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CIL Nova Petrochemicals Ltd.

BSE: 533407 Sector: Industrials
NSE: CNOVAPETRO ISIN Code: INE672K01025
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OPEN 29.75
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VOLUME 400
52-Week high 36.30
52-Week low 20.50
P/E 16.11
Mkt Cap.(Rs cr) 81
Buy Price 29.80
Buy Qty 20.00
Sell Price 31.45
Sell Qty 20.00
OPEN 29.75
CLOSE 31.00
VOLUME 400
52-Week high 36.30
52-Week low 20.50
P/E 16.11
Mkt Cap.(Rs cr) 81
Buy Price 29.80
Buy Qty 20.00
Sell Price 31.45
Sell Qty 20.00

CIL Nova Petrochemicals Ltd. (CNOVAPETRO) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the 12TH (Twelfth) Annual Reportof your Company along with Audited Financial Statements for the Financial Year ended 31stMarch 2016.

1. FINANCIAL SUMMARY/HIGHLIGHTS OF PERFORMANCE OF THE COMPANY:

Financial Results

(Rs. in Lakhs)
Particulars Year ended 31st March 2016 Year ended 31st March 2015
Sales/Income from operations (Net of excise) 20182.12 24301.38
Other Income 38.06 50.40
Total Income 20220.18 24351.78
Total Expense 19429.36 23843.55
Depreciation 588.76 662.02
Profit Before Tax 790.82 508.23
Tax 243.19 106.55
Profit After Tax 547.62 401.68

2. PERFORMANCE OF THE COMPANY:

The total revenue (net of excise) was Rs.20182.12 Lakh as against Rs.24301.38 Lakh inthe previous year showing a decrease of 17%. However productivity was increased incomparison to previous years production. Profit before tax (PBT) was Rs.790.82 Lakhs asagainst

`508.23 Lakh showing an increase of 56% and profit after tax (PAT) stood at Rs.547.62Lakhs as against Rs.401.68 Lakh in the previous year showing an increase of 36%.

3. DIVIDEND:

Your directors have not recommend Divided for this Financial Year as Ploughing back ofprofits will be good strategy for future growth and development of your Company.

4. RESERVES:

The Company proposes not to carry any amount to its General Reserves and the entireprofit is transferred to Reserves & Surplus as Surplus in Statement of Profit andLoss.

5. SHARE CAPITAL:

During the year under review the Company had Authorized Capital of Rs.325000000comprising of 27500000 Equity Shares of Rs.10/-Each and 500000 Preference Shares ofRs.100/- Each. Paid-Up Equity Share Capital of the Company as on date of this reportstands at Rs.135500000/- comprising of 13550000 Equity Shares of Rs.10/- Each.

Further Company had redeemed 500000 Non-Cumulative Redeemable Preference Shares on14th August 2015.

During the year under review the Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity.

6. DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.

7. FUTURE OUTLOOK:

Polyester filament Yarn (MMF) Market scenario

Polyester Filament Yarn consumption in Textile and Apparel has grown more than 6 %between 2000 to 2015 globally. In India also consumption is increasing year on year basis.Consumption of Polyester fibre is gaining momentum due to factors like fluctuation ofCotton prices increased presence & sourcing by global brands where polyester fibredominates growth of women’s wear segment growth of value retail etc.

Outlook for polyester as calculated by experts shows that consumption of polyester yarnwill be double to that of cotton by 2030. The Untapped opportunity remains in MMF basedproduct categories which can give an exponential growth to India’s export of textileand apparel. Consumption of MMF based products will increase in domestic Market infollowing Segment: a. Women’s western wear &lingerie-Increasing womenparticipation in work force;

b. Active wear-India’s large young population base with increasing awarenesstowards fitness; c. Mobiltech products-India’s emergences as global automobilemanufacturing hub; d. Work wear/Uniform-Increasing no. of school going children &consciousness of corporate towards their image; e. Hygiene products-Awareness of Indianwomen for hygiene will cause increasing uses of hygiene products

To reap maximum benefits of the future scenario India needs focus on manufacturing ofMMF based products. A drastic change is expected in the consumption of polyester yarnshare of which is projected to grow to 53% by 2030.

