BOARD'S REPORT To, The Members, Hawa Engineers Ltd. Your Directors have pleasure in presenting the Twenty Second Annual Report together with the Audited Statements of Accounts for the Year ended 31st March, 2015. OPERATIONAL OVERVIEW: During the Year under review, the total revenue from operations (gross) of your Company stood at Rs 5110.33 lacs as against Rs. 5329.86 lacs for FY 2013-14 showing a decrease of 4.12%. One of the reasons for the reduction in turnover is slowdown of economy. However, Earnings before interest, tax, depreciation and amortization (EBITDA) were Rs. 231.36 lacs registering a growth of 12.83% over the EBITDA of Rs. 205.05 lacs in 2013-14. Profit after tax (PAT) for the year was Rs. 68.36 lacs recording a decline of 24.55% over the PAT of Rs. 90.60 lacs in 2013-14. The movement of finished products from factory, arrangement of raw materials etc was satisfactory in comparison to previous financial year. The staff and workers put their sincere effort in the operation of the plant and achieving efficiency in the production level. During the Year under review, export realization has increased from Rs. 265.37 lacs to Rs. 413.22 lacs and your director feels proud in saying that we have been successfully able to expand our horizon in the International market. However, expenditure in foreign Currency has also increased from Rs. 12.42 lacs to Rs. 31.21 lacs as compared to that of Previous Year (2013-14). Your Directors have taken appropriate remedial action to mitigate the adverse circumstances and are hopeful of better performance and results during the current year. Your Company has taken effective steps to improve its production and sales during the year under review. APPLICATION FOR LISTING OF SECURITIES ON BOMBAY STOCK EXCHANGE: Your Directors feel proud to inform you that we have applied for listing of your equity shares on Bombay Stock Exchange Limited (BSE), Mumbai. Necessary formalities have been complied with and in few weeks, our shareholders will be able to successfully trade on BSE platform. DIVIDEND: The Company has made the profits during the year, but to conserve the resources, the Directors do not recommend Dividend this year. TRANSFER TO RESERVES: The Company proposes to transfer Rs. 75 lacs to the general reserve out of the amount available for appropriation and an amount of Rs. 28.30 lacs is proposed to be retained in the profit and loss account. HUMAN RESOURCE: The company has continued to maintain harmonious and cordial relations with its officers, supervisors and workers enabling the Company to maintain the pace of growth. Training is imparted to employees at all levels and covers both technical and behavioral aspects. MANAGEMENT DISCUSSION AND ANALYSIS: As per the provisions set out in the Clause 49 of the Listing Agreement, Management Discussion and Analysis forms part of this Annual Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: Loans, Guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report. FIXED DEPOSITS: Your Company has not accepted any Fixed Deposits and, as much, no amount of principle or interest was outstanding as on date of Balance Sheet. SUBSIDIARIES AND ASSOCIATES: No disclosure under the provisions of the Companies Act, 2013 and Rules made there under is required by the Company as there is no Subsidiary, Associate or Joint Venture Company. In accordance with the Provisions of Section 136 of the Companies Act, 2013, the Audited Financial Statements, auditor's report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting are available on Company's Website www.hawaengltd.com . CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES: There have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. PARTICULARS OF EMPLOYEES: The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure I to the Board's Report. There is no employee employed throughout the Financial Year and in receipt of remuneration of Rs. 60 lacs or more, or employed for the part of the year and in receipt of Rs. 5 lacs or more a month. Hence, no disclosure is required pursuant to Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. DIRECTOR'S RESPONSIBILITY STATEMENT: Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; (b) 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; (c) the Directors have 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; (d) the Director's have prepared the annual accounts on a "Going concern basis"; (e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CORPORATE GOVERNANCE: The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Secretarial Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. DIRECTORS AND KEY MANAGERIAL PERSONNEL: Pursuant to the provisions of Section 149 of the Act, this came into effect from April 1, 2014, Mr. Mahboob Abdul Rehman Shaikh and Mrs. Sabana Amjad Rehmani (woman director) were appointed as independent directors at the annual general meeting of the Company held on 30th September, 2014. The terms and conditions of appointment of independent directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year. Mr. Asad Kagdi retires by rotation and being eligible has offered himself for re-appointment. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company. Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the appointments of Mr. Aslam Kagdi, Chief Financial Officer for a period of 5 years and Mr. Dhanesh Pravinbhai Shah, Company Secretary as key managerial personnel of the Company were formalized in the meeting of Board of Directors of the Company held on July 03, 2015. NUMBER OF MEETINGS OF THE BOARD: The Board met Seven times during the Financial Year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed under Companies Act, 2013. DECLARATION BY INDEPENDENT DIRECTORS: The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION: The Current Policy is to have an appropriate mix of Executive and Independent Directors to maintain the independence of the Board, and separate its functions of Governance and Management. As on 31st March, 2015, the Board consists of 10 Directors, 4 of whom are Executive or Whole-time Directors, and 6 are NonExecutive Directors, of which 5 are Independent Directors. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on Director's appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of directors, and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by Board, is available on Company website: www.hawaengltd.com EVALUATION OF PERFORMANCE OF BOARD: The Board of directors has carried out an formal annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreement ("Clause 49"). The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. COMMITTEES OF THE BOARD: The details pertaining to composition of various committees as per the provisions of Clause 49 of Listing Agreement and Companies Act, 2013 are included in the Corporate Governance Report, which forms part of this report. FAMILIARISATION PROGRAMME The Company undertook various steps to make the Independent Directors have full understanding about the Company. The details of such familiarisation programmes have been disclosed on the Company's website: www.hawaengltd.com INTERNAL FINANCIAL CONTROLS: The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report. RISK MANAGEMENT: Apart from normal business risk, no major risk is foreseen that in the opinion of the Board may threaten the existence of the Company. During the Year, the Board has decided that Audit Committee shall identify risk, assess, monitor, review and report the risk engaged in the business and shall also carry out the role of Risk Management. AUDITORS AND AUDITORS' REPORT: Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s Nawab Memon & Associates (FRN: 129819W), Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the Twenty First annual general meeting (AGM) of the Company held on September 30, 2014 till the conclusion of the twenty fourth AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. However, due to Pre-occupation in other Activities, M/s Nawab Memon & Associates (FRN: 129819W) tendered their Resignation from the post of Statutory Auditor of the Company resulting into Casual Vacancy. Board of Directors in their meeting held on 16th February, 2015 recommended M/s Yusuf C. Mansuri & Co. (FRN: 111768W), Chartered Accountants, Ahmedabad to fill the Casual Vacancy and their appointment was approved in the Extra-ordinary General Meeting of the Members held on 28th March, 2015 till the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITOR: The Board has appointed M/s Samdani Shah & Associates, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith marked as Annexure II to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure III in the prescribed Form MGT-9, which forms part of this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: A) CONSERVATION OF ENGERGY: i. Steps taken or impact on conservation of energy: Though the company is not a power intensive unit, it has always emphasized the importance of energy conservation at each stage of operation and is in the process of implementing all possible measures of minimizing power consumption. ii. Steps taken by the Company for utilizing alternative sources of energy: Not Applicable iii. Capital Investment on energy conservation equipments: Not Applicable B) TECHNOLOGY ABSORPTION: i. Efforts made towards Technology Absorption: Our Company has successfully introduced the Investment Casting Process in steel and Stainless steel of various grades in the manufacturing of Valves. The company's products have been modernized to confirm to international standards of API, BS and DIN. ii. the benefits derived like product improvement, cost reduction, product development or import substitution : Not Applicable iii. in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) : Not Applicable iv. the expenditure incurred on Research and Development : Not Applicable DISCLOSURES: 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: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 4. 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. As per the requirement under The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with rules made there under, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment. ACKNOWLEDGEMENT: The Directors wish to convey their gratitude and appreciation to all of the Company's employees for their tremendous personal efforts as well as their collective dedication and contribution to the Company's performance. The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company and the Management. For and on behalf of the Board of Directors Sd/- Aslam Kagdi Chairman and Managing Director DIN: 00006879 Place : Ahmedabad Date : 29th May, 2015 |