The Board of Directors is pleased to present herewith the 23rd Annual Reportof your Company together with the Audited Accounts for the year ended 31stMarch 2016(FY16). The Management Discussion and Analysis has been annexed to theDirectors Report.
The highlights of financial results of the company are as follows: -
(Rs. in lacs)
|Particulars ||For the financial year 2016 (FY16) ||For the financial year 2015 (FY15) |
|Operating Revenues / Turnover ||6280.47 ||4514.19 |
|Profit before Depreciation & Amortization Finance charges ||2697.43 ||1352.90 |
|Depreciation & Amortization ||192.99 ||183.21 |
|Finance Charges ||21.47 ||26.05 |
|Profit / (Loss) before tax ||2482.97 ||1143.64 |
|Provision for taxation (incl. deferred tax) ||889.68 ||372.83 |
|Profit / (Loss) after tax ||1593.29 ||770.81 |
During the period under review the Company registered an uptick of 39% in theoperating revenues from Rs. 4514.19 lac in FY15 to Rs. 6280.47 lac in FY16. Thisperformance was largely driven by ramp up in the institutional business both for the maleas well as female condoms. In the total operating revenues the male condoms contributedabout 51% in value terms as against 49% for the female condoms. From a business natureperspective the contract manufacturing business contributed close to 20% in overallsales.
From the margins standpoint we expanded our EBITDA margins from 30.0% in FY15 to 42.9%in FY16. This is based on an absolute EBITDA increase of 99% from Rs. 1353.4 lac to Rs.2697.4 lac in FY16. The expansion in the EBITDA performance was led by increasedcontribution from female condoms business which attract relatively higher margins than themale condoms. At the net profit level we closed this financial year with a net profit ofRs. 1593.29 lac as against Rs. 770.81 lac in the previous year which is an increase of107%.
Your Board of Directors had declared 1st interim dividend of Rs. 1 (i.e. 10%) per equity share at their meeting held on 31st October 2015. Further2nd interim dividend of Rs. 2 (i.e. 20%) per equity share was declared by theBoard of Directors at their meeting held on 10th March 2016. During the yearthe Company paid a total dividend of Rs. 3 (i.e. 30%) per equity share
The whole of profit after tax has been transferred to Profit & Loss account.Interim Dividends are paid from the Profit & Loss account. There is no other amountthat has been proposed to be carried to any other reserves.
CHANGE IN NATURE OF BUSINESS:
During the financial year 2015-16 Company has not changed its nature of business andhas been continuing with the same line of business.
The paid up Equity Share Capital as at 31st March 2016 is Rs. 1111.50 Lac(Rs. Eleven Crores Eleven Lacs and Fifty Thousand Only). During the year under review theCompany has not issued shares with differential voting rights nor has granted any stockoptions as sweat equity. As on 31st March 2016 none of the Directors of theCompany hold instruments convertible into equity shares of the Company.
FINANCE AND ACCOUNTS
Your Company prepares its financial statements in compliances with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.The financial statements have been prepared on historical cost basis. The estimates andjudgments relating to the financial statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of transactions and reasonablypresent the Companys state of affairs profits and Cash Flows for the year ended 31stMarch 2016. There is no audit qualification in financial statements by the statutoryauditors for the year under review.
LOANS GUARANTEES & INVESTMENTS
Details of Loan Guarantees and Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to Financial Statements.
The Company has not accepted any deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014 or under Chapter V of the Act.
RELATED PARTY TRANSACTIONS
The Company has not entered into any contracts or arrangements with related partiesreferred to in Section 188(3) of the Companies Act 2013 and providing the information inthe prescribed Form AOC-2 are not applicable to the Company. There are no transactionswith related parties except those indicated out in notes to accounts.
INTERNAL CONTROL SYSTEMS
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism to deal with instance of fraud and mismanagement ifany. It ensures that strict confidentiality is maintained whilst dealing with concerns andalso no discrimination will be meted out to any person for a genuinely raised concern. Anysuspected or confirmed incident of fraud / misconduct can be reported thereof.
The Whistle Blower Policy has been posted on website of the Company at below link:-http://www.cupidltd.in/wp-content/uploads/2015/06/05_002_CG_Whistlerblower.pdf
RISK MANAGEMENT POLICY
There is a continuous process for identifying evaluating and managing significantrisks faced through a risk management process designed to identify the key risks facingbusiness. During the year a risk analysis and assessment was conducted and no major riskswere noticed.
PERFORMANCE EVALUATION OF BOARD
Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Nomination &Remuneration and other Committees. The same is found to be satisfactory.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
At the time of appointing a Director a formal letter of appointment is given to himwhich inter alia explains the role function duties and responsibilities expected of himas a Director of the Company. The Director is also explained in detail the Compliancerequired from him under the Companies Act 2013 Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 and other relevantregulations and affirmation taken with respect to the same.
