BOARD'S REPORT To The Members, The Directors have pleasure in presenting before you the 57th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2015 General Information about the Company, the Board's perception of future of the company considering market competition, production constraints, government polices etc., Major events concerning the company are to be highlighted. - Capital Goods Industry had to face the set back during the year under report. The performance of the Company was affected by the overall recessionary trend in the Industry. Therefore, your company was short of targeted turnover by Rs. 200/- Lakhs approximately. The PBTforthe year is of Rs. 148.13 Lakhs as against the Loss of Rs. 690.89 for the previous year. Thus, in spite of adverse market conditions the Company could come out of the red. - Company has formed a Subsidiary Company named BEMCO FLUIDTECHNIK PRIVATE LIMITED - (CIN U29248KA2015PTC078838) to manufacture mainly Critical Hydraulic valves, pumps & Power Packs. - During the year of operation your Company has allotted 4,00,000 Equity Shares of Rs. 10/- each, at a Premium of Rs. 60/- each, aggregating to a sum of Rs. 2,80,00,000/-, to the promoters and non-promoters on preferential basis. This was done to strengthen the Net Worth of the Company, which was eroded on account of losses incurred during Financial Year 2013-14 EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS: Subsequent to the date of Financial Statements (i.e. after 31st March 2015) no significant event has occurred. CHANGE IN THE NATURE OF BUSINESS: During the year under operation there was no change in the nature of business. DIVIDEND: Equity Shares: On account of inadequacy of profit during the year, the Board regrets its inability to recommend any dividend on equity shares. Preference Shares: Considering the inadequacy of profit for the year under report, the Company is unable to pay dividend for the year including arrears thereof for the year ended on 31st March 2014 In view of the above, Company is carrying the above amount as Contingent Liability towards Dividend on Preference Shares As, no Dividend is paid on preference shares for F.Y. 2013-14 and also for F.Y. 2014-15 as your Company is still carrying Brought Forward Losses, the Preference Share holders would get voting rights on par with equity share holders, in terms of the provisions of Section 47 of the Companies Act 2013 on and after the forthcoming AGM. 5. BOARD MEETINGS : The Board of Directors met 8 times during this financial year. 1. On 1st April 2014 2. On 28th May 2014 3. On 8th August 2014 4. On 12th September 2014 5. On 10th November 2014 6. On 19th December 2014 7. On 13th February 2015 8. On 27th March 2015 6. DIRECTORS AND KEY MANANGERIAL PERSONNEL : Appointment, Re-appointment, Change in Designation, Resignation of Directors (along with fact of resignation), Managing Directors, Whole Time Directors, KMP, Independent Directors DIRECTORS 1. Mr. M.M. Mohta The tenure of Mr. M. M. Mohta as Managing Director of the Company ended on 31st March 2014 and thereafter he opted not to continue as Managing Director. The Board elected him as Non-Executive Chairman of the company. 2. Mr. Anirudh Mohta Mr. Anirudh Mohta was the Joint Managing Director up to 31st March 2014 and appointed as Managing Director of the Company by the Board for a period of 5 years w. e. f. 1st April 2014, on the terms and conditions recommended by the Nomination and Remuneration Committee which were approved by the members of the Company in 56th AGM held on 12th September 2014. 3. Mrs. Urmila Devi Mohta Mrs. Urmila Devi Mohta is Non - Executive Director had retired by rotation in terms of the provisions of Companies ACT 1956 and reappointed as Non Executive Director of the Company in the 56th AGM held on 12th September 2014. She is liable to Retire by Rotation. 4. Mr. N. K. Daga Mr. N. K. Daga who retired by Rotation in terms of the provisions of Companies ACT 1956, at the 56th AGM and appointed as an Independent Director of the Company for a period of 5 years from the conclusion of 56th AGM held on 12th September 2014. 5. Mr. Ramesh Shah Mr. Ramesh Shah was appointed as an Independent Director of the Company in the 56th AGM, for a period of 5 years from the conclusion of 56th AGM held on 12th September 2014. 6. Mr. Dilip Chandak Mr. Dilip Chandak was appointed as an Independent Director of the Company in the 56th AGM, for a period of 5 years from the conclusion of 56th AGM held on 12th September 2014. KEY MANAGERIAL PERSONNEL - KMP 1. Mr. Anirudh Mohta-Managing Director Mr. Anirudh Mohta - Managing Director of the Company is appointed as KMP in terms of the provisions of Section 203 of the Companies Act 2013, in the Board Meeting held on 28th May 2014. 