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Pact Industries Ltd.

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Annual Report

For Year :
2017 2015 2014

Director’s Report

Dear Fellow,

The Directors of your Company are presenting their 24th Annual Report together with the Audited Statement of Accounts of Pact Industries Limited for the year ended 31st March, 2017.

1. FINANCIAL HIGHLIGHTS.

The summary of the financial performance of the Company for the financial year ended March 31, 2017 compared to the previous year ended March 31, 2016 is given below:_

(in lakh)

Particulars

Year Ended

Year Ended

March 31,2017

March 31,2016

Net Sales/Income

5221.92

5088.49

Gross profit before interest and depreciation

229.17

221.23

Finance cost

159.15

143.77

Profit before depreciation and amortization- (Cash Profit)

70.01

77.46

Depreciation and Amortization

29.73

48.23

PBT before exceptional items

40.28

29.23

Exceptional items

1.96

0.00

Profit before Tax (PBT)

38.32

29.23

Provision for Tax- Current

12.75

6.80

Provision for Tax- Deferred

3.70

2.42

Profit after Tax

21.87

20.01

Earnings per Share (EPS) (in Rs) (after exceptional item ) - Basic Diluted

0.04

0.40

2. OPERATIONAL REVIEW :

The net sale for the year is Rs. 5221.92 as compared to Rs. 5088.49 Lakh of previous year.

5. DIVIDEND

Directors are of the view that as the Expansion Programme has already been announced and to implement the capital-intensive plans together with loan repayment; these shall be made from operating surplus. The reserves & surplus of the Company have been kept intact to facilitate this purpose, so dividends have not been recommended for the year ending 31.03.2017 in the long term interest of the company.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply.

7. SHARE CAPITAL

“The Authorized Share Capital of the Company is Rs. 6,00,00,000/- (Rupees Six Crores only) consisting of 5,00,00,000 (Five Crores) equity shares of Rs. 1/- each and 10,00,000 (Ten lakh ) Redeemable Preference Shares of Rs. 10/-(Rupees Ten ) each and paid-up Capital of the Company is Rs 4,94,08,000(Rupees Four Crore Ninety four Lakhs Eight Thousand Only) comprising of 4,94,08,000 (Forty crore ninety four lakhs and eight thousand) equity shares of Rs. 1/- each and 10,00,000(Ten Lakh) Redeemable Preference shares of Rs. 10/- each.

7.1 BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

7.2 SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

7.3 BONUS SHARES

No Bonus Shares were issued during the year under review.

7.4 EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to the employees.

8. FINANCE

8.1 CASH AND CASH EQUIVALENT

Cash and Cash equivalent as at 31st March, 2017 is Rs. 46.27 Lakh. The Company continues to focus on judicious management of working capital. Working Capital parameters are kept under strict check through continuous monitoring.

8.2 DEPOSITS/ FIXED DEPOSITS

During the year, Company has not accepted deposit from the public falling within the ambit of Section 73 of Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Further, the Company has not repaid any deposit to public and there is no deposits are pending as on 31st March, 2017.

8.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Detail of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes of Financial Statements.

9. BOARD

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us, retain our competitive advantage.

9.1 No. Of Meetings Of The Board

During the year Seven(7) Board Meetings and Five (5) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The provisions of Companies Act, 2013 and listing agreement and SEBI (Listing Obligations and Disclosure) Regulation, 2015 were adhered to while considering the time gap between two meetings.

9.2 Remuneration Policy

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. The Remuneration Policy is stated in the Corporate Governance Report.

9.3 Declaration By Independent Directors

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and regulation 16(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015.

9.4 Board Evaluation

Pursuant to the provisions of companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder Relationship committee. The manner in which the evaluation has been carried out has been explained in Corporate Governance Report.

9.5 Training of Independent Directors.

Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our Company, the executive directors / senior managerial personnel make presentations to the inductees about the Company’s strategy, operations, product, markets, organization structure, finance, human resources, technology, quality, facilities and risk management.

9.6 Re- Appointments

Pursuant to the provisions of companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the details of Director appointed/ reappointment are given in this annual Report and forms part of this report.

9.7 Retirements and Resignations

During the year none of the directors has resigned from the directorship of the company.

10. COMMITTEES OF THE BOARD

a) Audit Committee : The company is having Audit Committee comprising of the following directors.

