The Members of Indokem Limited
Your Directors have pleasure in presenting the Fifty First Annual Reporttogether with the Audited Accounts for the financial year ended31st of March 2017.
1. Financial Results:
| || ||(Rs. In lakhs) |
|PARTICULARS ||For the financial year ended 31.03.2017 ||For the financial year ended 31.03.2016 |
|A Income from Continuing Operation ||7278.32 ||6003.63 |
|Profit/(Loss) Before Interest Depreciation & Taxes ||184.27 ||371.29 |
|Less: Interest ||72.46 ||303.22 |
|Depreciation ||64.82 ||48.85 |
|Profit/(Loss) Before Tax ||46.99 ||19.22 |
|Less: Short Provision for Tax in respect of earlier year ||- ||6.14 |
|Profit/ (Loss) After Taxes ||46.99 ||13.08 |
|B Income from Discontinuing Operations ||1319.44 ||(49.19) |
|Profit / (Loss) for the year ||1366.43 ||(36.11) |
|Profit/(Loss) Brought Forward from last year ||(3291.34) ||(3255.23) |
|depreciation of earlier years ||- ||- |
|Surplus/Deficit carried to Reserves ||(1924.91) ||(3291.34) |
Considering the accumulated losses the Board of Directors of your Company does notconsider it appropriate to recommend any Dividend for the financial year ended 31stMarch 2017.
3. Operational Performance:
Revenue from operations for F.Y. 2016-17 at Rs. 7278.32 lakhs was higher by 21.23% overprevious year 6003.63 lakhs. EBITDA at Rs. 184.27 lakhs registered a decline over theEBITDA of Rs. 371.29 lakhs in F.Y. 2015-16. PAT for the year including income fromdiscontinued operations was Rs. 1366.43 lakhs compared to the PAT of Rs. (36.11) lakhs inF.Y. 2015-16. The Income from discontinued operations is due to profit on sale of land atAnkleshwar Gujarat.
4. Transfer to Reserves:
In view of inadequate profits for the year under review no amount has been transferredto the reserves.
5. Directors and Key Managerial Personnel:
Pursuant to the provisions of Section 149 of the Act Shri. Kailash Pershad (DIN:00503603) Shri. Rajagopalan Sesha (DIN: 00289643) and Shri. Bhalchandra Sontakke (DIN:01225753) were ratified as Independent Directors of the Company at the Annual GeneralMeeting convened on 30th September 2014. They have submitted a declarationthat each of them meets the criteria of independence as provided in section 149(6) of theAct and there has been no change in the circumstances which may affect their status asIndependent Director during the year.
Smt. Asha M. Khatau retires by rotation and being eligible has offered herself forre-appointment.
During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than the sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.
Pursuant to the provisions of section 203 of the Act the Key Managerial Personnel ofthe Company are Shri. Mahendra K. Khatau as Chairman and Managing Director Mr. Manish M.Khatau as Whole Time Director Shri Mukund Nagpurkar as Chief Financial Officer and Mr.Bhavik B. Parekh as
Mr. Bhavik B. Parekh resigned from the position of the Company Secretary and ComplianceOfficer of the Company w.e.f. 19th June 2017 and Mr. Rajesh D. Pisal wasappointed at the same position of Company Secretary and Compliance Officer of the Company.
Shri. Mukund R. Nagpurkar resigned from the position of the Chief Financial Officer ofthe Company w.e.f. 31st July 2017 and Ms. Rupal B. Parikh was appointed at thesame position of Chief Financial Officer of the Company w.e.f 08th August2017.
6. Appointment of Director:
Smt. Asha M. Khatau Non- Executive Director of your Company retires by rotation andbeing eligible offers herself for reappointment. The details regarding Smt. Asha M.Khatau as required under Regulation 17 of SEBI Listing Regulations 2015 are disclosed inthe notice of the Annual General Meeting. None of the other Directors are related inter seexcept Shri. Mahendra K. Khatau and Mr. Manish M. Khatau who are related to each other.
7. Remuneration of Directors and Key Managerial Personnel:
Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the details of remuneration of Directors and Key ManagerialPersonnel are as furnished in Annexure C.
8. Training and Familiarization Programme for Directors:
The Company has provided information and made the Independent Directors aware about themajor developments in legal and regulatory areas particularly regarding Companies Act2013 and Regulation 25 (7) of SEBI Listing Regulations 2015. The details ofFamiliarization Programme for the Independent Directors are available on the website ofthe Company www.indokem.co.in
9. Statement on declaration given by Independent Directors:
The Independent Directors of the Company have submitted their declaration ofindependence as required under the provisions of Section 149 (7) of the Companies Act2013 stating that they meet the criteria of independence as provided in Section 149 (6) ofthe Act.
