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Nitin Fire Protection Industries

BSE: 532854|NSE: NITINFIRE|ISIN: INE489H01020|SECTOR: Miscellaneous
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Directors Report Year End : Mar '16    Mar 15

To,

The Members,

Nitin Fire Protection Industries Limited

The Directors have pleasure in presenting their 21st Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2016.

1. Financial summary or highlights/Performance of the Company (Standalone & Consolidated):

(Rs, in lakhs)

Particulars

2015-16

2014-15

2015-16

2014-15

Standalone

Standalone

Consolidated

Consolidated

Sales and other Income

47,130.03

50,234.68

149,424.68

115,786.73

Profit Before Interest and Depreciation

4,907.09

5,114.88

18,644.43

12,680.71

Finance Charges

3,471.86

3,154.28

5,250.05

4,136.60

Gross Profit

1,435.23

1,960.60

13,394.38

8,544.11

Provision for Depreciation & amortization expense

655.91

250.47

3,287.28

1,444.54

Net Profit Before Tax

779.32

1,710.13

10,107.10

7,099.57

Provision for income tax including deferred tax & wealth tax

208.98

353.00

227.30

377.30

Tax adjustments of earlier years(net)

26.47

0.33

26.35

10.80

Net Profit After Tax

543.87

1,356.80

9,853.45

6,711.47

Balance B/fd from earlier year

6,756.23

5,478.58

33,791.84

27,159.52

Balance available for appropriation

7,300.10

6,835.38

43,645.29

33,870.99

Transferred to General Reserve

-

-

-

-

Write back of proposed Dividend (p.y.)

-

512.92

-

512.92

Proposed Dividend on Equity Shares

-

(584.54)

-

(584.54)

Tax on proposed Dividend

-

-

-

-

Other adjustments related to Fixed Assets

-

7.53

-

7.53

Surplus carried to Balance Sheet.

7,300.10

6,756.23

43,645.29

33,791.84

2. Brief description of the Company’s working during the year/State of Company’s affairs:

The Company faced a marginal decline in its income in the Financial Year 2015-16 due to recession in the domestic economy, however there was a robust growth at a consolidated level. The Company operates in one segment viz. fire fighting industry.

Total income during the year ended March 31, 2016, on standalone basis stood at Rs,47,130.03 lakhs which is marginally lower than that compared to the previous year Rs,50,234.68 lakhs. However, as per the Consolidated Financial Statements, total income was Rs,149,424.68 lakhs registering an increase of29.05% as compared to the previous yearRs,s Rs,115,786.73 lakhs. The working of the Company is considered satisfactory. Barring unforeseen circumstances, the Board of Directors are hopeful of better performance of the Company during the current year.

The Company is one of the leading player in the fire fighting industry in India and continues to retain its leadership position among the Indian companies. It has continued to win new engagements and grow existing relationships and Company have started the initial process of eligibility norms for various Public and Private Sector undertakings. The Company is growing in the area of supply, install and commissioning of fire & safety solutions, manufacturing and distribution of fire protection and execution of annual maintenance contracts for fire protection systems. It also provides automated water and gas based fire suppression systems along with fire detection and BMS systems on turnkey basis. The broad range of products and services enables the Company to provide “end-to-end” services to its customers combined with its industry focus and its geographical spread, the Company is able to provide comprehensive and high value added services to its customers and is already a significant force and to expand in emerging markets.

3. Change in the nature of business:

There is no change in business of the Company during the financial year 2015-16.

4. Dividend:

The Board of Directors of the Company discussed to conserve the resources for future capitalization and growth and have not recommend any dividend for the year ended 31st March, 2016. (P. Y.: The Board recommend a Dividend of Rs,0.20/- per share on 292,269,622 Equity Shares of Rs,2/- each.)

5. Reserves:

The Company has not proposed to transfer its profit to the General Reserve out of the amount available for appropriation and an amount of Rs,7,300.10 Lakhs proposed to be retained in the Statement of Profit and Loss.

6. Share Capital:

During the year and by way of approval of the members at the 20th Annual General Meeting on September 21, 2015, the Authorized Share Capital of the Company had been increased from Rs,65.00 Crores to Rs,75.00 Crores divided into 375,000,000 equity shares of Rs,2/each.

As on 31st March, 2016, total issued, subscribed and paid-up share capital of the Company is Rs,584,539,244/- divided into 292,269,622 equity shares of Rs,2/- each, fully paid-up.

