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Your Directors have pleasure in presenting their Twenty Seventh Annual Report on the business and operations of your Company together with Audited Financial Statements for the year ended 31st March 2016.
2) REVIEW OF OPERAT IONS
The net sales/Income from operations during the year have gone down to Rs.63710.60 Lacs from Rs.78087.03 Lacs. It is mainly due to all round reduction in prices of all organic chemicals because of steep fall in global price of crude oil.
The Company’s profit before tax has gone up from Rs.R17349.68 Lacs in previous year to Rs.18655.71 Lacs in current year registering growth of 6%.
An Interim Dividend of Rs.3.50/– per equity share of face value of Rs.2/– each was declared on March 14, 2016 and paid on March 18, 2016.
The Board of Directors recommended further dividend on equity shares @ 25% on the share capital of the Company i.e. R0.50 per Equity Share of face value of Rs.2/– each for the year ended 31st March 2016, The total outgo on dividend account will be Rs.2483.75 Lacs (inclusive of tax on dividend).
4) TRANSFER TO RESERVES
Your Company proposes to transfer Rs.1350 Lacs to the General Reserve, out of the amount available for appropriation and an amount of Rs.44031.90 Lacs is proposed to be retained in the Profit & Loss Account.
5) SUBSIDIARY COMPAN Y
The Company does not have subsidiary company.
To further its growth plans the company is undertaking capital expenditure of Rs.200 Crores towards the below mentioned projects:
• New plant for producing para Tertiary Butyl Toluene / para Tertiary Butyl Benzoic Acid (PTBT/PTBBA); These products are IB based derivatives and find application in perfumery, personal care and as polymer additives.
• New plant for producing Tertiary Butyl Amine (TB Amine) which is used in the rubber and pharmaceutical industry.
• Couple of export oriented custom synthesis products.
• Setting up of 8 MW Co–generation plant at the company’s Lote facility.
7) TURNOVER AND PROFIT (OPERATING RESULTS)
The Company achieved gross turnover of Rs.61632.62 Lacs as compared to Rs.81558.24 Lacs in the previous year. The net profit after tax increased to Rs.13157.18 Lacs as compared to Rs.11579.40 Lacs in the previous year.
The properties and insurable interest of your company like Building, Plant and Machinery, Inventories etc. are properly insured.
9) DIRECTOR S
As per Section 149(4) of Companies Act 2013 every listed company shall have atleast one third of the total number of directors as independent directors. They shall hold office for a term upto five consecutive years on the Board of the Company as per section 149(10). As per Section 152 (6) (e) total number of directors shall not include independent directors. Mr. Girish M. Dave, Mr. R. K. Saraswat, Mr. A. A. Krishnan and Mr. C. B. Gokhale, as they shall hold a term upto five consecutive years on the Board of the Company, i.e. upto 31.03.2019.
Out of remaining 5 directors 3 are executive directors. Therefore Mr. Mohit Mutreja and Mr. Sunil Saraf retire at the ensuing Annual General Meeting and being eligible offer themselves for re–appointment.
10) AUDITOR S
Members are requested to appoint Auditors for the current year and to authorize the Board of Directors to fix their remuneration. At previous meeting, M/s. Karnavat & Co., Chartered Accountants, were appointed as Statutory Auditors of your Company from the conclusion of the previous Annual General Meeting. The said statutory auditors retire at the ensuing Annual General Meeting and being eligible under section 139 of the Companies Act, 2013, offer themselves for re–appointment.
11) A UDITOR S’ REPORT
The observations of Auditors as referred to in the Auditors’ Report are suitably explained in the Notes to the Accounts.
12) COST AUDITOR
As per Section 139 of the Companies Act, 2013, M/s. N. Ritesh & Associates have been appointed as a Cost Auditor for the year ending on 31.03.2017, subject to the approval of Central Government, if required.
The Audit Committee has received a Certificate from the Cost Auditors certifying their independence and arm’s length relationship with your Company. In accordance with Cost Audit (Report) Rules, 2001, the due date for fling the Cost Audit Report in XBRL for the financial year ended 31.03.2015 was 28.02.2016 and the same was filed on 29.09.2015 vide SRN No.: S39646849 with the Ministry of Corporate Affairs, New Delhi.
