluation of the performance of Directors
(d) To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.
The Company for the year under review has not paid any remuneration by way of sitting fees to Non-Executive Directors.
AUDIT COMMITTEE
The Company has in place a Board Level Audit Committee, in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the details in respect of which are given in Corporate Governance Report. Further, there has been no instance where the Board of Directors has not accepted the recommendation of Audit Committee.
VIGIL MECHANISM
The Vigil Mechanism Policy of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement/ SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for directors and employees to report concern about unethical behavior, actual or suspected fraud. Protected disclosures can be made by a whistle blower in writing to the Whistle Officer and under the said mechanism; no person has been denied access to the Chairman of the Audit Committee.
The Vigil Mechanism Policy may be accessed on the Company’s website at the link http://www.cteil.com/pdf/ Vigil%20Mechanism%20or%20Whistle%20Blower%20Policy.pdf
NUMBER OF MEETINGS OF THE BOARD
During the year under review, five Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forming part of this Report.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the year, the Company has not entered into any contracts/ arrangements with a related party as specified under Section 188 of the Companies Act, 2013 except for the payment of remuneration to Managing Director and Key Managerial Personnel. Hence, reporting under AOC-2 is not required. The policy materiality of related party transactions and dealing with related party transactions is available on the Company’s website at the link:
http://www.cteil.com/pdf/Policy%20on%20Related%20Party%20Transactions.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The details of investments covered under the provisions of Section 186 of the Companies Act, 2013 are disclosed in the Note No. 4 to the Financial Statements. The Company has not given any loans and guarantees under Section 186 of the Act during the Financial Year 2017-2018.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference to financial statements. During the year, no reportable material weakness in the design or operation was observed in the internal financial controls.
RISK MANAGEMENT POLICY
Pursuant to section 134(3) (n) of the Companies Act, 2013 and Regulation 21 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the Company has formulated a Risk Management Policy to mitigate the risks. Major risks identified by each of the businesses and functions are systematically addressed through mitigation actions on a continuing basis and are reported periodically to the Audit Committee and the Board. The details of the Risk Management functions are covered in the Corporate Governance Report.
STATUTORY AUDITORS
As per Section 139 of the Companies Act, 2013, M/s Ambavat Jain & Associates, LLP Chartered Accountants (Firm Registration No. : 109681W) were appointed as Statutory Auditors of the Company for a period of Five (5) years till the conclusion of Thirty Sixth Annual General Meeting of the Company.
SECRETARIAL AUDITOR
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 appointed M/s Ajay Anil Thorat & Associates, Practicing Company Secretaries to conduct the Secretarial Audit of the Company for the financial year 20172018. The report is attached herewith as Annexure - I to the Board’s Report.
M/s Ajay Anil Thorat & Associates, Practicing Company Secretaries, in their Secretarial Audit Report have made certain qualifications. The auditor’s qualifications and Boards explanation thereto are summarized as under:
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Auditors Qualifications
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Board’s explanation
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1.
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In Form AOC-4 XBRL for FY 2016-17, date of Board Resolution is written as 29/09/2017 (which is in fact date of AGM).
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It should be the date of Board Resolution i.e. 30th May, 2017, the company inadvertently wrote the date of AGM, however the e-form has been approved without any error.
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2.
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Internal Auditor has been appointed in the last quarter of the financial year; however, Form MGT-14 for appointment of Internal Auditor has not been filed.
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Company has filed MGT-14 with a late fee, however, Internal Auditor was appointed during the Financial Year 2017-2018 and Internal Auditor has given report for entire year.
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3.
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For certain remarks of us pertaining to earlier years report which was written by us in italic font, however, in the final printed and filed report the said remarks were not printed in italic fonts.
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The Secretarial Audit Report was incorporated in the last year’s Annual Report as it is. However, some remarks which were in italic font were printed normally. The company will take care in future.
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4.
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In NCLT order, point no 10 page no 5, it is written as conversion of public company into private company, however, as per me it should be vice-versa.
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Order was received from Hon’ble National Company Law Tribunal though it is obvious that a private limited company will be converted into public limited company and the same is mentioned in the Scheme of Arrangement.
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SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS
There are no significant and material orders passed by the Regulators/ Courts that would impact the going concern status and the Company’s operation in future.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
a) Conservation of Energy
i. Inspite of not being intensive, your Company enforces strict discipline in reducing power consumption
ii. Idle running of machinery consuming high power is restricted to the loading and unloading cycles of the respective machines.
b) Technology Absorption
Your Company has not imported any technology for manufacture of machinery.
c) Foreign Exchange Earnings and Outgo
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FY 2017-2018
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FY 2016-2017
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Total Foreign Exchange Outgo
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2,01,95,085
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23,49,052
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Total Foreign Exchange earned (FOB)
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NIL
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4,86,281
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EXTRACT OF ANNUAL RETURN
In accordance with Section 134 (3) (a) along with Section 92(3) of The Companies (Amendment) Act, 2017 the details forming part of the Extract of Annual Return in Form MGT-9 is annexed herewith as Annexure -II to this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure III.
There are no employees employed throughout the financial year who was in receipt of remuneration of INR 1.02 crore or more, or employed for part of the year and in receipt of INR 8.5 lakh or more a month, as mentioned under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) of the Companies Act, 2013 with respect to Director’s Responsibility Statement, it is hereby confirmed that in the preparation of the Annual Accounts:
- The applicable accounting standards had been followed along with proper explanation relating to material departures have been given;
- 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 at the 31st March, 2018 and of its profit for the year;
- Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- The annual accounts have been prepared on a going concern basis;
- The directors have laid down internal financial controls to be followed by the Company. Internal Financial Controls are adequate and were operating effectively;
- Proper Systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
ACKNOWLEDGEMENT
Your Directors acknowledge with gratitude the timely assistance and help extended by the Bankers for having provided the required bank facilities. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels for the continued good performance of your company.
For and on behalf of the Board of Directors
Jayesh R. Mehta
Place: Mumbai (DIN:00193029)
Date: 14th August, 2018 Chairman & Managing Director
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