Out of total 292,269,622 equity shares of the Company, 292,267,561 are in dematerialized form and 2,061 are in physical form and Bigshare Services Private Limited is our Registrar & Share Transfer Agent.

7. Shifting of Registered Office:

The Board at their meeting held on February 4, 2016 had approved the shifting of the registered office from 501, Delta, Technology Street, Hiranandani Gardens, Powai, Mumbai - 400076 to Office No. 801 & 802, C-wing, Neelkanth Business Park, Kirol Road, Vidhyavihar (W), Mumbai - 400086 with effect from 1st April, 2016.

8. Directors, Key Managerial Personnel, Independent Directors & Compliance Officer:

Mr. Nitin M. Shah (DIN: 00073232) retires by rotation at the forthcoming 21st Annual General Meeting of the Company and being eligible offers himself for re-appointment. The Board recommends the passing of the Resolution at Item No. 2 of the Notice of the Annual General Meeting.

All Independent Directors of the Company have submitted their declarations that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013 (“Act”) and Regulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations, 2015”).

Changes in Key Managerial Personnel

Mr. Nitin M. Shah has resigned from the post of Managing Director and also as Key Managerial Personnel of the Company w.e.f. November 10, 2015 and continue as a Non-Executive Chairman of the Company.

Pursuant to Section 203 of the Act, the Company has appointed Mr. Sraban Kumar Karan as a Company Secretary and Compliance Officer and also as a Key Managerial Personnel of the Company w.e.f. February 4, 2016. Mrs. Hemangi Patil has resigned from the post of Company Secretary & Key Managerial Personnel w.e.f. 9th March, 2015. However, the Board of Directors of the Company have accepted her resignation as CS & KMP w.e.f. 25th May, 2015.

9. Particulars of Remuneration to its Employees / Directors / Key Managerial Personnel

The information required under the provisions of Section 197 of the Act read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company and Directors is furnished below:

Sr.

No.

Name

Designation

Remuneration -FY 2015-16

(?)

Remuneration -FY 2014-15

(Rs,)

Increase / (decrease) in remuneration from previous year (Rs,)

Ratio/times per Median of employee remuneration (times)

1

2

3

4

5

6

7

1

Nitin M. Shah (*)

Non-executive

Chairman(*)

3,616,000/-

2,310,000/-

1,306,000/-

17.50

2

Partho Roy

CEO Project

7,701,507/-

7,150,000/-

551,507/-

25.00

3

Rahul N. Shah

Whole-time Director - KMP

54,000/-

134,129/-

(80,129/-)

0.82

4

Kunal N. Shah

Whole-time

Director

54,000/-

134,129/-

(80,129/-)

0.82

5

Kamlesh Gandhi

CFO - KMP

2,184,694/-

1,964,204/-

220,490/-

8.35

6

Sraban Kumar Karan (**)

CS - KMP

162,138/-

NA

NA

3.82

Qualifications and experience of the employee

Date of commencement of employment

Age

Last employment held by such employee before joining the Company

Nature of employment, whether contractual or otherwise

Percentage of equity shares held by the employee in the Company within the meaning of clause (iii) of Rule 5(2)

Such employee is a relative of any director or manager of the Company and if so, name of such director or manager

8

9

10

11

12

13

14

Diploma in Mechanical Engineering and 38 Years

01.04.2006

59

None

Contractual

20.61%

(60,226,835

shares)

Mr. Rahul N. Shah & Mr. Kunal N. Shah, Directors are relatives

Bachelor in Computer Science and 30 Years

01.12.2012

50

New Age LLC, UAE

Contractual

NIL

No

Graduate in Commerce & Diploma in Business Management and 17 years

14.08.2014

38

Nitin Fire Protection Ind. Ltd.

Contractual

6.44%

(18,831,333

shares)

Mr. Nitin M. Shah & Mr. Kunal N. Shah, Directors are relatives

Bachelor in Electronic and Tele Communications and more than 2 years

14.08.2014

32

Nitin Fire Protection Ind. Ltd.

Contractual

10.49%

(30,673,000

shares)

Mr. Nitin M. Shah & Mr. Rahul N. Shah Directors are relatives

C. A.

and 35 years

17.06.2013

56

Greshma Shares & Stocks Ltd.

