THE MEMBERS OF DE NORA INDIA LIMITED
The Directors hereby present their report on the business and operations of the Companyand the financial accounts for the year ended 31st March 2017.
1. FINANCIAL RESULTS
(Rs in lakhs)
|Particulars ||Financial Year ended on March 31 2017 ||Fifteen months' period ended on March 31 2016* |
| ||Audited ||Audited |
|Sales & Other Income (Net of duties) ||3042.06 ||5460.41 |
|Profit/(Loss) before Depreciation & Taxation ||515.81 ||1914.67 |
|Provision for Depreciation ||85.06 ||115.96 |
|Provision for Taxation for current/prior years ||142.36 ||601.10 |
|Deferred Taxation (Liability)/Asset for current/prior years ||9.73 ||0.32 |
|Net Profit after Tax ||288.39 ||1197.61 |
|Balance of Profit brought forward ||2867.42 ||2047.83 |
|Transfer to General Reserves ||- ||119.76 |
|Proposed Dividend ||- ||212.35 |
|Tax on Dividend ||- ||45.91 |
|Balance of Profit carried forward to next year ||3155.81 ||2867.42 |
* The Company's last financial year was for a period of fifteen months from 1stJanuary 2015 to 31st March 2016 to bring it in line with the requirements ofthe provisions of Section 2(41) of the Companies Act 20)13 hence the figures are notcomparable with the current year.
2. OVERVIEW OF COMPANY PERFORMANCE
The Company continues to enjoy a leadership position in the chlor alkali and cathodicprotection systems business.
During the financial year ended 31st March 2017 the Company recorded agross turnover of ' 3042.06 lakhs as compared to the gross turnover of ' 5460.41 lakhsduring the fifteen months period ended 31 st March 2016. The net profit of theCompany for the financial year ended 31st March 2017 stood at ' 288.39 lakhsas compared to the net profit of ' 1197.61 lakhs for the fifteen months period ended 31 stMarch 2016. Other Expenses for the period include increased Corporate
Social Responsibility spend which amounts to 2% of the last three year's average of theprofit after tax.
Based on the performance of the Company the Directors are pleased to recommend adividend of ' 2/- per equity share of face value ' 10/- (20% of the paid up share capital)for the year 2016-17 (Previous year ' 4/- per equity share for the fifteen months period).The payment of dividend is subject to the approval of the Members of the Company at theAnnual General Meeting (AGM) on September 27 2017 and will be paid on or after 16thOctober 2017.
If approved by the Members at the AGM the dividend will absorb ' 106.17 lakhs. Thedividend distribution tax borne by the Company will amount to ' 21.62 lakhs.
The Company proposes to transfer an amount of ' 28.84 lakhs to the General Reserve forthe financial year ended 31st March 2017.
5. SHARE CAPITAL
The paid-up share capital of the Company as on March 31 2017 is ' 530.86 lakhs andthere has been no change in the capital structure of the Company during the financial year2016-17.
6. MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statements relateand the date of this Report.
The Ministry of Corporate Affairs Government of India vide its notification datedFebruary 16 2015 issued the Companies (Indian Accounting Standards) Rules 2015 whichlays down a roadmap for Companies for implementation of Indian Accounting Standards (IndAS). Every listed Company having net worth of less than rupees five hundred crore (otherthan banking companies insurance companies and non-banking financial companies) isrequired to comply with Ind AS in the preparation of their financial statements foraccounting periods beginning on or after April 1 2017 with the comparatives for theperiods ending March 31 2017. In pursuance of the above notification the Company hasadopted Ind AS with effect from April 1 2017.
7. PUBLIC DEPOSITS
During the year under review there were no deposits as per the provisions of CompaniesAct 2013.
8. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility (CSR) continues to be a commitment of the Company inorder to create a good impact in the society it belongs. Acknowledging this commitmentthe Board of Directors has adopted a CSR policy in line with the provisions of theCompanies Act 2013 and also constituted a CSR Committee. The CSR policy inter-aliadeals with the objectives of the Company's CSR initiatives its guiding principles thrustareas responsibilities of the CSR Committee implementation plan and reporting framework.The details of the CSR Committee can be found in the Corporate Governance Report attachedto this Report.
