THE MEMBERS OF DE NORA INDIA LIMITED
The Directors have pleasure in presenting the 26th Annual Report togetherwith the Audited Accounts of your Company for the year ended 31st December2014. As required under the Ministry of Corporate Affairs General Circular 08/2014 No.1/19/2013-CL-V dated April 4 2014 the Financial Statements and other reports required tobe attached to the Annual Report for Financial Year 2014 are governed by the relevantprovisions schedules rules of the Companies Act 1956.
(RS. IN MILLIONS)
| ||2014 ||2013 |
|Sales & Other Income (Net of duties) ||327.66 ||369.18 |
|Profit/(Loss) before Depreciation & Taxation ||72.24 ||76.31 |
|Provision for Depreciation ||12.01 ||7.14 |
|Provision for Taxation for current/ prior years ||16.62 ||30.63 |
|Deferred Taxation (Liability)/Asset for current/prior years ||1.08 ||(9.21) |
|Net Profit after Tax ||42.53 ||47.75 |
|Balance of Profit brought forward ||175.84 ||157.98 |
|Transfer To General Reserves ||4.26 ||4.78 |
|Proposed Dividend ||7.96 ||21.23 |
|Tax on Dividend ||1.35 ||3.89 |
|Balance of Profit carried forward to next year ||204.80 ||175.84 |
The Directors of the Company recommend a Dividend of 15% of the paid-up capital (i.e.Rs. 1.5/- per share) for the year ended 31st December 2014 absorbing an amountof Rs. 9.32 Million of distributable profits inclusive of tax on dividend as against 40%dividend (i.e. Rs. 4/- per share) for the previous year 2013. The Directors feel the needto conserve the cash to efficiently maintain the operating cycle and for future growthprospects.
The Final Dividend subject to the approval of Members at the Annual General Meeting on29th June 2015 will be paid on or after 14th July 2015 to the Members whose namesappear in the Register of Members as on the date of book closure i.e. from Monday 22ndJune 2015 to Monday 29th June 2015 (inclusive of both dates).
The Company continues to remain the market leader in the Chlor Alkali and CathodicProtection Systems business.
However the year under review was very difficult and challenging. Even though thesales turnover of the Company for the year under review was lower than the previous yearthe profitability for the year has been affected drastically and the Company has reportedlower profit for the year ended 31st December 2014 due to weak industrial activity andsluggish market conditions in India. The Company is making all round efforts to overcomethese difficulties in this competitive environment and is optimistic that theCompanys various initiatives and cost reduction schemes will give positive resultsin the current year.
The Company is looking forward to maintain its position of market leader in MembraneRecoating Activity and Cathodic Protection Systems. The Directors are hopeful that ongoingefforts made in the field of Chlorate Cells fabrication would pave way for the futuregrowth of the Company.
DNIL has successfully developed the new business of supplying of special electrodes forwater treatment mainly for treating pharmaceutical waste water. DNIL was able to achievethe expected business in 2014 & looks forward to continue to develop this biz in 2015as well. DNIL is also continuing to market new products of De Nora Next namely: Solar MacNGOTM & Giselle.
During the year Mr. Luca Buonerba who was a NonExecutive Director resigned from thedirectorship of the Company with effect from 13.02.2014 and Mr. Robert Scannell wasappointed as the Additional Director with effect from 12.02.2014. Mr. RobertScannells appointment as a Non-Executive Director was regularized in the 25thAnnual General Meeting of the Company held on 14.05.2014. In compliance with theprovisions of the new Companies Act 2013 and the Amended Clause 49 of the ListingAgreement the Board of Directors of the Company appointed Mrs. Sarita DSouza as anAdditional Director on the Board to act as the Independent Woman Director w.e.f.22.08.2014.