Contractual

NIL

No

A.C.S.

and 9 years

19.01.2016

39

Mehta & Mehta, Company Secretaries

Contractual

NIL

No

(*) Resigned from the post of Managing Director and re-designated as Non-executive Chairman w.e.f. November 10, 2015 (**) Appointed as Company Secretary & KMP w.e.f. February 4, 2016 by the Board.

Other Disclosures pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Sr. No.

Requirements

Disclosure

1

Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year.

Refer to the particulars of remuneration to Employees and Director. For this purpose, sitting fees paid to the Directors have not been considered as remuneration.

2

Percentage increase in remuneration of Director, Chief

Name

% Increase in remuneration

Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year.

Mr. Nitin M. Shah -Director*

56.54%

Mr. Rahul N. Shah - WTD

Not applicable (N.A.) as there is reduction in salary

Mr. Kunal N. Shah - WTD

N. A. as there is reduction in salary

Mr. Partho Roy - CEO Project

7.71%

Mr. Kamlesh Gandhi - CFO

11.22%

Mr. Sraban Kumar Karan -CS

N.A. as appointed at the Board Meeting dated 04.02.2016.

(*) Resigned from the post of Managing Director and re-designated as Non-executive Chairman w.e.f. November 10, 2015.

Difference in remuneration between F.Y. 2015-16 & 2014-15 is due to bonus, leave encashment & other allowance paid. There is no increase in salary of KMP during F. Y. 2015-16.

3

Percentage increase in the median remuneration of employees in the financial year.

Nil.

Sr. No.

Requirements

Disclosure

4

Number of permanent employees on the rolls of Company as on 31st March, 2016.

140

5

Explanation on the relationship between average increase in remuneration and Company performance.

Factors considered while recommending increase in remuneration were performance of employee, financial performance of the Company etc. There is no increase in salary during F.Y. 2015-16 except in few cases.

6

Comparison of the remuneration of the Key Managerial Personnel (KMP) against the performance of the Company.

There is no increase in salary during F. Y. 2015-16.

7

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.

31/03/2016

31/03/2015

Market

Capitalisation (Rs, Cr.)

976

1,016

PE ratio (consolidated)

9.91

15.10

Last Public Offer : 2007 - Issue Price Rs,190/- per share.

There is 410% increase in market price compared to the public issue offer price.

8

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.

There is no increase in salary during F. Y. 2015-16 for employees of the Company except in few cases which is based on performance of employees.

9

Comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company.

The details of remuneration paid to the Key Mangerial Personnel are given above in point no. 9 for remuneration paid to employee and directors and it is in line with the performance of the Company.

10

Key parameters for any variable component of remuneration availed by the directors.

-

11

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.

0.70 : 1.00 (ratio)

12

Affirmation that the remuneration is as per the remuneration policy of the Company.

The remuneration paid is as per the remuneration policy of the Company.

Remuneration Policy:

Pursuant to the provisions of Section 178(3) of the Act, the Board has on the recommendation of the Nomination & Remuneration Committee framed a remuneration policy on March 26, 2016 for selection and appointment of Directors, Senior Management and their remuneration-

- Remuneration to Key Managerial Personnel and Staff is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain qualified professional and talent.

- For Directors, it is based on the shareholders’ resolutions, provisions of the Companies Act, 2013 and Rules framed therein and guidelines issued by the Central Government and other authorities from time to time.

Managerial Remuneration:

During the year, remuneration paid to the managing director and whole-time directors are as under:

1. Mr. Nitin M. Shah (Chairman & Managing Director till November 9, 2015) - Rs,3,616,000/

2. Mr. Rahul N. Shah (Whole-time Director) - Rs,54,000/3. Mr. Kunal N. Shah (Whole-time Director) - Rs,54,000/The Company pays sitting fees to all the Independent Directors for attendance during the meetings of the Board of Directors and the Audit Committee constituted by the Board of Directors of the Company.

10. Meetings:

During the year ended 31st March, 2016, the Board of Directors have met 7 (seven) times on 25.05.2015, 13.06.2015, 14.08.2015,

10.11.2015, 14.12.2015, 04.02.2016 and 26.03.2016 and 5 (five) Audit Committee meetings were held on 25.05.2015, 14.08.2015, 10.11.2015, 14.12.2015 and 04.02.2016 & One (1) Nomination and Remuneration Committee meeting was held on 04.02.2016 & One (1) Corporate Social Responsibility Committee meeting was held on 04.02.2016 & One (1) Independent Directors’ meeting was held on 04.02.2016 & Four (4) Stakeholders’ Relationship Committee meetings were held on 25.05.2015, 14.08.2015, 10.11.2015 and 04.02.2016 & One (1) Risk Management Committee meeting was held on 04.02.2016. The details of which are given in the Corporate Governance Report. The intervening gap between two consecutive Board meetings & Audit Committee Meetings respectively were within the period prescribed under the Companies Act, 2013.

