DIRECTORS' REPORT Dear Shareholders, Your Directors have great pleasure in presenting the 57th Annual Report together with the Audited Annual Accounts of the Company for the financial year ending 31st March 2015. DIVIDEND Your Directors are pleased to recommend a dividend @ Rs. 1.00 per Equity Share (10%) on the paid up capital of the Company for the year 2014-15, which if approved at the forthcoming AGM, will be paid to all those Equity Shareholders whose names appear (i) As Beneficial Owners as at the end of the business hours on 10th September, 2015 as per the list to be furnished by the depository in respect of the shares held in electronic form and, (ii) As member in the Register of Members of the Company after giving effect to all valid shares transfers in physical form lodged with the Company on or before 10th September, 2015. Your Directors also proposed to carry Rs. 1 crores to its General Reserve. OPERATIONS Your Company could achieve turnover of Rs.31955.32 lacs as against the previous year's turnover of Rs. 31362.85 lacs i.e. an Increase of 592.47 lacs (1.89%). The Company has been successful in increasing its export sales from Rs. 6907.73 lacs in previous year to Rs. 6996.85 lacs in current year i.e. an increase of Rs. 89.12 lacs (1.29%). Your Company has achieved PAT of Rs. 855.99lacs as against the previous year of Rs. 840.85 lacs i.e. an increase of Rs. 15.14 lacs (1.80%) JOINT VENTURE A joint venture agreement was entered into on August 1, 2006 with Rexam Beverage Can (India Holdings) Limited, U.K. a Rexam PLC, UK Group Company. The JV is established to manufacture, distribute and market two piece cans under the terms of which the Company and Rexam invested 49% (Forty Nine percent) and 51% (Fifty One percent) in the share capital of the Joint Venture Company, respectively. This Joint Venture Agreement was subsequently amended by the Company, Rexam and the Joint Venture Company from time to time. Pursuant to the provisions of the Joint Venture Agreement (as amended by the Addenda from time to time), the Company was holding 32,85,250 (Thirty Two Lakhs Eighty Five Thousand and Two Hundred and Fifty) equity shares in the Joint Venture Company ("Sale Shares") constituting 0.61% of the total issued and paid up equity share capital of the Joint Venture Company. As authorised by the Board at its meeting held on 5th Nov 2014, the Company had negotiation with Rexam HTW Beverage Can (India) Private Limited and sold the investment of 32,85,250 equity shares of Rs. 10 each of the JV to other partner M/s Rexam Beverage Can (India Holdings) Limited at USD 2 million on 17th April 2015. Consequently Mr. Sanjay Bhatia and Mr. Vijay Kumar Bhatia also resigned from the Board of JVC on 17th April 2015. However Management Services Agreement will continue till 30.06.2015 and Trade Mark License Agreement will continue till 31.03.2016. DIRECTORS In terms of the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company Mr. Vijay Kumar Bhatia retires at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board of Directors of the Company has a healthy blend of executive and non executive Directors which ensures the desired level of independence in functioning and decision making. All the non executive Directors are eminent professional and bring in wealth of expertise and experience for directing the management of the Company. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134 (3) (c) of the Companies Act, 2013 with respect to directors' responsibility statement, it is hereby confirmed that: - (a) In the preparation of the Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any. (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 31st March, 2015 and of the profit of the Company for that period. (c) We had taken proper and sufficient care 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. (d) We had prepared the Annual Accounts on a going concern basis: and (e) We 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) We had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A report in the form of Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement, as a part of this report is annexed hereto as Annexure - I. LOANS AND INVESTMENTS BY THE COMPANY Details of loans and investments made by the Company are given in notes to the financial statements. DEPOSITS During the year under review, the company has not accepted any deposit under Section 76 of the Companies act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. CORPORATE GOVERNANCE A report on Corporate Governance, along with a certificate from the Statutory Auditors of the Company detailing the compliance of Corporate Governance norms as enumerated in clause 49 of the listing agreements with the Stock Exchanges, is annexed as Annexure - II. