Gujarat Containers Limited.
Your Board of Director's are pleased to present the 24th Annual Report andthe Company's audited financial statement for the financial year ended March 312016.
1. Financial Statements :
|Particulars ||Year ended 31st March 2016 ||Year ended 31st March 2015 |
|Revenue from Operations ||5039.09 ||5507.89 |
|Other Incomes ||5.27 ||10.72 |
|Total Revenue ||5044.36 ||5518.61 |
|Profit before Interest Depreciation & Tax ||403.81 ||449.16 |
|Less: Finance Cost ||259.94 ||291.32 |
|Less: Depreciation & Amortization Expense ||73.76 ||91.99 |
|Add: Exceptional / Prior period adjustment ||13.90 ||(2.26) |
|Less : Provision for Taxation ||20.29 ||24.87 |
|Add: Provision for Deferred Tax ||1.59 ||4.13 |
|Net Profit ||65.31 ||42.85 |
2. Dividend :
During the year under review the Company has decided to plough back the profit for theongoing expansion and modernization activities of the Company. The Board therefore doesnot recommend payment of any dividend for the year under review.
3. Transfer to Reserve :
The Company does not propose to transfer any sum to the General Reserve of the Company.
4. Financial Performance and Operational Review :
During the financial year 2015- 2016
i. Net Sales (excluding Excise Duty) of the Company for the year under review is Rs.5039.09/- Lacs as compared to Rs. 5507.89/- Lacs in the previous year which showdecrease by 8.51% compared to previous year.
ii. Net Profit after Tax increased to Rs. 65.31 Lacs as against Net Profit of Rs.42.86 Lacs of the previous year showing an increase of 52.38%.
The Company has been putting its best endeavors to continue to stabilize its qualityof the products manufactured and to bring efficiency at all the level of operations byminimizing operational cost to the extent possible.
5. Change in the nature of business :
During the year under review there was no change in the nature of the business of theCompany.
6. Significant and Material Orders Passed by the Regulators or Courts:
No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
7. Subsidiary Companies:
During the year under review the Company does not have any subsidiary company.
8. Adequacy of internal financial controls :
The Company has in placed adequate and effective Internal Financial Controls withreference to financial statements. During the year such controls were tested and upgradedand no reportable material weaknesses in the design or operation were observed.
9. Particulars of Loans Guarantees or Investments :
During the year under review your Company has not directly or indirectly -
a) given any loan to any person or other body corporate other than usual advancesenvisaged in a contract of supply of materials if any;
b) given any guarantee or provided security in connection with a loan to any other bodycorporate or person; and
c) acquired by way of subscription purchase or otherwise the securities of any otherbody corporate.
10. Particulars of Contracts or Arrangements with Related Parties :
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of Company's business. The Company hasnot entered into any contract arrangement or transaction with any related party whichcould be considered as material as defined under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The Board has approved a policy for related party transactions which has been uploadedon the website of the Company (www.gujaratcontainers.com).
All the related party transactions are placed before the Audit Committee as well as theBoard for approval on a quarterly basis. Omnibus approval was also obtained from the AuditCommittee and the Board on an annual basis for repetitive transactions.
Related party transactions under Accounting Standard - AS 18 are disclosed in the notesto the financial statements. Prescribed Form No. AOC-2 pursuant to clause (h) ofsub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 is furnished as Annexure - B to this report.
11. Directors' Responsibility Statement :
Pursuant to section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that:
a. in the preparation of annual accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at March 312016 and of the Profit of the Companyfor the year ended on that date;
c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. they have prepared the annual accounts on a going concern' basis ;
e. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
12. Directors and Key Managerial Personnel :
During the year under review following changes occurred in the position of Directors& KMPs of the Company :
Mr. Nitin Thakkar and Mr. Abji Vishram Patel ceased to be Directors of theCompany on resignation due to their pre-occupation from 8th August 2015.
Mr. Divyakant Ramniklal Zaveri was appointed as an Independent Director of theCompany on 8th August 2015 in the causal vacancy caused by resignation of Mr.Nitin Thakkar in terms of the provisions of Section 149 of the Act.
Mrs. Neha Vivek Vora was appointed as a Whole Time Director designated asExecutive Director of the Company from 8th August 2015 in the causal vacancycaused by resignation of Mr. Abji Vishram Patel.