13) PO LICY ON DIRECTOR S’ APOINTMENT AND REMUNERAT ION AND OT HER DETA ILS
The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors’ report. The Remuneration policy is set out in the Annexure ‘A’ to the Director’s Report and is also available on the Company’s website.
The long term borrowings are raised through External Commercial Borrowings (ECBs) and Foreign Currency Term Loan (FCTL) from Banks and Financial Institutions.
15) F IXED DEPOSITS
During the year under review the Company did not invite or accept any Fixed Deposits within the meaning of Section 73 of the Companies Act, 2013 and as such, no amount of principal or interest was outstanding as on the date of balance sheet from public.
16) CONSERVAT ION OF ENERGY, TECHNOLOGY ABSORPT ION & FOREIGN EXCHANGE EARNINGS & OUTGO
Information as per Section 134 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014, relating to the above head are given in Annexure ‘B’ forming part of this report.
17) HUMAN RESOURCE
The Company believes that Human Resources play a very critical role in its growth. Its management has infused a lot of rigor, intensity in its people Development Processes and in honing skill sets. Various initiatives have been launched to provide growth opportunities to Employees. For the development of the Employees, the Company has created a structured training framework for its employees to ensure their ongoing education.
The Company’s Corporate Human Recourses function has played and continues to play an integral role in its talent management process.
18) QUALITY INITIAT IVES
Sustained commitment to highest levels of quality, best–in–class service management, robust information security practices and mature business continuity processes helped the Company attain significant milestones during the year.
The Company’s equity shares continue to be listed at BSE & NSE. We confirm that the Listing fee for the financial year 2015–2016 has been paid to them. The stock code of the company at BSE is 524200 and NSE is VINATIORGA.
20) DIRECTOR S’ RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii. they 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 at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2015–16.
21) DECLARAT ION BY INDEPENDENT DIRECTOR S
The Company has received declaration from all its Independent Directors 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.
22) MATER IAL CHANGES AFTER BALANCE SHEET DATE (31ST MARCH, 2016)
No material changes and commitments affecting the financial position of the Company have occurred between the end of the Financial Year (FY16) of the Company to which the Financial Statements relate and the date of this Board’s Report.
23) CORPORATE GOVERNANCE AND MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT S
The Corporate Governance and Management’s Discussion and Analysis Reports, which form an integral part of this report, are set out in separate annexures to this report, along with the certificate from the Auditors of the Company certifying compliance of the conditions of the Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchange. (See Annexure ‘C’ ‘D’ & ‘E’)
The Company is required to make disclosure under section 134 of the Companies Act, 2013 for its employee drawing remuneration in excess of Rs.60 Lacs per annum or Rs.5 Lacs per month. (See Annexure ‘F’) Employee holding 2% or more of the equity shares by himself/herself or along with his/her spouse:
1. Mr. Vinod Saraf – Managing Director – 6973550 shares – 13.52%
2. Mrs. Kavita Vinod Saraf – Spouse – 6228000 shares – 12.07%
25) NO CHANGE IN THE CLASS AND NAT URE OF THE BUSINESS OF COMPAN Y OR ITS SUBSIDIARIES
There has been no change in the class and nature of the business of the Company. The Company does not have Subsidiary Company.
26) DELAY IN COMP LETION OF BUY– BACK
The Company has not proposed to buy– back any shares.
27) COMPO SITION OF AUDIT COMM ITTE
The Audit Committee of the Company as on 31st March, 2016 comprised the following 3 Directors of the Company:
1. Mr. R. K. Saraswat: Independent Director – Chairman
2. Mr. Girish M. Dave: Independent Director – Member
3. Mr. C.B. Gokhale: Independent Director – Member
28) E SOP/ ESOS
The Company has not issued any ESOP or ESOS.
29) SWEAT EQUITY
The Company has not issued any sweat equity.
30) PREFERENT IAL ALLOTMENT
The Company has not issued any shares as a preferential allotment.
31) RE DEMPT ION OF SHARES/ DEBENTURES
The Company has not redeemed any Shares or Debentures.
32) SHAREHOLDER’S RESOLUTION
Employee stock option scheme 2008 for 2,00,000 equity shares face value of Rs.10/– each was approved in annual general meeting held on 27.09.2008. So far same is not implemented. Same is being reconsidered.
