Excel Industries Limited
Your Directors are pleased to present herewith the 56th Annual Report on thebusiness and operations of your Company and the Audited Financial Statements of theCompany for the year ended 31st March 2017 together with the Auditors Reportthereon.
KEY FINANCIAL HIGHLIGHTS
The Company's financial performance for the year ended March 31 2017 is summarisedbelow:
| ||2016-17 ||2015-16 |
|Gross Profit for the year ||3838.54 ||5180.73 |
|Less: Depreciation/Amortization ||1391.79 ||1487.52 |
|Profit before Tax before exceptional item ||2446.75 ||3693.21 |
|Exceptional item ||2668.78 ||- |
|Profit before Tax ||5115.53 ||3693.21 |
|Provision for Taxation: || || |
|Current Tax (MAT Payable) ||997.83 ||913.13 |
|Minimum Alternate Tax (MAT credit Entitlement) ||(493.87) ||- |
|Adjustment relating to earlier periods (net) ||(105.51) ||- |
|Deferred Tax ||221.90 ||235.72 |
| ||620.35 ||1148.85 |
|Profit After Tax from continuing operations ||4495.18 ||2544.36 |
|Less: Loss from discontinuing operations ||(51.52) ||(37.93) |
|Tax credit of discontinuing operations ||17.83 ||13.13 |
| ||(33.69) ||(24.80) |
|Profit for the year after tax ||4461.49 ||2519.56 |
|Add: || || |
|Balance brought forward from the previous year ||1975.82 ||2137.10 |
|Balance available for Appropriation ||6437.31 ||4656.66 |
|Appropriations: || || |
|Proposed Final Dividend* ||754.24 ||565.68 |
|Tax on Dividend ||153.55 ||115.16 |
|Transfer to General Reserve ||3500.00 ||2000.00 |
| ||4407.79 ||2680.84 |
|Carried forward to next year ||2029.52 ||1975.82 |
* During the year amount of per share dividend to be recognized as distributions toequity shareholders is Rs. 6/-.
Your Directors have recommended a dividend of Rs. 6 (120%) per equity share of FaceValue of Rs. 5/- each as against the total dividend of Rs. 4.50 (90%) paid for theprevious financial year 2015 -16. The dividend payout is subject to the approval of themembers at the ensuing Annual General Meeting.
AMOUNT TRANSFERRED TO RESERVE
Your Company proposes to transfer Rs. 35 crores to the general reserve and an amountof Rs. 20.30 crores is proposed to be retained in the Statement of Profit and LossAccount.
During the year under review the net sales from continuing operations increased fromRs. 43457.53 lacs to Rs. 44499.42 lacs registering an increase of 2.4%. The exportsincreased from Rs. 9313.01 lacs to Rs. 9616.25 lacs registering an increase of 3.3%.Further the Company made a profit from its continuing operation before exceptional itemand tax Rs. 2446.75 lacs compared to Rs. 3693.21 lacs in the previous year. Netprofit after adjusting net loss from discontinuing operation and exceptional item of Rs.33.69 lacs (previous year of Rs. 24.80 lacs) and Rs. 2668.78 lacs respectively amountingto Rs. 4461.49 lacs as compared to Rs. 2519.56 lacs in the previous year registering anincrease of 77%.
The construction of Multipurpose (MPP) plant in Roha is progressing well. First phaseof the plant is expected to be commissioned in Q2 of 2017-18.
During the year Pharma Intermediate plant capacity has been enhanced by addingbalancing equipments.
The Company has started the production of a new agro intermediate which is an importsubstitute through an inhouse developed process.
The Company is a major producer of agrochemical intermediates. India has emerged as ahub for production of Agrochemicals. The Government of India is taking steps to give boostto production of Agrochemicals in India. This augurs well for the Company as it is aleading supplier of intermediates for agrochemicals. Currently China is a majorcompetitor in the area of agrochemical intermediates. The tightening of environmentalnorms in China might lead to cut down in their production and increase in prices ofimported intermediated from China. This development will be favourable for the Company.
Further a normal monsoon has been predicted for the current year which is a good signfor agrochemical industry. In light of the above the overall outlook for the financialyear 2017-18 looks positive for agrochemical intermediates.
With steadfast commitment for enhancement of performance and human talent your Companyhas undertaken various initiatives in the gamut of talent management learning anddevelopment. One of such initiatives is linkage of performance to variable pay whereemployees are given incentive based on their individual and division's performance. Recentunion agreement with employees at Lote Plant is a skill based agreement; where employeesin the cadre of staff and worker are graded based on their techno-functional competence.For every position a skill-matrix is developed which denotes techno-functional competencefrom Level 1(beginner) to Level 5(master). Job rotations and on the job assignments areassigned to employees to enrich their working experience and to develop competence in thefunctional domain as well as in other disciplines. Welfare practices at factories andcorporate office are focused on holistic wellbeing of employees apart from providingcomfortable and safe work environment a well-balanced diet is provided in canteen at alllocations to ensure good health and wellness of employees. At the Company's premisesconsultation by doctors is provided along with regular health check-up. Your Company hasgenerally enjoyed cordial relations with its employees. Worker and staff employees arepaid in accordance with the wage agreement established with trade unions. Employeestrength of the Company as on 31st March 2017 was 909.