Mr. Dinesh Kamdar and Mr.Udaybhai Premjibhai Madhwani are being re-appointed asIndependent Directors at the ensuing Annual General Meeting for Second Term of furtherperiod of 5 years with effect from 1st October 2016 whose first terms expireat the ensuing AGM. Necessary resolutions in this regard are being proposed at theensuing Annual General Meeting for consideration and approval of the Members. They havesubmitted declarations that both they meet the criteria of independence as provided inSection 149(6) of the Act and that there has been no change in the circumstances which mayaffect their status as Independent Director of the Company.
During the year none of the Non-Executive Directors of the Company had anypecuniary relationship or transactions with the Company.
Key Managerial Personnel:
During the year under report following persons were the Key Managerial Personnel ofthe Company :
|Mr. Kiran Shah ||- Chairman & Managing Director |
|Mr. Neil Shah ||- Chief Finance Officer |
Mr. Kapil K. Dighe - Company Secretary & Compliance Officer
Mr. Kapil Dighe was appointed as a Company Secretary and Compliance Officer of theCompany on August 8 2015 and resigned on November 30 2015. However despite of bestefforts the Company could not appoint suitable qualified person was appointed as aCompany Secretary as per the requirements of the Companies Act 2013 till August 132016.
Events occurring after close of Financial Year :
Mr. Nitin Mistry has been appointed as a Company Secretary and Compliance Officer ofthe Company effective from August 13 2016 in compliance of the provisions of theCompanies Act 2013.
13. Declaration by Independent Directors :
The Company has received necessary declarations from all Independent Directors of theCompany confirming that they meet the criteria of independence laid down in Section 149(6)of the Companies Act 2013 as well as under Regulation 25 of SEBI (LODR) Regulations.There has been no change in the circumstances which may affect their status as independentdirector during the year.
14. Board Evaluation :
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and Individual Directors pursuant to the provisions of the Act and theCorporate Governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations").
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as the Board composition and structureeffectiveness of Board processes information and functioning etc.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee members on the basis of the criteria such as the composition of Committeesattendance prior study of materials given participation at the meetings level andeffectiveness of Committee meetings etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the Individual Directors on the basis of the criteria such as thecontribution of the individual Director to the Board and Committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof 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 NonexecutiveDirectors. The same was discussed in the board meeting that followed the meeting of theIndependent Directors at which the performance of the Board its Committees andindividual Directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the Independent Director being evaluated.
15. Familiarization Program for the Independent Directors :
In Compliance with the requirements of SEBI Regulations 2015 the Company has put inplace a familiarization programme for the Independent Directors to familiarize them withtheir role rights and responsibilities as Directors the working of the Company natureof the industry in which the Company operates business model etc. The details of thefamiliarization programme are explained in Corporate Governance Report.
16. Policy on Directors' Appointment and Remuneration and other details :
The Company's policy on Directors' Appointment and Remuneration and other mattersprovided in Section 178(3)of the Act has been disclosed in the Corporate GovernanceReport which forms part of the Board's report.
17. Number of Meetings of the Board :
During the year under review Four (4) Meetings of the Board of Directors were held onMay 29 2015 August 8 2015 October 31 2015 and February 13 2016. For details of themeetings of the Board please refer to the Corporate Governance Report which forms partof this report.
18. Extract of Annual Return :
As provided under Section 92(3) of the Act the extract of annual return is given in AnnexureA in the prescribed Form MGT-9 which forms part of this report.
19. Audit Committee :
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.
The Audit Committee of the Board of Directors meets the criteria laid down underSection 177 of the Companies Act 2013 read with Regulation 18 of Securities and ExchangeBoard of India (Listing Obligation and Disclosure Requirement) Regulation 2015 in theterms of reference to the Audit Committee.
20. Material Changes and Commitments if any affecting the Financial position of theCompany which have occurred between the end of Financial Year of the Company to which theFinancial Statement relate and the date of the Report :
There were no material changes and commitments that have affected the financialposition of the Company which have occurred between the financial year ended on March312016 and the report dated August 13 2016.