The recommendation by the Audit Committee as and when made to the Board has been accepted by it.

11. Board Evaluation:

The Board of Directors of the Company had discussed in their Board Meeting held on February 4, 2016 to evaluate its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The evaluation was in the stage of implementation process till the completion of financial year ended on March 31, 2016. The evaluation was made by the Board in their meeting held on May 30, 2016.

12. Details of Subsidiary/Joint Ventures/Associate Companies:

Pursuant to sub-section (3) of section 129 of the Act, the statement containing the salient features of the financial statement of a Company’s subsidiary(ies), associate Company(ies) and joint venture(s) is given in Form AOC-1 as Annexure - I [Performance and financial position of the subsidiaries included in the consolidated financial statement].

Further, the Annual Accounts and related documents of the subsidiary Company(ies) shall be kept open for inspection at the Registered Office of the Company. The Company will also make available copy thereof upon specific request by any Member(s) of the Company interested in obtaining the same. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report include the financial information of its subsidiary(ies).

13. Auditors:

Pursuant to the provisions of section 139 of the Act and the rules framed thereafter, M/s. Haribhakti & Co. LLP (FRN - 103523W/W-100048) and Deloitte Haskins & Sells LLP, Chartered Accountants, (FRN -117366W / W-100018) were appointed as joint statutory auditors of the Company from the conclusion of the twentieth annual general meeting (AGM) of the Company held on September 21, 2015 till the conclusion of the twenty fifth AGM to be held in the year 2020, subject to ratification of their appointment at every AGM.

The Company has received ratification letters dated 10th May, 2016 and 30th August, 2016 from Haribhakti & Co. LLP & M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, (FRN -117366W / W-100018), respectively, giving their consent to ratification for their re-appointment as Statutory Auditors for the year ended 31st March, 2017. The Board recommends the resolution No. 3 of the Notice of the AGM for the approval of the Members of the Company.

Audit Report: The Auditors’ qualifications and reply of the management are as under:

Basis of Qualification opinion of Statutory Auditors’ on Standalone Financial Statement:

a) Qualification in the Statutory Audit Report:

Note (a) of Statutory Audit Report describing the reasons for not recognizing provision for a claim of '' 50,133,481/- by a Bank with respect to a derivative contract entered into by its erstwhile subsidiary Company. As stated in the note, the Company has filed a petition in the High Court of Bombay. Pending the final outcome of the matter, we are unable to comment on the extent of provision required, if any, in this regard.

a) Management’s Reply on Qualification in the Statutory Audit Report:

Consequent to part sale of equity stake in an erstwhile subsidiary in December, 2010, the Company has taken over an outstanding claim of a derivative contract amounting to Rs,50,133,481/- (excluding interest). Based on a legal opinion the Company has filed a petition in the Hon’ble High Court of Bombay challenging the legality of the contract. Pending decision, no provision is made in the books of account for this claim.

b) Qualification in the Statutory Audit Report:

Note (b) of Statutory Audit Report describing the reasons for not recognizing provision for diminution in the value of long term investment in equity shares of Worthington Nitin Cylinders Private Limited (WNCPL) aggregating ''457,844,451/- as at March 31, 2016. In the absence of any assessment of the fair value of the investment as required under Accounting Standard 13 ‘Accounting for Investments’ and audited financial statements of WNCPL for the period subsequent to March 31, 2013, we are unable to comment on the diminution, if any, on the carrying amount of the investment as at March 31, 2016.

b) Management’s Reply on Qualification in the Statutory Audit Report:

Worthington Nitin Cylinders Private Limited (WNCPL) is our Associate Company and based on the valuation of the fixed assets of WNCPL from an independent value, the Company is hopeful that impairment, if any, will not be material and if any such thing is noticed in future, we will provide for the same.

c) Auditors’ Qualification in Internal Financial control report:

