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Empire Industries Ltd.

BSE: 509525 | NSE: | Series: NA | ISIN: INE515H01014 | SECTOR: Glass & Glass Products

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

The Directors hereby present their Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2019.

1. FINANCIAL RESULTS:

Particulars

Year ended 31.03.2019 Rs. in Lakh

Year ended 31.03.2018 Rs.in Lakh

Income:

Revenue from Operations

52621.73

47331.03

Other Income

3260.62

2672.56

Total Revenue

55882.35

50003.59

Expenditure

Cost of Materials Consumed

13962.12

4490.13

Cost of Project

2112.06

5605.12

Purchase of Stock-in-Trade

11042.14

11575.83

Changes in Inventories of Finished goods and Stock-in-Trade

-2122.34

-304.77

Employee Benefit Expenses

9171.81

8089.95

Finance Costs

1967.83

1627.60

Depreciation and Amortization Expenses

1067.43

1253.40

Other Expenses

12573.11

11659.99

Total Expenses

49774.16

43997.25

Profit Before Tax

6108.19

6006.34

Tax Expenses

(1) Current Tax

1250.00

1300.00

(2) Deferred Tax

474.69

39.00

Profit after tax

4383.50

4667.34

Other comprehensive income

-49.64

17.08

Total comprehensive income for the period

4333.86

4684.42

Appropriated as under:

Proposed Dividend

1500.00

1500.00

Tax on Dividend

305.36

305.36

General Reserve

2528.50

2879.06

Total amount appropriated

4333.86

4684.42

Earnings per equity share (for discontinued & continuing operations). a) Basic

73.05

77.78

b) Diluted

73.05

77.78

2. DIVIDEND:

Your Directors are pleased to recommend a Dividend of Rs.25/per equity share of face value of Rs.10/- each for the year ended 31st March, 2019 subject to the approval of Members at the Annual General Meeting on 26th July, 2019, will be paid on or after 26th July, 2019 to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Friday, 19th July, 2019 to Friday, 26th July, 2019 (both days inclusive). The total dividend for the financial year will absorb Rs.1500 Lakh (Previous Year Rs.1500 Lakh). The tax on distributed profits, payable by the Company would amount to Rs.305.36 Lakh as against Rs.305.36 Lakh for the previous financial year.

3. OPERATIONS:

The Division-wise details are given below:

i. VITRUM GLASS

Vitrum Glass is an acknowledged leader in the manufacture and marketing of high quality amber glass bottles for the Pharmaceutical industry - both for India and abroad. The division’s fully automated plant produces more than one million glass bottles a day with sizes from 5 ml to 500 ml. Vitrum boasts of a clientele comprising of the best multinational pharmaceutical companies in India such as GlaxoSmithKline Pharmaceuticals Ltd., Pfizer Limited, Merck Limited, Wardex Pharmaceuticals and Cipla Limited among others. During the year, the division achieved a turnover of Rs.166 crores, a 6% increase from the previous year. Out of the total turnover, exports were Rs.33.91 crores, an increase of 58% from the previous year. The division is expected to perform well in the current financial year.

ii. EMPIRE MACHINE TOOLS - MFTM

(Metal Forming, Testing & Metrology)

The MFTM division is engaged in the business of Engineering Consultancy, covering sales, service and turnkey project support of imported machines procured from globally reputed companies in fields of Metal Forming, Welding, Vacuum Metallurgy, Heat Treatment, Stamping Dies and Computer Tomography. The Division relies on big investments in the private and public sectors. Given the sluggish market, the overall orders booked in the year were below expectation. G.S.T of 18% has been imposed on all revenues earned, thereby adversely affecting the profitability of this division.

iii. EMPIRE MACHINE TOOLS - MCAT (Metal Cutting & Allied Technologies)

The MCAT division represents many state of the art machine tool companies in metal cutting in the world such as Waldrich Coburg (Germany), WFL (Austria) and Goratu (Spain) among others. It serves many sectors such as Defence, Automobile, Aerospace, Heavy Engineering, Railways, Energy and Power, Steel, Tool rooms and Fabricators. During the year under review, the order in-flow has been good due to positive growth in the Automobile and Railway sectors. The division expects to perform well in the current year due to increased demand in the Automobile, Aerospace, Railways and Tool room/MSME sectors. The main focus of the division this year will be on Defence, Aerospace, Railway and Automobile sectors. G.S.T of Eighteen percent has been imposed on all revenues earned. This will erode the profitability of this division.

iv. EMPIRE INDUSTRIAL EQUIPMENT

The EIE division is in the business of sourcing equipment from abroad and also providing turnkey solutions to sectors such as Steel, Oil and Gas, Power and Infrastructure. These services include local supply chain management, customs clearance, inland transportation, site management including civil foundation, electrical cabling and Erection & commissioning. For the year under review, the division performed reasonably well considering a general slow-down of Investments in the infrastructure sector. The division expects to perform better in the forthcoming year as a significant improvement in the overall investment climate is expected. However, due to an imposition of Eighteen percent G.S.T on all revenues earned, profitability will be adversely affected.

