Your Directors have pleasure in presenting their Twenty Fourth Annual Report togetherwith the Audited Accounts of the company for the year ended 31st March 2017.
The Company s financial performance for the year ended March 31 2017 is summarizedbelow:
| || ||(Rs. In Lakhs) |
|Particulars ||March 31 2017 ||March 31 2016 |
|Gross Sales ||5838.54 ||6683.18 |
|Less : Excise duty ||474.27 ||477.88 |
|Net Sales ||5364.27 ||6205.31 |
|Other Income ||81.30 ||123.23 |
|Total ||5445.57 ||6328.53 |
|Profit before depreciation & taxation ||463.32 ||1024.24 |
|Less : Depreciation ||431.75 ||416.77 |
|Less : Provision for taxation || ||167.59 |
|Less: Prior period adjustment (Taxation) ||0.43 ||0.29 |
|Add: Deferred Tax withdrawn ||(31.64) ||1.85 |
|Profit after taxation ||62.78 ||433.88 |
|Add: Balance brought forward from previous year ||3896.65 ||3593.01 |
|Surplus available for appropriation ||3959.43 ||4026.89 |
|Appropriations || || |
|General Reserve || ||21.69 |
|Proposed Dividend ||62.33 ||90.19 |
|Tax on Dividend ||12.69 ||18.36 |
|Additional depreciation on fixed asset as per Companies Act 2013 || || |
|Balance carried to Balance sheet ||3959.43 ||3896.65 |
|Total ||4034.45 ||4026.89 |
The company proposes to transfer an amount of Rs. Nil to the General Reserves. Anamount of Rs. 3959.43 lakhs is proposed to be retained in the statement of Profit &Loss account.
The company had a gross turnover of Rs. 5838.54 as against Rs. 6683.18 lakhs in theprevious year a decline of 12.64%. Profit before depreciation and taxation was Rs.463.32Lakhs against Rs.1024.24 lakhs in the previous year. After providing for depreciation andtaxation of Rs. 431.75 & Rs.(31.21) respectively the net profit of the Company forthe year under review was placed at Rs. 62.78 lakhs as against Rs. 433.88 lakhs previousyear.
Due to tough market conditions increase in cost of inputs and reduction in marginsthere was decline in profits as compared to the previous year hence the profit after taxhas reduced by 85.53 % during the year under review.
Based on the performance of the Company and the need for conservation of internalaccruals while maintaining the dividend for the shareholders your Directors are pleasedto recommend a final dividend of Rs. 1 per equity share at the rate of 10 % subject to theapproval of members. The dividend if approved by the Members will result in the out flowof Rs.62.33 lakhs from the company in addition to Rs. 12.69 lakhs by way of dividenddistribution tax. Dividend if declared will be paid to the Members whose names appear inthe Register of Members as on the date of the AGM.
During the year under consideration the paid up capital increased from Rs. 579.27Lakhs to Rs. 632.00 Lakhs by conversion of 4 40000 share warrants into equity (whichformed part of earlier preferential issue of equity shares to promoter group in thefinancial year 2015-16) and issue of additional 440000 equity shares of Rs. 10/- each(at a premium of Rs. 70/- per equity share) by the way of preferential issue to nonpromoters.
During the year company received Rs. 26400000 towards 440000 share warrants andissued shares for 440000 share warrants in 1:1 ratio. For the balance number of 660000share warrants the Non Promoters chose not to exercise the conversion of share warrantswithin the time stipulated under the Preferential allotment guidelines. Accordingly theinitial amount of Rs. 20/- Paid per warrant on 660000 share warrants stood lapsed andthe upfront money amounting to Rs.13200000/- received against these warrants wereforfeited and credited to Capital Reserve Account.
Cash & Cash equivalents as at March 31 2017 were Rs. 23.77 Lakhs. The companycontinues to focus on judicious management of its working capital ReceivablesInventories and other working capital parameters were kept under strict check throughcontinuous monitoring.
Company has not accepted any deposits within the meaning of Section 73 of the CompaniesAct 2013 and the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The company has an robust internal control system commensurate with the size scaleand complexity of its operations. The scope and authority of the Internal Audit functionis defined in the Internal Audit Manual. To maintain its objectivity and independence theinternal auditor reports to the chairman of the audit committee and to the Chairman &Managing Director of the Company.
