Your Directors have pleasure in presenting the Thirty Sixth Annual Report with theAudited Balance Sheet Statement of Profit & Loss Cash Flow Statement and the notesand schedules thereon for the year ended 31st March 2017.
1 . OPERATING RESULTS
The operating results of the Company for the year ended 31st March 2017 are as follows:
| ||Year ended on 31.03.2017 Rupees ||Year ended on 31.03.2016 Rupees |
|Profit before Depreciation ||251205517 ||205905146 |
|Less: Depreciation ||(30794917) ||(27223947) |
|Net Profit before Tax ||220410600 ||178681199 |
|Less: Provision for Income Tax ||(76525528) ||(64302098) |
|Less: Provision for Deferred Tax ||(1496439) ||(396565) |
|Net Profit after Tax ||142388633 ||113982536 |
|Add: Previous year's profit brought forward ||389153217 ||275170680 |
|Add: Prior years depreciation written back ||581588 || |
|Balance Profit carried forward ||532123438 ||389153217 |
2. TRANSFER TO RESERVES
There are no transfers to any specific reserves during the year.
3. THE STATE OF THE COMPANY'S AFFAIRS
During the year under review your company achieved a sale of Rs. 10015.39 lakhs(previous year Rs. 9629.25 lakhs) resulting in an increase of 4.01% over the previousyear. The profit before tax is at Rs. 2204.11 lakhs (previous year Rs. 1786.81 lakhs)resulting in an increase of 23.35%.
In order to conserve resources your directors do not recommend dividend for the yearended 31st March 2017.
5. FUTURE PROSPECTS
The capital expansion project undertaken by the company is proceeding as per schedule.The machinery erection and installation is currently ongoing and is expected to becompleted by Q2 2017-18. The plant is expected to be operational by Q3 2017-18. The totalproject expenditure is to the tune of Rs. 30 crores.
With the additional capacity the company plans on widening its product base furtherand also enhance the capacity for its existing products. The company is hopeful of postingstrong growth in the first full year of enhance capacity availability i.e. 2018-19.
6. THE CHANGE IN THE NATURE OF BUSINESS IF ANY;
There is no change in the nature of business of the Company.
7. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND.
There was no transfer during the year to the Investor Education and Protection Fund interms of Section 125 of the Companies Act 2013.
8. CONSERVATION OF ENERGY-TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE ETC.
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished as AnnexureA to Director's Report.
9. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICYOF THE COMPANY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed also discussed at the meetings of the Audit Committee and theBoard of Directors of the Company. The Company has voluntarily constituted Risk ManagementCommittee and risk management policy is available on the website of the company:www.nglfinechem.com
10. INTERNAL CONTROL SYSTEM
The Company's internal controls system has been established on values of integrity andoperational excellence and it supports the vision of the Company "To be the mostsustainable and competitive Company in our industry". The Company's internal controlsystems are commensurate with the nature of its business and the size and complexity ofits operations. These are routinely tested and certified by Statutory as well as InternalAuditors. Significant audit observations and follow up actions thereon are reported to theAudit Committee.
11. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE
COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013 read with Companies CorporateSocial Responsibility (Policy) Rules 2014. The Committee consists of following Directors:
|Mr. Milind Shinde ||Chairman |
|Mr. Rajesh Lawande ||Member |
|Mrs. Ajita Nachane ||Member |
As per provision of Section 135 of the Companies Act 2013 read with Rule 8 ofCompanies Corporate Social Responsibility (Policy) Rules 2014 the Board has approved CSRPolicy and the Company has spent towards CSR activities details provided in attachedAnnexure B to Director's Report.
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
The particulars of investment made under Section 186 of the Companies Act 2013 hasbeen disclosed in the financial statements in Schedule 13 of the Balance Sheet.
The Company has not given any loans or given any guarantees.
13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. There are no materially significant related party transactions made by the Companywith Promoters Directors or Key Managerial Personnel etc. which may have potentialconflict with the interest of the Company at large or which warrants the approval of theshareholders. Accordingly transactions are being reported in Form AOC-2 i.e Annexure C interms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules 2014.However the details of the transactions with Related Party are provided in the Company'sfinancial statements in accordance with the Accounting Standards.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions.