Name

Status

Category

Mr. Narinderjit Singh

Chairman

Independent and Non-Executive Director

Mr. Amandeep Singh

Member

Independent and Non-Executive Director

Mr. Harpreet Singh

Member

Executive Director

b) Nomination and Remuneration Committee : The company is having a Nomination and Remuneration Committee comprising of the following directors:

Name

Status

Category

Mr. Narinderjit Singh

Chairman

Independent and Non-Executive Director

Mr. Amandeep Singh

Member

Independent and Non-Executive Director

Mrs. Jasjeet Kaur

Member

Independent and Non-Executive Director

c) Corporate Social Responsibility Committee: Even though the provisions of Companies Act, 2013 regarding Corporate Social Responsibility are not attracted to the company yet the Company has been, over the years, pursuing as part of its corporate philosophy, an unwritten CSR policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the community with those of the Company itself in an environment of partnership for inclusive development.

d) Stakeholder Remuneration Committee : The Stakeholders’ Relationship Committee was constituted by the Board on consequent to the dissolution of the Share transfer cum Investors’ Grievance Committee. This Committee includes Mr. Narinderjit Singh (Chairman) and Mr. Amandeep Singh (member) and Mr. Harpreet Singh (member). Term of reference and other details are given in Corporate Governance Report and forms part of this report.

e) Risk Management Committee: The Company has formed the Risk Management Committee with its members as Mr. Amandeep Singh (Chairman), Mr. Narinderjit Singh (member) and Mrs. Jasjeet Kaur and the committee will perform its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management.

11. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (C) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made 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, 2017 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

12. AUDITORS

12.1 Statutory Auditors

At the Annual General Meeting the members will be required to appoint Auditors and fix their remuneration. M/s. Rajesh Mehru & Co., Chartered Accountants, statutory auditors of the company are retiring at the ensuing Annual General Meeting .and is not eligible for re-appointment pursuant to Sec 139(2) of the Companies Act, 2013. Therefore, M/S Gaur & Associates, Statutory Auditor (FRN No. 014727N & Membership No 085161) is eligible for appointment. The appointment, if approved, will be for a period of five years as required by Sec 139(1) of the act.

12.2 Secretarial Auditors

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 Brij K. Tiwari & Associates (CP No.: 2831, FCS: 4442),Company Secretaries to undertake the secretarial audit of the company. The Secretarial Audit Report is annexed herewith as ''Annexure - A''.

12.3 Internal Auditors

Mr. Bipin Bihari Singh performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time.

12.4 Cost Auditor

The Cost Audit was not applicable on the Company during the Financial Year 2016-17 as per Companies (Cost record & audit) Rules, 2014.

13. LISTING OF SECURITIES

The Securities of the Company are listed on Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Ltd. The Company has not paid annual listing fee to exchanges for the year 2017-18.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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.

15. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as ''Annexure- B''

16. VIGIL MECHANISM / WHISTLE BLOWER POLICY.

The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) 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.

17. SUBSIDIARIES,JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

18. RELATED PARTY TRANSACTIONS/ PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.

All transactions entered into with Related Parties as defined under Clause 49 of the Listing Agreement and SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015. During the financial year were in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The report of the Board in respect of the particular of contracts or arrangements with related parties referred to sub section (1) of Section 188 in form AOC-2 is annexed to this report in annexure- C

19. CORPORATE GOVERNANCE

SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from Practicing Company Secretary confirming compliance forms an integral part of this Report.

20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place a prevention of sexual Harassment policy in line with the requirements of the sexual Harassment of Women at the Workplace (prevention, prohibition and Redressal) Act, 2013. During the year 2016-17, no complaint were received by the Company related to sexual Harassment.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure- D“

22. 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 is as follows:

The company has two Executive Director and due to financial constraints being faced by the company, it has forgone remuneration paid to one executive director. Further, no sitting fees have been paid to any director during the year.

The particulars of the employees who are covered by the provisions contained in Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are:

a) Employed throughout the year Nil

b) Employed for part of the year Nil

The remuneration paid to all Key management Personnel was in accordance with remuneration policy adopted by the company.

23. APPRECIATION AND ACKNOWLEDGEMENTS

The company has been very well supported from all quarters and therefore your directors wish to place on record their sincere appreciation for the support and co-operation received from Employees, Dealers, Suppliers, Central and

State Governments, Bankers and others associated with the Company. Your Directors wish to thank the banks, financial institutions, shareholders and business associates for their continued support and cooperation. We look forward to receiving the continued patronage from all quarters to become a better and stronger company.

For and on behalf of the Board

For PACT INDUSTRIES LIMITED

Sd/- Sd/-

(Avtar Singh) (Harpreet Singh)

Chairman Managing Director

Place: Ludhiana

Date: 21.06.2017

Director’s Report