REPORT OF THE BOARD OF DIRECTORS
TO THE SHAREHOLDERS FOR THE YEAR ENDED MARCH 31 2017.
Your Directors are pleased to present the 31st Annual Report and the AuditedStatement of Accounts for the financial year ended March 31 2017.
The financial performance of the Company for the financial year ended March 31 2017 issummarised below:-
| || ||(Rs in Lacs) |
| ||2016-2017 ||2015-2016 |
|Gross Turnover and Other Income ||210686 ||200055 |
|Net Turnover and Other Income ||196866 ||186705 |
|Profit before Depreciation and Tax ||21773 ||20772 |
|Less: Depreciation on Fixed Assets ||4882 ||5306 |
|Profit before Tax ||16892 ||15466 |
|Less: Provision for Taxes ||5046 ||4988 |
|Profit after Tax ||11845 ||10478 |
|Amount Available for Appropriations ||36340 ||30636 |
|Less: Appropriations: || || |
|i) Interim Dividend ||597 ||1045 |
|ii) Proposed Final Dividend* ||- ||0 |
|iii) Tax on Interim Dividend ||50 ||96 |
|iv) Transfer to General Reserves ||5000 ||5000 |
|Leaving a Balance to be carried forward ||30693 ||24495 |
|Earnings Per Share (' ||79.38 ||70.22 |
|Cash Earnings Per Share (' ||112.09 ||105 |
|Book Value per Share ( ' ||467.17 ||392 |
*The proposed final dividend amounting to Rs 1 045 lacs for financial year 2016-17 asrecommended by the Board of Directors if approved by the shareholders shall be accountedfor during the current financial year in accordance to the Indian Accounting Standards.
Figures for FY 2015-16 have been restated as per Ind AS and therefore may not becomparable with financials for FY 2015-16 approved by the Directors and disclosed in thefinancial statement of previous year.
YEAR IN RETROSPECT
During the financial year 2016-2017 your Company achieved a gross turnover of Rs210686 lacs which is up by 5% from Rs 200055 lacs of the previous financial year.EBIDTA achieved by the Company was Rs 22932 lacs as against Rs 22585 lacs of theprevious year. The profit before tax recorded by the Company stood at Rs 1 6892 lacsvis-a-vis Rs 1 5466 for previous financial year. Consequently the earnings per share wentup from Rs 70 to Rs 79. The plastic business has achieved a volume growth of 8% and valuegrowth of 6%.
'@home' - the Company's retail business of lifestyle furniture furnishing andaccessories recorded a turnover of Rs 23294 lacs for the current financial year asagainst Rs 23576 lacs of the previous year. The said de-growth was due to trimming ofloss making stores. The Company's said business has achieved EBIDTA of Rs 1 008 lacs asagainst Rs 7 lacs of the previous year. The said improvement is majorly on account ofclosure of loss making stores rationalisation of expenses and cost reduction initiativestaken by the Company. The profit before tax of the said business stood at Rs 319 lacsvis-a-vis loss of Rs 1 205 lacs of the previous year. The Company's 18 @home stores havemarked its presence in 13 cities across India.
Your Directors proposes to carry a sum of Rs 5000 lacs to the General Reserve Accountout of the profits available.
The Board of Directors of the Company had approved the Dividend Distribution Policy onNovember 5 2016 in line with the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The said policy can be viewed on the Company's website at the followingweblink: http://www.nilkamal.com/Images/fckUploadedfiles/ file/investor/DividendDistribution Policy.pdf.
During the year under review your Company had declared interim dividend of Rs 7.00 perequity share (40%) on November 5 2016. Further in line with the aforesaid DividendDistribution Policy adopted by the Company your Directors also recommend a final dividendof Rs 7.00 per equity share (70%) which is subject to consideration and approval of theShareholders at the ensuing Annual General Meeting of the Company.
The total outflow on account of the interim dividend and the proposed final dividend(including distribution tax surcharge and education cess) shall amount to Rs 1 812 lacsfor the financial year 2016-2017.