The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website at www.nglfinechem.com
14. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
The Company has zero tolerance towards sexual harassment at the workplace and towardsthis end has adopted a policy in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.All employees (permanent contractual temporary trainees) are covered under the saidpolicy. An Internal Complaints Committee has also been set up to redress complaintsreceived on sexual harassment. During the financial year under review the Company has notreceived any complaints of sexual harassment from any of the women employees of theCompany.
15. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS
MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The auditors' report does not contain any qualifications reservations or adverseremarks. Report of the secretarial auditor is given as an annexure which forms part ofthis report.
16. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and Administration) Rules 2014 is furnished as Annexure Dto Director's Report
17. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE
YEAR UNDER REVIEW
During the financial year the Board had met four times on 20th May 2016 4th August2016 8th November 2016 and 3rd February 2017.
18. DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 The Board of Directors of theCompany hereby confirm:
That in the preparation of the annual accounts the applicable accountingstandards have been followed and there has been no material departure.
That the selected accounting policies were applied consistently and thedirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as on March 31 2017 and thatof the profit of the Company for the year ended on that date.
That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
That the annual accounts have been prepared on a going concern basis.
The Board has laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
The directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Company has neither accepted nor renewed any deposits during the year under review.
20. PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given asAnnexure E to this report.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of employeesdrawing remuneration in excess of the limits set out in the said Rules forms part of theReport. However having regard to the provisions of the first proviso to Section 136(1) ofthe Companies Act 2013 the Annual Report excluding the aforesaid information is beingsent to the Members of the Company. The said information is available for inspection atRegistered Office of the Company during working hours. Any member interested in obtainingsuch information may write to the Company Secretary at the registered office and the samewill be furnished on request.
The Nomination and Remuneration Committee of the Company has affirmed at its meetingheld on February 3 2017 that the remuneration is as per the remuneration policy of theCompany. The policy is available on the company's website: www.nglfinechem.com
During the year there has been no change in the composition of Board of Directors ofthe Company.
Ms. Ajita Nachane is liable to retire by rotation in this Annual General Meeting andbeing eligible she has offered herself for reappointment. Your Directors recommend herappointment.
22. ATTRIBUTES QUALIFICATIONS & INDEPENDENCE OF
DIRECTORS THEIR APPOINTMENT AND REMUNERATION
The Nomination & Remuneration Committee of Directors have approved a Policy forSelection Appointment and Remuneration of Directors which inter-alia requires thatcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors KMP and senior management employees and the Directors appointed shall be ofhigh integrity with relevant expertise and experience so as to have diverse Board and thePolicy also lays down the positive attributes/ criteria while recommending the candidaturefor the appointment as Director.
23. DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(7) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.
24. FAMILIARISATION PROGRAMME FOR INDEPENDENT
The familiarization programme aims to provide Independent Directors with thepharmaceutical industry scenario the socioeconomic environment in which the Companyoperates the business model the operational and financial performance of the Companysignificant developments so as to enable them to take well informed decisions in a timelymanner. The familiarization programme also seeks to update the Directors on the rolesresponsibilities rights and duties under the Act and other statutes. The policy onCompany's familiarization programme for Independent Directors is posted on Company'swebsite at www.nglfinechem.com.
The company has been rated by Crisil Ltd for SME and bank rating. The SME rating hasbeen awarded "SME 1" upgraded from "SME 2" indicating Highest level ofcredit worthiness adjudged in relation to other SMEs. The long-term rating is CrisilBBB/Stable upgraded from Crisil BBB-/Positive and short term rating is Crisil A3+ upgradedfrom Crisil A3. The company has also been rated by ICRA Ltd for bank borrowing and hasbeen awarded BBB/ Positive and short term rating is A3+ reaffirmed.