Future course of action:

Looking the scenario of polyester yarn we need to upgrade by innovation increase thevolume integration R&D and branding. Future demand is very promising.

8. PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION EXPENDITURE ON RESEARCHAND DEVELOPMENT FOREIGN EXCHANGE INFLOW/OUTFLOW ETC.

In accordance with the provisions of Section 134 (3) (m) the Companies Act 2013 readwith Rule 8 (3) Companies (Accounts) Rules 2014 the relevant information pertaining toconservation of energy technology absorption foreign exchange earnings and outgo isgiven in ANNEXURE – I and forms part of this report.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There were no such material changes occurred subsequent to the close of the financialyear of the Company to which the balance sheet relates and the date of the report whichcan affect the financial position of the Company.

10. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As required under Regulation 34 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the Management Discussion and Analysis Report of the Company for theyear under review is presented in a separate section forming part of the Annual Report.

11. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS:

No such Orders have been passed by the Regulators/Court or Tribunals which can impactthe going concern status and Company’s operation in future.

12. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES:

The Company had no Subsidiary or Joint Ventures or Associate Companies as on 31stMarch 2016.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY THE COMPANY:

Details of Loans Guarantees and Investments if any covered under the provisions ofSection 186 of the Act are given in the notes to the Financial Statements.

14. EXTRACTS OF ANNUAL RETURN:

In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of theAnnual Return in the prescribed format is appended to this Report as ANNEXURE-II.

15. RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the year under the reviewwere on an arm’s length basis and were in the ordinary course of business. There areno materially significant related party transactions made by the Company which may have apotential conflict with the interest of the Company at large and thus disclosure in FormAOC-2 is not required. The Board has formulated Policy on Related Party Transactionsdetailed policy is also available at http://cnpcl.com/corporate-policies.

16. KEY MANAGERIAL PERSONNEL:

As required under Section 203 of the Companies Act 2013 the Company has noted thatMr. Pooransingh Mathuria Whole-time Director Mr. Pradip Khandelwal Chief ExecutiveOfficer Mr. Satish Bhatt Chief Financial Officer and Mr. Romin Shah Company Secretary*were the Key Managerial Personnel of the Company for the year ended 31st March2016.

*Mr. Romin Shah resigned on 11th April 2016 and Mr. Chintan N. Amlani wasappointed as Company Secretary from 23rd May 2016.

17. DIRECTORS:

In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the Company Mr. Jyotiprasad Chiripal (DIN: 00155695) retiresby rotation at the ensuing Annual General Meeting and being eligible in terms of Section164 of the Act offers himself for re-appointment.

Further On Recommendation of Nomination and Remuneration Committee Board of Directorsof the Company has appointed Mr. Pooransingh Mathuria (DIN: 07430356) as an AdditionalDirector and was designated as Whole-time Director of the Company w.e.f. 13thFebruary 2016. Pursuant to Provisions of Section 152 of the Company Members of theCompany need to appoint Mr. Pooransingh Mathuria as Director. During the year under thereview Ms. Renu C. Siddhu Additional Independent Director (DIN: 05263778) has tenderedher resignation from the Board of Directors of the Company w.e.f. 26thOctober 2015 Ms. Pooja Gwalani (DIN: 07329927) was appointed as Additional IndependentDirector w.e.f. 6th November 2015 She tendered her Resignation on 26thMay 2016. Later on Ms. Chinar Rajkumar Jethwani (DIN: 07141393) was appointed on 13thAugust 2016 on the board of the Company as Additional Independent Director. Pursuant toProvisions of Section 152 of the Company Members of the Company need to appoint Ms. ChinarRajkumar Jethwani as Indendent Director.

None of the Directors is disqualified for appointment/reappointment under Section 164of the Companies Act 2013 as required by law this position is also reflected in theAuditors’ Report.

All the Independent Directors on the Board have given a declaration of theirindependence to the Company as required under Section 149(6) of the Companies Act 2013.

The composition of the Board meetings of the Board held during the year and theattendance of the Directors thereat have been mentioned in the Report on CorporateGovernance in the Annual Report.