v. EMPIRE VENDING (GRABBIT )

Grabbit is a market leader in providing premium vending services. It offers a wide range of vending products, snacks, beverages, perishables and sanitary care products. Through a combination of superior quality machines, use of advanced technology, and complete operational support (including seamless service delivery & prompt resolution of issues raised) - the customer is ensured the best value amongst all competitors in the market. Grabbit ’s proficiency is derived from years of experience in this industry. Ours was the first ever organized, automated vending service provider in the country. Grabbit has successfully built relationships with various reputed companies such as HSBC, Mondelez, Johnson & Johnson, Vodafone, Aurobindo Pharma etc. In the forthcoming year, it aspires to double the number of locations where its machines are installed.

vi. EMPIRE FOODS

The Empire Foods division imports various types of frozen food from across the globe, and sells to leading hotels, restaurants and caterers in the country. The division also processes prawns and shrimps (in Nellore, Andhra Pradesh) for exports to various countries around the world. i.e. USA, European Union, China, Vietnam and various countries within the Middle East. It received the “Excellence Award for Food Products” from the Indian Economic Development & Research Association for its contribution to the Food Industry in India. The division saw good growth in revenue but experienced pressure on margins due to Rupee fluctuation against other major currencies and an increase in price of its imported products. The current year has begun well both for exports as well as for distribution within India. The division is growing rapidly, and expects further growth this year.

vii. EMPIRE REAL ESTATE

This division manages Empire Industries Ltd’s owned properties comprising 10 lakh sq.ft. of Commercial and IT space. It boasts of an excellent clientele such as RBS, Black & Veatch, HDFC Bank, Zee Entertainment, ICICI Bank, CNBC TV 18, WPP and others. Its IT Park at Vikhroli, Mumbai, consists of 2 buildings - Empire Plaza 1 and Empire Plaza 2. Both buildings are 100% occupied. Its Commercial space at the Empire Complex located in Lower Parel, Mumbai, is currently 100% occupied.

Empire Industrial Centrum

This division is developing an integrated industrial township at Ambernath on its 35 acre plot of land. The project commenced in the year 2014-2015 and has received all necessary government approvals. Currently, 5 building are under development. These include 2 industrial and 3 residential buildings. It has registered a total of 5 buildings with RERA (2 industrial and 3 residential). Out of these, it has received Occupation Certificates from MIDC for 4 buildings (i.e 2 residential and 2 industrial). The Real Estate market is sluggish at the moment and therefore the progress will be slow.

The Empire Business Centre (TEBC)

Empire Business Centres offer fully furnished and built to suit serviced office spaces at Empire complex, Lower Parel and at the Fulcrum building at Andheri East Mumbai India. The Empire Business Centre (TEBC) is known for its high level of customer satisfaction and well-appointed contemporary infrastructure. It has had and continues to enjoy patronage of multinationals, SME and growing organizations including self-employed professionals. The products on offer include office space, virtual offices, meeting rooms and lounge / co-working spaces. Apart from its clients, the division enjoys excellent rapport with the broker fraternity both international and local. It has also augmented its digital presence to serve online customers. The division is currently exploring possibilities of starting other centres within Mumbai.

4. CAPITAL EXPENDITURE

The major Capital Expenditure is on account of Building (Rs.5.79 Lakh), Plant & Machinery (Rs.305.40 Lakh), Vehicles (Rs.224.43 Lakh), Furniture & Fixtures (Rs.347.69 Lakh) Office Equipment (Rs.46.85 Lakh), and Software (Rs.10.04 Lakh) and Capital Work-in-Progress ((Rs.4591.41 Lakh).

5. EXTRACT OF THE ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed to this report.

6. NUMBER OF MEETINGS OF THE BOARD

During the year Four Board Meetings and Four Audit Committee Meetings were convened and held. The details of these are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

7. 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 for the year ended March 31, 2019, 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 as at March 31, 2019 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 directors had prepared the annual accounts on a going concern basis;

(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;

“Internal Financial Controls” means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including the adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information;

(f) the directors had devised proper systems to ensure compliances with the provisions of the applicable laws and that such systems were adequate and operating effectively.

8. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.

9. COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 relating to the remuneration for the Directors, key managerial personnel, and other employees. As required by the rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the prescribed details are annexed to this report.

10. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK

There is no qualification, reservation or adverse remark or disclaimer made -

(i) by the auditor in his report; and

(ii) by the Company Secretary in practice in her secretarial audit report.

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT

There are no loans given, guarantees issued or investments made to which provisions of Section 186 are applicable to the Company.

12. CORPORATE GOVERNANCE

As per Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Listing Agreement with the Stock Exchange, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company’s Auditors confirming compliance forms an integral part of this Report.

