DE Nora India Ltd.
|BSE: 590031||Sector: Engineering|
|NSE: DENORA||ISIN Code: INE244A01016|
|BSE LIVE 15:40 | 27 Feb||236.45||
|NSE LIVE 15:31 | 27 Feb||234.70||
|Mkt Cap.(Rs cr)||125.55|
|Mkt Cap.(Rs cr)||125.55|
DE Nora India Ltd. (DENORA) - Director Report
Company director report
THE MEMBERS OF DE NORA INDIA LIMITED
The Directors have pleasure in presenting the 27th Annual Report togetherwith the Audited Accounts of your Company for the fifteen months financial period ended 31stMarch 2016 (from 1st January 2015 to 31st March 2016).
1. FINANCIAL RESULTS
(Rs. in Millions)
* The Company extended its financial year to bring it in line with the requirementsof the provisions of Section 2(41) of the Companies Act 2013. The above financial periodis of fifteen months from 1st January 2015 to 31st March 2016 and therefore the figuresare not comparable with the previous year.
2. CHANGE IN FINANCIAL YEAR
In compliance with the provisions of Section 2(41) of the Companies Act 2013 yourCompany at the Board Meeting held on February 19 2015 decided to change its financialyear from January-December to April-March. Accordingly the lastfinancial year of your Company was extended up to March 31 2016 covering a period offifteen months commencing from January 1 2015. Your Company shall henceforth follow itsFinancial Year commencing from April 1 and ending on March 31 every year.
The Board of Directors of your Company have recommended a Dividend of 40% of thepaid-up capital (i.e. ' 4/- per share) for the 15 months period ended 31stMarch 2016 absorbing an amount of ' 25.83 Million of distributable profits inclusive oftax on dividend.
The dividend subject to the approval of Members at the Annual General Meeting on 21stSeptember 2016 will be paid on or after 21st September 2016 to the Memberswhose names appear in the Register of Members as on the date of book closure i.e. fromThursday 15th September 2016 to Wednesday 21st September 2016(inclusive of both dates).
4. TRANSFER TO RESERVES
Your Company has transferred a sum of ' 11.98 Million to General Reserve as against thesum of ' 4.25 Million transferred to General Reserve last year.
5. STATE OF COMPANYS AFFAIRS
Your Company continues to remain the market leader in the chlor alkali and cathodicprotection systems business.
During the fifteen months period ended March 31 2016 your Company generated a totalTurnover of ' 508.38 Million as against the total Turnover of ' 305.21 during the lastfinancial year ended on December 31 2014 covering a period of twelve months. The NetProfit of your Company for the fifteen months period ended March 31 2016 stood at '119.76 Million as against the Net Profit of ' 42.53 Million for the twelve months periodended December 312014.
During the year Mr. Angelo Ferrari was appointed as the Additional Director with effectfrom 19.02.2015. His appointment as a Non-Executive Director was regularized in the 26thAnnual General Meeting of the Company held on 29.06.2015.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Robert Scannell Director of the Company retires byrotation at the forthcoming Annual General Meeting and being eligible for re-appointmentoffers himself for re-appointment. The Board recommends his reappointment.
Mr. Vinay Chopra Manager of the Company whose tenure as Manager expires on 15thJuly 2016 has been appointed by the Board of Directors of the Company as the ManagingDirector of the Company for a period of 3 years w.e.f. 16th July 2016 to 15thJuly 2019 subject to the approval of the members at the ensuing Annual General Meeting ofthe Company and the approval of applicable statutory authorities if any. The Boardrecommends his appointment as the Managing Director of the Company for a period of 3 yearsw.e.f. 16th July 2016.
The above appointment and re-appointment forms part of the Notice of the Twenty-seventhAnnual General Meeting and the relevant resolutions are recommended for your approvaltherein.
A brief resume of the Directors seeking appointment/ re-appointment the nature oftheir expertise in specific functional areas names of Companies in which they holddirectorships and the memberships of committees of the Board their shareholdings etc.are attached with the Notice of the Annual General Meeting of the Company.
Pursuant to Sub-section (7) of Section 149 of the Companies Act 2013 read with therules made thereunder all the Independent Directors have given the declaration that theymeet the criteria of independence as laid down in Sub-section (6) of Section 149 of theAct and Clause 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 [Listing Regulations 2015] and the Board at its meeting heldon May 25 2016 has duly taken note of the same.
