Your Directors take pleasure in presenting the 44th Annual Report on thebusiness and operations of your Company together with the Audited Financial Statements forthe year ended 31st March 2019.
1. State of Company's Affairs Financial Results
The financial performance of your Company is as summarized below for the year underreview:
(र in lakhs)
|Particulars || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from Operations ||15628.96 ||23779.03 ||30130.94 ||33422.81 |
|Less: Excise Duty ||- ||561.87 ||- ||675.52 |
|Revenue from Operations (Net of Excise Duty) ||15628.96 ||23217.16 ||30130.94 ||32747.29 |
|Profit for the year ||633.15 ||1359.31 ||1732.22 ||2197.23 |
|Add: Balance as per last year ||20660.20 ||19522.79 ||22464.65 ||20644.31 |
|Add: Effect of previous year transaction ||- ||- ||4.54 ||- |
|Less: Deduction during the year ||- ||- ||106.71 ||108.12 |
|Total ||21293.36 ||20882.10 ||24094.70 ||22733.41 |
|Appropriation || || || || |
|General Reserves ||- ||- ||70.00 ||- |
|Set off of Dividend Tax in respect of dividend from Subsidiary Company ||(49.53) ||(45.17) ||(49.53) ||(45.17) |
|Dividend Paid ||248.79 ||221.90 ||248.79 ||221.90 |
|Tax on Dividend Paid ||51.14 ||45.17 ||100.67 ||92.03 |
|Balance carried to Balance Sheet ||21042.95 ||20660.20 ||23724.77 ||22464.66 |
|Total ||21293.36 ||20882.10 ||24094.70 ||22733.41 |
2. Results of Operations
During the year under review consolidated revenue from operations was र 30130.94Lakhs as compared to र 32747.29 Lakhs in the previous year. On the standalone basisyour Company's revenue from operations was र 15628.96 Lakhs as compared to र23217.16 Lakhs in the previous year.
> Profit Before Tax
Consolidated profit before tax for the year was र 2440.58 Lakhs as against र2790.28 Lakhs in the previous year. On a standalone basis your Company's profit beforetax for the current year was र 706.26 Lakhs as against र 1406.12 Lakhs in theprevious year.
> Profit After Tax
Consolidated profit after tax for the year was र 1983.64 Lakhs as against र2356.77 Lakhs in the previous year. On the standalone basis your Company's profit aftertax for the current year was र 633.15 Lakhs as against र 1359.31 Lakhs in theprevious year.
3. Recent Developments at Micro and Macro Economic Levels
The macro environment remained mixed in 2018. Various Government initiatives includingMake in India Digital India increased spending on infrastructure and increased focus onrural development were expected to support increase in domestic demand but there has beena visible decline in growth in the second half of the year. The decline in trade andmanufacturing activity across automotive and other sectors was actually quite significant.Other factors were increased trade tensions among major economies and tightening of thecredit flow in the system. Prime Minister Narendra Modi has declared that he wants Indiato be a "$5 trillion economy" by 2024 this means that the Indian economy willneed to double in size in the next five years. This is a challenging but achievable goaland achieving such growth targets will require a combination of government policycorporate initiatives industry-academic partnerships prudent investments and greaterinternational access. Indian industry is well positioned to tap future opportunitiesthrough multiple levers such as foreign customers confidence growth in domesticconsumption better pricing and margins thereof increased capacities compliance withenvironmental regulations among others
The Board of Directors has recommended a final dividend of र 2.00/- per share for thefinancial year ended 31st March 2019. The outflow on account of dividendpayment amounts to र 268.97 Lakhs.
5. Share Capital
The movement of Equity Capital is as under:
|Particulars ||No. of Equity Shares |
|Equity Capital as on 1st April 2018 ||13448288 |
|Increase/ Decrease during the year ||Nil |
|Equity Capital as on 31st March 2019 ||13448288 |
Your Company has only one class of Equity Shares and it has neither issued shares withdifferential rights as to dividend voting or otherwise nor issued shares (includingsweat equity shares) to the employees or Directors of the Company under any Scheme. Nodisclosure is required under Section 67(3)(c) of the Companies Act 2013 ("theAct") in respect of voting rights not exercised directly by the employees or KeyManagerial Personnel of the Company as the provisions of the Section are not applicable.
6. Fixed Deposits
The Company has not accepted any deposits within the meaning of Section 73 of the Actand Rules framed thereunder.
7. Transfer to Reserves
Your Company does not propose to transfer any amount from the current year's profits tothe General Reserve. (Previous year Nil).
8. Directors and Key Managerial Personnel
At present your Company has seven Directors consisting of four Independent Directorsincluding a woman Director two Executive Directors and one Non-executive Director.