The Chairman and Managing Director also has one to one discussion with the newlyappointed Director to familiarize him with the Companys operations. Further theCompany has put in place a system to familiarize the Independent Directors about theCompany its products business and the on-going events relating to the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Omprakash Garg and Mrs. Veena Garg Director of theCompany retires by rotation at the ensuing Annual General Meeting of the Company andbeing eligible offers themselves for re-appointment.
Mr. Saurabh V. Karmase appointed as Company Secretary and Compliance Officer of thecompany with effect from 28th January 2016.
Further Company has also appointed Mr. Narendra M. Joshi as Chief Financial Officer(CFO) of the company with effect from 10th March 2016.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
Appointment Letters of Independent Directors and FamiliarizationProgram process to provide insights of the Company to Independent Directors arehosted on website (www.cupidltd.in) of the Company.
The Shareholders are also requested to appoint Mr. Omprakash Garg as Chairman andManaging Director of the Company as mentioned in item no. 5 of notice of annual generalmeeting.
During the year under review the Company has conducted 6 Board Meetings on thefollowing dates: 18th May 2015; 23rd July 2015; 12th August 2015;31st October 2015; 28th January 2016 and 10th March 2016. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013.
COMMITTEES OF THE BOARD
The Board of Directors has the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
M/s. Bhatter & Co. Chartered Accountants being eligible offer themselves forre-appointment. If re-appointed it will be within the prescribed limits specified inSection 139 of the Companies Act 2013. They hold office up to the forthcoming AnnualGeneral Meeting and are recommended for re- appointment to audit the accounts of theCompany for the financial year 2016-17.
As required under Section 204 of the Companies Act 2013 Secretarial Audit Report asobtained from Mr. Shailesh Kachalia Practising Company Secretary is annexed and formspart of the Board Report.
OBSERVATIONS AUDITOR & SECRETARIAL AUDITOR
There are no qualifications contained in the Auditors Report and Secretarial AuditReport. Except that Due to oversight the Company has not filled cost audit report for theyear ended 31st March 2014. The Company will file by paying additional fees.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return in Form No. MGT-9 as provided under sub-section (3) ofSection 92 of the Companies Act 2013 is annexed and forms part of the Board Report.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes having taken place affecting the financial position ofthe Company from the date of closure of financial year till the signing of Accounts.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / courts /Tribunals that would impact the going concern status of the Company and its futureoperations.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Companys policy requires conduct of operations in such a manner soas to ensure safety of all concerned compliances environmental regulations andpreservation of natural resources.
DISCLOSURE IN TERMS OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company take all necessary measures to ensure a harassment free workplace and hasinstituted an Internal Complaints Committee for redressal of complaints and to preventsexual harassment. No complaints relating to sexual harassment were received during theyear.
As per Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Report on CorporateGovernance practices followed by the Company together with a certificate from theAuditors of the Company confirming compliances forms integral part of this Report.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134 (3) (c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the year ended 31stMarch 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and judgement and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at 31st March 2016 and of the profit of the Company for theyear ended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
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 financialcontrols were adequate and were operating effectively;
f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
CONSERVATION OF ENERGY RESEARCH & DEVELOPMENT TECHNOLOGY ABSORPTION
A) Conservation of Energy:-
i. The Company has taken all effective steps to conserve the energy by installinglatest equipments for conservation of energy. As a stand-by arrangement in case ofno supply of electricity of the Company has installed generator set.
ii. The cumulative effect of the Energy conversations steps taken by the Company hasconsiderably reduced the consumption of Energy and saved the cost of the Company.
iii. The Company is not required to mention per unit consumption of Energy in"form A". B & C) Technology Absorption and Expenditure on Research &Development:-
The Company has deployed indigenous technology to manufacture it products. The Companyis also taking steps to upgrade its technology to improve the quality of its product so asto make same cost effective and compete in international market.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has earned foreign exchange of Rs. 4425.53 Lacs (Previous year Rs.3240.96 Lacs) through exports whereas the Company paid / payable foreign exchange of Rs.31.83 Lacs (Previous Year Rs. 67.65 Lacs) towards machinery / equipments. Furtherpayments made in foreign exchange of Rs. 29.12 Lacs (Previous Year Rs. 59.74 Lacs) towardsother expenses.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 of the Companies Act 2013 read withCompanies (Corporate Social Responsibility Policy) Rules 2014 the Board of Directors ofthe your Company has constituted a Corporate Social Responsibility ("CSR")Committee which is chaired by Mr. Pradeep Kumar Jain Independent Director of the Companythe other members of the committee are Mr. Omprakash Garg Chairman and Managing Directorand Mr. Jandhyala L. Sarma Independent Director. Your Company also has in place a CSRpolicy and the same is available on the website of the Company at www.cupidltd.in. Adetailed report as per Rule 8 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is attached as "Annexure 3" forming part of this report.