The Audit Committee monitors and evaluates the efficacy and adequacy of internalcontrol system in the company its compliance with operating systems accountingprocedures and policies at all locations of the company. Based on the report of internalauditor process owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and recommendations along withcorrective actions thereon are presented to the Audit Committee of the Board.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
As part of its initiatives under corporate social responsibility (CSR) the CSRcommittee has taken steps to find out such activities to contribute. The CSR committee hascalculated the CSR fund amounting to Rs. 19.16Lakhs for the year ending as on March 312017 and the amount will be spent on the CSR activities to be identified shortly.Identification of CSR activities is under process.
CONSERVATION OF ENERGY:
The Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.
The Company s products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis involved. The company constantly strives for maintenance and improvement in quality ofits products and entire Research & Development activities are directed to achieve theaforesaid goal. The company is having ongoing research and development activity to developvalue added products.
FOREIGN EXCHANGE EARNINGS AND OUT-GO:
During the period under review your company has gained Rs. 1.94 lakhs owing to foreignexchange fluctuations. Export revenue constituted 22.84% of Total Revenue as against30.37% in the previous year.
|Foreign ||Exchange ||Earnings ||: ||Rs. 124990273 |
|Foreign ||Exchange ||Outgo ||: ||Rs. 5129007 |
During the year under review your company enjoyed cordial relationship with workersand employees at all levels.
Mr. Satyanarayan Mundra and Mr. Sushil Kumar Mundra Directors retire by rotation andbeing eligible offer themselves for re appointment.
All independent directors have given declarations that they meet the criteria ofindependence as laid down under section 149 (6) of the Companies Act 2013 and Regulation25(3) of SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015.
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates thatthe Board shall monitor and review the Board evaluation framework. The framework includesthe evaluation of directors on various parameters such as:
Board dynamics and relationships
Relationship with stakeholders
Company performance and strategy
Tracking Board and committees effectiveness
The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard of its own performance and that of its committees and individual directors. ScheduleIV of the Companies act 2013 states that the performance evaluation of independentdirectors shall be done by the entire Board of Directors excluding the director beingevaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The evaluation process has been explained inthe corporate governance report. The Board approved the evaluation results as collated bythe nomination and remuneration committee.
Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out the annual performance evaluation of its own performancethe Directors individually as well as the evaluation of the working of its AuditAppointment and Remuneration Committees. A structured questionnaire was prepared aftertaking into consideration inputs received from the Directors covering various aspects ofthe Board functioning such as adequacy of the composition of the Board and its CommitteesBoard culture execution and performance of specific duties obligations and governance.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgment safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the Chairmanand the Non Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Secretarial Department. The Directors expressed theirsatisfaction with the evaluation process.
PERFORNAMCE EVALUATION COMMITTEE:
The company has formed a performance evaluation committee consisting of the followingmembers from March 29 2015.
|Name of the Member ||Designation |
|Laxminarayan Moondra ||Whole time director |
|Satyanarayan Mundra ||Whole time director |
|Sunil L Mundra ||Managing Director |
The committee met once during the financial year ended March 31 2017 on 31st Jan 2017The attendance record of the members at the meeting was as follows.
|Name of the Member ||Designation ||No. of Meetings ||Attended |
|Laxminarayana Moondra ||Whole time director ||1 || |
|Satyanarayan Mundra ||Whole time director ||1 || |
|Sunil L Mundra ||Managing Director ||1 || |
The Company has formed a BUSINESS RISK EVALUATION COMMITTEE consisting of followingmembers
|Name of the person ||Designation ||No of meetings ||attended |
|Shri Dr. C.M.Gurumurthy (Independent Director) ||Chairman ||1 || |
|Shri Sunil L Mundra (Managing Director) ||Member ||1 || |
|Shri Satyanarayan Mundra (Director) ||Member ||1 || |
|Shri Sushil Kumar Mundra (Director) ||Member ||1 || |
|Mr. MNV Kutty (COO) ||Member ||1 || |
Business Risk Evaluation and Management is an ongoing process within the Organization.The Company has a robust risk management framework to identify monitor and minimize risksas also identify business opportunities.