Further as per the provisions of the Companies Act 2013 Independent Directors arerequired to be appointed for a term of five consecutive years and shall not be liable toretire by rotation. Accordingly all the three Independent Directors Mr. M. A. SundaramMr. Ramesh V. N. P. R. Sardessai and Mrs. Sarita DSouza were reappointed as theIndependent Directors of the Company in the Extra-Ordinary General Meeting of the Companyheld on 29th September 2014 for a period of 5 years in compliance with theabove provision. The Company has also received declarations from the said IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed both under sub-section (6) of Section 149 of the Companies Act 2013 and underClause 49 of the Listing Agreement.
Mr. Ravi Menezes and Mr. Premal N. Kapadia stepped down as Directors of the Companyduring the year w.e.f. 27th November 2014 and 12th December 2014respectively. The Board placed on record its appreciation for the valuable servicesrendered by Mr. Ravi Menezes and Mr. Premal Kapadia.
The Board of Directors also deeply mourn the sad demise of one of the IndependentDirectors of the Company Mr. Ramesh V. N. P. R. Sardessai on 18th December2014 and acknowledges the outstanding contribution made by him as the Independent Directorof the Company during his tenure.
The Board has appointed Mr. Angelo Ferrari as an Additional Director of the Companywith effect from February 19 2015. In accordance with Section 161 of the Companies Act2013 (erstwhile Section 260 of the Companies Act 1956) Mr. Angelo Ferrari holds officeupto the date of the forthcoming Annual General Meeting of the Company and his candidaturefor appointment as a Director has been included in the notice convening the forthcomingAnnual General Meeting of the Company.
In accordance with the provisions of the Companies Act 2013 (erstwhile Companies Act1956) and the Articles of Association of the Company Mr. Krishan Khanna Director of theCompany retires by rotation at the forthcoming Annual General Meeting and being eligiblefor reappointment offers himself for re-appointment. The Board recommends hisre-appointment.
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 Amended Clause 49 of the Listing Agreement with the National Stock Exchangeof India Ltd. Management Discussion and Analysis Report Corporate Governance Report andPracticing Company Secretarys Certificate regarding compliance with the Code ofCorporate Governance are made part of the Annual Report.
CRITERIA FOR PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS
As per the requirements of the provisions of the Amended Clause 49 of the ListingAgreement the Company hereby discloses the criterias for the performance evaluation ofIndependent Directors of the Company as laid down by the Nomination and RemunerationCommittee of the Board. The performance of the Independent Directors would be judged onthe following parameters:
> Expertise in the matters requiring their knowledge and skills.
> Inputs received by the person during Board Meetings/ Committee Meetings
> Problem solving skills and strategic decision making abilities
> Contribution in the achievement of business targets
> Professional knowledge expertise and experience employed in the interest of theCompany
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The company has conducted familiarization programme for its Independent Directors on31.10.2014 details of which could be found on the following web link:
A certificate from the Manager and the Chief Financial Officer on the financialstatements of the Company as required under Clause 49 of the Listing Agreement with theNational Stock Exchange was placed before the Board.
INFORMATION AS REQUIRED UNDER THE LISTING AGREEMENT
The shares of the Company are presently listed at The National Stock Exchange of IndiaLimited Mumbai under the Stock Code DENORA EQ and the Company has paid listing feeupto March 31 2015 in respect of the above stock exchange.
The Company has maintained its continued endeavor in terms of quality and maintenanceof International Standards. The Company has got the prestigious certification for ISO9001:2008 for Quality Management System from JAS-ANZ on 07.08.2013 valid till 06.08.2016for the production and trading of Titanium Anodes/ Nickel Cathodes for Chlor- alkaliIndustry used for NaOH/ KOH/Cl2 Chlorate Cells for production of SodiumChlorate Electro Chlorinators for On-site Hypo Cathodic Protection Systems and SurfaceFinishing Products.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217 (2AA) of the Companies Act 1956 withrespect to Directors Responsibility Statement the Directors confirm that:- in thepreparation of the annual accounts for the financial year ended December 31 2014 theapplicable accounting standards have been followed and that there are no materialdepartures;
- 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 year and of the profit of the Company for that period;
- they have taken proper and sufficient care to the best of their knowledge andability for the maintenance
of adequate accounting records in accordance with the provisions of the Companies Act1956 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
- they have prepared the annual accounts for the financial year on a going concernbasis.
