To The Members of Nikhil Adhesives Limited
The Board of Directors are pleased to present the Thirtieth Annual Report together withthe Audited Accounts for the financial year ended 31st March 2016.
Summary of the Financial Results for the year is as under: -
| || ||(Rs. in Lakhs) |
|Particulars ||Financial Year 2015 - 2016 ||Financial Year 2014 - 2015 |
|Gross Profit Before Depreciation and Tax ||336.87 ||235.34 |
|Less :- Depreciation ||155.44 ||181.53 |
|Profit Before Tax ||181.43 ||53.81 |
|Less :- Provision for Taxation || || |
|Current Tax || |
|Deferred Tax ||22.46 ||15.79 |
|Profit After Tax ||158.97 ||38.02 |
|Add :- Balance Brought Forward ||267.75 ||229.73 |
|Profits Available For Distribution ||426.72 ||267.75 |
|Balance Carried Forward to Balance Sheet ||426.72 ||267.75 |
| ||426.72 ||267.75 |
In order to conserve resources your Directors express their inability to declare anydividend.
RESULT OF OPERATIONS
The Financial Year 2015-2016 continued the phase of positive outlook and optimism inthe country due to previous years decisive political mandate which had resulted inan overall improvement in the economic outlook. Even though the global economy remainedlukewarm due to several factors your company has nevertheless improved its profitability.
During the financial year 2015-16 the sales turnover of your company has increasedfrom Rs. 28355 lakhs to Rs. 29519 lakhs registering growth of 4.11%.Other income for theyear is Rs. 2 lakhs as against Rs. 33 lakhs for the previous year. The operating profitbefore depreciation and tax is Rs. 337 lakhs compared to Rs. 235 lakhs in the previousyear registering 43.40 % increase
The net profit after depreciation and tax is improved to ^159 lakhs compared to Rs. 38lakhs for the previous year.Net profit of ^159 lakhs for the current year is afterproviding for deferred tax of ^22 lakhs.
Detailed analysis of the performance of your Company is presented in the ManagementDiscussion and Analysis Report forming part of this Annual Report.
The deposits at the beginning of the financial year were NIL.
During the year your Company accepted deposits amounting to Rs. 165.25 from itsmembers.
As at 31 March 2016 the amount of deposits stood at Rs. 165.25
There has been no default in repayment of deposits or payment of interest during theyear. All the deposits accepted by the Company are in compliance with the requirements ofChapter V of the Companies Act 2013.
The Management Discussion and Analysis Report on Corporate Governance and aCertificate by the Managing Director confirming compliance by all the Board Members andSenior Management Personnel with Companys Code of Conduct Joint Certification bythe Managing Director and CFO to the Board and Auditors Certificate regardingcompliance of conditions of Corporate Governance are made a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board at its meeting held on 12th Feburary 2016 noted that in accordance with theprovisions of Section 135 of the Companies Act 2013 and the Companies (Corporate SocialResponsibility Policy) Rules 2014.The Company is statutorily not required to contributeany amount towards CSR for the financial year 2015-16. Accordingly the company has notundertaken any CSR activities during the year under review.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3) (c) of the Companies Act 2013:
a) That in the preparation of the annual financial statements for the year ended March31 2016 the applicable accounting standards read with requirements set out underSchedule III to the Companies Act 2013 have been followed and there are no materialdepartures from the same;
b) That such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2016 and the profit of the Company for the year ended on thatdate;
c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) That the annual financial statements have been prepared on a going concern basis;
e) That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
f) That the systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Companys system of financial and compliance controls with reference to thefinancial statements and risk management is embedded in the business process by which theCompany pursues its objectives. The company uses foreign exchange forward contracts tohedge its exposure for movements in foreign exchange rate. The use of this foreignexchange forward contract reduces the risk to the company. The company does not use thesefor trading or speculative purpose. Additionally the Audit Committee and the Board ofDirectors provide risk over sight through their review of potential risks which couldnegatively impact the operations the proposed budget and plan the Companysstrategic framework and any risks that may negatively impact it. The management iscommitted to ensure an effective internal control environment commensurate with the sizescale and complexity of the operations which provides assurance on the efficiency of theCompanys operations and safety/security of its assets besides orderly and legitimateconduct of Companys business in the circumstances which may reasonably be foreseen.The Company has defined organization structure authority levels delegated powers internalprocedures rules and guidelines for conducting business transactions.