Dr. Vinod D. Shah the Founder of the Company and a Director since its inceptionpassed away on May 27 2018. The Company owes its existence and dominant position to hisvision and foresight which saw the Company attain market leadership in its businesses.His technical qualifications and experience research oriented bent of mind and passionfor pushing scientific developments resulted in the continuous adoption of newtechnologies and saw the Company enter several new business areas. The fact that yourCompany is widely recognised today as a technology company is almost entirely due to hiswork and guidance. Dr. Shah's business acumen also meant that the Company was always in avery strong financial position. The Board places on record its sincerest gratitude to theFounder and Promoter of your Company and assures the Members that it will strive tocontinue in the pursuit of these lofty principles.
Due to advancing age and personal reasons Mr. Perviz H. Dastur (DIN: 00961016)resigned as a Director of the Company on 11th August 2018. Mr. Dastur joinedyour Company's Board in 1997. As a qualified Chartered Accountant with an MBA (Stanford)and his subsequent experience as CFO of Ingersoll Rand India Mr. Dastur provided deepinsights into the working of professional companies and their financial practices. TheBoard places on record its appreciation for the contributions made by Mr. Perviz Dasturduring his 21 years association with the Company.
In accordance with the provisions of Section 152(6) of the Act Mr. Ashwin R.Nagarwadia (DIN:00466681) Non-executive Director retires by rotation and being eligibleoffers himself for re-appointment. His background is given in the Corporate GovernanceReport which forms a part of this report. Since Mr. Nagarwadia is above seventy-fiveyears in age Your Company has obtained an approval of shareholders on 25thMarch 2019 by way of a special resolution through a Postal Ballot for the continuation ofthe Directorship of Mr. Nagarwadia as a Non-executive Director with effect from 1stApril 2019.
Mr. Mahendra K. Ghelani (DIN: 01108297) and Mr. Sushil U. Lakhani (DIN: 01578957)Independent Directors of the Company were appointed at the 39th Annual GeneralMeeting (AGM) of the Company held on 9th August 2014 for a term of five yearsi.e. from 9th August 2014 upto 8th August 2019. Further Mrs.Saraswati Sankar (DIN: 07133249) and Dr. Prakash D. Trivedi (DIN:00231288) were appointedas Independent Directors for a term of 5 years i.e. from 24th March 2015 upto23rd March 2020 and 21st May 2015 upto 20th May 2020respectively. Being eligible for re-appointment the Board of your Company hasre-appointed them for a second term of five years. The matter is being placed for approvalof Members by way of special resolution at the ensuing AGM.
The Board has also approved the continuation of Directorship of Mr. Ashwin R.Nagarwadia and Mr. Mahendra K. Ghelani beyond the age of seventy-five years which is alsoplaced for approval by Members by way of special resolution at the ensuing AGM.
Mr. Sameer V. Shah (DIN: 00105721) and Mr. Nirmal V. Shah (DIN: 00083853) Chairman andManaging Director and Vice Chairman and Managing Director of the Company respectivelywere appointed for a period of three years commencing from 1st August 2016 to31st July 2019 at the Board meeting held on 28th May 2016 whichwas further approved by Members at the 41st AGM held on 30th July2016. Based on the recommendation of the Nomination and Remuneration Committee the Boardof your Company has re-appointed them for further period of three years w. e. f. 1stAugust 2019 to 31st July 2022 at their meeting held on 18th May2019. The matter is being placed for your approval at the ensuing 44th AGM.
Pursuant to the provisions of Section 203 of the Act Mr. Sameer V. Shah Chairman andManaging Director Mr. Nirmal V. Shah Vice Chairman and Managing Director Mrs. RashmiGavli Chief Financial Officer and Mrs. Suchita Singh Company Secretary are the KeyManagerial Personnel of the Company as on the date of this Report.
9. Inter-se relationship between Directors
Mr. Sameer V. Shah Chairman and Managing Director and Mr. Nirmal V. Shah ViceChairman and Managing Director are relatives (siblings).
10. Declaration by Independent Directors
All the Independent Directors of the Company have furnished a declaration to the effectthat they meet the criteria of independence as provided in Section 149(6) of the Act andSecurities & Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (र the Listing Regulations').
11. Policy on Directors appointment and Remuneration
The Company has put in place an appropriate policy on appointment and remuneration ofDirectors and other matters provided under Section 178(3) of the Act. This policy isuploaded on the Company's website www.chembondindia.com. Salient features of thepolicy on remuneration of Directors have been disclosed in the Corporate Governancesection of this Annual Report.
12. Number of Board Meetings
Five (5) meetings of the Board were held during the year details of which arefurnished in the Corporate Governance Report .
13. Performance Evaluation and its Criteria
The Board of Directors carried out an evaluation of its own performance of the BoardCommittees and of the individual Directors pursuant to the provisions of the Act andCorporate Governance requirements as prescribed by the Listing Regulations.