AWARDS AND RECOGNITIONS
The Company's Puducherry unit has been awarded the "Energy Efficient Plant"from The Confederation of Indian Industry (CII) during the 17th National Awardfor Excellence in Energy Management 2016. The said award is in recognition of the energyefficient practices adopted by the Company. Also all the units of the Company have beenre-certified for ISO 50001 EnMS certification from TUV-SUD Germany.
Further continuing the Company's record of adopting the right practices for optimisingthe use of resources and energy conservation this year too your Company has bagged theFirst prize at the National Energy Conservation Award for Plastics Sector 2016 fromBEE-Government of India for its Sinnar unit. This is the third consecutive year where thesaid award has been conferred to the Company.
The Company has also received the "BIFMA Compliance Certification" and TheGreenguard certificate of compliance from the UK Certification and Inspection Limited forits Home Office Educational and Modular Furniture and Mattress range of products. Thesecertifications are an assurance of meeting the standards of sustainability by the Companyduring its manufacturing process.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of the provisions of Section 135 of the Companies Act 2013 read with the CSRRules the Board of Directors of your Company has adopted a CSR Policy and the same isavailable on its website and can be accessed athttp://www.nilkamal.com/Images/fckUploadedfiles/file/CSR%20POLICY.pdf.
Further in accordance with the Company's CSR Policy the Board of Directors of yourCompany has contributed '183.87 lacs towards Corporate Social Responsibility activities.The Company has expended the said amount towards CSR activities in terms of Schedule VIIof the Companies Act 2013 inter-alia with the chief aim of providing educationhealthcare facilities and maintaining environmental sustainability.
One of the project undertaken by the Company towards its CSR activity namely theJalyukt Shivar Abhiyaan at Koregaon village at Satara - a Government initiative forConstruction of cement earthen stop dams etc. to make Maharashtra a drought free state by2019 had secured a place in the top nine in the 'Satyamev Jayate Water Cup Competition'.
The Annual Report on CSR activities is annexed herewith as Annexure 'A'.
Further during the year under review the Company has incorporated a Company underSection 8 of the Companies Act 2013 namely 'Nilkamal Foundation' on August 3 2016.Accordingly your Company has in addition to making direct expenditure towards CSRactivities also contributed to Nilkamal Foundation for carrying out the said activities.
MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3)(l) of the Companies Act 2013 no material changes andcommitments which could affect the Company's financial position have occurred between theend of the financial year of the Company and date of this report.
BUSINESS RESPONSIBILITY REPORT
As required pursuant to the Regulation 34 of the Listing Regulations your Company hasprepared a Business Responsibility Report (BRR) for the financial year 2016-17. Howeveras a green initiative the said report is hosted on the Company's website which can beaccessed at http://www.nilkamal.com/menudetails/investors- zone/corporate-governance/358.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT
A separate section on corporate governance practices followed by the Company togetherwith a certificate from the auditors confirming its compliance forms a part of thisAnnual Report as per SEBI Regulations. Further as per Regulation 34 read with Schedule Vof the Listing Regulations a Management Discussion and Analysis report is annexed to thisreport.
SUBSIDIARIES AND JOINT VENTURES
During the year under review Nilkamal Foundation - a Company incorporated underSection 8 of the Companies Act 2013 for carrying out the CSR activities of the Company -had become subsidiary of the Company with effect from August 3 2016.
Apart from the above your Company has two other direct subsidiaries: Nilkamal EswaranPlastics Private Limited at Sri Lanka and Nilkamal Crates and Bins - FZE at UAE and onestep-down subsidiary: Nilkamal Eswaran
Marketing Private Limited at Sri Lanka; and two Joint Venture Companies: Nilkamal BitoStorage Systems Private Limited which is the Indo-German Joint Venture and CambroNilkamal Private Limited which is the Indo-US Joint Venture. There has been no materialchange in the nature of business of the said companies. All the said companies have shownsatisfactory performance during the financial year 2016-17.
In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financial statement of the subsidiaries are set out in the prescribed form AOC-1which forms part of the Annual Report.
