Your Directors are indeed pleased to present the Thirty First Annual Report and AuditedAccounts of the Company for the financial year ended March 31 2016.
FINANCIAL RESULTS :
| || |
Year ended on
| ||31-03-2016 ||31-03-2015 |
|(1) Income ||152.54 ||151.27 |
|(2) Profit before Interest Depreciation & Taxation ||23.34 ||25.51 |
|Less : Interest ||3.79 ||2.74 |
|(3) Profit before Depreciation and Taxation ||19.55 ||22.77 |
|Less : Depreciation ||2.99 ||2.22 |
|(4) Profit before Tax for the year ||16.56 ||20.55 |
|Less : Provision for Taxation : || || |
|(a) Current Tax ||4.37 ||4.84 |
|(b) Deferred Tax ||1.65 ||2.08 |
|(c) Excess Provision of earlier years (Net) ||(0.06) ||(0.06) |
|Sub-total ||5.96 ||6.86 |
|(5) Net profit after Tax for the year ||10.60 ||13.69 |
|Add : Balance B/f from previous years a/c. ||41.01 ||33.74 |
|Sub-total ||51.61 ||47.43 |
|(6) Less : (a) Utilised for issue of bonus shares ||--- ||1.26 |
|(b) Adjustment relating to Fixed Assets ||--- ||0.01 |
|(c) Transferred to General Reserve ||1.00 ||1.00 |
|(d) Proposed Dividend ||3.45 ||3.45 |
|(e) Dividend Distribution Tax ||0.70 ||0.70 |
|Sub-total ||5.15 ||6.42 |
|(7) Balance C/f to next years account ||46.46 ||41.01 |
OPERATIONS AND THE STATE OF COMPANYS AFFAIRS :
(A) Sales and Profit:
The sales and other income of the Company during 2015-16 were flat at Rs. 152.80 crorescompared to Rs. 151.27 crores of the previous year though there was 8 % volume growth insales of the Company. This was mainly due to lower contribution of export sales in totalsales of the Company. The company has made Profit before tax of Rs. 16.56 crores comparedto previous years Rs.20.55 crores. During the first half of F.Y. 201516 the Companyhad undergone stringent audit requirements to ensure that its neutraceuticals exportbusiness to U.S.A is not affected when the new law in U.S.A. is implemented which isexpected to be in place later this year. This had impacted the production of the Companyand in turn had impacted export. During the year Tocopherols prices remained stable.
(B) Raw Material:
Required quantities of both the Raw materials were available from within India andcouple of nearby countries.
Company was able to procure the required orders for its export products. Company madeexport of Rs. 30.20 crores (Previous Year - Rs. 38.57 crores) during the year.
(D) The Capital expenditure incurred during the year was mainly for increase incapacity of downstream product viz. Dimer Acid and related / balancing equipments. Duringthe year the Company successfully commissioned its new Dimerization plant.
No material changes and commitments affecting the financial position of the Companyhave occurred between March 31 2016 and the date of this Report.
TRANSFER TO RESERVES:
Your Directors recommend appropriation of Rs. 1.00 crore to General Reserve.
Your Directors are pleased to recommend a dividend of Rs.2.50 (i.e. 25 %) per equityshare (Previous Year Rs.2.50/- per equity share) on the Equity Share Capital for thefinancial year ended March 312016 subject to the approval of the shareholders at theensuing Annual General Meeting of the Company.
MEETINGS OF THE BOARD :
During the Financial Year 2015-16 6 (six) meetings of the Board of Directors tookplace. For further details please refer Report on Corporate Governance.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS :
The Company has not given any loan made investment given any guarantee or providedany security - covered u/s. 186 of The Companies Act 2013 - to anyone.
CORPORATE GOVERNANCE/MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A Report on the Corporate Governance Code along with a certificate from the Auditors ofthe Company regarding the compliance of conditions of Corporate Governance as stipulatedunder regulation 34 of SEBI (LODR) Regulations 2015 as also the Management Discussion andAnalysis Report are annexed to this Report.
During the year Company has not accepted any Fixed Deposits.
CREDIT RATING :
CARE has re-affirmed CARE A- (Single A Minus) to Long Term Bank facilities(considered to be good for our size of manufacturing companies) and CARE A1 (AOne) to Short Term Bank facilities.
The Company keeps on exploring the possibility of technical improvement and processoptimization for better yields / product mix / energy efficiency.
Shri Hemant N. Shah shall retire at the forthcoming Annual General Meeting of theCompany and being eligible offer himself for reappointment.
During the year under review Shri Harsha Raghavan and Shri Sumit Maheshwari wereappointed as Additional Directors Promoter Category u/s. 161 (1) of The Companies Act2013. They will hold the Office of Director upto the date of forthcoming Annual GeneralMeeting. Notices u/s. 160 of The Companies Act have been received for their appointment asDirectors of the Company.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS :
The Company has received declarations from all the Independent Directors of theCompany inter alia confirming that they meet the criteria of Independence as prescribedunder Section 149 of the Companies Act 2013 and Regulation 16(1)(b) of SEBI (LODR)Regulations 2015.
COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDINGCRITERIA FOR DETERMING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTORETC. :
Pursuant to the provisions of Section 178 and other applicable provisions if any ofthe Companies Act 2013 read with the Rules made thereunder and clause 49 of erstwhileListing Agreement [now Regulation 19 of SEBI (LODR)] Regulations 2015 the Board ofDirectors at their Meeting held on 11.08.2014 approved the Remuneration and NominationPolicy as recommended by the Nomination and Remuneration Committee. The salient featuresof the said policy covering the policy on appointment and remuneration and other mattershave been explained in the Corporate Governance Report.
BOARD EVALUATION :
Based on the criteria for evaluation of Independent Directors and the Board asrecommended by the Nomination and Remuneration Committee and as adopted by the BoardBoard carried out evaluation of its own performance and that of the independant Directors.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement of Section 134(3)(C) of the Companies Act 2013 withrespect to Directors Responsibility Statement the Directors hereby confirm:
(i) that in the preparation of the annual accounts for the year ended March 31 2016the applicable accounting standards read with requirements set out under Schedule III ofthe Companies Act have been followed and there are no material departures from the same;
(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year viz. March 312016 and of the profit of the Company for that period;
(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a 'Going Concernbasis;
(v) that the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and
(vi) that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
All the employees have worked with zeal and enthusiasm and your Directors wish toexpress their sincere appreciation to all the employees for their support co-operationand dedicated services.
PARTICULARS OF EMPLOYEES :
There was no employee drawing an annual salary of Rs. 60.00 lacs or more where employedfor full year or monthly salary of Rs. 500000/- or more where employed for part of theyear and therefore no information pursuant to the provisions of Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is required to begiven.
The Companys securities are listed with National Stock Exchange of India Ltd.BSE Limited and Ahmedabad Stock Exchange Ltd. The Company has paid the listing fees to BSELimited and National Stock Exchange of India Limited. As far as Ahmedabad Stock Exchangeis concerned we have already submitted written request to the Stock Exchange for lettingus know the amount of fees payable for F.Y. 2016-17. The details are still awaited.
CORPORATE GOVERNANCE :
As per Regulation 34(3) read with schedule V of the SEBI (LODR) Regulations 2015 aseparate Section on corporate governance practices followed by Company together with acertificate from Companys Statutory Auditors confirming compliance forms an integralpart of this report.
BUSINESS RESPONSIBILITY REPORT :
The Business Responsibility Reporting as required Regulation 34(2)(g) of SEBI (LODR)Regulations 2015 is not applicable to the Company.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :
All contracts / arrangements / transactions with related parties entered into by theCompany during the financial year with related parties were in the ordinary course ofbusiness and on an arms length basis. During the year the Company had not enteredinto any contract / arrangement / transaction with related parties which could beconsidered material in accordance with related party transactions.
CORPORATE SOCIAL RESPONSIBILITY (CSR) :
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility (CSR) Policy which has been approved by theBoard. The other details of the CSR activities as required u/s. 135 of the Companies Actare given in CSR Report at Annexure to Directors Report.
RISK MANAGEMENT POLICY :
The Company has put in place Risk Management Plan. The Company has identified followingelements of risk which in the opinion of the Board may threaten the existence of theCompany :
(1) Severe simultaneous drought in those Soya producing countries of the world on whichIndian Crude Soya Oil refining is partly dependent.
(2) Development of new and substantially cheaper manufacturing technologies usingaltogether new inputs for making various kinds of resins which are required for makingpaints printing ink hardners/adhesives
(3) New research on the benefits of Natural Vitamin E versus Synthetic one whichdilutes the benefit of Natural Vitamin E.
The Company has identified other hard vegetable oils such as Palm to which it canswitch over to in the extreme event of non-availability of soft oils based raw materialsthroughout the year.
The auditors M/s Jhaveri Shah & Co. Chartered Accountants Ahmedabad wereappointed at the last Annual General Meeting held on July 27 2015 for a term of fiveyears subject to ratification at each and every intervening annual general meeting. Theyhave however given the letter to the Company expressing their unwillingness to continueas the Statutory Auditors of the Company.
The Company now proposes to appoint subject to approval at the ensuing Annual GeneralMeeting M/s. Price Waterhouse & Co. Chartered Accountants LLP as the StatutoryAuditors of the Company for a term of five years subject to ratification at each andevery intervening annual general meeting. The Audit Committee of the Board of Directorshas recommended their appointment.
The Report of the Statutory Auditors for the financial year 2015-16 does not containany qualification reservation or adverse remark.
SECRETARIAL AUDIT REPORT
As required by Section 204 of The Companies Act 2013 read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. Parikh Dave & Associates Company Secretaries Ahmedabad a firm ofCompany Secretaries in Practice to conduct Secretarial Audit for the Financial Year2015-16. The Report of the Secretarial Audit for the financial year ended on March 312016 is annexed as Annexure to this Report. The said report contains one observation. Thestandard of Code of Conduct as per Insider Trading Regulations requires that the 'TradingWindow shall not be re-opened earlier than 48 hours from the time price sensitiveinformation pertaining to financials of the Company become generally available. We hadannounced closure of 'Trading Window till end of next day of the day on which BoardMeeting took place. We will ensure proper compliance of this regulation going forward. Wehowever wish to place on record that no transaction - either sale or purchase of equityshares - by any of the 'insiders was reported within 48 hours from the time ofrelease of price sensitive information.
