BOARD'S REPORT

To the Members of

Aeroflex Industries Limited,

Your Directors have pleasure in presenting the 22nd Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March, 2016. 

 1.FINANCIAL RESULTS

Your Company's performance during the year as compared with that during the Previous year is summarised below                                                           

                                                                                       (Amount in Rs.)

02. STATE OF COMPANY'S AFFAIRS:

Your Company is engaged in the business of manufacture of Stainless Steel Hose with or without braiding and assemblies products.During the year the Company recorded  revenue of Rs. 10415.32 lakhs and incurred a loss of Rs. 838.08 lakhs after interest and  depreciation and   as compared with the corresponding figures in the  previous year  of Rs.  8835.48 lakhs and a  loss  of Rs. 1077.38 lakhs respectively registering a growth of 17.88 % in turnover .

The bottom line  of the Company continues to be  under stress due to  non-availability of adequate working capital to support the optimum operations of  the Company on the one hand and increase in the input cost  since the same could not be passed on to customers. In spite of adverse operating conditions , the Company has been able to control and manage its  operations  in focused way and the results culminated into cash profit.

Legal cases filed by Banks for recovery is pending in High Court, DRT and DRAT. Company has given OTS proposal to Bankers for settlement of their loan. 

03. MATERIAL CHANGES AND COMMITMENTS :

There are no material changes and commitments affecting the financial  position of the company  which have occurred between the end of the  financial year of the Company to which the financial statement relate  and the date of report.

04. DIVIDEND :

In view of the  inadequate profit , the Directors are unable to recommend any dividend for the year 2015-16.

05. CHANGE IN NATURE OF BUSINESS:

 There is no change in nature of business.

06. FUTURE OUTLOOK:

Your Company despite gloomy performance believes  that the products of your Company are good and have wide applications in industries and it can be revived. The customers of the Company are of high repute. To reduce the cost of production ,control the expenses and increase the productivity and quality of products , it is  taking all imperative steps in this direction.  The efforts of the Company have resulted yields and the same are  evident from the financial statements of the Company. To  further  the efforts of the Company it requires  co-operations, assistance  of all the concerned authorities /institutions such as banks, governments, semi governments in extending financial and non-financial assistance which is of paramount importance.    

07.DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL :

Directors

In terms of the Articles of Association of the Company, Mr. Mustafa Abidali Kachwala (DIN: 03124453) retires at the ensuing Annual General Meeting. Mr. Mustafa Abidali Kachwala (DIN: 03124453) being eligible has  offered  himself  for re-appointment.     

Your Directors recommend the above  re-appointment.

Indpendent Directors

Pursuant to section 149(4) of the Companies Act,2013  read alongwith the rule 42 of the Companies (Appointment and Qualifiaction of Directors) Rules ,2014 ,the Company is required to appoint two independent directors on its Board but it could not do so in view of the order of  the Honourable High Court  Bombay which has restraint the Company from  altering the composition of the Board of Directors of the Company. In view of this the Company has no statement to be made  in this regard as required pursuant to section 134(3)(d)  of the Companies Act,2013.  

08. PARTICULARS  OF PERSONNEL AND RELATED DISCLOSURES  :

During  the year under review, no employee of the Company was in receipt of remuneration in excess of the limits prescribed  under rule 5(2) of the Companies (Appointment And Remuneration of Managerial Personnel) Rules, 2014.

09. DEPOSITS:

The Company has not accepted any Deposit within the meaning of Section 73 of the Companies Act, 2013 and rules made there under as such, no amount of principal or interest was outstanding as of the Balance Sheet date, nor is there any deposit in non-compliance of Chapter V of of the Companies Act, 2013.

10.DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant  to clause (c) of sub-section 3 of section 134  of the Companies Act, 2013 It is stated 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 profit and 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 annual accounts have been prepared on a 'going concern' basis for the Financial year ended 31st March 2016 keeping in view that  the Company  is a viable unit and the management is taking every possible step to put the Company on growth path  and is hopeful that  its efforts will fructify; and

(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.

(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.ENERGY CONSERVATION , TECHNOLOGY ABSORPTION  AND EARNIGN AND OUTGO  IN FOREIGN EXCHANGE

Pursuant  to rule 8(3)  of the Companies (Accounts) Rules, 2014, the relevant information is given hereinbelow:

(a)   CONSERVATION OF ENERGY :

 Your Company is taking every steps to conserve  and minimize the use of energy  wherever possible  such as using energy efficient computer terminals, purchasing energy efficient equipments etc.    

(b)    TECHNOLOGY IMPORT AND ABSORPTION :

During the year under review your Company has not imported any technology. Indigenous technology available is continuously  upgraded to make quality products.

     (c ) During the year under review the earnings and outgo in foreign exchange is as under

                                                                                                        (Amount in Rs.)   

                                                       2015-2016                                    2014 -2015                                                   

,

(a)    Earnings                             84,56,17,269                                 74,21,69,414

(b)    Outgo                                  23,92,51,451                                   19,69,11,310 

12. AUDITORS :

The Board of Directors of the Company have on the recommendation of the Audit Committee proposed that M/s Y.S. Moochhala and Co., Chartered Accountants, Mumbai be re-appointed as the Statutory Auditors of the Company and to hold the office from the conclusion  of this meeting till the conclusion of the next Annual General Meeting of the Company.  M/s Y.S. Moochhala and Co., Chartered Accountants, Mumbai have forwarded their letter to the Company stating that their re-appointment, if made, would  be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

Your Directors request you to appoint the auditors and fix their remuneration.

