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Sanginita Chemicals Ltd.

BSE: 538408 Sector: Industrials
NSE: SANGINITA ISIN Code: INE753W01010
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Sanginita Chemicals Ltd. (SANGINITA) - Director Report

Company director report

To

The Member

SANGINITA CHEMICALS LIMITED

Your Directors take pleasure in presenting the TWELFTH Annual Report of theCompany together with the Audited Accounts for the financial year ended on 31st March2017.

FINANCIAL SUMMARY/HIGHLIGHTS:

The brief financial results are as under:

(Rs. in lacs)

Particulars 2016-17 2015-16
Gross Revenue from Operation 17164.95 16783.32
Less: Vat (739.13) (731.41)
Excise (1707.47) (1665.59)
Add: Job work 14.81 28.44
Net Revenue from Operations 14733.16 14414.68
Profit/(Loss) before Depreciation and Tax 215.17 211.06
Less: Depreciation (44.64) (49.55)
Profit/(Loss) Before Tax and Extra Ordinary Items 170.53 161.51
Less: Extra Ordinary Items 0 0
Less: Current Tax 59.42 51.86
Deferred Tax (0.65) (0.82)
Profit/(Loss) After Tax 111.76 110.47
Add: previous year Profit/(Loss) 738.11 627.64
Less: Issue of Bonus Shares (423.39) 0
Balance Carried to Balance Sheet 426.48 738.11

The turnover of the Company for the year 2016-17 has increased from Rs.14414.68 Lacs toRs. 14733.16 Lacs. Due to this profit before Depreciation and Tax stands increased to Rs.215.17 Lacs as compared to profit of Rs. 211.06 Lacs in the last year.There was nonegative effect of Demonetization on the administration and business of the Company.

SUBSIDIARY COMPANIES/JOINT VENTURE COMPANY/ASSOCIATE COMPANY:

The Company does not have any Subsidiary Companies or Joint Venture Company orAssociate Company.

MATERIAL CHANGES AND COMMITMENT:

During the year there were no material changes and commitments affecting the financialposition of the Company which have occurred between the end of financial year of theCompany to which the financial statements relate and the date of the report.

REASONS FOR REVISION OF FINANCIAL STATEMENT OR REPORT:

During the year the financial statement or report was not revised. Hence furtherdetails are not applicable.

DIVIDEND:

In order to conserve resources your Directors express their inability to declare anydividend.

TRANSFER TO RESERVE:

Your Directors find it prudent not to transfer any amount to General Reserve.

INCREASE IN AUTHORISED SHARE CAPITAL:

During the year under review the Company has increased authorised share capital fromRs. 100000000 (Rupees Ten Crore only) divided in to 10000000 (One Crore) EquityShares of Rs. 10 each ; to Rs. 180000000 (Rupees Eighteen Crore only) divided in to18000000 (One Crore Eighty Lacs) Equity Shares of Rs. 10 each .

ALLOTMENT OF SHARES UNDER BONUS ISSUE:

The Company has allotted 4233900 equity shares of Rs. 10 each during the year underreview as Bonus share in the ratio of 1 equity shares of Rs. 10 each for every 2 Equityshares of Rs. 10 each held by the existing Shareholders of the Company.

SUCCESSFUL INITIAL PUBLIC OFFERING:

At the beginning of the financial year the Company was an unlisted private Company.With effect from 23rd December 2016 the Company was converted into a Public LimitedCompany. The Company has made an Initial Public Offer of 4566000 Equity Shares of Rs.10/- each for cash at a price of Rs. 22/- per equity share including a share premium ofRs.12/- per equity share vide prospectus dated 23rd February 2017. The Company hassuccessfully completed the Initial Public Offering (IPO) during the year pursuant to theapplicable SEBI Rules and Regulations. The IPO opened on 1st March 2017 and closed on 3rdMarch 2017.

The IPO of the Company received an encouraging response from the investors and thepublic issue was oversubscribed. The Equity Shares of the Company have been listed on SMEPlatform of NSE Limited w.e.f 10th March 2017.