21. Management Discussion and Analysis :
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations AndDisclosures Requirements) Regulation 2015 the Management Discussion and Analysis has beengiven hereunder.
a. Industry Scenario/India key market trends
Economic activity in Asia picked up speed as exports to advanced economiesdeteriorated. Domestic demand has been consistent and retail sales across much of Asiahave been brisk. Exports particularly to the United States Middle East and the euroarea have relatively gained momentum. India is an emerging economy with sizeable untappedpotential for rigid industrial packaging especially in its main industrial centre's nearthe coast. Industrial packaging in India is expected to grow with 10% p. a. and willremain largely dominated by metal and plastic drums. India's industrial maturity is stillrelatively low and low-value; low-quality packaging will increasingly be replaced by rigidindustrial packaging products. Thus industrial packaging demand growth exceeds GDP andunderlying industry forecasts. The need for rollable package products such as drums ispartly influenced by the country's lack of a sufficient infrastructure network and easyways for transportation.
As explained in the inception the Indian packing industry as a whole is expected tofare well with the encouraging support of the Government.
b. Opportunities and Threats :
Your Company operates in such an area where a large market exists with hugecompetition. Your Company's products are well-received in the market. However the Companyhas been through different marketing initiatives carving its way with moderate success.
c. Outlook :
Your Directors are well aware of the competition by manufacturers and prevailingscenario and have created a strategy to overcome this difficulties.
In view of inflationary trend and keen competitions prevailing in the market yourDirectors feel the performance of the Company has been reasonably good. Your Directors arealso aware of the fact that Indian Packing industry is highly potential to growth butcompetitive and fragmented.
The management is conscious about the changing scenario in industry and review takeplace regularly.
d. Risks and concerns:
i. Macro-economic risks: Risks emanating from changes in the global marketssuch as the recent financial meltdown regulatory or political changes and alterations inthe competitive landscape could affect the Company's operations and outlook. Any adversemovements in economic cycles in the Company's target markets could have a negative impacton the Company's performance. This risk is mitigated to some extent due to the Company'spresence in multiple diverse markets.
ii. Risk related of Raw Materials: Risks associated with key procurementrelationships include:
a. the availability of raw materials more particularly iron & Steel ;
b. the price of raw materials may be subject to material changes in worldwide pricinglevels;
c. input costs such as freight and electricity may be inconsistent or prices mayincrease; and
d. key supplier relationships may be lost or impaired contracts renewed on lessfavorable terms or key suppliers may cease or reduce their operations.
However the Company plans well in advance to procure the raw materials and purchasesits Raw Materials from the domestic reputed supplier located in different parts of thecountry to mitigate risk relating to availability of raw materials.
e. Internal Control System and their Adequacy :
The Company has adequate internal control systems including suitable monitoringprocedures commensurate with its size and the nature of the business. The internal controlsystems provide for all documented policies guidelines authorisation and approvalprocedures. The Company has an internal audit department which carries out auditsthroughout the year. The statutory auditors while conducting the statutory audit reviewand evaluate the internal controls and their observations are discussed with the Auditcommittee of the Board.
The Company's internal control systems are supplemented by an Internal Audit Programand periodic reviews by the Management. The Company has Independent Audit Firm as itsInternal Auditors and the Audit Committee
reviews its findings and recommendations at periodic intervals. Company's internalcontrol system is adequate considering the nature size and complexity of its business.
f. Discussion on financial performance with respect to operational performance:
During the financial year 2015-16 the net sale of the Company for the year underreview is Rs.5039.09/- Lacs as compared to Rs.5507.89/- Lacs of the previous year adecrease of 8.51% however the Company registered increased Net Profit of Rs. 65.31/-Lacs as against Net Profit of Rs. 42.86/- Lacs in the previous year increase by 52.38%.
g. Human Resources/Industrial Relations:
Employees are our greatest strength and the foundation of our Company. They play apivotal role in offering better product quality design and services to our customer. Weensure that employees gain ample opportunities for personal and professional growth. Highquality recruitment supports the talent management practices of the Company. To augmentthe journey of internationalization of the Company and create a multicultural work forcestrengthening leadership cadre with appropriate domain competencies has been done. TheCompany continues to foster a high performance culture by recognizing good performers andproviding them with career enhancing opportunities. Several HR initiatives have been takenfor the strategic alignment of the HR function with the business objectives. Theseinitiatives encompass employee engagement learning & development besides improvedinternal communication mechanism with employees.
h. Cautionary Statement:
Statements in the Management Discussion and Analysis describing the Company'sobjectives projections estimates expectations may be forward looking statements'within the meaning of applicable securities laws and regulations. Actual results coulddiffer materially from those expressed or implied. Important factors that could make adifference to the Company's operations include financial position of the company economicconditions affecting demand / supply price conditions in the domestic and overseas marketin which the company operates changes in the government regulations tax laws and otherstatutes.