ENVIRONMENT HEALTH AND SAFETY
The Company accords the highest importance to Environment Health and Safety (EHS).Continuous investment in infrastructure skill building and systems is done to ensure thatthe EHS of the Company is maintained at the highest standards.
In October '16 the Company's Responsible Care logo was renewed after an comprehensiveaudit by Indian Chemical Council and is extending extensive mentorship to otherIndustries for Responsible Care. The Company for catering to the increased demand ofPhosphorus Pentasulphide has introduced a new totebin handling system thereby vastlyimproving ergonomics and safety in plant.
The subject of quality has been moving from a mere technical requirements to a holisticapproach by the Company as also the customers and regulators. This is particularly so incase of chemical industry.
In keeping with this not only we have been fulfilling evolving need of ISO standardsbut also our quality systems and also continuously meeting customer expectations likeEcoVidis by European customers Pharma companies audits as well as Responsible Carerequirements.
We continue to invest in expertise and facilities as also training of our personnel forcontinuous improvement in Quality.
The Company continues to carry adequate insurance cover for all its assets againstforeseeable perils like fire flood earthquake fidelity etc. The Company continues tomaintain consequential Loss (Fire) Policy and the Liability Policy as per the provisionsof Public Liability Act. The Company has also taken a policy for Directors and OfficersResponsibility Policy.
Details of deposits covered under Chapter V of the Act are as under:
(a) The Company stopped accepting and renewing the fixed deposits with effect from 1stApril 2014 and it will refund all the existing fixed deposits as per their maturitydates.
(b) The amount of existing deposits from the public and the shareholders of the Companyat the end of the FY 2016-17 aggregates to Rs. 15.18 lacs. Total 45 Deposit holders didnot claim their deposits after the date on which the deposits became due for payment.
The amount due on such deposits and remaining unclaimed as on 31st March2017 was Rs. 15.18 lacs.
(c) There has been no default in repayment of deposits or payment of interest thereonduring the year under review. (d) All existing deposits of the Company are in compliancewith the requirements of Chapter V of the Act.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Your Company has not made any loans guarantees or investments during the financialyear 2016-17.
SUBSIDIARY JOINT VENTURE AND ASSOCIATES COMPANIES
The Company has two subsidiaries namely Kamaljyot Investments Limited and Excel BioResource Limited. Also the Company has one Associate company namely MobiTrash RecycleVentures Private Limited.
The salient features of the financial statements of the subsidiaries and the associateas required under Section 129 (3) of the Companies Act 2013 are furnished in Form AOC-Ias Annexure I forming part of this Report.
The Policy for determining material subsidiaries as approved by the Board may beaccessed on the Company's website at the link http://excelind.co.in/companyPolicies.html.
The financial statements of the subsidiary companies are not attached with this AnnualReport. The Company will make available the annual accounts of the subsidiary companiesand the related detailed information to any member of the Company who may be interested inobtaining the same in accordance with Section 136 of the Companies Act 2013. The annualaccounts of the subsidiary companies will also be kept open for inspection at theRegistered Office of the Company and are also available on the Company's website:http://excelind.co.in/annualReports.html. The Consolidated Financial Statements presentedby the Company include the financial results of its subsidiary companies and its associatecompany.
TRANSFER OF ENVIRONMENT AND BIO-TECH DIVISION OF THE COMPANY
The Board of Directors of the Company at their meeting held on 29th March 2017 hadapproved the transfer of Environment and Bio-Tech (ENBT) Division of the Company to ExcelBio Resources Limited a wholly owned subsidiary of the Company together with all relatedassets and liabilities on a going concern basis by way of a slump sale for aconsideration of not more than
Rs. 10 crores. A Business Transfer Agreement was executed between the Company and ExcelBio Resources Limited on 31.03.2017 for the said purpose. The investment of the Company inENBT division is less than 20% of the net worth of the Company and also the income of thedivision is less than 20% of the Income of the Company therefore this division is notregarded as Undertaking as per Section 180(1)(a) of the Companies Act 2013 henceshareholders' approval was not required.
NUMBER OF MEETINGS OF THE BOARD
During the FY 2016-17 seven meetings of the Board of Directors were held details ofthe meetings held are provided in the Corporate Governance Report forming part of thisannual report.
APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Act and Articles of Association of theCompany Mr. Dipesh K Shroff Non-Executive Director of the Company will retire byrotation at the ensuing Annual General Meeting of the Company and being eligible offershimself for re-appointment. The brief resume of the Director and other related informationis provided in the Corporate Governance Report forming part of this Annual Report. YourDirectors recommend his re-appointment as a Non-Executive Director.
NOMINATION AND REMUNERATION POLICY
On recommendation of Nomination and Remuneration Committee the Board of Directors atits Meeting held on Friday 30th January 2015 has approved a Nominationand Remuneration Policy for the appointment and remuneration of the Directors keymanagerial personnel and other employees.
The key objectives of the Policy are to lay down the criteria for appointment andremuneration of Directors Key Managerial Personnel and Executives at Senior Managementlevel and recommend to the Board their appointment and also to formulate criteria forevaluation of performance of Independent Directors and the Board and to devise a policy onBoard diversity.
The Policy inter-alia includes criteria for determining qualificationspositive attributes independence of a Director and expertise and experience required forappointment of Directors KMP and Senior Management. As per the Policy theremuneration/compensation to whole time Directors shall be recommended by the Nominationand Remuneration Committee to the Board for its approval. However theremuneration/compensation to whole-time Directors shall be subject to the prior/postapproval of the shareholders of the Company and Central Government wherever required.Further the Non-Executive Directors shall be entitled to the fees for attending meetingsof Board and Committees and also to the commission within the overall limit prescribed inthe Companies Act 2013.
The Nomination and Remuneration Policy is available on the Company's websitehttp://excelind.co.in/companyPolicies.html. Particulars of the Company's RemunerationPolicy and information required under Rules 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are set out in Annexure IIforming part of this Report.
In accordance with the provisions of Section 197(12) of the Companies Act 2013 andRule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the names and other particulars of every employee covered under the said rule areavailable at the Registered Office of the Company during working hours for a period of 21days before the Annual General Meeting and shall be made available to any shareholder uponrequest.
EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Nomination and Remuneration Committee has defined the evaluation criteria for thePerformance Evaluation of the Board its Committees and individual Directors.
Pursuant to the provisions of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out a formal annual evaluation ofits own performance and that of its Committees and individual Directors at its meetingheld on 29th March 2017.
The evaluation of each of the Directors was done inter-alia on the basis oftheir advisory role and contribution in the decision making. Further the evaluation ofthe Board as a whole and all the Committees of the Directors was done inter-alia on thebasis of the overall directions and guidance provided to the senior executives andsupervision over their performance.
(i) Declaration from Independent Directors
The Board has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theAct and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
(ii) Criteria for Performance Evaluation
Nomination and Remuneration Committee has laid down various criteria for performanceevaluation of Independent Directors which inter-alia includes preparedness andattendance at the meetings understanding of Company's operations and business andcontribution at Board Meetings.
(iii) Details of Familiarization Programme
The details of programme for familiarization of Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at the link http://excelind.co.in/companyPolicies.html
RELATED PARTY TRANSACTIONS
All the Related Party Transactions entered into during the financial year 2016-17 wereat an arm's length and in ordinary course of business.
The details of material transactions with related party are provided in Form AOC 2 as AnnexureIII forming part of this Report. All related party transactions as required underAccounting Standards 18 have been reported in the Notes to financial statements of theCompany.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at the linkhttp://excelind.co.in/companyPolicies.html.
VIGIL MECHANISM/WHISTLE BLOWER POLICY FOR THE DIRECTORS AND EMPLOYEES
Your Company believes in promoting a fair transparent ethical and professional workenvironment. The Board of Directors of the Company pursuant to the provisions of Section177 of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 has framed "Whistle Blower Policy" for Directors andemployees of the Company for reporting the genuine concerns or grievances or cases ofactual or suspected fraud or violation of the Company's code of conduct and ethicspolicy. The Whistle Blower Policy of the Company is available on the Company's websitehttp://excelind.co.in/companyPolicies.html.
CORPORATE SOCIAL RESPONSIBILITY
The Company firmly believes that the industry owes duty of welfare to the society atlarge and it shall pursue the commitment of Social Responsibility and carry out thesocial work directly and/or through other registered welfare organizations.
The Company's policy on Corporate Social Responsibility states various CSR activitiesthat the Company could undertake to discharge its responsibilities towards thesociety. In the FY 2016-17 the Company has undertaken various CSR activities at RohaLote and Mumbai. The CSR activities include water harvesting rural development promotionof education animal welfare women empowerment entrepreneurship development SwatchhaBharat/Sanitation programme and protection of environment. For the year ended 31stMarch 2017 the Company has spent Rs. 75.84 lacs on aforesaid CSR activities directly orthrough other registered welfare organizations like Vivekanand Research & TrainingInstitute etc.
Details on CSR spending as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 are set out in Annexure IV forming partof this Report.