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGERIAL PERSONNEL The Company has laid down a code of conduct for the Board Members and Senior Managerial Personnel of the Company. All Board Members and Senior Managerial Personnel have affirmed compliance with the Code of Conduct for the year 2014-2015. A declaration by Mr. Sanjay Bhatia, Managing Director, as to the compliance of the Code of Conduct by the Board Members and Senior Managerial personnel has been placed before the Board at its meeting held on 31st July, 2015, is enclosed as Annexure-III. VIGIL MECHANISM The Company has in place a whistle blower 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 any fear of rejection. Individuals can raise their concerns by an e-mail, or telephone or direct interaction or a letter to the Chairman of the Audit Committee of the Company. The Policy on vigil mechanism and whistler blower policy may be accessed on the Company's website at the link: <http://www.hindustantin.biz/vigil-mechanism.html> and it duly forms a part of corporate governance. DISCLOSURES The CEO and Chief Financial Officer (CFO) have furnished to the Board in its meeting held on 31st July, 2015 a certificate with regard to the financial statements and other matters of the Company as on 31st March 2015 as required under clause 49 of the listing agreement. No material penalty or stricture was imposed on the Company by any statutory authority for non-compliance on matter related to capital markets, during the last three years. The Company is complying with all the mandatory requirements of the Listing agreement of Stock Exchanges on 'Corporate Governance'. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators/or Courts which would impact the going concern status of the Company and its future operations. AUDITORS M/s M. L. Puri & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Company has received intimation to the effect that their re-appointment, if made would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013 and also that they are not otherwise disqualified within the meaning of Section 139 & 141 of the Companies Act, 2013, for such appointment. COST AUDITORS The Company has appointed M/s K.S. Bhatnagar & Associates, Cost Accountants for conducting cost audit of the Company for the financial year ending 31st March, 2016. For the financial year 2013-14, the Cost Auditor has duly filed the Cost Audit Report as per details below:- Financial year Due date of filing Date of filing 2013-14 27.09.2014 24.09.2014 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 has appointed M/s Gupta Vinod & Company, Practicing Company Secretaries, as secretarial auditor of the Company for the financial year ended March 31, 2015, to conduct the Secretarial Audit of the Company and their report is annexed herewith as Annexure - IV and this report does not contain any qualification, reservation or adverse remark. CORPORATE SOCIAL RESPONSIBILITY (CSR) During the year under review, the Board of Directors on recommendation of the CSR Committee formulated the CSR policy of the Company. The CSR activities of the Company are implemented in accordance with the core values viz. protecting stakeholder interests, grow in a socially and environmentally responsible way and striving towards inclusive development. The Company has identified some important areas of engagement which are as under: • Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water; • Promoting education, including special education and employment enhancing vocation skills especially among children women, elderly, and the differently abled and livelihood enhancement projects; • Promoting gender equality, empowering women, setting up homes and hostels for women and orphans, setting up old age homes, day care centre and such other facilities for senior citizen and measures for reducing inequalities faced by socially and economically backward groups; • Ensuring environment sustainability, ecological balance, protection of flora and fauna, animal, welfare, agro forestry, conversation of natural resources and maintain quality of soil, air and water; • Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts; • Measures for the benefits of armed forces veterans, war widows and their dependents; • Training to promote rural sports, nationally recognized sports, Paralympics sport and Olympic sports; • Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Casts, the Scheduled Tribes, other backward classes, minorities and women; • Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government; • Rural development projects." Details of CSR policy forming part of annual report is annexed as Annexure - V INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY Your company believes in formulating adequate and effective internal control system and implementing the same to ensure that assets and interests of the Company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances. The internal control system is improved continuously to meet the changes in business conditions and statutory and accounting requirements as required from time to time. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvements for strengthening them. The Company has a robust Management information system which is an integral part of the control mechanism. The Audit Committee of Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. CREDIT RATING The Company has recently obtained credit rating from ICRA. ICRA has reaffirmed its credit rating of the Company as "A-" for long term and "A1" for short term. The rating derives strength from the Company's significant presence in India's Can Manufacturing sector, technologically advanced operations, proven management capability. REMUNERATION Disclosure pursuant to Section 197(12) of Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided below: (ii) the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary in the financial year: The remuneration of non-executive Directors by way of sitting fee for attending Board meetings was increased by 50% viz. Rs. 10,000 per meeting to Rs. 15,000 per meeting and for Audit Committee sitting fee was increased by 67% viz Rs. 3000 per meeting to Rs. 5000 per meeting w.e.f 11th February, 2015. The