DIRECTORS' REPORT
Dear Members,
The Directors have the pleasure in presenting this Forty Sixth Directors' Report together with the audited Annual Accounts of the Company for the financial year ended March 31, 2018.
FINANCIAL PERFORMANCE
The highlights of the financial position for the year under review as compared to the corresponding period in the previous year are given below:
(Rs, in Lakhs)
Particulars
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Standalone
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Consolidated
|
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2017-18
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2016-17
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2017-18
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2016-17
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Total Income
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19,913.89
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29,305.67
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19,911.83
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29,256.94
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Total Expenses
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20,256.03
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29,331.79
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20,257.31
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29,329.38
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Profit / (Loss) before Taxation
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(342.14)
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(26.12)
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(345.48)
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(72.44)
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Exceptional Items
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(1,500.00)
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(4,196.29)
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-
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144.49
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Tax Expense
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193.59
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173.16
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193.58
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173.15
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Profit/(Loss) from Discontinued Operations after Tax
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-
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-
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(862.64)
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(3,436.29)
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Profit / (Loss) after Taxation
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(2,035.73)
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(4,395.57)
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(1,401.70)
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(3,537.39)
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Other Comprehensive Income
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139.35
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(1.16)
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139.73
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(9.24)
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Total Comprehensive Income for the year, Net of Taxes
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(1,896.38)
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(4,396.73)
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(1,261.97)
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(3,546.63)
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Earnings Per Share (in Rs,)
(basic & considering exceptional items)
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(6.69)
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(14.45)
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(1.77)
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(0.33)
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DIVIDEND
Your Directors are pleased to recommend Dividend at 30% (Rs, 0.60/- per Equity Share of Rs, 2/- each) on equity shares for the year ended March 31, 2018, subject to the approval of shareholders at the ensuing annual general meeting of the Company. The Dividend distribution would result in cash outflow of Rs, 220.68 Lakhs (including Dividend Distribution Tax).
OPERATIONS AND FINANCE
Your directors have analyzed Company's operations and financials in detail in Management's Discussion and Analysis.
PRINTING INDUSTRY
Printing industry slowed down with the global economic meltdown & inflation. Due to digital media, the paper printing industry weakened. The worldwide newspaper industry is facing year after year of shrinking advertising and circulation revenues of printed newspapers. Publishers are moving out of the traditional newsgathering role by adopting an 'online-first' approach. This shift has caused the decline in the demand of printing machineries.
Maintaining existing customer base, servicing them with the goal of retaining their business is imperative.
COMPANY
Motivating management practices, excellent leadership, highly skilled workforce and a well focused approach has led Manugraph to achieving the goal of being the leader in the niche 4-page Newspaper Offset Printing Press market. Manugraph develops strong business partnerships with clients, providing most satisfactory after-sale services on a continuous basis.
In India, Manugraph ranks as Numero Uno in the manufacture of web offset presses. With a whopping 60% market share and quality presses ranging in speeds from 35,000 - 70,000 copies per hour, Manugraph presses are present in nearly all major publication houses.
Manugraph has significant presence in the international market too. Leading publishers from South America, Europe, Middle East, Asia & the CIS countries have all invested in Manugraph presses.
Operations for the year was affected due to strike by workmen for about 4 months which has severely impacted the financials. Your Company continues to face challenging external scenario including demand.
Your Company successfully entered into the business of CI Flexo packaging printing machine during the year. The Company foresees a very good demand of package printing machines in India.
MANAGEMENT'S DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 32 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (hereinafter referred to as 'SEBI Listing Regulations'), the management's discussion and analysis is set out in this Annual Report.
PUBLIC / FIXED DEPOSITS
Your Company has not accepted any public / fixed deposits during the year and as such no amount of interest and principal deposit was outstanding as on the balance sheet date.
SUBSIDIARIES Manugraph Americas Inc.