The Companys system and process relating to internal control and procedures forfinancial reporting have been designed to provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition ofCompanys assets that could have a material effect on the financial statements andfor preventing and detecting fraud and other irregularities or deliberate miss-statements.Management is responsible for establishing and maintaining adequate disclosure controlsand procedures and adequate internal controls over financial reporting with respect tofinancial statements besides its effectiveness in the context of applicable regulations.The Internal Auditor the Audit Committee as well as the Board of Directors conduct fromtime to time an evaluation of the adequacy and effectiveness of the system of internalcontrols for financial reporting with respect to financial statements.
Industrial relations remained cordial throughout the year. Your Directors recognize andappreciate the sincere and hard work loyalty dedicated efforts and contribution of allthe employees in the growth and performance of the Company during the year.
In terms of Section(s) 149 152 and all other applicable provisions of the CompaniesAct 2013 for the purpose of determining the directors liable to retire by rotation theIndependent Directors are not included in the total number of directors of the Company.Accordingly Shri. Tarak J. Sanghavi (DIN: 00519403) Director shall retire by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forre-appointment as a Director of the Company.
The details of Directors seeking appointment/re-appointment as required underRegulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 are given in the Notice of the ensuing Annual General Meeting which is being sent tothe shareholders along with Annual Report.
DECLARATION BY INDEPENDENT DIRECTORS
The Independent Directors of your company have furnished the declaration that they meetthe criteria of Independence as provided in Section 149 (6) of the Companies Act 2013.
MEETINGS OF BOARD AND COMMITTEES
During the year under review six Board Meetings were convened and held. The details ofwhich are given in the Report on Corporate Governance.
PERFORMANCE EVALUATION OF BOARD COMMITTEES & DIRECTORS
The Listing Agreement the Board of Directors of the Company carried out the formalannual performance evaluation of all the Directors and also its self-evaluation processinteralia to assess the skills set and contribution that are desired recognizing thatcompetencies and experiences evolves over time. The process was conducted by allowing theBoard to engage in candid discussions with each Director with the underlying objective oftaking best possible decisions in the interest of the Company and its stakeholders. TheDirectors were individually evaluated based on structured self- assessment and personalinteraction to ascertain feedback on well defined parameters which interalia comprisedof level of engagement and their contribution to strategic planning and other criteriabased on performance and personal attributes of the Directors. During the process ofevaluation the Board of Directors also reviewed and discussed the annual performanceevaluation of Directors carried out by the Nomination and Remuneration Committee. Astatement in detail indicating the manner in which formal annual evaluation has been madeby the Board of Directors is given in the Report on Corporate Governance which forms apart of the Annual Report.
SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee (NRC) has adopted a terms of reference which interalia deals withthe manner of selection of Directors and the Key Managerial Personnel of the Company. TheNRC recommends appointment of Director/appointment or re- appointment of Managing Directorbased on their qualifications expertise positive attributes and independence inaccordance with prescribed provisions of the Companies Act 2013 and rules framed thereunder. The NRC in addition to ensuring diversity of race and gender also considers theimpact the appointee would have on Boards balance of professional experiencebackground view points skills and areas of expertise.
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee has also adopted the Remuneration Policy for the members of theBoard and Executive Management. The said policy earmarks the principles of remunerationand ensures a well balanced and performance related compensation package taking intoaccount shareholders interest industry practices and relevant corporate regulationsin India.
VIGIL MECHANISM /WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism and Whistle-Blower Policy to deal with instances offraud and mismanagement if any and conducting business with integrity including inaccordance with all applicable laws and regulations. The details of the Vigil Mechanismand Whistle-Blower Policy are explained in the Report on Corporate Governance and alsoposted on the website of the Company.