The performance of the Board and its Committees was evaluated by the Board afterseeking inputs from the Board / Committee Members based on criteria such as composition ofthe Board / Committees and structure effectiveness of the Board / Committee processesproviding of information and functioning etc. The Board and the Nomination andRemuneration Committee reviewed the performance of individual Directors based on criteriasuch as attendance in Board / Committee meetings contribution in the meetings likepreparedness on issues to be discussed etc.
The Independent Directors at its separate meeting held on 15th February2019 reviewed the performance of Non-Independent Directors and performance of the Boardas a whole performance of the Chairman of the Company taking into account the views ofExecutive and Non-executive Directors and assessed the quality quantity and timeliness offlow of information to the Board to perform their duties effectively and reasonably.
14. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Act the Board of Directors to the best of theirknowledge and ability in respect of the year ended 31st March 2019 confirmthat:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;
(b) they selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
(c) they took proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
(d) they prepared the annual accounts on a going concern basis;
(e) they laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and
(f) they devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
15. Audit Committee
The details in respect of composition of the Audit Committee and other information areincluded in the Corporate Governance Report.
16. Auditor's and Auditor's Report Statutory Auditor
M/s. Bathiya & Associates LLP Chartered Accountants (FRN:101046W/W100063) wereappointed as the Statutory Auditor of the Company for a period of 5 consecutive years atthe 43rd AGM held on 11th August 2018 until the conclusion of 48thAGM to be held in the FY 2023 on a remuneration mutually agreed upon by the Board ofDirectors and the Statutory Auditor.
As per the requirement of Central Government and pursuant to Section 148 of the Actread with the Companies (Cost Records and Audit) Rules 2014 as amended from time to timeyour Company has been carrying out audit of cost records every year.
The Board of Directors on the recommendation of Audit Committee has appointed Mr. R.Srinivas Raghavan Practicing Cost Accountant Pune (Firm Regn. No.: 100098) as the CostAuditor to audit the cost records of the Company for FY 2019-20. The Company is seekingthe ratification/approval of the Members for the remuneration to be paid to Mr. R.Srinivas Raghavan Practicing Cost Accountant for the FY ended 31st March2020.
The relevant Cost Audit Report for the FY 2017-18 was filed with Ministry of CorporateAffairs on 20th September 2018 in Form CRA-4.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder theBoard of Directors of the Company has appointed Mr. Virendra G. Bhatt Practicing CompanySecretary (C.P. No.: 124) to undertake the Secretarial Audit of the Company for the yearended 31st March 2019 . The Secretarial Audit Report for the Financial Yearended 31st March 2019 has been annexed as Annexure 1.
There are no Secretarial Audit observations / qualification for the year under review.
17. Subsidiaries and Step-down Subsidiaries
The Company has been carrying on its domestic and international operations through itssubsidiaries and step-down subsidiary as detailed below:
Your Company has nine subsidiaries and one step-down subsidiary namely;
i. Chembond Water Technologies Limited
ii. Chembond Material Technologies Private Limited
iii. Chembond Biosciences Limited
iv. Chembond Clean Water Technologies Limited
v. Chembond Polymers and Materials Limited
vi. Chembond Calvatis Industrial Hygiene Systems Limited
vii. Chembond Distribution Limited
viii. Chembond Chemicals (Malaysia) Sdn. Bhd.
ix. Phiroze Sethna Private Limited and
x. Gramos Chemicals India Private Limited (Step Down Subsidiary).
The details of financial performance of the subsidiaries and step-down subsidiarycompanies are given in AOC-1 (Annexure 2).
18. Remuneration to Directors and Key Managerial Personnel
The information required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedis given in Annexure 3.
19. Particulars of employees
In terms of Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended names and other particulars of the top ten employeesin terms of remuneration drawn and the name of every employee who is in receipt of suchremuneration stipulated in said Rules are required to be set out in a statement to thisreport. None of the employees of the Company are being paid remuneration exceeding theprescribed limit. The particulars of remuneration of top ten employees will be providedupon request.
20. Remuneration to Managing Director from Wholly Owned Subsidiary (WOS)
During the financial year 2018-19 Mr. Nirmal V. Shah Vice Chairman & ManagingDirector received remuneration of र 44.55 Lakhs from Chembond Water TechnologiesLimited WOS Company.
21. Policies and Disclosure Requirements
In terms of provisions of the Act and the Listing Regulations the Company has adoptedall the applicable policies. The policies are available on Company's web link http://www.chembondindia.com/policy.html.
All Directors and Senior Management Personnel have affirmed their adherence to theprovisions of the Code of Conduct during the financial year 2018-19.