The Printing industry in America has been going through very challenging times over the last decade, mainly due to the spread of electronic media and green initiatives coupled with pricing disadvantages.
Under the circumstances, there has been severe strain in the operations and financials of the wholly owned subsidiary company Manugraph Americas Inc. over the years. The operations were substantially scaled down and were carried out on a cash neutral basis. Over the years, we also managed to reduce the exposure to debts significantly. However, considering that there were no new orders for presses over the past 12 months and no clear visibility of any forthcoming cases, the management decided to voluntarily wind up the operations. Accordingly, a petition under Chapter 11 was filed at the US Bankruptcy court, middle district of Pennsylvania on June 1, 2017. Presently, the proceedings are managed as a debtor in possession under the supervision of the court. As of March 2018, substantially all the movable assets have been disposed off. A realtor has been appointed for sale of the property and the same has been listed. Accounts for the year ended March 2018 has been prepared on a discontinued operations basis. Accordingly, the equity value has been fair valued and necessary provision for impairment has been made in the accounts.
Constrad Agencies (Bombay) Pvt. Ltd.
During the year, there was no major business activity in the Company. The Holding Company viz. Manugraph India Limited invested Rs, 20 Lakhs in this subsidiary company to enable the subsidiary company to meets is routine administrative expenses.
A report on the performance and financial position of each of the subsidiaries, associates and joint ventures as per the Companies Act, 2013 is provided after Consolidated Financial Statements. The policy for determining material subsidiaries as approved by the Board may be accessed on the Company's website viz. www.manugraph.com.
In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, the Consolidated Financial Statements forms part of this Annual Report. The financial position and performance of each of the said subsidiary companies are given in the statement containing the salient features of the financial statements of the said subsidiary companies of the Company, which is annexed to this report.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone financial statements and the consolidated financial statements and all other documents required to be attached thereto has been hosted on its website www.manugraph.com. Further, in accordance with the fourth proviso to the said section, the audited annual accounts of each of the said subsidiary companies of the Company have been hosted on the Company's website www.manugraph.com.
Any shareholder interested in obtaining a physical copy of the aforesaid financial statements may write to the Company Secretary at the Registered Office of the Company. Further, please note that the said financial statements will also be available for inspection by the Members of the Company at the Registered Office of the Company during business hours from 11.00 a.m. to 1.00 p.m. on all working days except Saturdays, Sundays, Bank Holidays and National Holidays.
BOARD OF DIRECTORS
The Board of Directors on the recommendation of the Nomination & Remuneration Company, appointed Mrs. Basheera Indorewala as an Additional Independent Director of the Company w.e.f. February 7, 2018. A brief profile of Mrs. Indorewala is provided in the notice convening the ensuing Annual General Meeting ('AGM').
Mrs. Indorewala holds office only up to the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose Mrs. Indorewala's appointment as a Director.
Necessary declaration has been received from Mrs. Basheera Indorewala that she meets the criteria of Independence prescribed under Section 149(6) of the Act and the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 25(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.
Your Directors recommend the appointment of Mrs. Basheera Indorewala as an Independent Director for a period of 5 years, not liable to retire by rotation.
In accordance with the provisions of the Companies Act, 2013 and Company's Articles of Association, Mr. Sanjay S. Shah retires by rotation and is eligible for re-appointment. The Board recommends his re-appointment. None of the independent directors are due for retirement.
Brief profile of Mr. Sanjay S. Shah proposed to be re-appointed as Director of the Company is provided in the notice convening the ensuing AGM.
Declaration of Independence
All the Independent Directors of the Company have given their respective declarations stating that they meet the criteria prescribed for independence under the applicable laws and in the opinion of the Board, all the Independent Directors of the Company meet the said criteria.
Board Evaluation
Evaluation of performance of all Directors is undertaken annually. The Company has implemented a system of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects. The Board of Directors has expressed their satisfaction with the evaluation process. The evaluation parameters and the process have been explained in the Corporate Governance Report.