10. Particulars of Employees:
None of the employees of the Company fall under the limits laid down in Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
11. Directors' responsibility statement:
Pursuant to section 134(3)(c) of the Companies Act 2013 your Directors hereby confirmthat:
(i) In the preparation of the Annual Accounts the applicable accounting standards havebeen followed and there are no material departures;
(ii) Appropriate accounting policies have been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theProfit of the Company for that period;
(iii) Proper and sufficient care had been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theAssets of the Company and for preventing and detecting fraud and other irregularities;
(iv) The Annual Accounts had been prepared on a going concern basis;
(v) The Internal Financial Controls had been laid down to be followed by the Companyand the such internal financial controls are adequate and were operating effectively; and
(vi) In order to ensure compliance with the provisions of all applicable laws propersystems had been devised and that such systems were adequate and operating effectively.
12. Statutory Auditors:
M/s. Sheth Doctor & Associates Chartered Accountants Mumbai Statutory Auditorsof the Company retire at the conclusion of the 51st Annual General Meeting.They are not eligible for re-appointment as the period of 3 years available to them underthird proviso to Section 139 (2) of the Companies Act 2013 read with Rule 6 (1) of theCompanies (Audit and Auditors) Rules 2014 ("Rules') will be exhausted at theconclusion of the 51st Annual General Meeting to be held on 29thSeptember 2017.
The Board places on record its deep appreciation of the valuable contributions made byM/s. Sheth Doctor & Associates Statutory Auditors of the Company.
In accordance with the provisions of Section 139 (2) of the Companies Act 2013 whichprovides for rotation of Auditors the Audit Committee and the Board at their respectivemeetings have unanimously recommended to the Shareholders appointment of CNK &Associates LLP Chartered Accountants (Firm Registration Number - 101961W / W100036) asthe Statutory Auditors of the Company to hold office for five consecutive years from theconclusion of the 51st Annual General Meeting scheduled to be held on 29thSeptember 2017 till the conclusion of the 56th Annual General Meeting to beheld in the year 2022. This is subject to ratification by Shareholders at every AnnualGeneral Meeting.
CNK & Associates LLP has given a written consent to the Company for appointment asAuditors. CNK & Associates LLP has also given a certificate that they satisfy thecriteria prescribed in Section 141 of the Companies Act 2013 and their appointment ifmade shall be in accordance with the conditions laid down under the Act and Rules.
13. Secretarial Audit Report:
Pursuant to the Provisions of Section 204 of Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Ragini Chokshi & Co. Company Secretary in Whole-Time Practice Mumbaito undertake Secretarial Audit of the Company for the financial year ended 31stMarch 2017. The Secretarial Audit Report issued by M/s Ragini Chokshi & Co. in theprescribed Form MR-3 forms part of the Annual Report.
There are no-qualifications reservations or adverse remarks in the Report.
As required under Regulation 34(2) read with Schedule V of SEBI Listing Regulations2015 the Management discussion and Analysis is enclosed as a part of the AnnualReport.
The Company has taken necessary steps to adhere to all the requirements of SEBI ListingRegulations 2015. A report on Corporate Governance together with the Certificatecompliance with the conditions of Corporate Governance as stipulated in Regulation 34(3)read with Schedule V of SEBI Listing Regulations 2015 is included as a part of the AnnualReport.
15. Extract of Annual Return:
Pursuant to Section 134(3)(a) of the Companies Act 2013 read with Companies (Accounts)Rules 2014 the extract of Annual Return in the prescribed Form MGT-9 is attachedherewith and marked as Annexure d.
16. Number of meetings of the Board:
Four meetings of the board were held during the financial year. For details of themeetings of the Board please refer to the Corporate Governance Report which forms partof this report.
17. Performance evaluation of the Board:
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 under SEBI Listing Regulations 2015. Theperformance of the Board was evaluated by the Board after seeking inputs from all theDirectors 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 Committeeseffectiveness of Committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual 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 meetings etc. Inaddition the Chairman was also evaluated on the key aspects of his role.
A separate meeting of Independent Directors was convened in the month of March 2017to discuss the following:
(i) Review the performance of Non- Independent Directors and the Board as a whole;
(ii) Review the performance of the Chairman of the Company taking in to account theviews of Executive Directors and Non-Executive Directors;
(iii) Assess the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
All Independent Directors were present at the Meeting and discussed the above andexpressed their satisfaction.
18. 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 this report.
19. Internal financial control systems and their adequacy:
Company has established Internal Financial Control over financial reporting in currentfinancial year 2016-17.
The details in respect of Internal Financial Control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.
20. Audit Committee:
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.
21. Particulars of loans guarantees or investments:
Pursuant to section 186 of the Companies Act 2013 the details of loans giveninvestments made or guarantees given are given in Note No. 28 to the financial statementsfor the financial year 2016-17.
The loans investments guarantees and securities provided by the Company during thefinancial year ended 31st March 2017 together with the existing loansinvestments guarantees and securities do not exceed the limits prescribed undersub-section (2) of Section 186.
22. Transactions with parties:
None of the transactions with related parties fall under the scope of section 188(1) ofthe Companies Act 2013. Information on transactions with related parties pursuant tosection 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules 2014are stated in Annexure B in Form AOC-2 and the same forms part of thisreport.
All the properties and insurable interests of the Company including the buildingsplant and machineries and stocks have been adequately insured.