18. EVALUATION OF BOARD COMMITTEES AND DIRECTORS:

The evaluation of Chairman all the Directors and the Board and Committees thereof as awhole was conducted based on the criteria and frame work adopted by the Board. Theevaluation process has been explained in the Report on Corporate Governance in this AnnualReport. The Board noted the evaluation results that were collated and presented to theBoard.

19. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS:

The Board has on the recommendation of the Nomination & Remuneration Committeeformulated criteria for determining Qualifications Positive Attributes and Independenceof a Director and also a Policy for remuneration of Directors Key managerial Personneland senior management. The details of criteria laid down and the Remuneration Policy aregiven in the Corporate Governance Report. Further the said policy is also available athttp://cnpcl.com/corporate-policies.

20. PARTICULARS REGARDING EMPLOYEES REMUNERATION:

The statement containing particulars of employees as required under Section 197 (12) ofthe Companies Act 2013 read with Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this Report as Annexure -III.

21. COMMITTEES OF THE BOARD:

In accordance with the Companies Act 2013 and Listing Regulations the Company hasfollowing Committees in place:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

Details of the said Committees along with their charters composition and meetings heldduring the financial year are provided in the "Report on Corporate Governance"as a part of this Annual Report. Details of committee is also available athttp://cnpcl.com/

22. CORPORATE SOCIAL RESPONSIBILITY POLICY AND INITIATIVES:

The Company has not implemented Corporate Social Responsibility Policy and initiativesas the provisions of Section 135 of the Act and Rules made thereunder governing CorporateSocial Responsibility are not applicable to the Company.

23. STATUTORY AUDITORS AND THEIR REPORT:

M/s. J. T. Shah & Co. Chartered Accountants (FRN 109616W) were appointed asStatutory Auditors of your Company at the Previous Annual General Meeting held on 26thSeptember 2015 till the Conclusion of ensuing Annual General Meeting.

As per the Provisions of the Section 139 of the Companies Act 2013 your Board ofDirectors recommend to Appoint M/s. J. T. Shah and Co. Chartered Accountants to holdoffice from Conclusion of the Annual General Meeting till Conclusion of Ensuing AnnualGeneral Meeting of the Company. Further the Company has obtained a written confirmationunder section 139 of the Companies Act 2013 from M/s. J.T. Shah & Co. CharteredAccountants that their appointment if made would be in conformity with the limitsspecified under the Act.

The Report given by the Auditors on the financial statements of the Company is part ofthe Annual Report. The notes to the accounts referred to in the Auditors’ Report areself-explanatory and therefore do not call for any further comments.

There has been no qualification reservation adverse remark or disclaimer given by theAuditors in their Report.

24. SECRETARIAL AUDITORS AND THEIR REPORT:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rules madethereunder the Company had appointed M/s. Jatin Kapadia Practicing Company Secretariesas Secretarial Auditor of the Company to undertake the Secretarial Audit for the financialyear 2015-16.

The Secretarial Audit Report for financial year 2015-16 issued by M/s. Jatin KapadiaPracticing Company Secretaries has been appended as Annexure IV to this Report. There wereno qualifications or adverse remarks in their Report.

25. COST AUDITORS:

As per the provisions of Section 148 of the Companies Act 2013 read with Companies(Cost Records and Audit) Rules 2014 as amended from time to time the Board of Directorsof the Company on recommendation of Audit Committee has appointed M/s. Kiran J. Mehta& Co. Cost Accountants as Cost Auditor of the Company to conduct audit of CostAccounts of the Company for the Financial Year 2015-16. There has been no qualificationreservation adverse remark or disclaimer given by the Auditors in their Report.

26. RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM:

Company has implemented an integrated risk management approach through which it reviewsand assesses significant risks on a regular basis to help ensure that there is a robustsystem of risk controls and mitigation in place. Senior management periodically reviewsthis risk management framework to keep updated and address emerging challenges. Majorrisks identified for the Company by the management are Compliances of various applicableLaws Regulatory changes Manufacturing & Supply Litigation Technological Changesand new capital investments return. The management is however of the view that none ofthe above risks may threaten the existence of the Company as robust Risk mitigationmechanism is put in place to ensure that there is nil or minimum impact on the Company incase any of these risks materialize. Further Company had formulated Risk ManagementCommittee also however later on it was dissolved as separate Committee for the same wasnot required considering the size of your Company So Audit Committee looks for the RiskManagement after dissolution of Risk Management Committee.