7. CORPORATE GOVERNANCE
Your Company continues to be committed to good corporate governance aligned with thebest corporate practices. It has complied with the corporate governance requirements underthe Companies Act 2013 and the various standards set out by Securities and Exchange Boardof India and the Stock Exchange where it is listed. Pursuant to the provisions of theListing Regulations 2015 Management Discussion and Analysis Report Corporate GovernanceReport and Practicing Company Secretarys Certificate regarding compliance with theCode of Corporate Governance are made part of this Annual Report.
8. PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEARNINGS & OUTGO
Conservation of Energy
Your Company has always been conscious of the need for conservation of energy and hasbeen sensitive in making progress towards this end. Though the manufacturing activities ofthe Company involve consumption of energy it is not of major significance and noadditional investment is required to be made for reduction of energy consumption. Howeverefforts would be initiated by the Company to conserve energy in the best possible way inthe future.
Research and Development
Your Company has an ongoing technical collaboration for Ion Exchange MembraneElectrolysers for chlor- alkali industry electrochlorinators for water treatment andcathodic protection (anti corrosion) systems. These agreements are performed throughIndustrie De Nora S.p.A. Your Company did not incur any expenditure on R&D during theyear under review.
The Company is in the process of acquiring the technology for repair/recoating ofNACL-ODC & HCL- ODC membrane technology from Industrie Denora S.p.A. Milan Italy.
Foreign Exchange Earnings & Outgo
The information on foreign exchange earnings are detailed in Note No. 34 (a) andforeign exchange outgo is detailed in Note No. 34 (b) to the Accounts.
9. SUBSIDIARY COMPANIES
The Company does not have any subsidiary associate company or a joint venture.
10. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and the Corporate Governancerequirements as prescribed by SEBI under Clause 49 of the erstwhile Equity ListingAgreement with the Stock Exchange the Board of Directors had carried out an annualevaluation of its performance and that of its individual Directors.
The performance of the Board and individual Directors was evaluated by the Boardseeking inputs from all the Directors. The Nomination and Remuneration Committee reviewedthe performance of the individual Directors. A separate meeting of the IndependentDirectors was also held to review the performance of the Non-Independent Directorsperformance of the Board as a whole and performance of the Chairperson of the Companytaking into account the views of the Executive Directors and Non - Executive Directors.The Executive Directors and the Non-Executive Directors of the Board also evaluated theperformance of the Independent Directors of the Company.
The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure effectiveness of the Board processes information andfunctioning etc. The criteria for performance evaluation of the individual Directorsincluded aspects on contribution to the Board and Committee meetings their preparednesson the issues to be discussed at the meetings contributions at the meeting relationshipwith the peers and the Company Management etc. Further the chairperson was also evaluatedon the key aspects of his/her role.
11. REMUNERATION POLICY
The Company follows a Policy on Remuneration of Directors and Senior ManagementEmployees. The policy is approved by the Nomination & Remuneration Committee and theBoard. The main objective of the said policy is to ensure that the level and compositionof remuneration is reasonable and sufficient to attract retain and motivate theDirectors KMP and the Senior Management Employees. The remuneration involves a balancebetween fixed and incentive pay reflecting short and long-term performance objectivesappropriate to the working of the Company and its goals. The details of the RemunerationPolicy for the Directors and Senior Management Employees are given in the CorporateGovernance Report.
12. SELECTION OF NEW DIRECTORS AND BOARD MEMBERSHIP CRITERIA
The Nomination and Remuneration Committee works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business government education and public service. Characteristics expectedof all Directors include independence integrity high personal and professional ethicssound business judgment ability to participate constructively in deliberations andwillingness to exercise authority in a collective manner. The Company has also formulateda Policy on Board Diversity and Board Recruitment and Succession Policy.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to Directors Responsibility Statement the Directors confirm that:- in thepreparation of the annual accounts the applicable accounting standards have been followedand that there are no material departures;
- they have in the selection of the accounting policies consulted the StatutoryAuditors and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial period and of the profit of the Company for thatperiod;
- they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
- they have prepared the annual accounts on a going concern basis;
-they have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively;
- they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and were operating effectively.
