TO THE MEMBERS
The Directors take pleasure in presenting their Sixty-Third Annual Report on thebusiness and operations of the Company and the Audited Financial Statements for the yearended 31st March 2017.
1. FINANCIAL RESULTS
| || |
Financial Year Ended
|Particulars || |
| ||31/03/2017 ||31/03/2016 ||31/03/2017 ||31/03/2016 |
|Revenue from Operations (Net of Excise) and Other Income ||26149.06 || |
|26195.29 || |
|Exceptional Items ||393.33 || |
|393.33 || |
|Earnings before Interest Tax Depreciation & Amortisation (EBITDA) ||7660.61 || |
|7705.98 || |
|Finance Charges ||213.49 || |
|213.49 || |
|Depreciation ||892.73 || |
|892.73 || |
|Provision for Tax (including for earlier years): || || || || |
|(Less) Current Tax ||2075.00 || |
|2075.06 || |
|(Less) Deferred Tax ||155.98 || |
|155.98 || |
|(Less) (Excess)/Short Provision for Tax relating to prior years ||(461.43) || |
|(462.26) || |
|Net Profit After Tax ||4784.84 || |
|4830.98 || |
|Profit brought forward from previous year ||18140.56 || |
|18341.53 || |
|Surplus available for Appropriations ||22925.40 || |
|23172.51 || |
|Appropriations to: || || || || |
|Proposed Dividend || || |
| || |
|Dividend Distribution Tax || || |
| || |
|Transferred to General Reserve || || ||4.54 || |
|Transferred to Special Reserve u/s. 45IC of the RBI Act 1934 || || ||9.07 || |
|Profit carried to Balance Sheet ||22925.40 || |
|23158.90 || |
Your Directors have recommended a dividend of ' 34/- per equity share of ' 10/- eachfor the Financial Year 2016-17 to be paid if declared by the members at the AnnualGeneral Meeting to be held on 9th August 2017.
3. TRANSFER TO RESERVES
During the current financial year no transfers were made to reserves.
4. STATE OF COMPANY'S AFFAIRS
The gross sales and other income for the year under review were ' 26149 lacs asagainst ' 24161 lacs for the previous year registering increase of 8.2%. The profitbefore tax was ' 6554 lacs (after interest and depreciation charges of ' 1106 lacs) andthe profit after tax was ' 4785 lacs for the year under review as against ' 2870 lacsand ' 1797 lacs respectively for the previous year registering increase of 128% and166% respectively.
The Company produced 93564 MT of Hydrogen Peroxide during the year under review ascompared to 97637 MT during the previous year. The production was lower during the yeardue to two shutdowns taken to effect technical changes and bringing the heat recoverysystem in line and also due to building of inventory as a result of demonetization. Theheat recovery system is expected to result in significant savings in future and reduceGreenhouse Gas Emissions.
The Company sold 96195 MT of Hydrogen Peroxide during the year under review asagainst 96846 MT during the previous year. The Company continues to maintain its primeposition in the market and held 38% market share during the year as compared to 42% duringthe previous year due to large quantum of imports.
1.26 Million Cubic Meters (MCM) of Hydrogen Gas were also sold during the year asagainst 2.76 MCM during the previous year.
5. CHANGE(S) IN THE NATURE OF BUSINESS IF ANY
There is no change in the nature of business carried on by the Company and of itssubsidiary. The Company has not changed the class of business in which the Company has aninterest.
6. MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the report.
7. AWARDS AND RECOGNITION
The Company received the following awards during 2016-17:
|Name of Award ||Award Received from |
|Certificate of Merit for Excellence of Management of Health Safety & Environment for the year 2015 ||Indian Chemical Council Mumbai |
|Certificate of Appreciation in recognition of appreciable achievement in Occupational Safety and Health during Assessment Period of Three Years (2012-2014) ||National Safety Council |
8. SAFETY & ENVIRONMENT
The Company continues to maintain a good safety and environmental record. There was nolost time injury during the FY 2016-17. It has worked for 426 days without Lost TimeInjury as on 31st March 2017.