The Company's policy on Directors' appointment remuneration and other matters providedin Section 178(3) of the Act forms part of Nomination and Remuneration Policy and has beendisclosed in the Corporate Governance Report.
22. Risk Management
The Company has its Risk Management Plan & Policy in place which is also displayedon the website of the Company. In the opinion of the Board during the financial year2018-19 no elements of risk which may threaten the existence of the Company were noticedby the Board. The Committee monitors the risk management plan and ensures itseffectiveness. The details of Committee are set out in the Corporate Governance Report.
23. Internal Financial Control System
The Board is responsible for establishing and maintaining adequate internal financialcontrol as per Section 134 of the Act. Your Company has in place an adequate system ofinternal controls to ensure compliance with various policies practices and statutes. Ithas procedures covering all financial and operating functions and processes. These havebeen designed to provide a reasonable assurance with regards to maintaining of properaccounting controls for ensuring reliability of financial reporting monitoring ofoperations protecting assets from unauthorized use or losses and compliance withregulations. Key controls have been tested during the year and corrective and preventiveactions are taken for any weakness.
During the year no frauds have been detected or reported to Audit Committee of theCompany.
24. Corporate Governance & Vigil Mechanism
A separate Corporate Governance Report on compliance with Corporate Governancerequirements as required under Regulation 34(3) read with Schedule V to the ListingRegulations forms part of this Annual Report. The same has been reviewed and certified byMr. Virendra G. Bhatt Practising Company Secretary the Secretarial Auditors of theCompany and Compliance Certificate in respect thereof is attached as Annexure 4.
The Company has formulated a Whistle Blower Policy details of which are furnished inthe Corporate Governance Report thereby establishing a vigil mechanism for Directors andpermanent employees for reporting genuine concerns if any.
25. Corporate Social Responsibility (CSR)
The criteria prescribed under Section 135 of the Act with respect to constituting CSRCommittee adopting CSR policy and spending amount on CSR activities in accordance withthe Act is applicable to your Company from FY 2018-19. The Company had however voluntarilyframed CSR Policy and constituted CSR Committee as good corporate governance practice.
The key philosophy of all CSR initiatives of the Company is guided by three corecommitments of Scale Impact and Sustainability. During the year the Company has spentर 9.90 Lakhs on CSR activities. The Company has identified focus areas of engagementwhich have been enumerated in the Annual Report on CSR Activities attached as Annexure 5 .
The Company's CSR Policy is available on the website of the Company at http://www.chembondindia.com/policy.html.
26. Particulars of Related Party Transactions
All transactions entered into with related parties during the financial year were inthe ordinary course of business and on arm's length basis and do not attract theprovisions of Section 188(1) of the Act. Suitable disclosures as required by the IndianAccounting Standards (IndAS-24) have been made in the notes to the Financial Statements.The Board has a policy for related
party transactions which has been uploaded on the Company's website http://www.chembondindia.com/policy.html.Necessary disclosures in Form AOC-2 are attached as Annexure 6.
27. The Conservation of Energy Technology Absorption Foreign Exchange Earnings andOutgo
The particulars relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure 7.
28. Particulars of Loans Guarantees and Investments
Details of Loans Guarantees and Investments have been disclosed in the FinancialStatements.
The Promoter Groups holding in the Company as on 31st March 2019 was 63.91%of the Company's paid-up Equity Capital. The Members may note that the shareholding andother details of Promoters has been provided in Extract of Annual Return as mentioned inpoint no. 30 below.
30. Extract of the Annual Return as on 31st March 2019
The details forming part of the extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Act is annexed as Annexure 8 and is also available on theCompany's website viz. http://www.chembondindia.com/pdf/Audit-Report/Extract%20of%20Annual%20Return MGT9 310319.pdf
31. Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review as stipulatedunder the Listing Regulations is presented in a separate section forming part of thisReport.
32. Prevention Prohibition and Redressal of Sexual Harassment of Women
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary and trainees) are covered under this policy who are also provided training aboutthe Act.
During the year under review one complaint was received which was resolved within thestipulated time period.
33. Material changes and commitment
Except as disclosed elsewhere in the Report there have been no material changes andcommitment affecting the financial position of your Company which have occurred betweenthe end of the financial year of the Company and the date of this Report.
34. Significant and Material Orders
No significant and material order has been passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.
35. Compliance with Secretarial Standards
The Company has complied with the applicable Secretarial Standards.
Your Board wish to place on record their appreciation and acknowledge with gratitudethe support and co-operation extended by the Government authorities Bankers customersvendors employees and members during the year under review and look forward to theircontinued support.
|On behalf of the Board || |
|Sameer V. Shah ||Nirmal V. Shah |
|Chairman and Managing Director ||Vice Chairman and Managing Director |
|Mumbai || |
|18th May 2019 || |