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NGL Fine Chem Ltd.

BSE: 524774 Sector: Health care
NSE: N.A. ISIN Code: INE887E01022
BSE LIVE 15:40 | 22 Aug 391.35 3.85
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OPEN 387.00
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VOLUME 560
52-Week high 470.00
52-Week low 251.50
P/E 16.99
Mkt Cap.(Rs cr) 242
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 387.00
CLOSE 387.50
VOLUME 560
52-Week high 470.00
52-Week low 251.50
P/E 16.99
Mkt Cap.(Rs cr) 242
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

NGL Fine Chem Ltd. (NGLFINECHEM) - Director Report

Company director report

TO

THE MEMBERS

Your Directors have pleasure in presenting the Thirty Fifth Annual Report with theAudited Balance Sheet Statement of Profit & Loss Cash Flow Statement and the notesand schedules thereon for the year ended 31st March 2016.

1. OPERATING RESULTS

The operating results of the Company for the year ended 31st March 2016 are as follows:

Year ended on 31.03.2016 Year ended on 31.03.2015
Rupees Rupees
Profit before Depreciation 205905146 154558776
Less: Depreciation (27223947) (25967831)
Net Profit before Tax 178681199 128590945
Less: Provision for Income Tax (64302098) (46516286)
Add: Provision for Deferred Tax (396565) 1226067
Net Profit after Tax 113982536 83300726
Add: Previous year's profit brought forward 275170681 191869955
Balance Profit carried forward 389153217 275170681

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. 9629.25 lakhs(previous year Rs. 8832.79 lakhs) resulting in an increase of 9% over the previous year.The profit before tax is at Rs. 1786.81 lakhs (previous year Rs. 1285.91 lakhs) resultingin an increase of 39%.

4. DIVIDEND

In order to conserve resources your directors do not recommend dividend for the yearended 31st March 2016.

5. FUTURE PROSPECTS

The company is undertaking a capital expansion project at its existing plant inTarapur. The necessary statutory consents have been received and construction hascommenced. The plant is expected to be operational by first quarter of 2017-18. The totalproject expenditure is to the tune of Rs. 25 crores.

With the additional capacity coming on stream the company is confident of growing athigher than industry growth rate. The demand for the products manufactured by the companycontinues to be strong and will help fuel growth.

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 Investor Education and Protection Fund interms of Section 205C of the Companies Act 1956.

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 POLICY OF THECOMPANY

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 SOCIALRESPONSIBILITY 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 some amount towards CSR activities details provided inattached Annexure 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 Listing Regulations. There are no materially significant related partytransactions made by the Company with Promoters Directors or Key Managerial Personneletc. which may have potential conflict with the interest of the Company at large or whichwarrants the approval of the shareholders. Accordingly transactions are being reported inForm AOC-2 i.e Annexure C in terms of Section 134 of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014. Also the details of the transactions with Related Partyare provided in the Company's financial statements in accordance with the AccountingStandards.

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 but secretarial Audit Report contain one qualification of appointment of CompanySecretary however the Company is in process of finding a suitable candidate for the post.Report of the secretarial auditor is given as an annexure which forms part of this 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 8th May 2015 5th August2015 30th October 2015 and 9th February 2016.

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 accounting standardshave been followed and there has been no material departure.

* That the selected accounting policies were applied consistently and the directorsmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2016 and that of the profitof 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 the company andthat such internal financial controls are adequate and were operating effectively. -

* The directors have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

19. DEPOSITS

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 Compliance Officer at the registered office and thesame will be furnished on request.

The Nomination and Remuneration Committee of the Company has affirmed at its meetingheld on February 9 2016 that the remuneration is as per the remuneration policy of theCompany. The policy is available on the company's website: www.nglfinechem.com

21. DIRECTORS

During the year there has been no change in the composition of Board of Directors ofthe Company.

Mr. Rajesh Lawande is liable to retire by rotation in this Annual General Meeting andbeing eligible he has offered himself for reappointment. Your Directors recommend theirappointment.

Mr. Rahul Nachane (holding DIN 00223346) is proposed to be re-appointed as ManagingDirector of the Company for the term of three (3) years with effect from June 1 2017 inthe insuing AGM.

22. ATTRIBUTES QUALIFICATIONS & INDEPENDENCE OF DIRECTORS THEIR APPOINTMENT ANDREMUNERATION

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 DIRECTORS

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 .

25. RATING

The company has been rated by Crisil Ltd for SME and bank rating. The SME rating hasbeen awarded "SME 2" indicating ‘High' level of credit worthiness adjudgedin relation to other SMEs. The long term rating is Crisil BBB-/Positive (reaffirmed) andshort term rating is Crisil A3 (reaffirmed). The company has also been rated by ICRA Ltdfor bank borrowing and has been awarded BBB/Stable.

26. STATUTORY AUDITORS

M/s Bharat Gandhi & Co. Chartered Accountants Mumbai bearing ICAI FirmRegistration No as 101214W were appointed as Statutory Auditors at their Annual GeneralMeeting held on 12th September 2014 for the period of three (3) years. i.e till theAnnual General Meeting to be held in year 2017 subject to ratification at each AnnualGeneral Meeting. The Company has received letter from them to the effect that theirappointment if made would be within the prescribed limits under Section 141(3)(g) of theCompanies Act 2013 and that they are not disqualified from appointment.

The resolution for ratification of his appointment is put forward for your approval inthe ensuing Annual General Meeting.

27. INTERNAL AUDITORS

The company has appointed M/s R Devarajan & Co Chartered Accountants Mumbai(ICAI firm registration number 102415W) as internal auditors of the company for financialyear 2016-17.

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 2015-16 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. Their reportis appended to this report as Annexure 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 2016-17.

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 THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

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 COURTSOR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'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

During the year in accordance with the Companies Act 2013 the Board re-constitutedsome of its Committees and also formed a Risk Management Committee on voluntary basis.There are currently five Committees of the Board as follows:

* Audit Committee

* 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. REGISTERED OFFICE OF THE COMPANY

The company has shifted its registered office to Mumbai by passing special resolutionin the AGM held on 11.09.2015 Registered office is shifted to 301 E Square Subhash RoadVile Parle (East) Mumbai-400057.

40. 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.

41. POLICIES

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

42. AWARDS AND ACCOLADES

Your company was listed by Forbes Asia as "Asia's 200 Best Under Billion" inJune 2015.

43. ENHANCING SHAREHOLDER VALUE

Your company firmly believes that its success the marketplace and a good reputation areamong the primary determinants of value to the shareholder. The organizational vision isfounded on the principles of good governance and delivering leading-edge products backedwith dependable after sales services. Following the vision Your Company is committed tocreating and maximizing Long-term value for shareholders.

44. 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.

45. ACKNOWLEDGEMENTS

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 sd/-

Milind Shinde

Chairman

Mumbai August 4 2016.

ANNEXURE A TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31st MARCH 2016.

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.The company invests continually in API process development and upgradation. This enablesus to launch new products and refine the processes of existing products. At our R & Dcenter in Mumbai scientists are engaged in research projects in chemistry recoverysystems and process improvements aimed at cost improvements and new product development.This also enables us to support our customers in their pharmaceutical research anddevelopment activities.

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)

2015-16 2014-15
Capital - 12.67
Revenue 85.32 87.49
Total 85.32 100.16
As percentage of turnover 0.89% 1.13%

B. TECHNOLOGY ABSORPTION:

1. Research & Development

I Efforts made towards technology absorption;

The company has not acquired any technology during the year.

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. 6957.85 lakhs
Total Foreign Exchange Used Rs. 1129.50 lakhs