For the year ended 31st March 2017 the Company was required to spend anamount of ' 20.62 lakhs for its CSR activities which have been expended in full. TheAnnual Report on the Corporate Social Responsibility Activities of the Company for thefinancial year 201617 is enclosed as Annexure I' and forms a part of this report.
9. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE
The Company attaches considerable significance to good Corporate Governance as animportant step towards building investor confidence improving investors' protection andmaximizing long-term shareholders value. In terms of Regulation 34 of the SecuritiesExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("Listing Regulations") a Report on Corporate Governance along withCompliance Certificate issued by a Practicing Company Secretary is attached asAnnexure II'.
Further the Management Discussion and Analysis Report on the operations of the Companyas stipulated under the Listing Regulations is also appended to the Board's Report asAnnexure III'.
10. CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in the nature of business of the Company during the financial yearended 31st March 2017.
11. DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year Mr. Krishan Khanna stepped down as Director (Non-Executive) of theCompany after a long association. The Directors wish to place on record their deepappreciation of the immense contribution made by Mr. Khanna to the growth and developmentof the Company's business.
The Board of Directors has appointed Ms. Supriya Banerji as Non-Executive Director witheffect from 27th October 2016 in the casual vacancy caused by the resignationof Mr. Krishan Khanna.
In terms of Section 196 197 read with Schedule V of the Companies Act 2013 theappointment by the Board of Directors of Mr. Vinay Chopra as the Managing Director of theCompany for a term of 3 years was confirmed in the AGM of the Company held on September212016. Mr. Chopra shall hold office not subject to retire by rotation for a term ofthree years commencing from the date of his appointment as Managing Director i.e. fromJuly 16 2016 till July 15 2019.
In the forthcoming Annual General Meeting Mr. Angelo Ferrari Director will retire byrotation and being eligible is considered for re-appointment.
Necessary details for the reappointment of the aforesaid Director have been included inthe notice convening the ensuing AGM and have been provided in the explanatory statementof the notice. The Directors recommend his reappointment.
All the Directors of the Company have confirmed that they are not disqualified frombeing appointed as Directors in terms of Section 164(2) of the Companies Act 2013.
The Key Managerial Personnel ('KMP') in the Company as per Section 2(51) and 203 of theCompanies Act 2013 are as follows:
Mr. Vinay Chopra: Managing Director
Mr. Deepak Nagvekar: Chief Financial Officer
Ms. Jyoti Bandodkar: Company Secretary
During the year there was no change (appointment or cessation) in the office of KMP.
12. BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to applicable provisions of theCompanies Act 2013 and the corporate governance requirements as prescribed by the ListingRegulations.
The overall performance of the Board was evaluated by the Board after seeking inputsfrom all the Directors on the basis of the criteria such as the achievement of Companyobjectives effectiveness of Board processes information and functioning of Board etc.The performance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of the criteria such as the composition of Committeeseffectiveness of Committee meetings etc.
The Board and the Nomination & Remuneration Committee reviewed the performance ofthe individual Directors on the basis of the criteria such as the contribution of theindividual Director to the Board and Committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetingsrelationship with peers & Company Management etc. In addition the Chairman was alsoevaluated on the key aspects of his role.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors.
Performance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated. On the basis of performance evaluation done bythe Board it shall be determined whether to extend or continue their term of appointmentwhenever their respective term expires.
The Directors expressed their satisfaction with the evaluation process.
13. DIRECTOR'S 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 year and of the profit of the Company for that year;
- 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;
- t hey have prepared the annual accounts on a going concern basis;
- they have laid down internal financial controls to be followed by the Company andthat such 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. BOARD MEETINGS
During the Financial Year 2016-17 four Board meetings were held. For details thereofkindly refer to the section 'Board of Directors - Board Meetings' in the CorporateGovernance Report.
15. AUDIT COMMITTEE
The Audit Committee as on March 31 2017 comprised of the following Directors: Mr. M.A. Sundaram (Chairman) Mrs. Sarita D'Souza and Mr. Robert Scannell as members. For moredetails thereof kindly refer to the section 'Board Committees - Audit Committee' in theCorporate Governance Report. All recommendations made by the Audit Committee during thefinancial year 2016-17 were accepted by the Board of Directors.