The Company has an Internal Control System commensurate with size scale andcomplexity of its operations. The internal financial controls are adequate and areoperating effectively so as to ensure orderly and efficient conduct of businessoperations. The Company has appointed M/s. Jhaveri Shah and Co. Chartered Accountants asan Internal Auditors of the Company. The Audit Committee in consultation with the internalauditors formulates the scope functioning periodicity and methodology for conducting theinternal audit. The internal auditors carry out audit covering inter alia monitoring andevaluating the efficiency & adequacy of internal control systems in the Company itscompliance with operating systems accounting procedures and policies at all locations andsubmit their periodical internal audit reports to the Audit Committee. Based on theinternal audit report and review by the Audit committee process owners undertakenecessary actions in their respective areas. The internal auditors have expressed that theinternal control system in the Company is robust and effective. The Board has also put inplace requisite legal compliance framework to ensure compliance of all the applicable lawsand that such systems are adequate and operating effectively.

27. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy to report genuine concerns and grievances.Details Whistle Blower Policy has been mentioned in the Report of Corporate Governancethe same is available at http://cnpcl.com/corporate-policies.

28. DIRECTORS’ RESPONSIBILITY STATEMENT:

In accordance with the provisions of clause (c) of sub-section (3) ofSection 134 of the Companies Act 2013 and to the best of their knowledge and belief andaccording to the information and explanations obtained by them your Directors statethat-i. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures; ii. theDirectors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period; iii. the directors had taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofCompanies Act 2013 and Rules made thereunder for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities; iv. the directors hadprepared the annual accounts on a going concern basis; v. the directors had laid downinternal financial controls to be followed by the company and that such internal financialcontrols are adequate and were operating effectively and vi. the directors had devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.

29. CORPORATE GOVERNANCE:

As required by Schedule V(C) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed report on Corporate Governance is given as apart of the Annual Report.

The Company is in full compliance with the requirements and disclosures that have to bemade in this regard. The Auditors’ Certificate of the compliance with CorporateGovernance requirements by the Company is attached to the Report on Corporate Governance.

30. GENERAL SHAREHOLDER INFORMATION:

General Shareholder Information is given in Report on Corporate Governance forming partof the Annual Report.

31. ACKNOWLEDGEMENT:

Your Directors wish to express their grateful appreciation for the co-operation andsupport received from customers shareholders financial institutions banks and thesociety at large. Deep appreciation is also recorded for the dedicated efforts andcontribution of the employees at all levels as without their focus commitment and hardwork the Company’s consistent growth would not have been possible despite thechallenging environment.

For and on behalf of the Board
Sd/-
Jyotiprasad Chiripal
Place : Ahmedabad Chairman
Date : 13th August 2016 DIN: 00155695

ANNEXURE – I TO THE DIRECTORS REPORT CONSERVATION OF ENERGY/ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO:

A. CONSERVATION OF ENERGY:

i. The Steps taken or impact on conservation of energy:

Company has started using fuel efficient Coal instead of Lignite and Local Coal andthis will in-turn reduce the fuel and maintenance cost of the Company.

ii. The Steps taken by the Company for utilizing alternate sources of energy:

• Company is now using fuel efficient Coal instead of Lignite and local fuel bywhich fuel as well as power consumption of the company is reduced.

iii. The Capital investment on energy conservation equipments:

Separate Shed has been established for storing the fuel efficient Coal by this Coalwill remain dry during the rain and will be protected from moist so efficiency of thePlant and Machinery will be maintained.

B. TECHNOLOGY ABSORPTION:

i. The efforts made towards technology absorption:

Company has started to use fuel efficient Coal this will directly have positive effecton durability of Boiler and Coal Plant so deterioration of the same will be reduced.

Further Company has done capital expenditure in Machinery and Company is planning forstandby equipments in utility and power generation.

ii. Benefits derived like Product Improvement Cost Reduction Product Development orimport Substitution:

• As company is using fuel efficient Coal so overall Cost of Production will bereduced.