2. Mr.R.B.Patil-CFO Mr. R. B. Patil who was General Manager Finance of the Company till 31st March 2014 was appointed as CFO and KMP of the Company in the Board Meeting held on 28th May 2014, on the terms and conditions, as recommended by the Nomination and Remuneration Committee in its meeting held on 28th May 2014. 3. Mrs. Mamta D. Jain - Company Secretary 7. Mrs. Mamta D. Jain a qualified Company Secretary, having Membership No ACS-25022, has been appointed as Company Secretary and KMP of the Company in the Board Meeting held on 27th March 2015, on the terms and Conditions, as recommended by the Nomination and Remuneration Committee in its meeting held on 27th March 2015. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS: The Company has received necessary declaration from each Independent Director of the Company confirming that, they meet the criteria of Independence as prescribed both under the Companies Act 2013 and Clause 49 of the Listing Agreement with the Stock Exchange. COMPOSITION OF COMMITTEES: 8. a. AUDIT COMMITTEE Chairman: OtherMembers: Mr. R. M. Shah - Independent Director Mr. N. K. Daga-Independent Director Mr. Anirudh Mohta - Managing Director b. NOMINATION AND REMUNERATION COMMITTEE Chairman: OtherMembers: Mr. R. M. Shah - Independent Director Mr. Dilip Chandak - Independent Director Mrs. Urmila Devi Mohta - Non Executive Director c. STAKE HOLDERS RELATIONSHIP COMMITTEE Chairman: OtherMembers: Mr. Dilip Chandak - Independent Director Mr. Anirudh Mohta - Managing Director Mrs. Urmila Devi Mohta - Non Executive Director d. COMMITTEE FOR PREVENTION OF SEXUAL HARRSSMENT OF WOMAN AT WORKPLACE Chairman: OtherMembers: Miss Kirti Ramchandra Devale - Company Employee Mrs. Urmila Devi Mohta - Non Executive Director 9. VIGIL MECHANISM: The Vigil Mechanism acts as an additional internal element of the Company's compliance and integrity policies. All employees, directors, vendors, suppliers, dealers and consultants, including auditors and advocates who are associated with BEMCO can raise concerns regarding malpractices and events which may negatively impact the company. Vigil Mechanism has been established under the supervision of the Chief financial Officer of the Company. The Audit Committee and the CFO reviews the working of the Vigil Mechanism from time to time and make suggestions, if needed. The Vigil protects the whistleblower against victimization for the disclosures made by him/her and ensures complete confidentiality of the whistleblower's identity and the information provided by him/her. The investigation is conducted honestly, neutrally and in an unbiased manner. The subject or other involved persons in relation with the protected disclosure are also given an opportunity to be heard. Strict disciplinary actions are taken against anyone who conceals or destroys evidences related to protected disclosures made under this mechanism. The Vigil Mechanism policy also provides for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. 10. DIRECTOR'S RESPONSIBILITY STATEMENT: In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had 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 end of the financial year and of the loss of the company for that period; c) the directors had taken 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; d) the directors had prepared the annual accounts on a going concern basis; e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively 11. INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/JV (1) Subsidiary Company: A subsidiary company namely BEMCO FLUIDTECHNIK PRIVATE LIMITED - (CIN U29248KA2015PTC078838) has been incorporated on 13th February 2015 to carry out the business of - To manufacture, produce, fabricate, design, install, repair or otherwise acquire, buy, sell, exchange, distribute trade, deal in ordeal with, import and export, take on lease or give on lease, hydraulic pumps, valves, accumulators, hydraulic motors, hydraulic equipments, cylinders, power packs with hydraulic, mechanical, pneumatic, electric, electronic or computerized control systems, hydraulic aero planes, hydraulic and mechanical jacks, tractor components, components for earth moving machinery and material handling equipments and spares, accessories and subassemblies for the above, involving hydraulic systems. The Subsidiary is formed with Mr. Jagdish Narasinha Joshi, on 80:20 ratio (i.e. 80% Shares of Bemco Hydraulics Limited and 20% of Mr. Jagdish Narasinha Joshi). Authorized Share Capital of this Company is Rs. 25,00,000/-. Issued, subscribed and Paid up Share Capital of this Company is Rs. 1,00,000/-. During the year under report this Company did not Commence its business. No Activities have been carried out in the year F.Y. 2014-15 (2) Associate Companies: In terms of sub Section (6) of Section 2 of the Companies Act 2013, the company has no Associate Company. 