All the properties of the Company including buildings plant and machinery stocks andmaterials have been adequately insured. The Company also has a public liability insurancepolicy as per the Public Liability Insurance Act 1991.
10. FIXED DEPOSITS
The Company does not accept fresh deposits at present and as such no amount onaccount of principal or interest on public deposits was outstanding as on the date of thebalance sheet.
11. DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
Naperol Investments Limited (Naperol) is the only subsidiary of the Company. There wereno joint ventures and associate companies.
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 the statement containing salient features of the financialstatements of Naperol (in Form AOC-1) forms part of the Consolidated Financial Statements.Pursuant to Section 136 of the Companies Act 2013 the Company is exempted from attachingto its Annual Report the Annual Report of Naperol.
The Audited Financial Statements of the subsidiary company are kept open for inspectionby the Members at the Head Office of the Company. The Company shall provide free of costa copy of the financial statements of its subsidiary company to the Members upon theirrequest. The statements are also available on the website of the Company atwww.naperol.com.
12. PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY COMPANY NAPEROL INVESTMENTSLIMITED
Naperol Investments Limited was incorporated on 6th May 1980 and isregistered as a Non-Banking Financial Company as provided by Section 45-IA of the ReserveBank of India Act 1934. The Company is engaged in the business of long term investment.During the year under review the Company earned a profit after tax of ' 46.14 Lacs asagainst ' 47.81 Lacs in 2015-16.
13. CONSOLIDATED FINANCIAL STATEMENTS
The Company has prepared Consolidated Financial Statements (CFS) in accordance with theapplicable Accounting Standards as prescribed under the Companies (Accounts) Rules 2014of the Companies Act 2013. The Consolidated Financial Results reflect the results of theCompany and its subsidiary. As required under Regulation 34 of the SEBI (ListingObligations and Disclosure
Requirements) Regulations 2015 the Audited CFS together with the IndependentAuditors' Report thereon are annexed and form part of this Report. The summarizedConsolidated Financial Results are provided above at point no. 1 of this Report.
14. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is appended as Annexure I.
15. CORPORATE GOVERNANCE
Your Company has taken adequate steps to ensure that all mandatory provisions ofCorporate Governance in terms of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 have been complied with.
A separate report on Corporate Governance along with a Certificate from a PracticingCompany Secretary regarding compliance of the conditions of Corporate Governance isappended as Annexure II.
16. CORPORATE SOCIAL RESPONSIBILITY
The Company had spent ' 7404588/- towards its Corporate Social Responsibility (CSR)activities during the Financial Year 2016-17 as per the provisions of the Companies Act2013.
The CSR Policy of the Company and the details about the development of CSR Policy andinitiatives taken by the Company on Corporate Social Responsibility during the year as perthe Companies (Corporate Social Responsibility Policy) Rules 2014 have been appended as AnnexureIII.
17. DETAILS OF BOARD MEETINGS
During the year five Board Meetings were held details of which are provided in theCorporate Governance Report.
18. ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Internal Audit plays a key role in providing an assurance to the Board of Directorswith respect to the Company having adequate Internal Control Systems. The Internal ControlSystems provide among other things reasonable assurance of recording the transactions ofits operations in all material respects and of providing protection against significantmisuse or loss of Company's assets. The details about the adequacy of Internal FinancialControls are provided in the Management Discussion and Analysis Report.
19. SHARE CAPITAL
The paid-up Equity Share Capital as on 31st March 2017 was ' 574.70 Lacs.During the year under review there has been no change in the paid-up Equity Share Capitalof the Company.
However Solvay S. A. one of the promoters of the Company had transferred its entireholding of 1442500 (25.10%) shares by inter-se promoter transfer to other promotersviz. Nowrosjee Wadia & Sons Limited and Mr. Nusli N. Wadia. Accordingly Solvay S. A.has ceased to be a promoter of the Company as on 31st March 2017.
20. EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 an extract of Annual Return in Form MGT-9 isappended as Annexure IV.