22. Risk Management :
The Company has in place a Risk Management Policy pursuant to Section 134 of theCompanies Act and Regulation 21 of SEBI (LODR) Regulations. It establishes various levelsof accountability and overview within the Company while vesting identified managers withresponsibility for each significant risk.
The Internal Audit Department facilitates the execution of Risk Management Practices inthe Company in the areas of risk identification assessment monitoring mitigation andreporting. Through this program each Function carried on project sites addressesopportunities and risks through a comprehensive approach aligned to the Company'sobjectives. The Company has laid down procedures to inform the Audit Committee as well asthe Board of Directors about risk assessment and management procedures and status.
This risk management process which is facilitated by internal audit covers riskidentification assessment analysis and mitigation. Incorporating sustainability in theprocess also helps to align potential exposures with the risk appetite and highlightsrisks associated with chosen strategies. The major risks forming part Risk Managementprocess are linked to the audit.
The Audit Committee of the Board of the Company has been entrusted with the task toframe implement and monitor the risk management plan for the Company and it isresponsible for reviewing the risk management plan and ensuring its effectiveness with anadditional oversight in the area of financial risks and controls. Major risks identifiedby the businesses and functions are systematically addressed through mitigating actions ona continuing basis.
23. Control Systems and their Adequacy :
The Company has adequate internal control systems including suitable monitoringprocedures commensurate with its size and the nature of the business. The internal controlsystems provide for all documented policies guidelines authorization and approvalprocedures. The Company has M/s. Bhavindip Seth & Co. the Firm of CharteredAccountants as an Internal Auditor which carries out audits throughout the year. Thestatutory auditors while conducting the statutory audit review and evaluate the internalcontrols and their observations are discussed with the Audit committee of the Board.
24. Corporate Social Responsibility (CSR) :
The Company has already constituted a Corporate Social Responsibility (CSR) Committeein accordance with Section 135 of the Companies Act 2013.
For the Company Social Responsibility is a key element of accountability and it willcontinue to strive in its behavior and actions to surpass the levels of minimum statutorycompliance. The Company believes in the sustainable growth and prosperity of its stakeholders and views its responsibilities not only as business responsibilities but asEthical and Social as well.
The CSR policy of the Company is placed on the website of the Company(www.gujaratcontainers.com). Ongoing expansion cum modernization program undertaken by theCompany however in view of merger profit and the Company has not pursued any initiativeon CSR activities.
25. Safety Environment and Health :
The Company's commitment to excellence in Health and Safety is embedded in theCompany's core values. The Company has a stringent policy which drives all employees tocontinuously break new ground in safety management for the benefit of people propertyenvironment and the communities where we operate.
The Company respects human rights values its employees and their communities. TheCompany considers safety environment and health as the management responsibility. Regularemployee training programmes are in place throughout the Company on Safety Environmentand Health and has well identified and widely covered safety management system in placefor ensuring not only the safety of employees but surrounding population across itsoperations.
26. Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace :
The Company has zero tolerance for sexual harassment at the workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company hasconstituted an Internal Committee headed by the Woman Director with other women employeesto redress complaints received which are monitored by the Committee which is fully awareof the Policy and redressal mechanism. All employees of the Company those of contractorsas well as trainees are also covered under this Policy.
No complaint was received from any employee during the financial year 2015-2016 andhence no complaint is outstanding as on 31.03.2016 for redressal.
27. Vigil Mechanism/ Whistle Blower Policy :
There is a Whistle Blower Policy in the Company and that no personnel has been deniedaccess to the Chairman of the Audit Committee. The policy provides for adequate safeguardsagainst victimization of persons who use vigil mechanism. The Whistle Blower Policy isposted on the website of the Company. (www.gujaratcontainers.com).
28. Corporate Governance
As per SEBI Listing Regulations Report on Corporate Governance with StatutoryAuditor's Certificate thereon forms part of this report.