12. EXTRACT OF ANNUAL RETURN: Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is given as a part of this Annual Report (FORMAT IN ANNEXURE I) 13. AUDITORS The Auditors, M/s A. C. Bhuteria & Company, Chartered Accountants, (Firm Registration No. 303105E) retire at the conclusion of ensuing Annual General Meeting and, being eligible; offer themselves for reappointment for a period of one year from the conclusion of this Annual General Meeting [AGM] till the conclusion of 58th AGM. Present Auditors were appointed in the 43rd AGM held on 29th September 2001 and since then they are carrying out the audit of the Company and are eligible for re-appointment for the FY 2015-16, in terms of Second Proviso to Section 139(2) of the Companies Act 2013. 14. SECRETARIAL AUDIT: Secretarial audit report as provided by M/s SDR & ASSOCIATES, a Firm of Practicing Company Secretaries, is annexed to this Report. QUALIFICATIONS IN AUDIT REPORTS Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made— (a) by the statutory auditor in hisreport: Nil and (b) by the Secretarial Auditor in their Secretarial Audit report. The secretarial auditors have qualified their report on the aspect of non appointment of Company Secretary during the substantial part of financial year ended 31st March 2015. In this regard, the Board desires to stress the fact that till 31st March 2014, Company was not required to appoint a whole time Company Secretary as its capital was less than Rs. 5 crores. After notification of section 204 on 1st April 2014, the Company made frantic efforts to appoint a Secretary but then it could not obtain services of a suitable qualified company Secretary hence the appointment could not be made at an early date. But no sooner the eligible and willing CS was available; the Company has complied; the legal provisions by appointing Ms Mamta D. Jain (ACS-25022) as Company Secretary on 27th March 2015. So far as furnishing of copy of altered Articles is concerned the same is just technical because the explanatory statement annexed to notice convening last AGM was self explanatory on this point. A copy thereof is being delivered now. 17. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS: No regulatory authority has passed any orders having material impact on the Company. 18. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS There are sound internal controls commensurate with nature and size of the Company that have been incorporated in the Policy to detect the financial discrepancies well in time. Key policies are defined, understood and enforced. Operating procedures are clearly defined; detailed and harmonized procedures are available across the organization. Several controls are preventive in nature and automated. All stakeholders are aware of their roles and responsibilities with respect to processes and controls. The culture of compliance with laid down guidelines and procedures is evident through the actions and behavior of individuals and teams. The Management Information System ensures that adequate and accurate information is available for reporting and decision making. The Audit committee also evaluates the operating effectiveness of Internal Financial Control systems. Moreover: - Internal Audit is carried out at regular intervals by an Independent Chartered Accountant, who submits his report to the Audit Committee and Board. - Statutory Auditors carry out the verification of Books on every Quarter before submitting their Limited Review Report. Board is prompt in maintaining the adequacy of Internal Financial Controls with reference to the Financial Statements 19. PARTICULARS OF LOANS, GUARANTEES ORINVESTMENTS: The investments in shares and other securities held by the Company were made much prior to notification of section 186 of the Companies Act, 2013 and after notification of section 186 of the Companies Act, 2013 the company has not made any investment in shares and securities except a sum of Rs. 80,000/- in its subsidiary company. SECURED LOANS: Company has not provided any Secured Loan to anybody during the year UNSECURED LOANS: Company has not provided any Loan except to its Employees as Salary Advance CURRENT/NON-CURRENT INVESTMENTS: - Company has not made any investments neither in Share Capital (except its subsidiary company) nor in any other Form. - During current FY 2015-16,till date, Company has invested Rs. 80,000/- for 8,000 Equity Shares of Rs. 10/-each, in its Subsidiary Company namely BEMCO FLUIDTECHNIK PRIVATE LIMITED GUARANTEES: - In normal course of business; Company does issue Bank Guarantees & Indemnity Bonds for Getting Advances from Customers/ to collect the retention Money from Customers during warranty period of supply of Goods. SECURITIES EXTENDED - In normal course of business Company needs to provide the Warranty certificates for the goods supplied. And no other security is extended during the year. 20. RISK MANAGEMENT POLICY: - The RISK MANAGEMENT POLICY is in compliance with Section 134 (3) (n) of the Companies Act 2013 and the amended Clause 49 of the Listing Agreement (w. e. f. 1st October 2014) which requires