21. 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:
1. i n the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
2. they have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at the end of the financial year and of theprofit of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared the Annual Accounts on a going concern' basis;
5. they have laid down internal financial controls to be followed by the Company andthat such internal controls are adequate and were operating effectively; and
6. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and were operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and the reviews performed by the Management and the relevantBoard Committees including the Audit Committee the Board is of the opinion that theCompany's internal financial controls were adequate and effective during the financialyear 2016-17.
22. STATUTORY AUDITORS
M/s. S. B. Billimoria & Co. Chartered Accountants (ICAI Registration No. 101496W)Statutory Auditors of the Company will cease to hold office on the conclusion of theensuing Annual General Meeting (AGM) as required by mandatory rotation of the Auditorsunder the Companies Act 2013.
The Audit Committee recommended to the Board for approval the appointment of M/s.Price Waterhouse Chartered Accountants LLP (PW) (FRN. 012754N/N500016) as StatutoryAuditors. The Board has approved the appointment of PW for a period of 5 (five) yearssubject to the approval of the shareholders at the ensuing AGM.
PW are eligible for appointment as Statutory Auditors under Section 141 of theCompanies Act 2013 and the rules framed thereunder. Members are requested to considertheir appointment from the conclusion of the ensuing AGM upto the conclusion of the AGM tobe held in the financial year 2022-23 subject to ratification by the Members at every AGMas per the provisions of the Companies Act 2013.
There are no qualifications reservations or adverse remarks made in the StatutoryAuditors' Report.
23. COST AUDIT
As per the Cost Audit Orders Cost Audit is applicable to the Company's organic &inorganic chemicals and industrial gases products/ business of the Company for thefinancial year 2017-18.
In view of the same and in terms of the provisions of Section 148 and other applicableprovisions of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014 M/s. D. C. Dave & Co. Cost Accountants (ICWA Registration No. 000023) havebeen appointed as Cost Auditors to conduct the audit of cost records of the Company forthe financial year 2017-18. The remuneration of ' 400000/- plus applicable service taxand re-imbursement of travelling and out-of-pocket expenses incurred by them which isproposed to be paid to them requires ratification of the Members at the ensuing AnnualGeneral Meeting.
The Company has submitted its Cost Audit Report for the financial year 2015-16 to theMinistry of Corporate Affairs within the stipulated time period.
There are no qualifications reservations or adverse remarks made in the Cost Auditors'Report.
24. SECRETARIAL AUDIT REPORT
In terms of Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 M/s. Parikh & AssociatesPracticing Company Secretaries have been appointed as Secretarial Auditors of the Companyto carry out Secretarial Audit. The Report of the Secretarial Auditors is appended as AnnexureV.
There are no qualifications reservations or adverse remarks made in the SecretarialAuditors' Report.
25. LISTING OF SHARES
The equity shares of the Company are listed on BSE Limited situated at PhirozeJeejeebhoy Towers Dalal Street Mumbai 400 001.
The Company has paid necessary listing fees to BSE Limited as prescribed by SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
26. RELATED PARTY TRANSACTIONS
The Company's policy on dealing with Related Party Transactions is disclosed on theCompany's website (weblink: http://www.naperol.com/pdf/boardpolicies/RPT_Policu.pdf). Alltransactions entered into with Related Parties as defined under the Companies Act 2013and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 during the financial year were in the ordinary course of business and onan arms length basis and do not attract the provisions of Section 188 of the CompaniesAct 2013.
During the year the Company had not entered into any contract/arrangement/transactionswith related parties which could be considered as material. The related party transactionsare disclosed under Note No. 30 of the Notes to Financial Statements for the year 2016-17.
27. AUDIT COMMITTEE
The Audit Committee of the Company comprises of 3 Independent Directors. The detailsare provided in the Corporate Governance Report.
Pursuant to the requirements of the Companies Act 2013 the Company has establishedvigil mechanism through the Audit Committee for directors and employees to report genuineconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or Ethics Policy.
