To the Members
Your Directors have pleasure in presenting Annual Report of the Company together withthe Audited Accounts for the year ended on 31st March 2017.
Salient financial results during the year under review as compared to the previous yearare mentioned below:-
| || ||(Rs./ Crores) |
| ||2016-17 ||2015-16 |
|Sales (Gross) & Other Income ||509.81 ||588.91 |
|Profit before Interest & Depreciation ||70.53 ||61.25 |
|Finance Cost ||5.48 ||6.31 |
|Depreciation ||6.86 ||7.43 |
|Profit before Taxes ||58.19 ||47.51 |
|Tax Expenses for the year :- || || |
|- Current Tax ||19.76 ||0.61 |
|- Deferred Tax (Assets)/Liability ||(1.02) ||13.90 |
|Less : Exceptional Items ||5.41 ||3.07 |
|Profit after Taxes ||34.04 ||29.93 |
The Board of Directors decided to plough back the earnings to strengthen the financialsof the Company hence do not recommend dividend for the year.
RESULTS OF OPERATIONS AND STATE OF COMPANY'S AFFAIRS
The Company has recorded production of 38918 MT and Sale of 37515 MT during the yearunder review as against 41616 MT and Sale of 41616 MT respectively during the previousyear. The EBIDTA increased to Rs. 70.53 Crore from Rs. 61.25 Crore and Net Profitincreased to Rs.34.04 from Rs.29.93 Crore in the previous year. Barring unforeseencircumstances it is expected that during current financial year company should continue todo well.
The Company's exports continue to grow at a healthy pace. For the year exports were ofRs.156.87 Crore (14187 MT) as compared to Rs.143.06 Crore (12769 MT) in the correspondingperiod of last year.
INTEGRATED CPP FILM PROJECT
The installation of Machinery is completed trial run has begun. Barring unforeseencircumstances it is expected that commercial production shall start in the Month ofJuly-August 2017.
As reported last year consequent to payment of debt restructured under CDR the Companyexited from CDR. However recompense amount shall be paid on approval from respectivebanks and CDR EG/Core group which is yet awaited.
Based on discussions with Lead Bank the Company provided Rs.848.86 Lakh towardsrecompense amount.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
a) Industry Structure and Development The Demand of Acrylic Fibre during theyear remained subdued consequently company's production fallen to 38918 MT from 41616 MTand sales were down to 37515 MT from 41616 MT.
b) Opportunities and Threat Principal raw material i.e. A C N is a by-product of crudeoil. During the year under review prices of crude remained volatile so the A C N priceswhile it is now stabilizing in the band of 50 USD per barrel as such it is expected thatA C N prices would also move in a narrow band. Since it is being imported the fluctuationin foreign exchange i.e. USD vs. INR has a bearing on the margin of the Company.
c) Segment-wise / Product-wise performance The Company has only one segment i.e.Acrylic Fibre.
d) Risk and Concern Since Company is dependent upon imported raw materials as suchsudden movement in USD and volatility in crude oil affects the margin. To de-risk thecompany is increasing thrust on exports; during the year Company's exports were about 38%of sales.
As per terms and conditions of appointment Shri Vineet Jain retire by rotation in theforthcoming Annual General Meeting and being eligible offers himself for re-appointmentShri Vineet Jain Managing Director and Shri Rakesh Mundra Director (Finance) arereappointed w.e.f 01.10.2017 and 14.02.2017 respectively. Their appointment needs to beconfirmed at the forthcoming Annual General Meeting.
Company has received resignation letter dated 30.03.2017 from Shri Ram Singh SeniorManager (Finance) nominee director of PICUP due to his retirement from PICUP. Boardplaced on record its appreciation for the valuable services rendered by him.
All independent Directors have declared that they meet the criteria of independence aslaid down under Section 149 (6) of the Companies Act 2013 and Regulation 40 of the SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 of the ListingAgreement with Stock Exchange.