16. REMUNERATION POLICY
Based on the recommendations of the Nomination & Remuneration Committee the Boardhas approved the Remuneration Policy for Directors Key Managerial Personnel (KMP) and allother employees of the Company. As part of the Policy the Company strives to ensure that:
the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully;
relationship between remuneration and performance is clear and meets appropriateperformance benchmarks; and
remuneration to Directors KMP and Senior Management involves a balance betweenfixed and incentive pay reflecting short medium and long-term performance objectivesappropriate to the working of the Company and its goals.
A summary of the Remuneration Policy is appended to this report as Annexure IV'.
17. RELATED PARTY TRANSACTIONS
In line with the requirements of the Companies Act 2013 and Listing Regulations theCompany has formulated a Policy on Related Party Transactions which can be accessed on theCompany's website at www.denoraindia.com/Company/Investors/ShareholderInformation/Policies&Codes.
All Related Party Transactions that are entered into during the year were on arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions made with the Promoters Directors or KeyManagerial Personnel which may have a potential conflict of interest with the Company atlarge. Accordingly disclosures of related party transactions in terms of clause (h) ofsub section (3) of Section 134 of
Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 in FormAOC - 2 is not applicable. However you may refer to the Related Party Transactions as perthe Accounting Standards under notes to the financial statements.
All Related Party Transactions are placed before the Audit Committee for review andapproval. Prior omnibus approval is obtained for Related Party Transactions on a yearlybasis for transactions which are of a foreseen and repetitive nature and /or entered inthe ordinary course of business and at arm's length basis.
18. PARTICULARS OF REMUNERATION OF DIRECTORS KMP's AND EMPLOYEES
The disclosure pertaining to remuneration and other details of Directors KMP's andemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed to this Report as 'Annexure V'.
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 financial yearunder review.
19. SECRETARIAL AUDIT
Mr. Sadashiv V. Shet Practising Company Secretary was appointed as the SecretarialAuditor of the Company for the financial year 2016-17 pursuant to Section 204 of theCompanies Act 2013. The Secretarial Audit Report submitted by him in the prescribed formMR - 3 is attached as 'Annexure VI' and forms part of this report. There are noqualifications or observations or adverse remarks or disclaimer of the Secretarial Auditorin the report issued by him for the year 2016-17 which call for any explanation from theBoard of Directors.
20. PARTICULARS OF INVESTMENTS LOANS AND GUARANTEES
The particulars of investment loans/advances and guarantees under Section 186 of theCompanies Act 2013 for the financial year are given in the notes forming part of theFinancial Statement which forms part of this Annual Report.
21. EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return as on March 31 2017 in the prescribed Form No. MGT - 9 is appended asAnnexure VII' to this report.
22. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the regulators courts ortribunals impacting the going concern status and Company's operations in future.
23. WHISTLE BLOWER POLICY/VIGIL MECHANISM
In terms of Section 177 of the Companies Act 2013 Rules framed thereunder andRegulation 22 of the Listing Regulations the Company has a vigil mechanism in place forthe Directors and employees of the Company through which genuine concerns regardingvarious issues relating to inappropriate functioning of the organization can becommunicated. For this purpose the Board has a Whistle Blower Policy and the same hasbeen uploaded on the website of the Company at www.denoraindia.com/Company/Investors/ShareholderInformation/Policies&Codes. The Policy provides access to theChairman of the Audit Committee in certain circumstances. No person has been denied anopportunity to have access to the Audit Committee Chairman. However during the year underreview there has been no incidence reported which requires action by the Audit Committee.
24. ADEQUACY OF INTERNAL FINANCIAL CONTROLS (IFC')
The Company has a well-placed and proper IFC system which ensures that all assets aresafeguarded and protected and that the transactions are authorised recorded and reportedcorrectly. The controls are adequate for ensuring the orderly & efficient conduct ofthe business including adherence to the Company's policies compliance of applicablelaws prevention & detection of frauds/errors the accuracy & completeness ofaccounting records and timely preparation of reliable financial information.
These controls based on the prevailing business conditions and processes have beentested during the year and no reportable material weakness in the design or effectivenesswas observed. The framework on Internal Financial Controls over Financial Reporting hasbeen reviewed by the Internal and Statutory Auditors. During the year the InternalAuditors have also been engaged for providing assistance in improvising the IFC framework.