The vigil mechanism provides for adequate safeguards against victimisation of personswho use such mechanism and make provision for direct access to the Chairman of the AuditCommittee in appropriate or exceptional cases.
The details of establishment of such mechanism is also disclosed on the Company'swebsite (weblink: http://naperol.com/pdf/ boardpolicies/Whistle-Blower-policy.pdf).
28. RISK MANAGEMENT POLICY
The Company has formulated a Risk Assessment & Management Policy. The details ofthe Risk Management are covered in the Corporate Governance Report.
29. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. Ness N. Wadia Director retires by rotationat the ensuing Annual General Meeting (AGM) and being eligible offers himself forre-appointment.
Mr. S. R. Lohokare has been re-appointed as Managing Director of the Company for a termof three years with effect from 1st May 2018 by the Board of Directors subjectto the approval of the Members which is being sought at the ensuing AGM.
Necessary resolutions for the re-appointment of Mr. Ness N. Wadia and Mr. S. R.Lohokare have been included in the Notice convening the ensuing AGM and requisite detailshave been provided in the explanatory statement to the Notice. Your Directors commendtheir re-appointment.
All the Independent Directors have given a declaration under Section 149(7) of theCompanies Act 2013 ("Act") that they meet the criteria of independence as laiddown under Section 149(6) of the Act and Regulation 16 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.
Key Managerial Personnel
Mr. Sunil Londhe resigned as Chief Financial Officer w.e.f. 31st August2016.
The Board of Directors had on the recommendation of the Nomination & RemunerationCommittee appointed Mr. Shailesh Chauhan as Chief Financial Officer w.e.f. 11thNovember 2016.
30. NOMINATION AND REMUNERATION POLICY
The Board has adopted on the recommendation of the Nomination & RemunerationCommittee a policy for selection and appointment of Directors Senior Management andtheir remuneration. A brief detail of the policy is given in the Corporate GovernanceReport and also posted on the Company's website (weblink:http://www.naperol.com/pdf/boardpolicies/Nomination_ Policy.pdf).
31. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out annual performanceevaluation of its own performance the Directors individually as well the evaluation ofthe working of its Audit Committee Nomination & Remuneration Committee CorporateSocial Responsibility Committee and Stakeholders' Relationship Committee. The manner inwhich the evaluation has been carried out has been explained in the Corporate GovernanceReport.
32. PARTICULARS OF EMPLOYEES
The information in terms of provisions of Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 which forms part of this Report is appended as Annexure VI.
However as per the provisions of Section 136 of the Act the report and accounts arebeing sent to the Members and others entitled thereto excluding the information onemployees' particulars which is available for inspection by the Members at the Head Officeof the Company during business hours on working days of the Company up to the date of theensuing Annual General Meeting. If any Member is interested in obtaining a copy thereofsuch Member may write to the Company Secretary in this regard.
33. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in Note No. 18 of the Notes to the FinancialStatements.
34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There have been no significant and material orders passed by the regulators courts andtribunals impacting the going concern status and the Company's operations in future.
35. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is appended as Annexure VII.
36. CLIMATE CHANGE AND GREENHOUSE GAS EMISSIONS
The details on climate change and greenhouse gas emissions are appended as AnnexureVIII.
37. DIVIDEND DISTRIBUTION POLICY
The Dividend Distribution Policy is currently not applicable to the Company since theCompany does not fall under the top five hundred listed entities as on 31stMarch 2017. However this Policy has been adopted on a voluntary basis as recommendedunder Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Policy is posted on the Company's website (weblink:http://naperol.com/pdf/boardpolicies/Dividend_Distribution_Policy.pdf).
Your Directors would like to express their sincere appreciation to the CustomersVendors Bankers Shareholders Central and State Governments and Regulatory Authoritiesfor their continued co-operation and support.
Your Directors also take this opportunity to acknowledge the dedicated efforts made byemployees for their contribution to the success achieved by the Company.
| ||On behalf of the Board of Directors |
| ||NESS N. WADIA |
| ||Chairman |
|Mumbai 23rd May 2017 || |