M/s. PHD & Associates Chartered Accountants (Firm Registration No.111236W) wereappointed as Statutory Auditors to hold office until the conclusion of the ensuing AnnualGeneral Meeting of the Company. Since Messrs PHD & Associates have been functioning asAuditors of the Company since last five consecutive years the Board of Directorsunanimously agreeing to the recommendation of the Audit Committee further recommendsre-appointment of Messrs PHD & Associates as Statutory Auditors of the Company foranother term of 5 (five) years from the conclusion of the ensuing Annual General Meeting(30th AGM) till the conclusion of fifth consecutive Annual General Meeting (34th AGM)hereafter subject to ratification by shareholders in every Annual General Meeting whichis in accordance with the provisions of Section 139 read together with other provisions ofChapter X of the Companies Act 2013 and the Rules made there under. A certificate hasbeen received from them to the effect that their appointment as Auditors if made wouldbe in accordance to the provisions of Section 139 and 141 of the Companies Act 2013 andrules framed there under.
The Board of Directors has appointed Messrs B.F. Modi & Associates CostAccountants as Cost Auditors for conducting audit of the cost accounts maintained by theCompany in respect of the products of the Company covered under The Companies (CostRecords and Audit) Amendment Rules 2014 and fixed their remuneration based on therecommendation of the Audit Committee. The remuneration payable to Cost Auditors issubject to ratification by the shareholders in the ensuing Annual General Meeting of theCompany.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Messrs N.K.Singhai& Associates Company Secretaries were appointed to undertake the Secretarial Audit ofthe Company for the year ended 31 March 2016. There are no adverse remarks orobservations made by Messrs N.K.Singhai & Associates in the Secretarial Audit Reportexcept for:
(i) Non appointment of the Company Secretary by the company required as per theprovisions of Section 203 of the Companies Act 2013 for which the company clarifies thatsubsequent to the closure of the F.Y. 2015-16 the company has appointed Mrs. Rinky Pandeyas the Company Secretary on 30th May 2016.
(ii) Pending MCA formality for the regularization of appointment of Mrs. Ishita Gandhithe Independent Director for which the company clarifies that the same shall be compliedwith soon.
The Report of the Secretarial Auditor is given in Annexure-I which is attached heretoand forms a part of the Directors Report.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statement relate and the date of the report.
During the year under report no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and companysoperations in future.
RELATED PARTY TRANSACTIONS
All related party transactions entered into during the financial year under review bythe Company were on an arms length basis and in the ordinary course of business.There are no material significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large. All related partytransactions are placed before the meeting(s) of Audit Committee for approval. Prioromnibus approval of the Audit Committee is obtained for the financial year for thetransactions which are of a foreseen and repetitive in nature. The statement givingdetails of all related party transactions entered into pursuant to the omnibus approvaltogether with relevant documents/information are placed before the Audit Committee forreview and approval on quarterly basis. The company has developed a Policy on materialityof Related Party Transactions and dealing with Related Party Transactions. The Policy onmateriality of Related Party Transactions and dealing with Related Party Transactions asapproved by the Board is uploaded on the companys website and the same is availableat the web link http://www.nikhiadhesives.com
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013
The particulars of Loans Guarantees and Investment in pursuance to Section 186 of theCompanies Act2013 are given in the Notes to the Financial Statements.
DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.
As required under Section 197(12) read with Rule 5 of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the details of the ratio of theremuneration of each Director to the median employees remuneration and such otherdetails as prescribed therein are given in Annexure-II which is attached here to andforms a part of the Directors Report.
EXTRACT OF ANNUAL RETURN
An Extract of Annual Return as per Section 92(3) of the Companies Act 2013 is given inAnnexure- III which is attached here to and forms a part of the Directors Report.
PARTICULARS OF EMPLOYEES
The particulars required pursuant to Section 197 of the Companies Act 2013 read withRule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel)Rules2014 are not applicable to the company as there was no employee drawing remunerationto the extent mentioned therein.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8 of TheCompanies (Accounts) Rules 2014 the information on Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo are given in Annexure-III which isattached hereto and forms a part of the Directors Report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
a. Issue of equity shares with differential rights as to dividend voting or otherwise.
b. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
c. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.
d. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys operations in future.
e. During the year under review there were no cases filed or reported pursuant to theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013.
The Board desires to place on record its grateful appreciation for the excellentassistance and co-operation received from the Government Authorities and continued supportextended to the Company by the bankers investors suppliers and esteemed customers andother business associates. Your Directors also wish to place on record their deep sense ofappreciation to all the employees of the Company for their unstinted commitment andcontinued contribution in the performance of the Company.
| ||For and On Behalf of the Board of Directors |
|Place: Mumbai ||Rajendra J. Sanghavi |
|Date: 30th May 2016 ||Chairman |