In the qualified opinion it is mentioned that material weakness have been identified in the operating effectiveness of Company’s internal financial control with respect to provision for diminution of value of investment ( fully described in note 45 to the standalone financial statement), provision for a claim on a derivative contract (fully described in note 35 to the standalone financial statements) determination of terms of purchase of items of inventory and underlying documentation relating to internal movements of item of inventory and policy documentation pertaining to human resources and payroll related matters, which could potentially impact the related account balances when determined and recognized.

c) Management’s reply on Qualification in Internal Financial control report:

The clarification on the provision for diminution in value of investment of Worthington Nitin Cylinders Private Limited and for derivative contract claim have been explained above in audit observation and the Company has initiated process to implement the required process and procedures in purchase terms, inventory and pay roll related matters.

d) Basis of Qualification opinion of Statutory Auditors’ on Consolidated Financial Statement:

The above qualification of Statutory Auditors’ on Standalone Financial Statement remains same with respect to their basis of qualified opinion on Consolidated Financial Statement in addition to non-consideration of accounts of the associate Company i.e; Worthington Nitin Cylinders Private Limited when prepared the Consolidated Financial Statement. The qualification is as given below:

As described in note 46 to the consolidated financial statements, the reasons for not consolidating the financial statements and the reasons for not recognizing provision for diminution in value of long-term investment in equity shares of Worthington Nitin Cylinders Private Limited (WNCPL) aggregating Rs,457,844,451/- as at March 31, 2016. In the absence of any assessment of the fair value of the investment as required under Accounting Standard 13 ‘Accounting for Investments’ and audited financial statements of WNCPL for the period subsequent to March 31, 2013, we are unable to comment on the diminution, if any, on the carrying amount of the investment as at March 31, 2016.

d) Management’s reply on Qualification in Consolidated Financial Statement:

The Company has not received the audited financial statement from the associate Company. Finalization of the accounts is under process. With respect to provision for diminution of value of investment (fully described in note 46 to the consolidated financial statement), it is hereby stated that Worthington Nitin Cylinders Private Limited (WNCPL) is our Associate Company and based on the valuation of the fixed assets of WNCPL from an independent valuer, the Company is hopeful that impairment, if any, will not be material and if any such thing is noticed in future, we will provide for the same.

14. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Mr. Kishor V. Ved, Practicing Company Secretary, to undertake the Secretarial Audit for the financial year ended 31st March, 2016. The report of the Secretarial Auditors in Form No. MR-3 is enclosed as Annexure II to this report. The observation of Secretarial Auditor and reply of the Management are as follows:

OBSERVATIONS OF SECRETARIAL AUDITOR

MANAGEMENT’S REPLY

Ms. Hemangli Patil’s resignation dated 09.03.2015 as a Company Secretary and Key Managerial Personnel (CS & KMP) was accepted by the Board of Directors of the Company w.e.f. 25.05.2015. However, the Company has appointed Mr. Sraban Kumar Karan as a CS & KMP w.e.f. 04.02.2016 i.e. after a period of six months of vacation of office as required under section 203 of the Companies Act, 2013 (“Act”).

The Company could not get a suitable candidate for the post of a CS & KMP & hence, there was delay in appointment. The Company ensures the compliances of the Act within the prescribed time limit in future.

As per scrutinizer’s report of the 20th Annual General Meeting of the Company held on 21.09.2015, the Company has provided 3 days for postal ballot voting. However, the members of the Company have approved and passed the special resolutions with requisite majority.

The members of the Company has not raised any objections for shorter period of voting due to oversight of the provisions of the Companies Act, 2013 and approved and passed the special resolutions with requisite majority. The Company ensures the compliances of the Act within the prescribed time limit in future.

The Company has submitted voting results on 25.09.2015 after 48 hours of conclusion of AGM held on 21.09.2015 vide NSE’s letter dated 11.12.2015

The Company has explained the reasons for delay in filing of the same to the National Stock Exchange of India Limited (NSE) vide the Company’s letter dated 13.01.2016. The Company ensures the submission of the same within the prescribed time limit in future.

OBSERVATIONS OF SECRETARIAL AUDITOR

MANAGEMENT’S REPLY

The Company has declared dividend at the AGM held on 21.09.2015 and deposited the amount of dividend declared in a separate dividend bank account on 28.09.2015 i.e. after five (5) days of declaration of dividend as required under section 123(4) of the Act.

There was delay in deposit of dividend into a separate bank account and the Company ensures the submission of the same within the prescribed time limit in future.