Independent Directors also reviewed the performance of non-independent Directors and the Board as a whole in line with the Company's policy on Board Evaluation.
Appointment & Remuneration Policy
The Board of Directors had reviewed Policy for Appointment of Directors and Senior Management and Evaluation of Directors' Performance, copy of which is placed on the website of the Company viz. www.maugraph.com.
Non Executive Directors
The Non Executive Directors ('NED') are paid remuneration by way of Sitting Fees. During the year, the Company paid sitting fees of ' 15,000/- per meeting to the NEDs for attending meetings of the Board & Audit Committee and ' 9,000/- per meeting to the NEDs for attending Nomination & Remuneration Committee meeting.
Executive Directors
Executive Directors are paid remuneration by way of salary, perquisites, allowances and commission. Salary is paid within the range fixed by the members of the Company.
Management Staff
Remuneration of employees largely consists of basic remuneration, perquisites, allowances and performance incentives. The components of the total remuneration vary for different grades and are governed by industry patterns, qualifications and experience of the employee, responsibilities handled by him, his annual performance, etc.
DISCLOSURES
Meetings of the Board
Four Board Meetings were held during the year and the gap between any two Board Meetings was not more than one hundred and twenty days, thereby complying with applicable statutory requirements. The meetings were held on May 26, 2017, September 14, 2017, November 23, 2017, and February 7, 2018.
Board Committees
As on March 31, 2018, the Board had four committee viz. Audit Committee, Stakeholders Relationship Committee, Nomination & Remuneration Committee and Corporate Social Responsibility (CSR) Committee. A detailed note on composition, functions and roles of each of the Committees are provided separately under Corporate Governance Report of this Annual Report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons or entities which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Attention of members is drawn to the disclosure of transactions with related parties set out in Note No. 31 of Standalone Financial Statements, forming part of the Annual Report.
The policy on Related Party Transactions as approved by the Board is available on website of the Company viz.: www.manugraph. com.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company aims to further the socio economic welfare to the lesser privileged and to those in need through its CSR activities. Your Company lays special emphasis on education and vocational training of youth including females in the local community for their economic empowerment. In order to achieve this objective your Company continues to support Industrial Training Institutes.
Apart from the above, the Company provides education and other loans to employees which enable their children for higher education.
Since the Company has not earned profits in the previous financial year, the Company is not mandatorily required to contribute towards CSR activities. The Annual Report on our CSR Activities is appended as 'Annexure A' to this report.
EXTRACTS OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is available on the website of the Company viz. www. manugraph.com.
STATUTORY AUDITORS
The members of the Company at its Annual General Meeting held on August 27, 2014 have appointed M/s. Natvarlal Vepari & Co., Chartered Accountants, as the Statutory Auditors of the Company to hold office up to the conclusion of the fifth consecutive annual general meeting of the Company.
M/s. Natvarlal Vepari & Co. has confirmed their eligibility as Statutory Auditors. M/s. Natvarlal Vepari & Co. has also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
The report of the auditors to the shareholders is a part of the Annual Report. The notes to the Accounts, that are a part of the financial statements, are self-explanatory and need no further clarifications or explanations.
During the year under review, neither the Statutory Auditors nor the Secretarial Auditors has reported to the Audit Committee any instances of fraud committed against the Company by its officers or employees of the Company.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the relevant provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Aashish K. Bhatt & Associates, a Company Secretary in Practice to act as Secretarial Auditor of the Company for the financial year 2017-18. The Report of the Secretarial Audit is annexed herewith as 'Annexure C'. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
COST AUDITOR
Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications / Circulars issued by the Ministry of Corporate Affairs from time to time, the Board has appointed M/s. C.S. Adawadkar & Co., Cost Accountants, to conduct the audit of the cost records of the Company for the financial year 2017-18.