The objectives and scope of the Risk Management Committee broadly comprise of.
1. Oversight of risk management performed by the executive management;
2. Reviewing the BRM policy and framework in line with local legal requirements andSEBI guidelines;
3. Reviewing risks and evaluate treatment including initiating mitigation actions andownership as per a pre-defined cycle;
4. Defining framework for identification assessment monitoring mitigation andreporting of risks.
5. Within its overall scope as aforesaid the Committee shall review risks trendsexposure potential impact analysis and mitigation plan.
INDEPENDENT DIRECTORS MEETING:
During the year under review the Independent Directors met on 31st Jan 2017 interalia to discuss:
1. Evaluation of the performance of Non Independent Directors and the Board ofDirectors as a Whole;
2. Evaluation of the performance of the Chairman of the Company taking into accountthe views of the Executive and Non Executive Directors.
3. Evaluation of the quality content and timelines of flow of information between themanagement and the Board that is necessary for the Board to effectively and reasonablyperform its duties.
All the independent Directors were present at the meeting.
|POLICIES: Name of the policy ||Brief description ||Web link |
|Whistle blower Policy ||The company has adopted the whistle blower mechanism for ||http://www.naturalcapsules.com/ |
|(Policy on vigil Mechanism) ||directors and employees to report concerns about unethical behaviour actual or suspected fraud or violation of the Company s code of conduct and ethics. There has been no change to the Whistle blower Policy adopted by the Company during fiscal 2016. No employee has been denied access to the audit committee. ||pdf/vigil-mechanism-and-whistle- blowers-policy.pdf |
|Nomination and Remuneration policy ||This policy formulates the criteria for determining qualifica- tions competencies positive attributes and independence for the appointment of a director (executive/non-executive) and also the criteria for determining the remuneration of the directors key managerial personnel and other employees ||http://www.naturalcapsules.com/ pdf/nomination-and-remuneration- policy.pdf |
|Corporate Social Responsibility Policy ||The policy outline the Company s strategy to bring about a positive impact on society through programs relating to hun- ger poverty education healthcare environment and lower- ing its resource footprint. ||http://www.naturalcapsules.com/ pdf/corporate-social-responsibility- policy.pdf |
|Determination of materiality for disclosures Policy ||The information covered by this Policy shall include informa- tion related to the Company s business operations or perfor- mance which has a significant effect on securities invest- ment decisions that the company is required to disclose in a timely and appropriate manner by applying the guidelines for assessing materiality. ||http://www.naturalcapsules.com/ pdf/Determination-of-Materiality-for- Disclosures.pdf |
|Related Party Transaction Policy ||The Policy regulates all transactions between the Company and its related parties. ||http://www.naturalcapsules.com/ pdf/policy-on-related-party- transactions.pdf |
|Insider Trading Policy ||The policy provides the framework in dealing with securities of the Company ||http://www.naturalcapsules.com/ pdf/Code-of-Conduct-Insider- Trading.pdf |
|Document Retention and Archival Policy ||The policy deals with the retention and archival of corporate records of Natural capsules limited. ||http://www.naturalcapsules.com/ pdf/Document-Retention-and- Archival-Policy.pdf |
During the year 5 Board Meetings and 4 Audit committee meetings were convened andheld. The details of which are given in the corporate governance report. The interveninggap between the meetings was within the period prescribed under the Companies Act 2013.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that: i) In the preparation of the annual accounts the applicable accountingstandards have been followed. ii) The directors have selected such accounting policies andapplied them consistently and made judgments and estimates that were reasonable andprudent so as to give a true and fair view of the state of affairs of the company at theend of the financial year and of the profit or loss of the company for the year underreview. iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities.iv) The directors have prepared the annual accounts on a going concern basis. v) Thedirectors have laid down internal financial controls to be followed by the company andthat such internal financial controls are operating effectively. vi) The directors haddevised proper system to ensure compliance with the provisions of all applicable laws andthat such system were adequate and operating effectively.
RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were onarm s length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with promoters keymanagerial personnel or other designated persons which may have potential conflict withinterest of the company at large.