The Audit Committee now headed by Shri. Pradeep Kumar Jain as Chairman of thecommittee. Shri. Omprakash Garg and Shri. Jandhyala L. Sarma are Members. The details ofall related party transactions if any are placed periodically before the AuditCommittee. During the year there were no instances where the Board had not accepted therecommendations of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE:
Nomination and remuneration committee has been reconstituted on 28thJanuary 2016. On reconstitution on 28th January 2016 the following aremembers: -
|Mr. Pradeep Jain ||Chairman |
|Mr. Jandhyala L. Sarma ||Member |
|Mrs. Veena Garg ||Member |
The Company paid Rs. 3756652/- remuneration to Mr. Omprakash Garg Chairman &Managing Director of the Company for the year 2015 - 2016. Nominal sitting fees are paidto the other Directors of the Company. Further Company reimburses out of pocket expensesincurred by all Directors of the Company as per approvals and under review by Nominationand Remuneration committee members.
Further during the financial year 2015-2016 Nomination and Remuneration Committee hadidentified and recommended to the board the appointment of Mr. Saurabh V. Karmase asCompany Secretary and Compliance Officer of the company with effect from 28th January2016 and Mr. Narendra M. Joshi as Chief Financial Officer of the company with effect from10th March 2016.
TERMS OF REFERENCE:
Terms of reference of the committee inter alia include the following:
1. Formulation of the criteria for determining qualifications positive attributes andindependence of a director and recommend to the board of directors a policy relating tothe remuneration of the directors key managerial personnel and other employees;
2. Formulation of criteria for evaluation of performance of independent directors andthe board of directors;
3. Devising a policy on diversity of board of directors;
4. Identifying persons who are qualified to become directors and who may be appointedin senior management in accordance with the criteria laid down and recommend to the boardof directors their appointment and removal.
5. Whether to extend or continue the term of appointment of the independent directoron the basis of the report of performance evaluation of independent directors.
PERFORMANCE EVALUATION CRITERIA FOR INDEPENDENT DIRECTORS:
Pursuant to the provisions of the Companies Act 2013 and regulation 17 of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the performance evaluation of the Independent Directors is carried out by othernon-independent directors on the basis of their contribution towards important aspects ofthe company and active participation on the board. The Directors express theirsatisfaction with the evaluation process.
Further the company have constituted Performance Evaluation Policy to evaluate theperformance of Independent Directors and the said policy is available on the website ofthe company at www.cupidltd.in
REMUNERATION OF DIRECTORS:
Pecuniary Relationship or Transactions with the Non-Executive Directors:
There was no any pecuniary relationship or transaction took place between the companyand its non-executive directors.
Criteria of making payments to non-executive directors:
Company is paying the sitting fees to all the non-executive directors as decided by theboard for attending the board meetings and various committee meetings. Further Companyreimburses out of pocket expenses incurred by all the non-executive directors of theCompany in connection with various affairs of the company.
PARTICULARS OF EMPLOYEE
The disclosure required under section 197 of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isattached as "Annexure 4" .
The statement of particulars of employees pursuant to Rule 5 (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisAnnual Report.
As per the Companies (cost records and audit) Rules 2014 notified by Ministry ofCorporate Affairs cost audit is not applicable to the company. Therefore the board didnot proceed with the appointment of cost auditor and cost audit for the year 2016-17. Thecompany is properly maintaining its cost record internally.
SUBSIDIARY/JOINT VENTURE/ASSOCIATE COMPANIES
Company doesnt have any Subsidiaries or Joint Ventures or Associate companies ason the report date as defined under the Companies Act 2013 and providing the informationin the prescribed Form AOC-1 are not applicable to the Company.
Statements in this report describing the Companys objectives projectionsestimates expectations or predictions may be forward looking statements considering theapplicable laws or regulations. These statements are based on certain assumptions andexpectations of future events. Actual results could however differ materially from thoseexpressed or implied. Important factors that could make a difference to the Companysoperations include global and domestic demand supply conditions.
Finished goods prices raw materials cost and availability fluctuations in exchangerates change in Government regulations and tax structure within India and the countrieswith which the Company has business contacts and other factors such as litigation andindustrial relations.
Your Directors would like to express their grateful appreciation for the assistance andco-operation received from all organizations connected with its business during the yearunder review. Your Directors also wish to place on record their deep sense of appreciationfor the committed services of Executives and Staff of the Company. Your Directors are alsodeeply grateful for the confidence and faith shown by the Shareholders of the Company inthem.
For and on behalf of the Board of Directors
| ||Omprakash Garg |
| ||Chairman & Managing Director |
| ||Din No: 00140756 |
|CIN No. : L25193MH1993PLC070846 || |
|REGISTERED OFFICE || |
|A - 68 M. I. D. C. (Malegaon) Sinnar Nasik || |
|Maharashtra- 422113 || |
|Place: Mumbai || |
|Date: 13th July 2016 || |