13. QUALIFICATION  IN THE AUDITORS' REPORT - BOARD'S COMMENTS OR EXPLANATION     

The observation of Auditors contained in their Report and Note 9 of Part B to Notes of Accounts are self explanatory and hence do not call for any further clarification under section 134(3)(f) of the Companies Act,2013.  

14. EXTRACT OF ANNUAL RETURN :

Extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013 is attached herewith (Annexure "A)

15. NUMBER OF MEETINGS OF  THE BOARD :

Number of meetings of  the Board during the financial year 2015-2016 were5 (five) and were held on 29th June, 2015, 29th August, 2015, 8th September, 2015, 30th December, 2015 and 2nd March, 2016.      

16. PARTICULARS OF LOANS GIVEN, INVESTMENT MADE AND  GUARANTEES GIVEN AND SECURITIES PROVIDED COVERED UNDER SECTION 186(4) OF THE COMPANIES ACT, 2013 :

The Company has no  particulars to  be furnished in respect of loans given, investment made and  guarantees given and securities provided covered under section 186(4) of the  Companies Act, 2013, since it has not carried on any  activity mentioned  hereinabove during the year under report.

17. PARTICULARS OF  CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES :

The Company has not entered into any contract or arrangement with any person including  persons covered under sub - section(1) of section 188 of the Companies Act, 2013.

18. COMPOSITION OF AUDIT COMMITTEE :

The Company has Audit Committee comprising of the following members

(a)   Mr.  Yusuf M Kagzi

(b)   Mr.  Mustafa  Kachwala

(c)   Mr.  Mastram Verma  

which was constituted in accordance with the provisions of section 292A of the  Companies Act, 1956. The company could not reconstitute the committee as per Section 177 (3) of Companies Act 2013 because it was restrained by a High Court order to alter its composition.  

19. NOMINATION AND REMUNERATION COMMITTEE :

Due to the High Court order restraining the company from altering its composition, the company has not been able to constitute a nomination and remuneration committee as per Section 178 of the Companies Act, 2013.

20. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM :

The Company has established vigil mechanism policy for the directors and employees  to report their genuine  concerns or grievances. The policy provides for adequate safeguard against victimisation of employees and directors who avail of the vigil mechanism  and also provides for direct access to the Chairperson of the Audit Committee.

21.GENERAL :

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

 (a) Issue of equity shares with differential rights as to dividend, voting or      otherwise.

(b)  Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

(c) Name of Comapnies which have become  or ceased to be its subsidiaries, joint ventures or associates companies during the year.

(d)  None of the  Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

(e) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in

future.

Your Directors further state that 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.

22. RISK MANAGEMENT :

The  component  of risk  in the activities of your  Company   is very minimal.

In the opinion of the Board  there is no element of risk that may threaten the existence  of the Company. The Company regularly  manages and  monitors  the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

23. INTERNAL FINANCIAL CONTROLS :

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

24.ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the assistance and support extended by all Government Authorities, Financial Institutions, Banks, Consultants, Solicitors, and Shareholders of the Company. Your Directors express their appreciation for the dedicated and sincere services rendered by the employees of the Company

   For and on Behalf of the Board of Directors

Place :     Mumbai                                                                       

Date  :   August 18, 2016                                                                Yusuf M. Kagzi

                                                                                        Chairman and Managing Director

Your Company is engaged in the business of manufacture of Stainless Steel Hose with or without braiding and assemblies products.During the year the Company recorded revenue of Rs. 10415.32 lakhs and incurred a loss of Rs. 838.08 lakhs after interest and depreciation and as compared with the corresponding figures in the previous year of Rs.8835.48 lakhs and a loss of Rs. 1077.38 lakhs respectively registering a growth of 17.88 % in turnover . The bottom line of the Company continues to be under stress due to non-availability of adequate working capital to support the optimum operations of the Company on the one hand and increase in the input cost since the same could not be passed on to customers. In spite of adverse operating conditions , the Company has been able to control and manage its operations in focused way and the results culminated into cash profit. Legal cases filed by Banks for recovery is pending in High Court, DRT and DRAT. Company has given OTS proposal to Bankers for settlement of their loan.

Your Company is taking every steps to conserve and minimize the use of energy wherever possible such as using energy efficient computer terminals, purchasing energy efficient equipments etc.

During the year under review your Company has not imported any technology. Indigenous technology available is continuously upgraded to make quality products.

During the year under review the earnings and outgo in foreign exchange is as under (Amount in Rs.) 2015-2016 2014 -2015 (a)Earnings 84,56,17,269 74,21,69,414 (b)Outgo 23,92,51,451 19,69,11,310

Pursuant to clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 It is stated 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 profit and 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 annual accounts have been prepared on a 'going concern' basis for the Financial year ended 31st March 2016 keeping in view that the Company is a viable unit and the management is taking every possible step to put the Company on growth path and is hopeful that its efforts will fructify; and (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. (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.