26. STATUTORY AUDITORS
M/s Bharat Gandhi & Co. Chartered Accountants Mumbai bearing ICAI FirmRegistration No as 101214W shall retire as Statutory Auditors of the Company from theconclusion of the ensuing 36th Annual General Meeting to be held for the financial year2016-2017 and shall not be eligible for re-appointment.
The Board of Directors of your Company at its meeting held on Friday 5th May 2017appointed M/s Manek & Associates Chartered Accountants (FRN: 126679W) as newStatutory Auditors of your Company for a period of 5 years from the conclusion of theensuing Annual General Meeting till the conclusion of the Annual General Meeting to beheld in the year 2022 based on the recommendation of the Audit Committees and subject tothe approval of the members (including ratification of the appointment by the members atevery Annual General Meeting held after this Annual General Meeting till the expiry oftheir term). They have confirmed to the Company that their appointment if made at theensuing 36th Annual General Meeting would be within the limits prescribed under Section141 of the Companies Act 2013 and that they are not disqualified from appointment withinthe meaning of the said Act.
27. INTERNAL AUDITORS
The company has appointed M/s R Devarajan & Co Chartered Accountants Mumbai(ICAI firm registration number 102415W) as internal auditors for financial year 2017-18.
28. SECRETARIAL AUDITORS
The Company has appointed Mr. Hemant Shetye partner of M/s HS Associates CompanySecretaries as Secretarial Auditors of the Company to carry out the Secretarial Audit forthe Financial Year 2016-17 and to issue Secretarial Audit Report as per the prescribedformat under rules in terms of Section 204(1) of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Pursuant tothe qualification mentioned in the report regarding non-appointment of a whole-timeCompany Secretary the Company has appointed a whole-time company secretary with effectfrom 4th April 2017 and made the default good. Their report is appended to this report asAnnexure F to Director's Report.
29. COST AUDITORS
The company has appointed M/s. Sanghvi Randeria & Associates. Cost AccountantsMumbai (Firm registration number 00175) as Cost Auditors of the Company for financialyear 2017-18.
30. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management's Discussion and Analysis Report for the year under review asstipulated under regulation 34 (3) and Part B of schedule V of the SEBI (ListingObligation and Disclosure Requirement) Regulation 2015 is annexed to this Annual Report.
31. CORPORATE GOVERNANCE
The Company is committed towards maintaining the highest standards of CorporateGovernance and adhering to the Corporate Governance requirements as set out by Securitiesand Exchange Board of India. The Report on Corporate Governance as stipulated underregulation 34 (3) and Part C of schedule V of the SEBI (Listing Obligation and DisclosureRequirement) Regulation 2015 forms part of the Annual Report. The Certificate from thepracticing Company Secretary confirming compliance with the conditions of CorporateGovernance as stipulated under regulation 34 (3) and Part E of schedule V of the SEBI(Listing Obligation and Disclosure Requirement) Regulation 2015 is also published in thisAnnual Report.
32. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have any subsidiary joint venture or associate company andtherefore provision with respect to Section 129 of the Companies Act 2013 are notapplicable to the Company.
33. REPORT ON CORPORATE GOVERNANCE
Corporate Governance Report prepared by HS Associates Company Secretaries is annexedhereto as Annexure to this report.
34. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND
PROVIDING VIGIL MECHANISM
The Audit Committee consists of the following members
Mr. Milind Shinde Chairman
Mr. Jayaram Sitaram Member
Mr. Rajesh N. Lawande Member
The above composition of the Audit Committee consists of independent directors viz.Mr. Jayaram Sitaram and Mr. Milind Shinde who form the majority.
The Company has established a vigil mechanism policy to oversee the genuine concernsexpressed by the employees and other Directors. The Company has also provided adequatesafeguards against victimization of employees and Directors who express their concerns.The Company has also provided direct access to Mr. Rahul Nachane Chief Ethics Counselloron reporting issues concerning the interests of co-employees and the Company. The VigilMechanism Policy is available at the website of the company: www.nglfinechem.com
35. ANNUAL EVALUATION BY THE BOARD
In compliance with the Companies Act 2013 and Regulation 17 of the ListingRegulations the performance evaluation of the Board and its Committees were carried outduring the year under review. More details on the same are given in the CorporateGovernance Report.
36. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING
THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THEFINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THEREPORT
There have being no material changes and commitments affecting the financial positionof the Company occurred during the financial year.
37. THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS ANDCOMPANY'S OPERATIONS IN FUTURE
During the year there has been no significant material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and company's operations infuture.
38. COMMITTEES OF THE BOARD
In accordance with the Companies Act 2013 the Board has also formed a Risk ManagementCommittee on voluntary basis. There are currently five Committees of the Board asfollows:
Corporate Social Responsibility Committee
Nomination and Remuneration Committee
Stakeholders' Relationship Committee
Risk Management Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Report on Corporate Governance" a part ofthis Annual Report.
39. OTHER DISCLOSURES
The company does not have any Employees Stock Option Scheme in force and henceparticulars are not furnished as the same are not applicable.
The Company seeks to Promote Highest levels of ethical standards in the normal businesstransactions guided by the value system. The SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 mandates formulation of certain policies for ListedCompanies. The Policies are reviewed periodically by the Board and are updated based onthe need and compliance as per the applicable laws and rules and as amended from time totime. The policies are available on the website of the Company at www.nglfinechem.com
41. AWARDS AND ACCOLADES
Your company was listed by Forbes Asia as "Asia's 200 Best Under Billion" inJune 2016 and awarded IPF Fastest Growing Manufacturing Company Award Pharmaceuticals (Small) for 2016.
42. ENHANCING SHAREHOLDER VALUE
Your company firmly believes that its success the marketplace and a good reputationare among the primary determinants of value to the shareholder. The organizational visionis founded on the principles of good governance and delivering leading-edge productsbacked with dependable after sales services. Following the vision Your Company iscommitted to creating and maximizing Long-term value for shareholders.
43. CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operation include global and domestic demand and supply conditionsaffecting selling prices of Raw Materials Finished Goods input availability and priceschanges in government regulations tax laws economic developments within and outside thecountry and various other factors.
Your Directors take this opportunity to express their sincere appreciation andgratitude for the continued co-operation extended by shareholders Employees customersthe Government Banks suppliers and other business associates.
For and on behalf of the Board of Directors
|Milind Shinde |
|Mumbai 5th May 2017 |
ANNEXURE A TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31st MARCH 2017.
Information pursuant to the Companies (Accounts) Rules 2014.
A. CONSERVATION OF ENERGY
I. Steps taken or impact on conservation of energy
Following activities were taken to conserve Energy
1. Energy audits to identify key areas for improvement in energy efficiency ofprocesses adopted and eliminating wastage.
2. Implementation of the energy conservation methods and improving input-output ratios.
3. Modernizing recovery systems to obtain higher recoveries with shorter cycle times.
II. Capital investment on energy conservation
No Capital investment was incurred on energy conservation during the year.
|III Expenditure on R&D activity || || |
| ||(Rupees in lakhs) |
| ||2016-17 ||2015-16 |
|Capital ||24.81 ||-- |
|Revenue ||93.44 ||85.32 |
|Total ||118.25 ||85.32 |
|As percentage of turnover ||1.18% ||0.89% |
The company has not acquired any technology during the year.
B. TECHNOLOGY ABSORPTION:
1. Research & Development
I Efforts made towards technology absorption;
The company invests continually in API process development and upgradation. Thisenables us to launch new products and refine the processes of existing products. At our R& D center in Mumbai scientists are engaged in research projects in chemistryrecovery systems and process improvements aimed at cost improvements and new productdevelopment. This also enables us to support our customers in their pharmaceuticalresearch and development activities.
2. Technology Absorption Adaptation and Innovation
The company has not absorbed any technology under a formal technology transferarrangement during the year. The company carries out Research & Development in its ownlaboratory.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows are as under
Total Foreign Exchange Earned Rs. 7321.85 lakhs
Total Foreign Exchange Used Rs. 889.90 lakhs