A) Name of the related party and nature of relationship where control exists:
|Name of Related Party ||Nature of Relationship |
|M/s Mundra Enterprises ||Entity in which Director or KMP is related: |
| ||Mr.Sunil L Mundra |
| ||Mr. Laxminarayan Moondra |
| ||Mr. Sathyanarayana Mundra |
(B) (i) Related Party Transactions:
|Name of Related Party ||Nature of Transaction ||Amount of || |
Amount Outstanding at the end of year
| || || || |
| || || ||Current ||Year || |
| || ||Transaction Current Year\ (Previous Year) ||(Previous Year) || ||(Previous ||Year) |
|M/s Mundra Enterprises ||Operating Lease ||612000 ||45900 || || || |
| ||Rental Payments ||(576000) || || || || |
There were no material significant related party transactions having potential conflictwith the interest of company.
The company does not have any subsidiary.
CODE OF CONDUCT:
The Board of Directors has approved a code of conduct which is applicable to themembers of the Board/committees and all employees in the course of day to day businessoperations of the company. The company believes in Zero Tolerance against briberycorruption and unethical dealings / behaviors of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as code ofbusiness conduct which forms an appendix to the code. The code has been posted on thecompany s website www.naturalcapsules.com.
The code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. The code gives guidance through examples on the expectedbehavior from an employee in a given situation and the reporting structure.
All the Board members and the senior management personnel have confirmed compliancewith the code. All management staff was given appropriate training in this regard.
PREVENTION OF INSIDER TRADING:
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulation 2015. The InsiderTrading Policy of the Company lays down guidelines and procedures to be followed anddisclosures to be made while dealing with shares of the Company as well as theconsequences of violation. The policy has been formulated to regulate monitor and ensurereporting of deals by employees and to maintain the highest ethical standards of dealingin Company securities. The Insider Trading Policy of the Company covering code ofpractices and procedures for fair disclosure of unpublished price sensitive informationand code of conduct for the prevention of insider trading is available on our websitehttp:// www.naturalcapsules.com/pdf/Code-of-Conduct-Insider-Trading.pdf.
All Board of Directors and the designated employees have confirmed compliance with theCode.
AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT:
Regarding the observation made in the Secretarial Auditors Report relating to notspending full CSR amount It is clarified that the company has spent Marginal amount onCSR and the company still in the process of identifying proper areas of CSR hence theremaining amount was not spent.
Regarding the observations pertaining to delay in filing of the Annual Return with BSEit is clarified that the delay was due to change in online forms prescribed by the BSE.
The existing Statutory Auditors M/s Gnanoba and Bhat Bengaluru informed the Board thattheir tenure as per Companies Act has been concluded. Accordingly the Board as per therecommendation of Audit Committee appointed M/s. P Chandrasekar Chartered Accountants(Firm Reg No. 000580S )Bengaluru as Statutory Auditors of the company for a period of Five(5) years commencing from Financial Year 2017-18 Subject to approval of the members at the24th Annual General Meeting of the Company.
Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Mr. R. Parthasarathi Company Secretary in practice to undertake the SecretarialAudit of the Company for the financial year 2017-18 in the board meeting held on 27th May2017. The Secretarial Audit report for the financial year 2016-17 is annexed herewith asAnnexure B" EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure C". BUSINESS RISK MANAGEMENT:
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 17(9) (b)of SEBI (LODR) Regulations 2015 the company has constituted a business risk managementcommittee. The details of the committee and its terms of reference are set out in thecorporate governance report forming part of the Boards report. At present the company hasnot identified any element of risk which may threaten the existence of the company.
PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 read with rule 5 (1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of Directorsand KMP are given in Corporate Governance Report which form an integral part of thisReport are set out in Annexure-E.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS:
The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are set out as separate Annexure together with theCertificate from the auditors of the Company regarding compliance with the requirements ofCorporate Governance as stipulated in Scheduled V (E) of the SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015.
There were no material changes and commitments affecting the financial position of thecompany from the end of financial year 2016-2017 up to the date of this report.
Your Company and its Directors wish to extend their sincerest thanks to the Members ofthe Company Bankers State Government Local Bodies Customers Suppliers ExecutivesStaff and workers at all levels for their continuous cooperation and assistance.
For and on Behalf of the Board
Sunil L Mundra
Date : May 27th 2017