The Equity shares of the Company as listed on SME platform of NSE Limited have aregular and continuous trading.

DIRECTORS & KEY MANAGERIAL PERSONNEL:

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mrs. Hansaben D.Chavada (DIN: 00479509) Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible has offered herself to be reappointed as Director ofthe Company.

The Board recommends the re-appointment of Mrs. Hansaben D Chavada (DIN: 00479509) asDirector of the Company liable to retire by rotation.

During the year under review Mr. Faiyazkhan Y. Pathan (DIN: 07702208) and Mr.Jagdishkumar V. Thakor (DIN: 07702521) were appointed as Independent Directors of theCompany for 5 years w.e.f. 10th January 2017 at the Extra Ordinary General Meeting of theCompany held on 10th January 2017.

Mr. Dineshsinh B. Chavada (DIN:01497977) was appointed as Managing Director and Mr.Vijaysinh D. Chavda (DIN:00479413) for a period of 5 years from 23rd November 2016 at theExtra Ordinary General Meeting of the Company held on 30th November 2016.

Mr. Rajesh G. Lachhwani was appointed as Company Secretary and Ms. Sangitaben D. Chavdawas appointed as CFO of the Company w.e.f. 1st January 2017.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed: 1. that in the preparationof the annual accounts the applicable accounting standards had been followed along withproper explanation relating to material departures; 2. that the Directors had selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit or loss of the Companyfor that period; 3. that the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; 4. that the Directors had prepared the annual accounts on a goingconcern basis; and 5. that the directors had laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively.

6. that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

FORMAL EVALUATION BY BOARD OF ITS OWN PERFORMANCE:

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirement) Regulations 2015 the Board shall carry out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of Audit and Nomination & Remuneration Committees based onthe criteria and framework adopted by the Board.

NUMBER OF MEETINGS OF BOARD:

The Board of Directors duly met 17 (Seventeen) times.

DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received necessary Declaration from each Independent Director/s undersection 149(7) of the Companies Act 2013 that they meets the criteria of Independencelaid down in section 149(6) of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS / SWEAT EQUITY SHARES / EMPLOYEESTOCK OPTION SCHEME:

During the year the Company has not issued any equity shares with differential votingrights or sweat equity shares or shares under employee stock option scheme. Hencedisclosure regarding the same is not given.

AUDITORS:

M/s. B. K. Chavda & Co. Chartered Accountants the existing auditors of theCompany were appointed as auditors of the Company at the 9th AGM for holding the officefrom the conclusion of that 9th AGM till the conclusion of the 13th AGM (Subject toratification by the members at every subsequent Annual General Meetings).

As per Section 139(1) every company shall at the first annual general meeting appointan individual or a firm as an auditor who shall hold office from the conclusion of thatmeeting till the conclusion of its sixth annual general meeting and thereafter till theconclusion of every sixth meeting and the manner and procedure of selection of auditors bythe members of the company at such meeting shall be such as may be prescribed.

It is further provided that the Company shall place the matter relating to suchappointment for ratification by members at every annual general meeting. Hence the membersare requested to consider the matter of ratification of appointment of Auditors made andalso to fix their remuneration.

AUDITORS' REPORT AND NOTES ON ACCOUNTS:

The Board has duly reviewed the Statutory Auditor's Report on the Accounts. Theobservations comments and notes of Auditor are self explanatory and do not call for anyfurther explanation /clarification.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. K. K. Patel & Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as "Annexure-1".