• Company has developed unique products like POY Danniers 32/14 25*14 and 22/14during the year. Further these products are rarely produced in India and response from themarked is overwhelming so your Company is planning accordingly.

• Company during the year established Paper Tube Plant for captive use of the sameand for selling it to the outside parties and this will lead to;

a) Consistency in Quality of Packing Material;

b) Revenue will be increased and

c) Cost of Production will be decreased and this will lead to increase in profitmargins of the Company.

iii. In case of Imported Technology (imported during the last 3 years reckoned from thebeginning of the financial year) –Not Applicable

iv. The expenditure incurred in Research and Development: Company has done expenditurein testing equipment in order to have check in quality of the product and maintain thesame.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Details of foreign exchange earnings and outgo are given in the notes to the FinancialStatements.

Annexure – III to the Directors Report

Details pertaining to remuneration as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

i. The ratio of the remuneration of each Director to the Median Remuneration of theEmployees of the Company for the Financial Year 2015-16 and

ii. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the Financial Year

(`In Lakhs)
Sr. No. *Name of Director/KMP and its Designation Remuneration to the Director/KMP for the Financial Year 2015-2016 Percentage increase/ decrease in remuneration in the Financial Year 2015-2016 Ratio of Remuneration of each Director to the Median Remuneration of Employees
1. Mr. Jyotiprasad Chiripal Director and Chairman
2. Mr. Vedprakash Chiripal Director
3. Mr. Pooran Singh Mathuria Whole-time Director 0.65 NA 6.29
4. Mr. Pradip Khandelwal Chief Executive Officer 25.98 6.52 14.18
5. Mr. Satish Bhatt Chief Financial Officer 7.22 8.90 3.94
6. Mr. Romin Shah Company Secretary 4.27 15.72 2.33

* Only Sitting Fees is paid to Independent Directors.

iii. The Median Remuneration of Employees (MRE) of the Company is ` 183213 for theFinancial Year 2015-2016. The MRE for the year increased by Rs.17222 as compared to `166266 during the previous financial year.

iv. The number of permanent employees on the rolls of the Company is 133 for the yearended 31st March 2016.

v. Sales and Operating Income for the year ended 31st March 2016 decreasedby 17% However Profit before Tax was increased by 56% as compared to the previous year.Average increase in employees’ remuneration was 9.4% Overall increase in remunerationis in line with the performance of the Company.

vi. The remuneration of the Key Managerial Personnel (KMP) of the Company and thepercentage increase in the remuneration of KMP during 2015-16 is as given in (i) and (ii)above. The performance of the Company is as stated in (v) above.

vii. The Market Capitalization as on 31st March 2016 was Rs.3495.90 Lakhsas compared to Rs. 2574.50 Lakhs as on March 31 2015. Price Earnings Ratio of the Companydecreased to 6.39 as on 31st March 2016 as against 6.42 as on 31stMarch 2015.

viii. Average percentage increase made in the salaries of employees other than themanagerial personnel in the last Financial Year was 9.25%.

Managerial Remuneration was not increased during the year under consideration theincrease in remuneration is determined based on the performance by the employees of theCompany.

ix. The remuneration of each of the Key Managerial Personnel is given in (i) and (ii)above. The performance of the Company in comparison is as stated in (v) above.

x. There is no variable component in remuneration of Directors of the Company.

xi. It is hereby affirmed that the remuneration paid is as per the Remuneration Policyof the Company.

xii. The ratio of the remuneration of the highest paid director and other details ofthe employees who are not directors but received remuneration in excess of the highestpaid director during the year is as below Employees covered under rule 5(2) of theCompanies (Appointment and Remuneration) Rules 2014 mentioned as below;

(`In Lakhs)
Mr. S. P. Paranjape Mr. Akhil Sharaf
Designation Assistant Vice president Marketing & Sales Assistant Vice president Production
Remuneration received 20.84 13.55
Nature of Employment Full time Full time
Qualification and Experience B. Tex. Diploma-Textile
Date of commencement of employment 4th May1999 1st February 2011
Age 51 Years 47years
Last employment held by such employee before joining the company Nova Petrochemicals Ltd. Raj Reyons Industries Ltd.
Whether employees are a relative of any director or manager in the company. No No
Ratio of Remuneration to Director 1.57 1.02