M/s B S R & Co. LLP Chartered Accountants Mumbai (ICAI Firm RegistrationNo.101248W/W-100022) the statutory auditors of the Company hold office until theconclusion of the ensuing Annual General Meeting of the Company. The said Auditors havebeen holding office as the Statutory Auditors of the Company for a period of 7 (Seven)consecutive financial years. In terms of Section 139 of the Companies Act 2013 read withthe Companies (Audit and Auditors) Rules 2014 a listed company cannot appoint orre-appoint an audit firm as an Auditor for more than two terms of five consecutive years.The period for which the firm has held office as Auditor prior to the commencement of theCompanies Act 2013 shall be taken into account for calculating the period of 10 (Ten)consecutive years as the case may be. Further Section 139 of the Companies Act 2013 hasalso provided a period of 3 (Three) years from the date of commencement of the Act tocomply with this requirement.
Accordingly they can be appointed as Auditors for a further period of 3 (three) yearsonly in terms of Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014. Hence it was proposed to appoint M/s B S R & Co. LLP CharteredAccountants Mumbai (ICAI Firm Registration No. 101248W/W-100022) as the statutoryauditors of the Company to hold office from the conclusion of the Twenty Sixth AnnualGeneral Meeting till the conclusion of the Twenty Ninth Annual General Meeting of theCompany i.e. for a period of 3 (Three) years subject to ratification of theirappointment at every Annual General Meeting. The statutory auditors however have conveyedtheir unwillingness to be appointed as the statutory auditors of the Company for the aboveterm due to their internal restructuring.
In lieu of the above the Company proposed to appoint M/s B S R & Associates LLPChartered Accountants Mumbai (ICAI Firm Registration No. 116231W/W-100024) a LLP firmunder the same network of audit firm (M/s. B S R Affiliates) as that of the outgoingauditors as the statutory auditors of the Company to hold office for the remaining termof 3 years since they are associated with B S R & Co. LLP Chartered AccountantsMumbai the ex-auditor of the Company until the conclusion of the Annual General Meetingof the Company to be held in the year 2018. The Company has received a letter from themproviding consent to the above appointment and to the effect that their appointment ifmade would meet the requirements of the provisions of the Companies Act 2013 and rulesmade thereunder.
Accordingly approval of the members to the appointment of M/s B S R & AssociatesLLP Chartered Accountants Mumbai (ICAI Firm Registration No.116231W/W-100024) as theStatutory Auditors of the Company for a period of three years to hold office from theconclusion of this Annual General Meeting till the conclusion of the Twenty-Ninth AnnualGeneral Meeting of the Company to be held in the year 2018 (subject to the ratification oftheir appointment at every Annual General Meeting) is being sought at the ensuing AnnualGeneral Meeting.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per provision 135 of the Companies Act 2013 and rules made thereunder everyCompany having a net profit of Rs. 5 Crore during any financial year would be required toconstitute a Corporate Social Responsibility Committee and spend 2% of its average netprofits made during the immediately preceding financial years towards CSR activities inpursuance of a policy on CSR to be framed by the CSR Committee. It further requires theBoards report to give a note on such activities and in the event of shortfall fromthe specified quantum the reasons for the same to be explained therein. Since the Companyhas a net profit of Rs. 5 Crore in its preceding financial years the Company is coveredunder the provisions of Section 135 of the Companies Act 2013 and the rules madethereunder.
A Committee of the Board has already been constituted with Mr. M. A. Sundaram anIndependent Director as its Chairperson. The Committee has also framed a Policy onCorporate Social Responsibility in compliance with the above provision.