As per the Companies (Cost Records and Audit) Rules 2014 as amended by Companies (CostRecords and Audit) Amendment Rules 2014 issued by the Central Government the Company isrequired to get its cost records maintained by the company for the products covered underChapters 2917 and 3823 of Sr. No. 18 of table mentioned under Rule 3 (B) - Non-regulatedSectors audited by a Cost Auditor. Accordingly the Board of Directors as per therecommendation of the Audit Committee proposes to appoint M/s. Rajendra Patel &Associates Cost Accountants as Cost Auditors for the financial year 2016-17.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
A. Conservation of Energy
(a) Energy Conservation measures taken:
Energy Conservation is an ongoing feature at Adi Finechem Ltd. During the year Companytook trials of its various motors to measure efficiency vis-a-vis last generation motors.The trials show fair amount of saving of power and Company is now contemplating to proceedin the matter.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of Energy: The Company is exploring investments in replacement of its severalmotors particularly those with >15 HP rating.
(c) Impact of measures listed in (a) and (b) for reduction of energy consumption andconsequent impact on the cost of production of goods:
The above mentioned energy saving initiatives will help the company to contain itsPower and Fuel costs.
(d) Total energy consumption per unit of production as per prescribed Form 'A :
As per annexure attached.
B. Technology Absorption
The Company has an ongoing program for up gradation of existing products improvementin manufacturing processes reduction in product costs and increase in yield of primeintermediate / finished products. The Company was able to achieve higher yield of itsprime intermediate / finished products on its Fractional Column/ autoclave equipments.This is done through constant interaction with employees customers and vendors.
Company continued its experiment with process routes.
C. Foreign Exchange Earnings and outgo
Foreign Exchange Earnings Rs.301951610/-
Foreign Exchange Utilised Rs.85232381/-
Extract of Annual Return :
The details forming part of the extract of Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed herewith as Annexure to thisReport.
Your Board of Directors wishes to place on record its appreciation to the contributionmade by the employees of the company. The company has achieved impressive growth throughthe competence hard work solidarity cooperation and support of employees at all levels.The Directors also wish to thank the Government authorities bank and shareholders fortheir cooperation and assistance extended to the company.
| ||For and on behalf of the Board of Directors |
|Place : Ahmedabad ||Utkarsh B. Shah |
|Date : April 29 2016 ||Chairman |
|A. POWER AND FUEL CONSUMPTION ||2015-16 ||2014-15 |
| || || |
|1. ELECTRICITY || || |
|A. Purchased Units ||6961590 ||5815265 |
|Total Amount (Rs.) ||52606167 ||42032719 |
|Rate / Unit (Rs.) ||7.56 ||7.23 |
|B. Own Generation Units ||190472 ||163304 |
|Units per Litre of Diesel ||3.31 ||3.20 |
|Average Cost / Unit (Rs.) ||16.40 ||20.10 |
| || || |
|2. FURNACE OIL || || |
|Quantity (in KL) ||218.138 ||251.390 |
|Total Cost ||5193848 ||10713307 |
|Average rate per litre (Rs.) ||23.81 ||42.61 |
| || || |
|3 LIGNITE / COAL || || |
|Quantity (in M.Tons) ||8814.57 ||11178 |
|Total Cost ||50224900 ||51033176 |
|Average rate per Kg. (Rs.) ||5.68 ||4.57 |
| || || |
|4. OTHERS (IF ANY) ||- ||- |
|B. Consumption per unit of Production ||Production (M.Tons) ||Standards if any ||Per M.Ton |
|1 ELECTRICITY || || ||KWH |
|Deodorizer Distillate (Mixed Tocopherol Concentrate) ||1279.690 ||- ||532 |
| ||(1648.017) ||- ||(525) |
|Linoleic Acid ||2269.225 ||- ||346 |
| ||(1858.455) ||- ||(342) |
|Dimer Acid ||3777.055 ||- ||296 |
| ||(2550.397) ||- ||(340) |
|2 FURNACE OIL || || ||Litres |
|Deodorizer Distillate (Mixed Tocopherol Concentrate) ||1279.690 ||- ||18.79 |
| ||(1648.017) ||- ||(24.00) |
|Linoleic Acid ||2269.225 ||- ||10.77 |
| ||(1858.455) ||- ||(10.50) |
|Dimer Acid ||3777.055 ||- ||15.89 |
| ||(2550.397) ||- ||(32.00) |
|3 LIGNITE / COAL || || ||KGS. |
|Deodorizer Distillate (Mixed Tocopherol Concentrate) ||1279.690 ||- ||977 |
| ||(1648.017) ||- ||(1050) |
|Linoleic Acid ||2269.225 ||- ||421 |
| ||(1858.455) ||- ||(499) |
|Dimer Acid ||3777.055 ||- ||927 |
| ||(2550.397) ||- ||(1275) |