33) DISQUALIFICAT ION OF DIRECTOR
No Director of the Company is disqualified under any law to act as a Director.
34) INSIDER TRADING PRO CEEDINGS/ ENQUIRY
Letter was received from SEBI inquiring about of purchase of equity shares by two employees on 29.02.2012 and same was replied on 5th March 2012. Letter was written to SEBI for purchase of equity shares by one employee on 06.06.2012. And as on date we have not received any further communication.
35) CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee was constituted on 10th May 2014 and reconstituted on 26th February 2015 as per Clause 49 of Listing Agreement for Corporate Governance. This committee comprises of 4 directors of the Company.
All the members of Corporate Social Responsibility Committee mentioned above have good knowledge and exposure to utilize the Company’s resources towards its corporate social responsibility. The Corporate Social Responsibility policy is available on Company’s website.
The average profit of the Company for last three year is Rs.13489.85 Lacs. Prescribed CSR expenditure is Rs.269.80 Lacs Details of CSR spent during the financial year 2015– 16 is as per Annexure ‘G’ enclosed. Amount unspent during the year is Rs.4.03 Lacs.
The brief outline of the Corporate Social Responsibility (CSR) policy of the Company is set out in Annexure ‘H’ of this report and is also available on the website of the Company. 36) M GT – 9 Extract of Annual Return for financial year ended 31.03.2016 (Pursuant to section 92(3) of the Companies Act, 2013 read with the companies (Management and Administration) Rules, 2014 Form No. MGT–9 is enclosed (Annexure ‘I’).
37) SECRETAR IAL AUDIT REPORT
To comply with the provisions of Section 204 of the Companies Act, 2013 we enclose herewith secretarial audit report received from M/s. VKM & Associates, Practicing Company Secretary for the year ended 31st March 2016 (Annexure ‘J’).
38) RISK MANAGEMENT
The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The risk management policy is set out in Annexure ‘K’ of the Directors Report and is also available on Company’s website.
40) DEPOSITS FROM PUBLIC
This Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
41) PART ICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below
42) DISCLOSURE REQUIREMENTS
The corporate governance report with auditors’ certificate thereon and management discussion and analysis are attached, which form part of this report. Appointment letters of the Independent Directors are available on the website of the company.
The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and the Listing Agreements with stock exchanges (URL: www. vinatiorganics.com).
43) TRAN SACTION WITH RELATE D PART IES
None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in ‘Annexure L’ in Form AOC–2 and the same forms part of this report.
44) BOAR D EVALUAT ION
The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (“SEBI”) under Clause 49 of the Listing Agreements (“Clause 49”).
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board meetings, information and functioning, etc.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee (“NRC”) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.
45) INDEPENDENT DIRECTOR S’ METING
The Independent Directors of the Company met on 21st May, 2015 & 7th March, 2016, inter–alia to discuss:
(i) Review the performance of non–Independent Directors and the Board of Directors as a whole;
(ii) Review the performance of the Chairperson of the Company, taking into account the views of the Executive and Non–Executive Directors;
(iii) Asses the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
In a separate meeting of independent Directors, performance of non–independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non–executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. (Annexure ’M’)
46) N UMBER OF METINGS OF THE BOAR D
Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.
47) INTERNAL FINANCIAL CONTRO L SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.
48) AUDIT COMM ITTE
The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report
49) CORPORATE POLICIES AND PRO CEDURES ON INTERNAL FINANCIAL CONTRO LS:
The Corporate Policies and Procedures on Internal Financial Controls policy is set out in Annexure ‘N’ of the Directors Report and is also available on Company’s website.
50) BUSINESS RESPONSIBILITY REPORT :
The Business Responsibility Report is set out in Annexure ‘O’ of the Directors Report and is also available on Company’s website.
51) APPRE CIAT ION & ACKNOWLEDGEMENTS
Your Directors take this opportunity to place on record their sincere gratitude for assistance and cooperation received from Central & State Governments, banks, financial institutions, shareholders, business associates and esteemed customers for their continued support and assistance during the year.
Your Directors also place on record their appreciation for the excellent contribution made by all employees of Vinati Organics Limited through their commitment, competence, co–operation and diligence to duty in achieving consistent growth of the Company.
For and on behalf of the Board of Directors
Girish M. Dave
Date : 14th May 2016
Place : Mumbai