During the year the Company was unable to spend any amount on CSR activities due topaucity of time after forming the Committee till the year end. However the Companycontinues to endeavor holding the CSR commitments in the true spirit going forward.
CHANGE IN THE FINANCIAL YEAR OF THE COMPANY
The provisions of the new Companies Act 2013 mandates all Companies to adopt a uniformFinancial Year (FY) of 1st April to 31st March with limitedexception to a Company which is a holding company or subsidiary of a company incorporatedoutside India which may be required to follow a different FY for consolidation outsideIndia.
Hence in order to fulfill the above requirement of law the Board of Directors of theCompany have decided to change the FY of the Company from 1st January - 31stDecember to 1st April - 31st March with effect from the close of theFY 2014. Accordingly the Financial Year of the Company for 2015 would be for a period of15 months commencing from 1st January 2015 to 31st March 2016.
Pursuant to the provisions of Section 233B of the Companies Act 1956 and with theprior approval of the Central Government M/s K. C. Kohli & Co. Delhi having FirmRegistration No. 100541 had been appointed as the Cost Auditors of the Company forauditing the Companys cost accounts relating to the company products for theFinancial Year ended 31st December 2014. The due date for filing the Cost Audit Report forthe year ended 31st December 2014 is 29th June 2015 and the same will be fledwith the Ministry of Corporate Affairs within the due date.
The information required under Section 217(2A) of the Companies Act 1956 and theRules framed there under is annexed hereto as Annexure A and forms part of theReport.
The Company has not invited or accepted any fixed deposits during the financial yearand as such no amount of principal or interest was outstanding as of the Balance Sheetdate.
WHISTLE BLOWER POLICY
The Company had 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. No personnel/Director has been deniedaccess to the Audit Committee. The details of the establishment of such policy aredisclosed on the Companys website www.denoraindia.com.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year 2014were on an arms length basis and were in the ordinary course of business. There areno materially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basisfor the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are audited and a statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis.
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.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information in accordance with Section 217(1)(e) of the Companies Act 1956 read withRule 2 of Companies (Disclosure of Particulars in the Report of Board of Directors) Rules1988 are set out in Annexure B forming part of this report.
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 employee unionsshareholders customers dealers suppliers bankers Regulatory & Governmentauthorities Stock Exchanges and all other business associates for the continuous supportgiven by them to the Company and their confidence in its management.
For and On behalf of the Board of Directors
|Place : Kundaim Goa ||M. A. SUNDARAM |
|Dated: February 19 2015 ||CHAIRMAN |
ANNEXURE A TO DIRECTORS REPORT
Particulars of Employees pursuant to Section 217(2A) of the Companies Act 1956 readwith Companies (Particulars of Employees) Rules 1975 forming part of the DirectorsReport for the year ended 31st December 2014.
There was no employee for year ended 31st December 2014 who was in receipt ofremuneration for that year which in the aggregate was not less than Rs. 6000000 perannum.
ANNEXURE B TO DIRECTORS REPORT
INFORMATION IN ACCORDANCE WITH SECTION 217 (1) (e) OF THE COMPANIES ACT 1956 READ WITHCOMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988.
A. CONSERVATION OF ENERGY
Though the manufacturing operations involve consumption of energy it is not of majorsignificance. The Company is not covered under the list of industries required to furnishinformation in Form A.
B. TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT
Your Company has 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.
TECHNOLOGY ABSORPTION ADAPTATION & INNOVATION
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.
C. FOREIGN EXCHANGE EARNINGS & OUTGO
The information on foreign exchange earnings are detailed in Note No. 35(a) and foreignexchange outgo is detailed in Note No. 35 (b) to the Accounts.
| ||For and On behalf of the Board of Directors |
|Place : Kundaim Goa ||M. A. SUNDARAM |
|Dated: February 19 2015 ||CHAIRMAN |