The Cost Audit Report is required to be filed within 180 days from the end of the financial year. The Cost Audit Report for the financial year ended March 31, 2017 was filed within the due date and for March 31, 2018 will be filed within the prescribed period.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
(i) that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.
(ii) that such accounting policies have been selected and applied consistently and judgment 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, 2018 and of the loss of the Company for the year ended on that date;
(iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the annual financial statements have been prepared 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; and
(vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
CORPORATE GOVERNANCE
The Company believes that sound corporate governance is a key element for enhancing and retaining the trust of investors and various other stakeholders. The Company observes high standards of corporate governance in all areas of its functioning with strong emphasis on transparency, integrity and accountability. Corporate Governance is a journey for constantly improving sustainable value creation.
As required under the provisions of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, a separate report on Corporate Governance forms part of this Annual Report, together with a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance.
HUMAN RESOURCES
Employees are vital to the Company. Your Company considers that 'the power of knowledge engineering' is powered by its people. To achieve its aim of attracting, retaining and developing a committed workforce, your Company sustained various growth and developments initiatives during the year. However, Long-term settlement agreement with workers has delayed because of very high demand for hike in already high wage levels. The Company is at advance stage of negotiations for settlement with the Labour Union.
Your Company is committed to provide a healthy and safe work environment free from accidents, injuries and occupational health hazards.
The Company had a total of 996 permanent employees as on March 31, 2018.
Particulars of Employees
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act and Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) have been appended as Annexure B to this report. Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of the Rules are available at the Registered Office of the Company during working hours, 21 days before the Annual General Meeting and shall be made available to any shareholder on request. Such details are also available on your Company's website www.manugraph.com.
The Company states that there are no employees (other than Managing Directors) employed throughout the financial year 2017-18 and drawing a salary of ' 1.02 crore per annum or more or employed for part of the year and in receipt of remuneration of Rs, 8.50 Lakhs or more per month as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The details of salary paid to Managing Directors are part of Corporate Governance Report, forming part of this Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
RISK MANAGEMENT
In a rapidly changing business environment, companies in printing industry face numerous risks that impact their businesses. It is therefore, imperative to identify and address these risks and at the same time leverage opportunities for achieving business objectives.
To establish and maintain a system of risk management and internal control, the Board periodically reviews the risk management system and maintenance of a risk profile (both financial and non-financial risks).
A brief report on risk evaluation and management is provided under Management's Discussion and Analysis Report forming part of this Annual Report.
INTERNAL FINANCIAL CONTROLS
The Company has a well placed, proper and adequate IFC system which ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. The Company's IFC system also comprises due compliances with Company's policies and Standard Operating Procedures (SOPs).
The Company has appointed Internal Auditors who report to Audit Committee of the Board. The Audit Committee reviews internal audit reports periodically based annual internal audit plan.
WHISTLE BLOWER POLICY
The Company has in place a whistleblower policy, to support the Code of Business Ethics. This policy documents the Company's commitment to maintain an open work environment in which employees, consultants and contractors are able to report instances of unethical or undesirable conduct, actual or suspected fraud or any violation of Company's Code of Business Ethics at a significantly senior level without fear of intimidation or retaliation.
The Whistle Blower Policy has been posted on the website of the Company viz. www.manugraph.com.
DISCLOSURE IN TERMS OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has set up an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of women employees at workplace. During the year, there were no complaints relating to sexual harassment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed as 'Annexure D'.
CAUTIONARY STATEMENT
Statements in the Directors' Report & Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be forward looking statements. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company's operations include cyclical demand, changes in government regulations, tax regimes, economic development and other ancillary factors.
APPRECIATIONS
Your Directors would like to thank all stakeholders, namely, customers, shareholders, dealers, suppliers, bankers, employees and all other business associates for the continuous support given by them to the Company and its Management.
For and on behalf of the Board
Place : Mumbai Sanat Shah
Date : May 24, 2018 Chairman
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