Your Company has voluntarily constituted a Risk Management Committee to formulate apolicy for risk management for implementing and monitoring the risk management plan of theCompany. The risk management committee is composed of three Directors including twoindependent Directors and one senior executive of the Company.
Your Company recognizes that the risk is an integral part of business and is committedto managing the risks proactive and efficient manner. Your Company periodically assessesthe risks in the internal and external environment along with the treating the risks andincorporates risk management plants in its strategy business and operational plans.
Your Company through its risk management process strives to contain impact andlikelihood of the risks within the risk taking ability as agreed from time to time withthe Board of Directors. There are no risks which in the opinion of the Board threaten theexistence of the Company. However some of the risks which may pose challenges are set outin the Management Discussion and Analysis which forms part of this Report.
The Audit Committee of Directors comprises of Mr H N Motiwalla (Chairman of theCommittee) Mr. P S Jhaveri Mr. R N Bhogale and Mrs. Usha A Shroff. All therecommendations made by the Audit Committee during the year were accepted by the Board ofDirectors of the Company. The terms of reference and other details of the Audit Committeeare available in the Corporate Governance Report forming part of this annual report.
The Audit Committee and the Board of Directors of the Company at their meeting held on24th May 2017 and 26th May 2017 respectively had recommended theappointment of Price Waterhouse Chartered Accountants LLP having firm registration no.012754N/N500016 as the new Statutory Auditors of the Company for a period of five yearsfrom the conclusion of this Annual General Meeting subject to ratification by membersevery year in place of existing Auditors S R B C & Co LLP Chartered Accountants whowill be retiring at this Annual General Meeting in compliance with mandatory rotation ofAuditors as per the provisions of Section 139(2) of the Companies Act 2013.
SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
The Board has appointed Mr. Prashant Diwan Practising Company Secretary as theSecretarial Auditor of the Company for the year 2016-17 to conduct the Secretarial Auditof the Company. The Secretarial Audit Report of the Company issued by Mr. PrashantDiwan for the financial year ended 31st March 2017 is attached with this Reportas Annexure V.
The Board of Directors at their meeting held on 27th May 2016 had appointedM/s Kishore Bhatia & Associates (Firm Registration No. 00294) Practicing CostAccountants as the Cost Auditors of the Company for the financial year 2016-17 for allthe applicable products of the Company. The Cost Audit Report for the year ended31.03.2016 which was required to be filed with the Ministry of Corporate Affairs on orbefore 15.10.2016 was filed on 14.10.2016.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. Your Company continues tofollow the principles of good Corporate Governance and the Board of Directors lays strongemphasis on transparency accountability and integrity. Your Company has complied with allthe mandatory requirements of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Pursuant to SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Management Discussion and Analysis and Corporate Governance Reporttogether with Auditors' Certificate thereon form part of this Report.
EXTRACT OF ANNUAL RETURN
Pursuant to provisions of Section 92(3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 extract of Annual Return in FormMGT 9 is set out in Annexure VI forming part of this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
The information on conservation of energy and technology absorption and foreignexchange earnings and outgo as required under Section 134 of the Companies Act2013 read with the Companies (Accounts) Rules 2014 is set out in Annexure VIIforming part of this Report
MATERIAL ORDERS PASSED BY THE REGULATORY AUTHORITIES OR COURT/MATERIAL CHANGES ORCOMMITMENTS
There are no significant material order passed by the regulators/courts which canimpact the going concern status of the Company and its future operations. There are nomaterial changes or commitments occurring after 31st March 2017 which mayaffect the financial position of the Company.
INTERNAL FINANCIAL CONTROLS
The Company has adequate systems of internal financial controls to safeguard andprotect its assets from unauthorized use or misappropriation. All the financialtransactions are properly authorized recorded and reported to the Management. The Companyfollows all the applicable Accounting Standards for proper maintenance of books ofaccounts for financial reporting.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended 31st March 2017 theBoard of Directors hereby confirms that: (a) in the preparation of the annual accountsthe applicable accounting standards had been followed along with proper explanationrelating to material departures; (b) they had selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year and of the profit and loss of the Company for that period; (c) theyhave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities; (d) they have preparedthe annual accounts on a going concern basis; and (e) they have laid down internalfinancial controls to be followed by the Company and that such internal financial controlsare adequate and operating effectively.
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
EXPLANATION OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION RESERVATION OR ADVERSEREMARK OR DISCLAIMER MADE
The reports of Statutory Auditors and Secretarial Auditors are free from anyqualification reservation or adverse remark or disclaimer.
Your Directors acknowledge with gratitude the support and co-operation received fromthe Shareholders Government Authorities Bankers Investors Customers and Suppliers.
| ||For and on behalf of the Board of Directors |
| ||ASHWIN C. SHROFF |
|Date: 26th May 2017 ||Chairman & Managing Director |
|Place: Mumbai ||DIN: 00019952 |