13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

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 who 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. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The report of the Board in respect of the particulars of contracts or arrangements with related parties referred to sub-section (1) of section 188 in Form AOC-2 is annexed to this report.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, relating to the foregoing matters is given in the Annexure forming part of this report.

15. REPORT ON RISK MANAGEMENT POLICY

The Risk Management Committee with its members as Mr. Dileep Malhotra, Mr. Rajbir Singh and Mr. C. P. Shah performs its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

The Company has developed and implemented the CSR policy to carry out activities in health and education and also formed KARO Trust which has been registered on 12.03.2015 with Charity Commissioner, Mumbai for this purpose. The policy is put up on Company’s website. CSR report as per the provision of section 135 of the Companies Act, 2013 is annexed to this report.

17. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE

Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and compliance committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

18. TRANSFER OF SHARES/UNPAID/UNCLAIMED AMOUNTS TO IEPF

Pursuant to the provisions of Section 125 of Companies Act, 2013 the Unclaimed Dividend, Fixed Deposits and interest thereon which remained unpaid/unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Companies Act, 2013.

As per provisions of Section 125(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the Rules”) notified by the Ministry of Corporate Affairs effective from September 7, 2016, the Company is required to transfer all shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more in the name of Investor Education and Protection Fund (IEPF) Suspense Account established by the Central Government. Accordingly, the Company has transferred shares to IEPF Authority.

19. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

20. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made thereunder, the Company has constituted Internal Committees (IC). While maintaining the highest governance norms, the Company has appointed external independent persons, who have done work in this area and have requisite experience in handling such matters. During the year, no complaint with allegations of sexual harassment was received by the Company. In order to build awareness in this area, the Company has been conducting programmes in the organisation on a continuous basis.

21. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

22. SECRETARIAL AUDIT REPORT

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 Mrs. Deepa Gupta, Practicing Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed to this report.

23. DIRECTORS

In accordance with the provisions of the Companies Act, 2013, and the Articles of Association of the Company, Mr. Dileep Malhotra, having Director Identification Number 00027168, retire by rotation at this Annual General Meeting and being eligible offer herself for re-appointment. Mr. Chandrakant Poonamchand Shah (DIN: 00450394), Independent NonExecutive Director of the Company, whose term expires at this Annual General Meeting, has given his consent for reappointment as an Independent Non-Executive Director of the Company to hold office for second term of five consecutive years with effect from the conclusion of 118th Annual General Meeting to the conclusion of 123rd Annual General Meeting of the Company.

24. SUBSIDIARIES, JOINT VENTURE OR ASSOCIATE COMPANIES

There are no companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year.

25. DETAILS RELATING TO FIXED DEPOSITS

The details relating to deposits covered under Chapter V of the Act -

(a) Accepted during the year: Rs.2905.07 Lakh.

(b) Remained unpaid or unclaimed as at the end of the year: Rs.109.46 Lakh.

(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year Rs.1,00,000/- and if so, number of such cases and the total amount involved-

(i) At the beginning of the year: Nil

(ii) Maximum during the year: Nil

(iii) At the end of the year: Nil

Deposits received from Directors amounting to Rs.813.50 Lakhs, which are exempted borrowings and not covered under sections 73 to 76 of the Companies Act, 2013 as amended from time to time.

26. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

27. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL CONTROLS

The Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business. The Company has a well-established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including suitable monitoring procedures and self-assessment exercises. In addition to external audit, the financial and operating controls of the Company at various locations are reviewed by the Audit Committee of the Board. The Audit Committee reviews the adequacy and effectiveness of the implementation of audit recommendations including those relating to strengthening Company’s management policies and systems.

As required by the Companies Act 2013, the Company has implemented an Internal Financial Control (IFC) Framework. Section 134(5)(e) requires the Directors to make an assertion in the Directors Responsibility Statement that the Company has laid down internal financial controls, which are in existence, adequate and operate effectively. Under Section 177(4)(vii), the Audit Committee evaluates the internal financial controls and makes a representation to the Board. The purpose of the IFC is to ensure that policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business are implemented, including policies for and the safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

28. ACKNOWLEDGEMENT

Your Directors would like to express their gratitude for the abundant assistance and co-operation received by the Company from its workers, staff, officers, Consortium Banks, members and other Government Bodies during the year under review.

29. AUDITORS

M/s. A. T. Jain & Co., Chartered Accountants (Firm Registration No.103886W) were appointed as Statutory Auditors of the Company at the Annual General Meeting held on 27th July, 2017 for a term of five consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.

30. COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its Construction activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Vinay Mulay & Co. to audit the cost accounts of the Company for the financial year 2018-2019 on a remuneration of Rs.1,00,000/-. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member’s ratification for the remuneration payable to M/s. Vinay Mulay & Co., Cost Auditors is included at Item No. 8 of the Notice convening the Annual General Meeting.

On Behalf of the Board of Directors

Place : Mumbai S. C. MALHOTRA

Date : May 24, 2019 Chairman

Director’s Report