Shri D.K. Kapila Shri S.C. Malik Shri S. Sathyamoorthy and Smt. Soma GargIndependent directors of the Company have submitted their disclosures to the Board thatthey fulfill all requirements as stipulated in Section 149(6) of the Companies Act 2013and read with the relevant rules.
KEY MANAGERIAL PERSONNEL
As required under Section 203 of the Companies Act 2013 the Company has noted thatShri Vineet Jain Managing Director and Shri Rakesh Mundra Director (Finance) &Company Secretary are the Key Managerial Personnel of the Company.
NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration.
The Nomination and Remuneration Policy is stated in the Corporate Governance Report.
EVALUATION OF BOARD PERFORMANCE
The Board carried out an annual evaluation of its own performance of each Board Memberindividually as well as the working of its committees.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(3) (c) of the Companies Act 2013 yourDirectors to the best of their knowledge and belief and according to the information andexplanations obtained by them hereby confirm:
a) That in the preparation of the annual accounts for the financial year ended 31stMarch 2017; the applicable accounting standards had been followed along with properexplanation relating to material departures;
b) That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year ended 31st March 2017 and of the profits of the company for theyear ended on that date;
c) That the directors had 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;
d) That the directors had prepared the annual accounts on a going concern basis;
e) That the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
f) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The company has complied with the Corporate Governance code as stipulated under thelisting agreement executed with the Stock Exchanges. A separate section on CorporateGovernance along-with a certificate from the auditors of the Company is annexed and formspart of this Report
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
None of the transactions with any of the related parties were in conflict with yourcompany's interest. Attention of members is drawn to the disclosure of transactions withrelated parties set out in Note No.34 of the Financial Statements forming part of thisAnnual Report. All related party transactions are negotiated on arm's length basis.
DISCLOSURE UNDER SEXUAL HARRASSMENT OF WORMEN AT WORK PLACE
The Company has in place requisite Internal Committees as envisaged in the SexualHarassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.
No complaints on issues covered by the above act were received during the year.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed against your Company by theregulators or courts or tribunals during the FY 2016-17 impacting the going concern statusand your Company's operations in future.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your directors have constituted the Corporate Social Responsibility Committee (CSRCommittee).The said Committee has been entrusted with the responsibility of formulatingand recommending to the Board a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company monitoring the implementationof the frame work of the CSR Policy and recommending the amount to be spent on CSRActivities.
During the year your Directors have constituted a Risk Management Committee which hasbeen entrusted with the responsibility to assist the Board to overseeing and approving theCompanies Risk Management framework and all the risks that the company faces such asstrategic financial credit market liquidity security property IT legalregulatory reputational and other risks have been identified and assessed and there is anadequate risk management.
AUDITORS AND AUDITORS REPORT Statutory Auditors
Under Section 139 (2) of Companies Act 2013 and the Rules made thereunder it ismandatory to rotate Statutory Auditors on completion of the maximum term permitted underthe said section. The Audit Committee of the Company has proposed and on 29thMay 2017 the Board of Directors of the Company recommended the appointment of M/s. SureshKumar Mittal & Co. Chartered Accountants (Reg. No. 500063N) as Statutory Auditors ofthe Company. Suresh Kumar Mittal & Co. will hold office for a period of fiveconsecutive years from the conclusion of the 34th Annual General Meeting to beheld on 27th September 2017 till the conclusion of the 39th AnnualGeneral Meeting to be held in the year 2022 subject to the approval of the shareholders ofthe Company. The first year of audit will be of the financial statements for the yearending March 31 2018 which will include the audit of the quarterly financial statementsfor the year.