The Company has received the SEBI’s letter dated 28.10.2015 with regard to updation of the related party transaction policy on the Company’s website, under clause 49 of the Listing Agreement.

By oversight, the RPT policy could not be posted on website of the Company. The Company has informed the SEBI on 19.11.2015 that the RPT policy has been updated on the Company’s website and the Company ensures the submission of the same within the prescribed time limit in future.

There was delay in filing of the corporate governance for the quarter ended 31st December, 2015.

By oversight, there was a delay in submission. However, the Company has paid fine of Rs.4,000/- to the NSE vide the Company’s letter dated 25.05.2016 and 14.06.2016. The Company ensures the submission of the same within the prescribed time limit in future.

The Standalone Audited Financial Results for the year ended

31.03.2016 was submitted to Stock Exchanges on 31.05.2016 and the Consolidated Audited Financial Results for the year ended

31.03.2016 was submitted with the Stock Exchanges on 03.06.2016 & 04.06.2016 after the prescribed time limit as specified in Reg. 33 of the SEBI (LODR), Regulations, 2015

By oversight, there was a delay in submission of financial results and the Company has paid penalty for the same to the Bombay Stock Exchange (BSE) vide the Company’s letter dated 29.06.2016 and also to NSE vide the Company’s letter dated 14.06.2016. The Company ensures the submission of the same within the prescribed time limit in future.

The consolidated financial statements of the Company for the year ended 31st March, 2016 has been prepared in absence of audited financial statement of Associate Company viz. Worthington Nitin Cylinders Pvt. Ltd (WNCPL).

WNCPL is in process of finalizing their financial statement & on completion of the same, the Company will comply with the provisions of the Companies Act, 2013 as required.

Pursuant to the provisions of Section 92 of the Act, the details regarding changes in shareholding of the one of the promoters and two (2) out of the top ten (10) shareholders of the Company, during the financial year 2015-16 are yet to filed in Form MGT-10 with the Registrar of Companies.

The Company is in process of submission of the details with Registrar of Companies and the same will be submitted in due course. The Company ensures the submission of the same within the prescribed time limit in future.

There was delay in filing of E-forms and E-returns of few forms.

Due to oversight of the provisions of the Act. The Company ensures the submission of the same within the prescribed time limit in future.

15. Disclosure about Cost Audit:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the Company is not required to carry out the cost audit for the financial year ended 31st March, 2016. However, the maintenance of cost records is necessary and the Company is in process of updating the cost records for the year ended 31st March, 2016.

16. Internal Audit & Controls:

Pursuant to Section 138 of the Companies Act, 2013, read with the Clause 49 of the Listing Agreements with Stock Exchanges and the SEBI (LODR) Regulations, 2015, the Company has appointed M/s. Tolia and Associates, Chartered Accountants (Firm Registration Number:111017W) as Internal Auditor of the Company for the financial year 2015-16 and also appointed them for the financial year 2016-17.

17. Internal Financial Control System:

The Company has overall effective systems and procedure for internal control for ensuring orderly and efficient conduct of business, safeguarding its assets, prevention & detection of frauds & errors & completeness of accounting records and timely preparation of reliable financial information. These systems are periodically reviewed by the Audit Committee of the Board of Directors. The Audit Committee and the Board have ensured that the said system is adequate considering the nature of business and size of the transactions.

18. Issue of employee stock options:

The Company has not issued / granted any stock options to its employees including its Key Managerial Personnel and hence, the provisions of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 are not applicable.

19. Vigil Mechanism / Whistle Blower Policy:

Your Company has put in place Whistle Blower Mechanism. The detailed mechanism is given in Corporate Governance Report forming part of this report and the same has been posted on the Company’s website at www.nitinfire.com, under investors’ link.

20. Risk management policy:

The Company has been addressing various risks impacting and the policy of the Company on risk management is provided in Management Discussion and Analysis in the Annual Report.

21. Management Discussion And Analysis:

Macroeconomic development:

The Indian economy is in upward trend if the growth of previous years will be compared. The growth rate for the financial year 2015-16 is 7.6 per cent despite below normal monsoon, slow down in export and subdued global demand. Besides that, IMF and World Bank has marked India as bright spot in the world economy. The adoption of liberalized foreign direct investment policy by the regulators has witnessed continuous economic growth in India. With more investment and industrialization, the Company is firm in its growth in the near future.

