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Carnation Industries Ltd.

BSE: 530609 | NSE: | Series: NA | ISIN: INE081B01010 | SECTOR: Castings & Forgings

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2006

Director’s Report

Dear Members, The Directors are pleased to present the 32nd Annual Report and the Audited Financial Statement of the Company for the financial year ended 31st March, 2015. FINANCIAL PERFORMANCE (Rs. in Lacs) For Year ended 31.3.2015 Revenue from operation and other operating revenue: Export Sales (Net of Freight) 9030.29 Domestic Sales (Net of Central 150.25 Excise and Vat) Export Incentives 425.82 Other Income 314.30 9920.66 Profit before Finance Costs, 993.17 Depreciation & Amortisation and Tax Finance Costs 654.25 Depreciation & Amortisation 161.83 Profit/(Loss) before Tax 177.09 Provision for Tax - Current 40.00 - Deferred (4.87) - Tax for Earlier Years 1.71 Profit/(Loss) after Tax 140.25 Surplus brought forward from 290.58 previous year Available Surplus/ (Deficit) for appropriation 430.83 Proposed Dividend 20.74 Dividend Distribution Tax 4.15 Surplus/(Deficit) carried to Balance Sheet 405.94 For Year ended 31.03.2014 Revenue from operation and 8970.96 other operating revenue: 207.31 Export Sales (Net of Freight) Domestic Sales (Net of Central 482.38 Excise and Vat) 172.81 Export Incentives 9833.46 Other Income 1022.24 Profit before Finance Costs, 558.53 Depreciation & Amortisation and Tax 180.20 Finance Costs 283.51 Depreciation & Amortisation Profit/(Loss) before Tax 58.40 Provision for Tax (13.81) - Current 0.76 - Deferred 238.16 - Tax for Earlier Years 84.78 Profit/(Loss) after Tax Surplus brought forward from previous year 322.94 Available Surplus/ (Deficit) 27.66 for appropriation 4.70 Proposed Dividend 290.58 Dividend Distribution Tax Surplus/(Deficit) carried to Balance Sheet FINANCIAL REVIEW During the financial year ended 31st March, 2015 the Company has achieved total revenue (net) from operations of Rs. 9920.66 lacs against Rs. 9833.46 lacs in the previous year. The profit before Finance Cost, Depreciation & Amortisation and Tax was Rs. 993.17 lacs against Rs.1022.24 lacs in the previous year. The profit before tax was Rs.177.09 lacs against Rs. 283.51 lacs in 2013- 2014. The profit after tax was Rs.140.25 lacs against Rs.238.16 lacs in 2013-2014. Cash generation from operation was at a lower level than previous year due to increase in sundry debtors. The refund of input tax credit is better but still slow which has compounded the liquidity problem. The management has taken appropriate steps to ensure expeditious realization of the input tax credit and the export proceeds. DIVIDEND Your Directors have recommended a dividend of 6% (Re. 0.60 per Equity Share of Rs.10 each) for the financial year ended March 31,2015 subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. The dividend together with the dividend tax will entail a cash outlay of Rs.24.89 lakhs. The dividend will be paid to members whose names appear in the Register of Members as on 23rd September, 2015; in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date. POLLUTION CONTROL MEASURES The pollution control measures installed in the units of the Company are in full operation as required under the statutes. SUBSIDIARY AND ASSOCIATE COMPANIES The Company does not have any Subsidiary or Associate Companies. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Companies Act, 2013 and as per the Articles of Association of the Company Mr. Arun Kumar Bose (DIN: 00131295), Whole time Director, will retire by rotation at the ensuing Annual General Meeting and being eligible , offers himself for reappointment. Dr. Sephali Roy (DIN: 07151823) was appointed as an Additional cum Independent Director of the Company and shall hold office upto the date of the Annual General Meeting. The Company has received a notice from a member of the Company proposing her candidature for the office of the Directorship of the Company. Mr. Ravindra Prakash Sehgal (DIN:00119477) was appointed as the Managing Director of the Company for a period of five years with effect from 1.9.2010. The Board of Directors at its meeting held on 12th February, 2015 approved the re-appointment of Mr. Ravindra Prakash Sehgal for a further period of five years with effect from 1.9.2015. Mr. Sehgal is subject to retirement by rotation. Mr. Suvobrata Saha (DIN: 00131180) was appointed as the Jt. Managing Director of the Company for a period of five years with effect from 1.9.2010. The Board of Directors at its meeting held on 12th February, 2015 approved the reappointment of Mr. Suvobrata Saha for a further period of five years with effect from 1.9.2015. Mr. Saha is subject to retirement by rotation. The Board of Directors of the Company has appointed