14. STATUTORY AUDITOR
M/s B S R & Associates LLP Chartered Accountants Mumbai (ICAI Firm RegistrationNo. 116231W/W- 100024) have been appointed as the statutory auditors of the Company tohold office from the conclusion of the 26th Annual General Meeting held on 29thJune 2015 until the conclusion of the 29th Annual General Meeting of theCompany to be held in the calendar year 2018 subject to ratification of the appointmentby the members at the respective AGMs to be held in the year 2016 and 2017 respectively.
Your Company has received a certificate confirming their eligibility to be re-appointedas Auditors of the Company in terms of the provisions of Section 139(1) of the CompaniesAct 2013 and Rules framed thereunder. The Auditors have also confirmed that they hold avalid certificate issued by the Peer Review Board of the Institute of CharteredAccountants of India as required under the provisions of Clause 33 of the newly notifiedListing Regulations 2015.
Accordingly ratification of the appointment of the Statutory Auditors is being soughtfrom the Members of the Company at this AGM for the Financial Year 2016-17.
Further the report of the Statutory Auditors alongwith the notes to the Schedules forthe 15 months period is enclosed to this report. The observations made in theAuditors Report are self-explanatory and therefore do not call for any furthercomments.
The Auditors Report does not contain any qualification reservation or adverseremark.
15. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasappointed Mr. Sadashiv. Shet a Practising Company Secretary to undertake the SecretarialAudit of the Company. The Secretarial Auditors Report in the prescribed format forthe fifteen months period ended March 312016 is annexed to this Directors Report asAnnexure 1 and forms part of the Annual Report. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with Section 135 of the Companies Act 2013 and Rules framed thereunderyour Board has constituted a Corporate Social Responsibility (CSR) Committee. Based on theRecommendation of the CSR Committee a Corporate Social Responsibility Policy (CSR Policy)of the Company has also been adopted. The CSR Policy of the Company is available on thewebsite of the Company at www.denoraindia. com andcan be viewed using the below link:
Your Company has initiated various CSR programs during the financial Period as per theCSR Policy adopted by the Board and shall monitor the same through its CSR Committeewhich meets periodically. A brief outline of the same is set out in Annexure 2 of thisreport in the format prescribed in the Companies (CSR Policy) Rules 2014.
17. BOARD MEETINGS
During the period under review five Board Meetings were convened and held. The detailsof the composition of the Board and its committees and of the meetings held attendance ofthe Directors at such meetings and other relevant details are provided in the CorporateGovernance Report.
Pursuant to the provisions of Part VII of Schedule IV of the Companies Act 2013 readwith clause 25(3) of Listing Regulations 2015 a separate meeting of theIndependent Directors was held on April 21 2015 for transacting the business enumeratedunder the said provisions.
18. COMPOSITION OF AUDIT COMMITTEE
The Board has constituted the Audit Committee which comprises of Mr. M. A. Sundaram asthe Chairman and Mr. Robert Scannell and Mrs. Sarita DSouza as the members. Moredetails on the Committee are given in the Corporate Governance Report.
19. PARTICULARS OF EMPLOYEES
The disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to the Report as Annexure 3.
The statement containing particulars of employees as required under section 197(12) ofthe Act read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is not provided since there were no employees who were drawingremuneration more than ' 5 lakhs per month during whole or part of the 15 months financialperiod under review.
20. FIXED DEPOSITS
Your Company has not invited or accepted any fixed deposits from the members/publicunder Section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits)Rules 2014 during the financial period under review.
21. RISK MANAGEMENT
Risk management has always been an integral part of the corporate strategy. YourCompany has laid down a well-defined risk management mechanism covering the risk mappingrisk exposure potential impact and risk mitigation process. A detailed exercise is beingcarried out to identify evaluate manage and monitor both business and non-businessrisks. The Board periodically reviews the risks and suggests steps to be taken to controland mitigate the same through a well- defined framework. The risk management framework isdiscussed in detail in the Management Discussion and Analysis report forming part of thisAnnual Report.
22. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There were no significant or material orders passed by the Regulators or Courts orTribunal which would impact the going concern status of the Company and its futureoperation.