annual increase in the salary of Managing Director, Whole Time Director, Company Secretary and CFO is as below (iii) the percentage increase in the median remuneration of employees in the financial year: 8.8 % (iv) the number of permanent employees on the rolls of Company: 446 (Four hundred and Forty Six), as on 31 March, 2015. (v) the explanation on the relationship between average increase in remuneration and Company performance: The average increase in remuneration of the employees was 13.3%. The average increase in remuneration is closely linked to and driven by achievement of annual corporate goals and overall business, financial and operational performance of the Company. (vi) comparison of the remuneration of the key managerial personnel against the performance of the Company: The increment in the financial year 2014-15 was based on the performance in the financial year 2013-14 vis-a-vis financial year 2012-13. Despite an inflationary environment and increasingly fierce competition, extremely challenging domestic business environment, political turmoil and unrest in Middle east and Eurozone sovereign debt crisis, the Company delivers and achieves turnover of Rs. 31362.85 lacs in the financial year 2013-14 as against the turnover of Rs. 27281.73 lacs in the financial year 2012-13 i.e. an increase of Rs. 4081.12 lacs (14.96%). The Export Sales has also been increased from Rs. 4860.42 lacs to Rs. 6907.73 lacs i.e. an increase of Rs. 2047.31 lacs (42.12%). The Company has been successful in increasing its PAT from Rs. 734.89 lacs in the financial year 201213 to Rs. 840.85 lacs in in the financial year 2013-14 i.e. an increase of Rs. 105.96 lacs (14.42 %). (vii) variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer and Preferential Allotment : The Company had allotted equity shares under its IPO in May, 1995 at a price of Rs. 40/- per equity share including Premium of Rs. 30/- per share, the Company had further made Preferential Allotment and issue of Zero Coupon Convertible Warrants in August 2005 at the price of Rs. 44/- per equity share including Premium of Rs. 34/- per share (Zero Coupon Convertible Warrants were converted to equity shares in Feb 2007 i.e. after 18 Month). The market quotations/price of the shares of the Company as at 31 March, 2015 on BSE compared to the IPO price increased by 57.63% and compared to Preferential Allotment and Zero Coupon Convertible Warrants increased by 43.30%. (viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average increase in the remuneration* of employees was 13.6% other than the managerial personnel in the last financial year whereas the average increase in the remuneration of managerial personnel was 11.8% thus there was not any exceptional circumstances for increase in the managerial remuneration. *It does not include incentive bonus, leave encashment, gratuity, ex gratia being onetime payment/ based on net profit/production proformance/payments to LIC of India. (ix) comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company: The increase in the remuneration of Mr. Sanjay Bhatia, Managing Director, Mr. Vijay Kumar Bhatia and Mr. Ashok Kumar Bhatia, and Mr. PP Singh, Whole-Time Director is 11.1%, 14.0%, 14.0%, 4.9% respectively. The increase in remuneration of Mr. Rajat Pathak, VP (Finance) & Company Secretary and Mr. M.K. Mittal, AVP (Accounts) & CFO is 13.6% and 10.2 % respectively. The comparison of the remuneration against the performance of the Company is detailed in clause (vi) above. (x) the key parameters for any variable component of remuneration availed by the directors: Only commission payable to Managing Director is a variable component of remuneration availed by him which is linked as a percentage of net profit of the Company. (xi) the ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: Not applicable. (xii) Affirmation that the remuneration is as per the Remuneration Policy of the Company: The remuneration is as per the Remuneration Policy of the Company. PERSONNEL Particulars of employees as required under the provisions of Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, is not provided as there are no employees covered under it. PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE EARNINGS AND OUTGO. The information in accordance with the provisions of Clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are forming part of the Directors' Report for the year ended 31st March, 2015 is given in Annexure - VI. RELATED PARTY TRANSACTIONS All related party transactions entered into by the Company during the 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 which may have potential conflict with the interest of the Company at large . All related party transactions that were entered into during the financial year were on an arm's length basis. Details of such transactions are given in the Annexure - VII to this report. Further the following related persons were appointed during the financial year 2014-15 to the period from 01.04.2015 to 31.03.2020. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith in Annexure -VIII. ACKNOWLEDGEMENT The Board wishes to place on record with deep sense of satisfaction, their appreciation for the high degree of professionalism, commitment and dedication displayed by employees at all levels and the guidance, cooperation and assistance extended to the Company by its Bankers, Shareholders, Customers and Suppliers. For & on behalf of Board (SANJAY BHATIA) Chairman Place : New Delhi Date : 31st July, 2015 |