In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company www.nilkamal.com.Further as per fourth proviso of the said section audited annual accounts of each of thesubsidiary companies have also been placed on the website of the Company www.nilkamal.com . PARTICULARS OF LOANS GUARANTEES ORINVESTMENTS
Your Company has not given any Loans or Guarantees covered under the provisions ofSection 186 of the Companies Act 2013.
Further during the year under review the Company has made investment in (i) 31562equity shares of Beta Wind Farm Private Limited for the purpose of availing wind energyfrom them for the Company's unit situated at Hosur in the State of Tamilnadu and (ii) 98equity shares of Nilkamal Foundation which is a Section 8 Company incorporated by theCompany for the purpose of undertaking its CSR activities.
NOMINATION AND REMUNERATION POLICY OF THE COMPANY
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy relating to remuneration of the Directors Key Managerial PersonnelSenior Management Personnel and other employees alongwith the criteria for appointmentand removal of the Directors Key Managerial Personnel and Senior Management Personnel ofthe Company. The Nomination and Remuneration Committee is fully empowered to determine/approve and revise subject to necessary approvals the remuneration of managerialpersonnel after taking into account the financial position of the Company trends in theindustry qualifications experience past performance and past remuneration etc. Thedetails of the remuneration policy are available on the website of the Companywww.nilkamal.com. The Non-Executive Directors are paid sitting fees for every meeting ofthe Board and its Committees attended by them.
AUDITORS AND AUDITORS' REPORT
Pursuant to the provisions of Section 139 of the Act read with applicable Rules framedthereunder M/s. Vora and Associates having ICAI Registration No. 111612W one of thepresent Joint Statutory Auditors of the Company completes their term as Auditors and henceretires from the office as such. The Audit Committee and the Board of Directors haveplaced on record their appreciation for the professional services rendered by M/s. Voraand Associates during their long association with the Company as its auditors.
Further pursuant to the provisions of Section 139 of the Companies Act 2013 M/s. B SR & Co. LLP having ICAI Registration No. 101248W/ W-100022 were appointed as theCompany's Joint Statutory Auditors at the 28th Annual General Meeting to holdoffice for a period of four years subject to the ratification by the shareholders atevery subsequent Annual General Meeting. M/s. B S R & Co. LLP shall now continue to bethe sole statutory auditor of the Company.
M/s. B S R & Co. LLP being eligible have expressed their willingness to suchre-appointment as the Statutory Auditors. A certificate from them has been received to theeffect that their appointment as Statutory Auditors if made would be in accordance tothe provisions of Sections 139 and 141 of the Companies Act 2013 and rules framedthereunder.
A resolution seeking ratification of their appointment forms a part of the Noticeconvening the 31st Annual General Meeting and the same is recommended for yourconsideration and approval.
The notes to accounts referred to in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.
In conformity with the provisions of Section 148 of the Companies Act 2013 andCompanies (Cost Records and Audit) Rules 2014 the Company has appointed M/s. B. F. Modiand Associates Cost Accountants as the Cost Auditors to carry out audit of the costrecords of the Company for the financial year 2017-2018.
Mr. B. F. Modi being eligible has expressed his willingness to be reappointed as CostAuditors of the Company for the financial year 2017-2018.
The Cost Audit Report for the financial year ended March 31 2016 was filed in due timewith the Central Government (Ministry of Corporate Affairs).
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board appointedMr. Pratik M. Shah Practicing Company Secretary to undertake the Secretarial Audit forthe financial year 2016-2017. The Report of the Secretarial Auditor is annexed herewith asAnnexure 'B'.
EXTRACT OF ANNUAL RETURN
As required pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 the extract of the AnnualReturn in Form MGT 9 is annexed herewith as Annexure 'C'.
The Board of your Company is duly constituted in accordance with the requirements ofthe Companies Act 2013 read with the Listing Regulations.
The Board of Directors on the recommendation of the Nomination and RemunerationCommittee had appointed Mr. K. Venkataramanan as an Additional Director (Independent) witheffect from November 5 2016 to hold office until the ensuing Annual General Meeting ofthe Company. A resolution seeking his regularisation as an Independent Director of theCompany forms a part of the Notice calling this Annual General Meeting.