Pursuant to Section 148 of the Companies Act 2013 Act read with the Companies (CostRecords and Audit) Rules 2014 your Directors on the recommendation of the Auditcommittee appointed M/s. Satnam Sigh Saggu Cost Accountant as Cost Auditors of yourcompany for the Financial Year 2017-18 to carry out the cost audit for the applicablebusiness on a remuneration of Rs.40000/- (Rupees forty thousand only) plus applicabletaxes and reimbursement of out of pocket expenses. A certificate from M/s. Satnam SighSaggu Cost Accountants has been received to the effect that their appointment as CostAuditors of the Company if made would be in accordance with the limits specified underSection 141 of the Act and Rules made thereunder.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyappointed M/s. V.K. Sharma & Co Practicing Company Secretaries to undertakeSecretarial Audit for the financial year 2016-17. The Secretarial Audit Report for theFinancial Year ended 31st March 2017 is annexed herewith to this Report. M/sV.K. Sharma & Co. Practicing Company Secretary also appointed as Secretarial Auditorfor the Financial Year 2017-18.
Pursuant to provisions of Section 138 of the Companies Act 2013 M/s. Jinender Jain& Company Internal Auditors have conducted internal audit of the functions andactivities of the Company and maintained Internal Control Systems of the Company duringFinancial Year 2016-17.
DISCLOSURES: Audit Committee
Company has an Audit Committee of the Board of Directors in place. The terms ofreference of the Audit Committee are in line with Section 177of the Companies Act 2013read with Companies (Meetings of Board and its Powers) Rules 2014 and SEBI (ListingObligation and Disclosure Requirements) Regulations 2015 Detailed informationpertaining to Audit Committee has been provided in the Corporate Governance Report whichforms part of this Annual Report. All recommendations made by the Audit Committee wereaccepted by the Board.
The Company has established a Vigil Mechanism policy in accordance with the provisionsof the Companies Act 2013 read with Rules there under and the Listing Agreement with thestock exchanges to deal with the instances of fraud and mismanagement. The details of thevigil mechanism are posted on the website of the Company.
Meetings of the Board
During the year four meetings of the Board of Directors were held. The maximum intervalbetween any two Board Meeting did not exceed 120 (One hundred twenty) days.
Particulars of Loans Investments Guarantees
Particulars of Loans given Investments made Guarantees given and Securities providedalong with the purpose for which the Loan or guarantee or security is proposed to beutilized by the Company is provided in financial statement.
Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo.
Particulars relating to Conservation of Energy Technology Absorption and ForeignExchange earnings and outgo as required to be disclosed under the Act are annexed heretoand form part of this Report.
Extract of Annual Return
A separate report on the details of the Extract of Annual Return in form MGT-9 isannexed herewith which form part of the Director's Report.
Particulars of Employees and related disclosures.
Provisions of Section 197 (12) of the Act read with Rules 5 (2) and 5 (3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are notattracted as none of the employees drawing excess remuneration of the limits set out inthe said Rules.
Your Company is an ISO 9001:2000 accredited by Bureau of Indian Standard Rooid VoorAccreditatie and Netherland. This certification indicates our commitments in meetingglobal quality and standards.
The company does not accept fixed deposits.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Management of the Company has been focused on building a process drivenorganization with sound checks and controls. The adequacy of the checks and balances iscontinuously evaluated through self audits well defined MIS and internal audits. Thebusiness process and operational SOPs are updated on regular basis to incorporate theinternal learnings and best practices of other organisations. Senior management remainsactively engaged in reviewing and strengthening Internal Control Systems. The internalAudit observations are carefully studied and implementation of the remedial actioncontinuously monitored. Both the observations of internal audit and remedial action planare presented and discussed in detail in the Audit Committee of the Board of Directors.
Internal Financial Control:
The Company has in place robust internal financial controls with reference to financialstatements. During the year such controls were tested and no reportable material weaknessin the design or operations were observed.
Your Directors wish to place on record their deep appreciation of the continued supportand co-operation received from Financial Institutions Banks and Shareholders the Stateand Central Government.
Your Directors also wish to place on record their appreciation of the devoted servicesof the Company's employees who have diligently contributed to the Company's progress.
| || ||for and on behalf of the Board |
| ||Rakesh Mundra ||Vineet Jain |
| ||Director (Finance) & Company Secretary ||Managing Director |
|Place : New Delhi || || |
|Dated : 29th May 2017 || || |