Our business and strong track record

Nitin Fire Protection Industries Limited (NFPIL) is a Fire Protection solutions provider, with an agenda to provide wide range of systems to protect and prevent from disaster of fire. The Company is providing end to end Fire Protection Solutions for various industries like Refineries, Control Rooms, Power Plants, Offshore Platforms, Server Rooms & Data Centres, Warehouses, Commercial Spaces, Hospitals and Hospitality sector.

We undertake large scale fire protection system installation and have successfully completed 32 years of operation in India and have completed various installations both direct & indirect across India.

We have following objectives:-

- Safe living of the society and increasing awareness and education of safety and security at all times.

- To promote and use the advance technology and modern fire safety and protection systems.

INDUSTRY STRUCTURE & DEVELOPMENT

The Company estimates the Global Fire & Safety market to be US0bn, growing in excess of GDP. The major players are TYCO, UTC, Honeywell, Siemens etc. NFPIL currently enjoys 0.1% share of the Global Fire Industry and it expects to gradually increase its market share. There is a definite demand for Fire Protection products worldwide with newer products under development. The Innovation and Product Development are the critical aspects of success in the industry

Financial Performance

During the year, your company continues to grow and has delivered a year on year growth of 29.05% in consolidated revenues largely attributing to the success in the Middle East. The consolidated PAT has grown from '' 671 mn in FY 2015 to '' 985 mn in FY 2016. The earnings per share was ''3.37 in FY 16 compared to '' 2.30 in the same period last year.

Future Growth

Not only Industry but also the housing societies and commercial complexes are shifting their attention to take necessary steps to safeguard their localities. All these augurs well for the demand for Fire Protection Industry.

Your Company has initiated steps to enter into new Public and Private sector undertakings, which will help your Company to sustain growth.

The Company’s strategy for longer term growth has been to (a) continually expand its addressable market by penetrating into the newer geographies, newer segments and (b) strengthen and deepen existing client relationships through a customer centric approach, superior execution that gives clients satisfaction.

The Company has over 60 (domestic international) approvals from various agencies & regulatory bodies required to operate in this business & execute fire protection, safety & security solution projects across various demographics. The Company also has tie-ups with international components & product manufacturers to procure & distribute their products & use their technology, thereby giving it an edge over the local players in providing fire protection, safety & security solutions to the clients

There will be large spending, asset creation and business development in UAE due to the Expo 2020 and other events. With UAE contributing 64.91% of the total revenue, your Company is in a position to capture the higher growth potential of the growing markets. Worldwide demand for this segment is expected to grow due to more awareness and concerns for the safety.

With almost three decades of experience your Company has established a better footprint in India to match the fire safety standards required by the growing needs from these sectors. The diversified portfolio of products and its regular up gradation has helped your Company to add value in markets of UAE, South Asia and Europe.

Our strength is our determination and team work, Challenges and threats are Competition, the vibrations in the economy, government policies, government spending on new projects etc.

Human Resources

Your Company considers human resource to be an important and valuable asset for the organization. Therefore, it constantly strives to attract and retain best “Talents” for the present and future business requirements and growth. The Company has grown due to the commitment, dedication and passion of our employees and we thank them for their continuous support, efforts and sacrifices. And the Company expects their continuous guidance and support in future. The Company inspires and motivates employees and promotes teamwork, trust and confidence for the organizational growth and to attain the organizational goals. The Company is focused in providing a meaningful environment which provides them the confidence to realize their potential and motivates employees to develop themselves personally and professionally. The required Initiatives are taken in the areas of employee’s health, safety training and development. Company takes pains to see that employee’s interest and growth are not overlooked.

Risk Management and Internal Control System

The Company has a proper and adequate system of controls in order to ensure that all assets are safeguarded against loss from unauthorized use or disposal. Regular Internal Audit checks are carried out to ensure that the responsibilities are executed effectively and that proper and adequate systems are in place and is reviewed by auditing committee set by the Management.

Your Company continues to comply with laws, regulations and policies as per the regulatory guidelines that are applicable. Your Company maintains strong compliance and has dedicated Compliance Department for ensuring regulatory compliance.

The Company monitors principal risks and uncertainties that can impact our ability to achieve strategic objectives. Internal controls are regularly tested for design and operating effectiveness. The Internal Control System is supplemented by defined risk management programme identifying and mitigating risks which are reviewed by the Board of Directors of the Company.