29. Human Resources :
The human resource plays a vital role in the growth and success of an organization. TheCompany has maintained cordial and harmonious relations with employees across variouslocations.
Your Company continuously invest in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement.
30. Deposits from Public :
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
31. Conservation of Energy Technology Absorption Foreign Exchange Earnings And Outgo:
The Company is serious in conserving energy by reducing consumption of power byimplementing closed monitoring over plan running and adequate maintenance of electriccomponents of plants and other machinery. The Company has not made any capital investmentbut continued earlier/same actions for conservation of energy.
Technology absorption: Your Company has not taken new technology for absorption It hasneither imported any technology nor made any expenditure on research and developments andit does not carry out any research and development activities.
Foreign Exchange earnings and outgo : There was no inflow or outflow of foreignexchanges during the year under review.
32. Particulars of Employees and Remuneration :
Pursuant to the Rule 5(2) & (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules no employee of the Company was paid remuneration exceedingthe prescribed limits during the financial year 2015-2016.
The information required under Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure - C formingpart of the Report.
All the properties and insurable interests of the Company including Buildings Plants& Machineries and Stocks have been adequately insured.
34. Share Capital :
The paid-up equity share capital of the Company as at 31st March 2016 isRs. 56500000. The Company currently has no outstanding shares issued with differentialrights sweat equity or ESOS.
35. Auditors :
(i) Statutory Auditors:
Pursuant to the provisions of Section 139 of the Act and the rules framed there underM/s. V. K. Shastri & Co Chartered Accountants was appointed as statutory auditors ofthe Company from the conclusion of the 22nd Annual General Meeting (AGM) of theCompany held on 30th September 2014 till the conclusion of the 25thAGM to be held in the calendar year 2017 subject to ratification of their appointment atevery AGM. The Company has received letter from them to the effect that their appointmentif made would be within the prescribed limits under Section 141(3)(g) of the CompaniesAct 2013 and that they are not disqualified from appointment.
The Company has placed the matter of ratification of their appointment as StatutoryAuditors of the Company for the financial year 2016-2017 for the approval of the membersat this Annual General Meeting.
The Auditors' Report for the financial year ended March 31 2016 does not contain anyqualification reservation adverse remark or disclaimer.
(ii) Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed Mr. Jayesh Vyas of M/s. Jayesh Vyas and Associates Practicing CompanySecretary to undertake the Secretarial Audit of the Company for the year ended March 312016. The Secretarial Audit Report is annexed as Annexure D which contains two adverseremarks / qualifications.
The response of your Directors on the observation made by the Secretarial Auditor is :-Response to Point No.1 :
Despite of best efforts the Company could not recruit and select suitable qualifiedperson as a Company Secretary as per the requirements of the Companies Act 2013 tillAugust 13 2016.
Mr. Nitin Mistry has been appointed as a Company Secretary and Compliance Officer ofthe Company effective from August 13 2016 in compliance of the provisions of theCompanies Act 2013.
Response to Point No. 2
60200 Shares of the Company are held in physical form by the relatives of promoterswhich could not be demated due to pending compliance of opening of their demat accountsthe same are now under process.
(iii) Internal Auditor :
Your Company has appointed M/s. Bhavindip Seth & Co Chartered AccountantsVadodara as the Internal Auditors to carry out the Internal Audit function of variousoperational areas of the Company and accounting.
(iv) Cost Auditors :
Your Company does not require to get its cost records audited by the qualified CostAuditors in view of non applicability. No appointment of Cost Auditors has been madetherefore.
36. Stock Exchange :
The Company's equity shares are listed on the BSE Limited and the Listing Fees of theCompany for the Financial Year 20152016 have been paid. The address of the said Exchangeis as under:
Phiroze Jeejeebhoy Towers Dalal Street Fort Mumbai - 400 001.
Scrip ID: GUJCONT'; Scrip Code: 513507; Group : P'; ISIN: INE276I01011
37. Acknowledgement :
The Board places on record its deep appreciation for the continued support receivedfrom various clients vendors and suppliers and Bankers Government Authorities Employeesat all levels and Stakeholders in furthering the interest of the Company.
|Date: 13-08-2016 ||For and on behalf of the Board of Directors |
|Place: Vadodara || |
| ||Kiran Arvindlal Shah |
| ||Chairman & Managing Director |