The Board has implemented systems to ensure compliance of all applicable laws thesesystems were effective and operative. At regular intervals the management place before theBoard a certificate certifying compliance of laws and regulations as applicable to thebusiness and operations of the Company after obtaining confirmation from all functionalheads responsible for compliance of such applicable laws and regulations.
25. STATUTORY AUDITORS
The Company's Auditors M/s B S R & Associates LLP Chartered Accountants Mumbai(ICAI Firm Registration No.116231W/W-100024) were appointed as the Statutory Auditors ofthe Company for a period of three years at the 26th Annual General Meetingupto the conclusion of the 29th Annual General Meeting subject to ratificationby Members at every Annual General Meeting of the Company. They have confirmed theireligibility under Section 141 of the Companies Act 2013 and the Rules framed thereunderfor reappointment as Auditors of the Company. As required under Regulation 33 of theListing Regulations the auditors have also confirmed that they hold a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India.Accordingly the Board recommends to the Members for ratification of the appointment ofM/s B S R & Associates LLP Chartered Accountants as the Statutory Auditors of theCompany at the ensuing Annual General Meeting.
26. CONSERVATION OF ENERGY TECHNOLGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
Conservation of Energy
The 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 (R&D')
The 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. The 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 De Nora
S.p.A. Milan Italy.
Foreign Exchange Earnings & Outgo
The information on foreign exchange earnings are detailed in Note No. 33 (a) andforeign exchange outgo is detailed in Note No. 33 (b) to the Accounts.
27. SUBSIDIARY COMPANIES
The Company does not have any subsidiary associate Company or a joint venture.
28. 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.
29. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH AREREPORTABLE TO THE CENTRAL GOVERNMENT
The Statutory Auditor & Secretarial Auditor of the Company have not reported anyfrauds to the Audit Committee or to the Board of Directors under Section 143(12) of theCompanies Act 2013 including Rules made thereunder.
30. RISK MANAGEMENT
Business risk evaluation and management is an ongoing process within the organization.The Company has a robust risk management framework to identify monitor minimize andreport risks. As a process the risk associated with the business are identified andprioritized based on severity likelihood and effectiveness of current detection. Suchrisks are reviewed by the Senior Management on a yearly basis. The Audit Committee of theBoard of Directors of the Company assists the Board in overseeing that all the risks thatthe organization faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks.
31. CHANGE OF 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 passed an interim orderagainst the Company's Registrar & Transfer Agent (R&TA) M/s Sharepro Services(India) Pvt. Ltd. ("Sharepro") inter-alia restraining Sharepro and severalentities linked with the management of Sharepro from buying selling or dealing in thesecurities market
or associating themselves with securities market either directly or indirectly in anymanner till further directions. SEBI had also directed all the Companies who were clientsof Sharepro to conduct an audit of the records and systems relating to share transfertransmission payment of dividend etc. carried out by Sharepro on behalf of thesecompanies. Further all such client companies were advised by SEBI to change the R&TA.
Accordingly the audit of records and systems of Sharepro carried out by Mr. Umesh P.Maskeri a Practising Company Secretary at the behest of the Company did not reveal anyirregularity or violations in respect of the transfer of securities or payment of dividendduring the audit period from 2006 to 2016.
Further in compliance with the above SEBI mandate the Company has also changed itsRegistrar and Transfer Agent and has appointed M/s. Bigshare Services Private Limited aSEBI registered Category - I Registrar & Share Transfer Agent (SEBI Registration
No. INR000001385) as the new RTA of the Company with effect from June 1 2016.
The Directors wish to convey their appreciation to all of the Company's employees fortheir enormous personal efforts as well as their collective contribution to the Company'sperformance. The Directors would also like to thank the shareholders customers dealerssuppliers bankers employee unions regulatory & government authorities stockexchanges and all the other business associates for the continuous support given by themto the Company and their confidence in its management.
|For and on behalf of the Board of Directors For De Nora India Limited |
| ||M. A. Sundaram |
|Place: Kundaim Goa ||Chairman |
|Date: August 08 2017 ||DIN: 00144607 |