23. EXTRACT OF ANNUAL RETURN
As mandated by Section 92 of the Companies Act 2013 read with the rules madethereunder extract of the Annual Report as on 31st March 2016 in Form No. MGT- 9 is enclosed as Annexure 4 to this Report.
24. WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has formulated a policy to provide adequate safeguards againstvictimization of employee(s) and Director(s) who report any violation of the Code ofConduct or any unethical behaviour actual or suspected fraud or improper practice to theTop Management and Audit Committee and to prohibit managerial personnel from takingadverse personnel action against employees/Directors as a result of theemployees/Directors good faith disclosure of alleged wrongful conduct to theAudit Committee on a matter of public concern. It is affirmed that no personnel/Directorhas been denied access to the Audit Committee. The details of the establishment of suchpolicy are disclosed on the Companys website www.denoraindia.com.
25. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the fifteen months periodwere on an arms length basis in the ordinary course of business and are incompliance with the applicable provisions of the Companies Act 2013 and the ListingRegulations 2015. The same are placed before the Audit Committee and the Board forapproval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis forthe transactions which are of a foreseen and repetitive nature. The transactions enteredinto pursuant to the omnibus approval so granted are audited and a statement givingdetails of all related party transactions is placed before the Audit Committee and theBoard of Directors for their approval on a quarterly basis.
Further there are no materially significant related party transactions made by theCompany with Promoters Directors Key Managerial Personnel etc. which may have apotential conflict with the interest of the Company at large or which warrants theapproval of the Members of the Company during the period under review. Accordingly notransactions are being reported in Form AOC-2 in terms of Section 134 of the Act read withRule 8 of the Companies (Accounts) Rules 2014. However the details of the transactionswith related parties are provided in the Companys financial statements in accordancewith the Accounting Standards.
The Company has also framed a policy on dealing with the related parties and hasdisclosed the same on the Companys website at www.denoraindia.com.
26. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments in terms of Section 186 of theCompanies Act 2013 for the 15 months financial period under review have been provided inthe Notes to the Financial Statement which forms part of this Annual Report.
27. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to thefinancial statements and no material reportable weakness was observed in the system.Further the Company has in place adequate financial controls commensurate with the sizeand nature of its operations.
28. CHANGE IN THE REGISTRAR & TRANSFER AGENT OF THE COMPANY
The Securities and Exchange Board of India vide its Interim Order No.WTM/RKA/MIRSD2/41/2016 dated 22nd March 2016 had restrained the CompanysRegistrar and Share Transfer Agent (R&STA) i.e. M/s. Sharepro Services(India) Private Limited from dealing with the securities market due to some irregularitiesdetected in the conduct of its activities as the Registrar and Share Transfer Agent.Further vide the above order the current clientele of M/s. Sharepro Services (India)Private Limited were advised to carry out/switchover their activities related to theR&STA either in house or through another R&STA registered with SEBI.
In addition to the above the Companies were also directed to conduct a thorough auditof the records and systems of M/s. Sharepro Services (India) Private Limited with respectto the dividends paid and transfer of securities to determine whether dividends have beenpaid to actual/beneficial holders and whether securities have been transferred as per theprovisions of the law for the last 10 years. The audit has to be completed by theCompanies within a period of three months from the date of the order i.e. 22ndMarch 2016 and thereafter a report shall be submitted to SEBI by the Companies in thatregard. Further within a period of six months from the date of the order the Companiesshall take appropriate action in cases where violations are observed in accordance withthe provisions of law and inform SEBI accordingly.
In compliance with the above SEBI mandate the Company has changed its Registrar andTransfer Agent and has appointed M/s. Bigshare Services Private Limited a SEBI registeredCategory - I Registrar & Share Transfer Agent (SEBI Registration No. INR000001385) asthe new R&STA of the Company with effect from June 12016.
The Directors wish to convey their appreciation to all of the Companys employeesfor their enormous personal efforts as well as their collective contribution to theCompanys performance. The Directors would also like to thank the shareholderscustomers dealers suppliers bankers employee unions regulatory & governmentauthorities stock exchanges and all the other business associates for the continuoussupport given by them to the Company and their confidence in its management.
For and On behalf of the Board of Directors For De Nora India Limited