AUDIT COMMITTEE:

As required under the provisions of section 177 of the Companies Act 2013 and Rulesmade there under the Board of Director at its meeting held on 12th January 2017constituted the Audit Committee. The Audit Committee comprises of the following members:

1. Mr. Jagdishkumar Thakor Chairperson 2. Mr. Faiyazkhan Pathan Member

3. Mr. Vijaysinh Chavda Member

NOMINATION & REMUNERATION COMMITTEE:

As required under the provisions of section 178 of the Companies Act 2013 and Rulesmade there under the Board of Director at its meeting held on 12th January 2017constituted the Nomination and Remuneration Committee. The Nomination and RemunerationCommittee consists of the following members:

1. Mr. Faiyazkhan Pathan Chairperson 2. Mr. Jagdishkumar Thakor Member

3. Mrs. Hansaben Chavada Member

STAKEHOLDERS RELATIONSHIP COMMITTEE:

As required under the provisions of section 178 of the Companies Act 2013 and Rulesmade there under the Board of Director at its meeting held on 12th January 2017constituted the Stakeholders Relationship Committee. The Stakeholders RelationshipCommittee consists of the following members:

1. Mr. Faiyazkhan Pathan Chairperson 2. Mr. Jagdishkumar Thakor Member

3. Mr. Vijaysinh Chavda Member

RISK MANAGEMENT POLICY/PLAN:

It may please be noted that as per the applicable requirement of Companies Act 2013 arisk management policy/plan of the Company is developed and implemented for creating andprotecting the Shareholder's value by minimizing threats or losses and to identify andprovide a framework that enables future activities of a Company to take place in aconsistent and controlled manner.

VIGIL MECHANISM:

The Company has a vigil mechanism for its directors and employees to deal withinstance of fraud/ mismanagement if any and to report concerns about unethical behavioractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The details of the policy are posted on the website of the Company.

CODE OF BUSINESS CONDUCT AND ETHICS:

The Company has laid down a Code of Conduct (COC) which is applicable to all the Boardmembers and Senior Management of the Company. The COC is available on the website of theCompany www.sanginitachemicals.co.in. All the members of the Board and Senior Managementhave affirmed compliance with the Code.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment measures in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. During the year there were no complaints received under thesaid act.

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 Company's shareholders may refer the Company's website for the detailed Nomination& Remuneration Policy of the Company on the appointment and remuneration of Directorsincluding criteria for determining qualifications positive attributes independence of aDirector; and other matters provided under sub-section (3) of section 178.

The Company's remuneration policy is directed towards rewarding performance based onreview of achievements periodically. The remuneration policy is in consonance with theexisting industry practice.

ANALYSIS OF REMUNERATION:

The details of remuneration paid to Directors and Key Managerial Personnel is given inextract of Annual Return attached with this report.

Disclosure/details pursuant to provisions of Section 197(12) of the Companies Act 2013read with Companies (appointment and Remuneration of managerial personnel) Rules 2014 aregiven as follows:

Names and Positions [A] Ratio of Directors' Remuneration to the median Remuneration of Employees [B] Percentage (%)increase in Remuneration
Mr. Dineshsinh B. Chavada (Chairperson & Managing Director) 2.56 Nil
Mr. Vijaysinh D. Chavda (Whole Time Director) 3.85 Nil
Mrs. Hansaben D. Chavada (Director) Nil Nil
Mr. Faiyazkhan Y. Pathan (Independent Director) Nil Nil
Mr. Jagdishkumar V. Thakor (Independent Director) Nil Nil

The median remuneration of employees of the Company during the financial year was Rs.93600/- p.a.

[C] Percentage increase in the median Nil
Remuneration of Employees
[D] Number of permanent Employees on the rolls of Company 22 (Twenty Two)
[E] Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof There was no change in the average salaries of employees other than NEDs and KMPs made in the year 2016-17. Similarly there was no change in the Managerial
Remuneration in the year 2016-17 as compared to the year 2015-16. The CFO & CS as Key Managerial Personnel were appointed in the year 2016-17 only.

PARTICULARS OF EMPLOYEES:

The statement showing the names of the top ten employees in terms of remuneration drawnis given as "Annexure – 2."

There are no employees of the Company drawing remuneration requiring disclosure ofinformation under Section 134 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014.

DETAILS OF THE REMUNERATION TO MD/WTD (AS PER CLAUSE-IV OF SECTION-II OF PART-II OFSCHEDULE V):

(i) All elements of the remuneration package such as salary benefits bonuses stockoptions and pension: The details are given in clause- VI (A) of MGT-9 attached to thisreport as Annexure - 3.