Mr. Biplab Ganguly as Chief Financial Officer of the Company at its Board Meeting held on 13.8.2014. None of the Directors of the Company are disqualified for being appointed/re-appointed as Directors, as specified in Section 164 of the Companies Act, 2013. The Board recommends the appointment/re-appointment of the above Directors with a view to avail their valuable advices and wise counsel. A brief profile of the above Directors seeking appointment/ re-appointment required under Clause 49 of the Listing Agreement, is given in the Notice of AGM. DECLARATION OF INDEPENDENCE Your Company has received declaration from the Independent Directors as prescribed under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as provided in Section 149(6) of the Act read with Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. FAMILIARIZATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS The Independent Directors are familiarised with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. On appointment, the Independent Director is issued a Letter of Appointment setting out in detail, the terms of appointment, duties and responsibilities. ANNUAL EVALUATION OF BOARD''S PERFORMANCE Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual Directors. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Non Independent Directors and Board as a whole was also carried out by the Independent Directors. The Directors expressed their satisfaction over the evaluation process and results thereof. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE During the Financial Year, four meetings of the Board of Directors and seven meetings of the Audit Committee of the Company were held, the details of which are given in the Corporate Governance report which forms a part of this report. The intervening gap between the Board meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. AUDIT COMMITTEE The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee. NOMINATION AND REMUNERATION COMMITTEE The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. STAKEHOLDERS'' RELATIONSHIP COMMITTEE The composition and terms of reference of the Share transfer cum Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. MEETING OF INDEPENDENT DIRECTORS During the year under review, a meeting of Independent Directors was held on 27th March, 2015 wherein the performance of the Non-Independent Directors and the Board as a whole was reviewed. The Independent Directors at their meeting also assessed the quality, quantity and timeliness of low of information between the Company''s management and the Board of Directors 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: i) In the preparation of the annual accounts for the year ended March 31,2015, the applicable accounting standards read with the requirements set out under Schedule III to the Companies Act, 2013 have been followed and there are no material departures from the same; ii) 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; iii) The Directors have 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; iv) The Directors have prepared the annual accounts of the Company on a going concern basis; v) Proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and are operating effectively; and vi) Proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively. TRANSFER TO RESERVES The Company did not transfer any amount to reserves. PUBLIC DEPOSITS During the financial year 2014-15, your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. CHANGES IN SHARE CAPITAL There was no change in the share capital of the Company for the F.Y. 2014-2015. MATERIAL CHANGES AND COMMITMENTS AFTER THE BALANCE SHEET DATE There have been 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 statements relate and the date of the report. CORPORATE GOVERNANCE Your Company complies with the provisions relating to Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance along with the Auditors Certificate thereon form part of the Annual Report. BUSINESS RESPONSIBILITY REPORT A business Responsibility Report as per Clause 55 of the Listing Agreement, detailing the various initiatives of your Company forms an integral part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND RESEARCH AND DEVELOPMENT The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo to be disclosed under the Act, are provided in Annexure - A to this report. RELATED PARTY TRANSACTIONS During the financial year 2014-15, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definition Details) Rules, 2014 which are in the ordinary course of business and on arms'' length basis and in accordance with the provisions of the Companies Act, 2013. During the financial year 2014-15, there were no transactions with related party which qualify as material transactions under the Listing Agreement. The details of the related party transactions as required under Accounting Standard - 18 are set out in Other Notes (28-xii) which is forming part of the Annual Report. The particulars of every contract entered into by the company with Related Parties referred to in Section 188(1) of the Companies Act, 2013 as prescribed under the Companies (Accounts) Rules, 2014 is appended as Annexure - B hereto and forms part of this Report. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULAR OF EMPLOYEE In accordance with Section 178 and other applicable provisions, if any, of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on 13th November, 2014 formulated the Remuneration Policy of the Company. The salient aspects of the Remuneration Policy, on the appointment and remuneration of the Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report. The remuneration policy of the Company is being set out as Annexure - C to this report and has also been uploaded on the website : www.carnationindustries. com of the Company. PARTICULARS OF EMPLOYEES Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out as Annexure - D to this report. Disclosure under Rule 5(2) of the Companies (Appointment & Remuneration) Rules, 2014 is not applicable to your Company as none of the employees are drawing salary more than the limit prescribed under the aforesaid Rules. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 are set out herewith as Annexure - E to the Report. STATUTORY AUDITORS The Auditors M/s. Jain & Bagaria, Chartered Accountants, Statutory Auditors of the Company, were appointed at the 31st AGM to hold office till the conclusion of the 34th AGM. The Board in terms of Section 139 of the Act, on the recommendation of the Audit Committee, has recommended for the ratification of the Members the appointment of M/s Jain & Bagaria from the conclusion of the ensuing AGM till the conclusion of the 33rd AGM. Appropriate resolution in respect of the above is appearing in the Notice convening the 32nd AGM of the Company. In this regard, the Company has received a certificate from the auditors to the effect that if they are re-appointed, it would be accordance with the provisions of Section 141 of the Companies Act, 2013. COST AUDITOR In compliance with the Central Government''s Order your Board had appointed Mr. Deep Narayan Bandhyopadhyay, Cost Accountant, to carry out the Cost Audit of the Company for F.Y. 2014- 2015. However, Ministry of Corporate Affairs came out with a notification on 31.12.2014 under the Companies (Cost Records and Audit) Amendment Rules, 2014 wherein your Company, being an export oriented company, has been excluded from the purview of Cost Audit from F.Y. 2015-2016. Therefore Cost Audit is no more applicable to the Company. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Manoj Kumar Banthia, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as Annexure-F to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. LOANS, GUARANTEE AND INVESTMENTS The Company has not lent out any money or made any investment or provided any guarantee during the year under review. SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS /COURT There are no significant material orders passed by the regulator/court which would impact the going concern status of the Company and its future operations. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility is not applicable to your Company pursuant to Section 135 of the Companies Act, 2013. VIGIL MECHANISM Your Company has formulated a Whistle Blower Policy pursuant to the provisions of Section 177(10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby employees can raise their issue against any kind of harassment, victimization or any other unfair practice being adopted against them. The Whistle Blower Policy has been uploaded on the website : www.carnationindustries.com of the Company. STOCK EXCHANGE The Equity Shares of the Company are listed with BSE Limited and The Calcutta Stock Exchange Limited. POLICY ON PREVENTION OF SEXUAL HARASSMENT The Company has adopted a policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year ended 31st March, 2015 the Company has not received any Complaints pertaining to Sexual Harassment. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation and thanks to the Banks, Financial Institutions, various Government Authorities for their valuable assistance and co-operation for the trust and confidence reposed in the Company by the Customers and Shareholders. Your Directors also thank the Executives, Staff and Workforce of the Company for their efficient and dedicated services. On Behalf of the Board of Director R. P. Sehgal (Managing Director) Place: Kolkata Suvobrata Saha Date: 12th August, 2015 (Jt. Managing Director)

Director’s Report