24. Material Changes and Commitments:
In financial year 2014-15 the Company had entered into Memorandum of Understanding(MOU) with a buyer for sale/transfer of its asset at Ankleshwar Gujarat. The saidtransaction has been completed successfully during the year.
In previous year Company has entered into MOU for acquisition of Plot of Land at MIDCAmbernath together with factory building standing thereon and machineries installedtherein. Documentation for effecting transfer of rights is under process and will beconcluded shortly.
25. State of Company's Affairs:
There is no change in the nature of business during the year under review. No order hasbeen passed by any Regulatory Court or Tribunal which can impact the going concern statusof the Company and its operations in future.
26. The Conservation of Energy Technology Absorption Foreign exchange Earnings andOutgo:
Your Company is engaged in the continuous process of energy conservation by way ofimproved operational and maintenance practices:
A. Conservation of Energy:
(a) Energy Conservation measures taken:
(i) Electrical energy:
Regular preventive / predictive maintenance of electrical system is carried outto ensure minimum loss of energy / power supply.
Regular up gradation in electrical system is done so as to minimize consumptionof electrical power supply.
(ii) Furnace Oil / LDO Consumption:
Considering the above issue there are no major consumption of Furnace Oil / LightDiesel Oil. However there are some processing activities carried out limiting theconsumption of energy.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy:
Apart from the above mentioned strategies your Company is in the process to upgrade andinstall new machineries which will altogether result in energy saving and will add tooperational efficiency in coming years.
(c) Impact of the measures at (a) and (b) for reduction of consumption of energy andconsequent impact on the cost of production:
There is no such special impact for the same.
(d) Total energy consumption and energy consumption per unit of production: As per Form A forming part of Annexure A.
B. Technology Absorption:
Your Company has taken positive efforts for technology absorption and its upgradation;
(a) Modification in air conditioning system to improve process conditions.
(b) Modification in existing machines for high value and new products developmentsincluding process simplification.
(c) The Company focused its Research and Development efforts on process and processdevelopment of new products and formulations trouble shooting.
Due to above factors and measures been considered there are various benefits resultedas such;
(i) Cost reduction
(ii) Improvement in quality
(iii) Improvement in operating performance
(iv) New product developments
C. Foreign Exchange Earnings and Outgo:
| || ||(Rs. in 000) |
|PARTICULARS ||31.03.2017 ||31.03.2016 |
|I. Expenditure in Foreign Exchange Currency || || |
|Value of Imports on C.I.F. on the basis of Raw Materials ||2150 ||5510 |
|Travelling ||1095 ||1254 |
|Foreign Bank Charges ||106 ||189 |
|Consultancy charges ||132 ||406 |
|TOTAL ||3483 ||7359 |
|II. Earnings in Foreign Exchange || || |
|F.O.B. Value of Exports ||125369 ||79831 |
|1. Foreign exchange earned ||125369 ||79831 |
|Export of goods on FOB basis || || |
|2. Outgo of Foreign exchange ||2150 ||5510 |
|CIF value of Imports || || |
|3. Expenditure in Foreign Currencies ||1333 ||1849 |
27. Risk Management:
Your Company has a robust risk management framework to identify evaluate businessrisks and opportunities. This framework seeks to create transparency minimize adverseimpact on the business objectives and enhance the Company's competitive advantage. Thebusiness risk framework defines the risk management approach across the enterprise atvarious levels including documentation and reporting. The framework has different riskmodels which help in identifying risk trend exposure and potential impact analysis at aCompany level as also separately for business segments. The key business risks identifiedby the Company and its mitigation plans are included in Management Discussion and AnalysisReport.
28. Subsidiary Company Associate Company and Joint Venture Company:
Your Company does not have any Subsidiaries or Associates or Joint Venture Companies.
Your Company has not accepted any deposits from public.
30. Internal Financial Control:
Company has established Internal Financial Control over Financial Reporting in currentfinancial year 2016-2017.
31. Committees of Directors and Key Managerial Personnel:
Composition of Audit Committee of Directors Nomination and Remuneration Committee ofDirectors and Stakeholders Relationship/Grievance Committee of Directors number ofmeetings held of each Committee during the financial year 2016-2017 and meetings attendedby each member of the Committee as required under the Companies Act 2013 are provided inCorporate Governance Report forming part of the report.
32. Corporate Social Responsibility (CSR):
Your Company does not fall under the criteria of Corporate Social Responsibility aslaid down under Section 135 of the Companies Act 2013 and by virtue of above your Companyhas not initiated any initiative for the same.
33. Cost Audit:
You Company does not fall under the eligibility criteria to conduct Cost Audit and tomaintain Cost Records as required under Section 148 of the Companies Act 2013 during thefinancial year 2016-2017.
The Board of Directors thank the Company's employees customers vendors investors fortheir continuous support and is grateful for the confidence and faith shown in them. YourDirectors take this opportunity to place on record their sincere gratitude to the BanksCentral and State Government Departments and the Local Authorities for their guidance andsupport.
| ||For & on behalf of the Board |
| ||Sd/- |
| ||Shri. Mahendra K. Khatau |
|Place: Mumbai ||Chairman & Managing Director |
|Date : 08th August 2017 ||DIN: 00062794 |