Vision 2020

Accelerate growth via entering into growing market;

Develop & Promote Technologically Sound products;

Lookout for in-organic opportunities in this space;

Introduce & penetrate the largest market for Fire protection, North America.

Cautionary Statement

In this Management’s Discussion and Analysis and directors’ report detailing the Company’s objectives, projections, estimates, expectations or predictions and describing the Company’s strength, strategies and estimates are “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.

22. Extract of Annual Return

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT 9 as a part of this Annual Report is enclosed as an Annexure III.

23. Material changes and commitments, if any, 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

There are no adverse material changes or commitments occurring after 31st March, 2016 which may affect the financial position of the Company or may require disclosure.

24. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future

Nil.

25. Deposits

The Company has not accepted any deposits during the financial year under review.

26. Particulars of loans, guarantees or investments under section 186(4) of the Companies Act, 2013

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note 34(II) to Financial Statements.

27. Particulars of contracts or arrangements with related parties

The particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 during the financial year have been provided in Form AOC-2, as disclosed in Annexure IV

28. Corporate Governance Certificate

A report on Corporate Governance approved by the Board of Directors of the Company and a certificate from Mr. Kishor V. Ved, Practicing Company Secretary, Mumbai, for the year ended 31st March, 2016 is set out in the Annexure to the Directors’ report. The Company has fully complied with the Corporate Governance practices specified under the Companies Act, 2013 and the Listing Agreement with the BSE Limited and the National Stock Exchange of India Limited and SEBI Listing Regulations, 2015.

29. Disclosure as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Under the said Act, the Company has set up a “Committee for Harassment of Women at Work Place” to look into complaints relating to sexual harassment at work place of any women employees. During the year under review, the Company has not received any complaints of harassment.

30. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information required under section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 with regard to conservation of energy and technology absorption and foreign exchange earnings and outgo are provided in Annexure V attached to this report.

31. Corporate Social Responsibility (CSR)

The Company has been carrying out Corporate Social Responsibility (CSR) activities. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Annual Report on CSR activities that includes details about the CSR policy of the Company and CSR initiatives taken during the year is annexed herewith as Annexure VI.

32. Directors’ Responsibility Statement

To the best of knowledge and belief, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013:

(i) that in the preparation of the Annual Accounts for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) 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, 2016 and of the profit of the Company for the year ended on that date;

(iii) that 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 annual accounts have been prepared on a going concern basis;

(v) that 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; and

(vi) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

33. Transfer of Amounts to Investor Education and Protection Fund

Pursuant to Section 125 of the Companies Act, 2013, the Company is having unclaimed or unpaid dividends of ''93,309/- for the year ended 31st March, 2009 and the balance as on the date of completion of 7 years from the date of transfer to Unpaid Dividend Account will be transferred to the Investors Education and Protection Fund (the Fund) set up by the Government of India in September, 2016 and no payments shall be made from such Fund, if any, claim arises after the said transfer to the Fund.

Members who have not yet encased their dividend warrant(s) for the financial year ended 31st March, 2009 onwards, are requested to make their claims to the Company accordingly, without any delay.

Status of unclaimed and unpaid dividend

(Rs,in lakhs)

Year Ended

Amount of Dividend

Unclaimed and unpaid dividend as on 31st March, 2016

% of Unclaimed and Unpaid Dividend

March 31,2009

378.09

0.9331

0.25

March 31,2010

441.11

0.8933

0.20

March 31,2011

630.16

0.5216

0.08

March 31,2012

882.21

0.7723

0.09

March 31,2013

441.11

0.2624

0.06

March 31,2014

No Dividend Declared

March 31,2015

585.54

1.2221

0.21

34. Listing with the Stock Exchange

The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 to the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) where the Company’s Shares are listed.

35. Acknowledgements

Your Directors wish to place on record their appreciation, for the contribution made by the employees at all levels but for whose hard work and support, your Company’s achievements would not have been possible. Your Directors also wish to thank its customers, dealers, agents, suppliers, investors and bankers for their continued support and faith.

For and on behalf of the Board

Nitin Fire Protection Industries Limited

Sd/- Sd/-

(Rahul N. Shah) (Kunal N. Shah)

(Whole-time Director) (Whole-time Director)

(DIN - 00073226) (DIN - 00077216)

Mumbai, September 6, 2016

Source : Dion Global Solutions Limited
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