Further during the year Mr. D. B. Engineer (Independent Director) ceased to be aDirector of the Company due to his demise on May 30 2016. The Board places on record itssincere appreciation and gratitude to Mr. Dadi B. Engineer for his pioneering effortsduring his association with the Company for more than a decade.
In accordance with the provisions of Companies Act 2013 and the Articles ofAssociation of the Company Mr. Manish V. Parekh (DIN: 00037724) Director of the Companyretires by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-election.
Further all Independent Directors have given declarations that they meet the criteriaof independence as given under Section 149 of the Companies Act 2013 and the relevantprovisions of the Listing Regulations.
The required information of the Directors to be re-appointed/appointed pursuant to theprovisions of the Listing Regulations forms part of the Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors confirm the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
(a) that in the preparation of the annual accounts the applicable accounting standardshave been followed and that no material departures have been made from the same;
(b) that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;
(c) that they have taken proper and sufficient care 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;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that they have laid down Internal Financial Controls to be followed by the Companyand that such Internal Financial Controls are adequate and were operating effectively;
(f) that they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
CHANGE IN ACCOUNTING STANDARDS
Your Company has adopted the Indian Accounting Standards (Ind AS) issued by theMinistry of Corporate Affairs dated February 16 2015 relating to the Companies (IndianAccounting Standard) Rules 2015 with effect from April 1 2016 and have prepared thefinancial statements in accordance with the said Ind AS.
CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required under the Regulation 34 of the Listing Regulations a cash flow statementis part of the Annual Report 2016-17. Further the Consolidated Financial Statements ofthe Company for the financial year 2016-2017 are prepared in compliance with theapplicable provisions of the Act Accounting Standards and as prescribed by ListingRegulations. The said Financial Statements have been prepared on the basis of the auditedfinancial statements of the Company its subsidiaries and joint venture companies asapproved by their respective Board of Directors.
ADEQUACY OF RISK MANAGEMENT SYSTEMS
The Board of Directors have adopted an Enterprise Risk Management Policy framed by theCompany which identifies the risk and lays down the risk minimization procedures. Theseprocedures are periodically reviewed to ensure that executive management controls riskthrough means of a properly defined framework.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Whistle Blower Policy (WBP) to deal withinstance of fraud and mismanagement if any. The details of the WBP is explained in theCorporate Governance Report and also posted on the website of the Company.
REPORTING OF FRAUDS
There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
An Internal Complaints Committee has been constituted by the Company in line with theprovisions of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder to redress complaints received on sexualharassment. During the financial year under review the Company has not received anycomplaints of sexual harassment.
RELATED PARTY TRANSACTIONS
The Board of Directors has adopted a Policy on materiality of and dealing with relatedparty transactions. All contracts or arrangements with related parties entered into ormodified during the financial year were at arm's length basis and in the ordinary courseof the Company's business. All such contracts or arrangements were entered into only withprior approval of the Audit Committee except transactions which qualified under Omnibusapproval as permitted under law. No material contract or arrangements with related partieswere entered into during the year under review.
Your Company's Policy on Related Party Transactions as adopted by your Board can beaccessed on the Company's website athttp://www.nilkamal.com/Images/fckUploadedfiles/file/Related Party TransactionsPolicy.pdf.
The details of the annual evaluation of the performance of the Board its Committeesand individual Directors pursuant to the requirements of the Act and the ListingRegulations are mentioned in the Report on Corporate Governance.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure 'D'.
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 theemployees drawing remuneration in excess of the limits set out in the said Rules areprovided in the Annexure forming part of the Annual Report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annexure formingpart of the Annual Report.
Having regard to the provisions of Section 136(1) read with its relevant provision 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 atthe Registered Office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished without any fee.
Your Company has not accepted Deposits from public falling within the ambit of Section73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014during the year under review.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company's operations in future.
Your Directors wish to place on record their sincere appreciation for the encouragementand co-operation received by the Company from the Bankers State Government AuthoritiesLocal Authorities and its Employees during the year.
| ||For and on behalf of the Board |
| || |
|Place: Mumbai ||Vamanrai V. Parekh |
|Date: May 11 2017 ||Chairman |