the Company to lay down procedure for risk assessment and procedure for risk minimization. The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. - The Board ensures that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e. to ensure adequate systems for risk management. The Company enables compliance with all appropriate laws and regulations, wherever applicable, through the adoption of best practices. - The Board of Directors of the Company and the Audit Committee periodically reviews and evaluates the risk management system of the Company so that the management controls the risks through properly defined network. Head of Departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning, and they report to the Board and Audit Committee when circumstances require. - Company is working at the Norms laid down in the ISO 9001-2008 &ISO 14001-2004 and strictly follow all the norms and procedures to overcome the various risk factors. 21. CORPORATE SOCIAL RESPONSIBILTY POLICY : As the company does not fall within the criteria laid down in section 135 of the Companies Act, 2013, nothing under this head is applicable statutorily but the Boards' commitment to social cause remains. 22. RELATED PARTY TRANSACTIONS : Particulars of Contracts or Arrangements with Related parties referred to in Section 188(1) in FormAOC-2asANNEXURE-ll 23. FORMAL ANNUAL EVALUATION: The Board consisting of Mr. Anirudh Mohta as the Managing Director, Mr. M M. Mohta as Non Executive Chairman and Mrs. Urmiladevi Mohta as Women Director all from promoter group and Mr. Ramesh Shah, Mr. Dilip Chandak and Mr. N. K. Daga as independent non executive Directors have a system of self evaluation in the form of firstly, the independent Directors carrying out evaluation of Executive Director Mr. Anirudh Mohta through separate meeting of independent Directors where, the promoter Directors are not present. In the process of evaluation, the independent Directors have made many suggestions to the Managing Director for better performance. Similarly, the promoter Directors have through their own separate meetings, which are not attended by independent Directors, evaluated the performance of independent Directors and have raised many questions about role of independent directors and on the whole the promoter directors and Executive Director have appreciated the performance of independent Directors especially the contribution made in the deliberations of the Board of Directors by Chairman of the Audit Committee Mr. R. M. Shah. In addition, the performance evaluation of Mr. M. M. Mohta, the Chairman of the Board of Directors and Mrs. Urmiladevi Mohta a women director is made by rest of Directors and here too lot of suggestions are made for overall qualitative change in the deliberations of the Board. 24. DISCLOSURE ABOUT COST AUDIT Cost audit of the cost records maintained by the Company is conducted by Mr. Umesh Kini, practicing Cost Auditor Sirsi, and the company has filed such cost audit report for the financial year ended on 31st March 2014 with the MCA. Cost audit report was self explanatory. Further, the Company appointed Mr. Umesh Kini, practicing Cost Auditor Sirsi, as a Cost Auditor for Cost Records Compliance Certification. 25. RATIO OF REMUNERATION TO EACH DIRECTOR : Details / Disclosures of Ratio of Remuneration to each Directorto the median employee's remuneration as perANNEXURE - III 26. LISTING WITH STOCK EXCHANGES: The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE where the Company's Shares are listed. 27. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION: Bemco Hydraulics Limited is committed to good Corporate Governance. It was a mandatory requirement under Clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd; till 30th September 2014 & vide SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated 15.09.2014 thereafter though it is not applicable to our Company as neither the paid Capital exceeds Rs. 10/-Crore nor Net WORTH exceeds Rs. 25/-Crores but BEMCO continues to follow good corporate Governance practices. Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as a part of this Annual Report (ANNEXURE IV) Certificate from the Practicing Company Secretary / Secretarial Auditor of the company confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report. Directors confirm that the payment of remuneration to the Managerial Personnel is in accordance with Schedule V Part II, Section II 28. EVENT BASED DISCLOSURES: The Company has made an issue of 4,00,000 Equity Share of Rs. 10/- each, for cash at a premium of Rs. 60/-, aggregating to a sum of Rs. 280/- Lakhs to the Promoters, Promoters Group and Other than Promoters. M. M. MOHTA Chairman DIN-00068884 2 Mohanam, 10th Cross, Bhagya Nagar, Belgaum, 590006,Karnataka ANIRUDH MOHTA Managing Director DIN-00065302 2 Mohanam, 10th Cross, Bhagya Nagar, Belgaum, 590006,Karnataka Place : Belgaum Dated : 7thAugust2015 |