(ii) Details of fixed component and performance-linked incentives along with theperformance criteria:

The details are given in clause- VI (A) of MGT-9 attached to this report as Annexure– 3 and performance criteria is linked with net profit of the Company.

(iii) Service contracts notice period and severance fees:

Term valid till 22nd November 2021. Notice period is 6 month on either side or theCompany paying 6 months remuneration in lieu of such notice and no severance fees.

(iv) Stock option details if any and whether these have been issued at a discount aswell as the period over which they accrued and how they are exercisable: The Company hasnot granted any stock option.

REGULATORY ORDERS:

During the year there were no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.

CSR COMMITTEE:

As the requirement of CSR Committee is not applicable to the Company no furtherdetails/disclosure required to be given in this regard.

DETAILS ON CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO:

(A) Conservation of energy
(i) the steps taken or impact on conservation of energy The Company accords high priority to conservation of energy. However there are no specific steps taken in this regard.
(ii) the steps taken by the company for utilizing alternate sources of energy The Company is not utilizing alternate sources of energy.
(iii) the capital investment on energy conservation equipments NIL

 

(B) Technology absorption
(i) the efforts made towards technology absorption NIL
(ii) the benefits derived like product improvement cost reduction product development or import substitution NIL
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) The Company has not imported any technology during the year. Hence there are no details to be furnished under this clause.
(a) the details of technology imported;
(b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and
(iv) the expenditure incurred on Research and There are no expenditure incurred on Research and
Development Development by the Company.
(C) Foreign exchange earnings and Outgo
The Foreign Exchange earned in terms of actual inflows during the year and Nil
The Foreign Exchange outgo during the year in terms of actual outflows Nil

INTERNAL FINANICAL CONTROL:

The Directors has laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and have been operatingeffectively.

DEPOSITS:

During the year under report your Company has not accepted any deposits pursuant toSection 73 of the Companies Act 2013. Hence further details are not given.

Details of money accepted (if any during the year) by the Company from the Directorsand/or the relatives of Directors of the Company are given in the notes to the FinancialStatements and the same are not deposit as per the applicable provisions of Companies Act2013 and rules made thereunder.

CORPORATE GOVERNANCE:

It may please be noted that as our Company is not falling in the applicability criteriaprescribed as mentioned in the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015.

Hence the Report on Corporate Governance is not forming part of the Directors' Report.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT- 9 is annexedherewith as "Annexure -3"

PARTICULARS OF LOANS INVESTMENTS OR GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT2013:

There are no Loans Investments or Guarantees /Security given by the Company during theyear under section 186 of the Companies Act 2013; hence no particulars are required tobe given.

MANAGEMENT DISCUSSION AND ANALYSIS:

Necessary Management Discussion and Analysis Report pursuant to Regulation 34(2)(e) ofThe SEBI (LODR) Regulations 2015 is appended as "Annexure-4" to Director'sReport.

RELATED PARTY TRANSACTION:

There are no particulars of contacts or arrangements with related parties referred toin Section 188(1) of the Companies Act 2013 which are required to be reported in theprescribed form AOC-2. The details of related party transactions as per AS-18 areotherwise reported in the financial statements. The related party transactions areotherwise carried out in the ordinary course of business and on arms length basis and thesame are in the best interest of the Company. The related party transactions are due tobusiness exigencies.

APPRECIATION:

Your Directors wish to place on record their sincere appreciation for significantcontribution made by the employees at all the levels through their dedication hard workand commitment thereby enabling the Company to boost its performance during the yearunder report.

Your Directors also take this opportunity to place on record the valuable co-operationand continuous support extended by its valued business associates Practicing CompanySecretary Auditors Supplier Customers Banks / Financial Institutions Governmentauthorities and the shareholders for their continuously reposed confidence in the Companyand look forward to having the same support in all its future endeavors.

By Order of the Board

Sd/-Dineshsinh B Chavada

(DIN: 01497977) Chairman & Managing Director

Place : Gandhinagar

Date : 20th May 2017