Chembond Chemicals Ltd.
|BSE: 530871||Sector: Industrials|
|NSE: CHEMBOND||ISIN Code: INE995D01025|
|BSE 00:00 | 23 Jun||200.95||
|NSE 00:00 | 23 Jun||200.65||
|Mkt Cap.(Rs cr)||270|
|Mkt Cap.(Rs cr)||270.08|
Chembond Chemicals Ltd. (CHEMBOND) - Director Report
Company director report
Your Directors take pleasure in presenting the 45 Annual Report on the business and operations of your Company together with the audited financial statements for the year ended 31 March 2020.
State of Company's Affairs
The financial performance of your Company is as summarized below for the year under review:
Results of Operations
During the year under review consolidated revenue from operations was Rs 26804.28 lakhs as compared to Rs 30130.94 lakhs in the previous year. On the standalone basis your Company's revenue from operations was Rs 5854.29 lakhs as compared to Rs 15628.96 lakhs in the previous year.
Profit Before Tax
Consolidated profit before tax for the year was Rs 789.21 lakhs as against Rs 2440.58 lakhs in the previous year.
On a standalone basis your Company's profit before tax for the current year was Rs 530.81 lakhs as against Rs 706.26 lakhs in the previous year.
Profit After Tax
Consolidated profit after tax for the year was Rs 308.50 lakhs as against Rs 1983.64 lakhs in the previous year. On the standalone basis your Company's profit after tax for the current year was Rs 554.16 lakhs as against Rs 633.16 lakhs in the previous year.
Recent Developments at Micro and Macro Economic Levels
Financial Year 2019-20 has been a challenging year with weakening macro-economic conditions slowing market growths and the COVID-19 outbreak towards the end of the year. The unprecedented Covid-19 pandemic is a global health crisis and has impacted the global economy. However with the Atmanirbhar Bharat Abhiyaan (self-reliant India) the Government is taking steps towards making India a bigger and more important part of the global economy and has announced reforms to attract foreign investment further improve the ease of doing business and privatise most government owned enterprises.
During the year the Company declared and paid an Interim dividend of Rs 2/- per share. The Board of Directors has not recommended final dividend for the financial year ended 31 March 2020. The out ow on account of Interim dividend payment amounted to Rs 268.97 lakhs.
The movement of Equity Capital is as under:
Your Company has only one class of Equity Shares and it has neither issued shares with differential rights as to dividend voting or otherwise nor issued shares (including sweat equity shares) to the employees or Directors of the Company under any Scheme. No disclosure is required under Section 67(3) (c) of the Companies Act 2013 (the Act) in respect of voting rights not exercised directly by the employees or Key Managerial Personnel of the Company as the provisions of the Section are not applicable.
Listing of shares on National Stock Exchange of India Limited
Your Company came up with Initial Public Offer on BSE Limited (BSE) in the year 1995 and the shares are successfully traded on BSE for the last 24 years. During the year under review the shares of your Company got listed on the National Stock Exchange of India Limited (NSE). The Listing ceremony was held on 20 November 2019. We are amongst the Top 1000 Companies listed on BSE & NSE as per Market Capitalisation.
The Company has not accepted any deposits within the meaning of Section 73 of the Act and Rules framed thereunder.
Transfer to Reserves
Your Company does not propose to transfer any amount from the current year's profits to the General Reserve. (Previous year Nil).
Directors and Key Managerial Personnel
At present your Company has seven Directors consisting of four Independent Directors including a Woman Director two Executive Directors and one Non-executive Director.
In accordance with the provisions of Section 152(6) of the Act Mr. Nirmal V. Shah (DIN:00083853) Vice Chairman and Managing Director retires by rotation and being eligible offers himself for reappointment. His background is given in the Corporate Governance Report which forms a part of this report.
The Board has approved the continuation of Directorship of Dr. Prakash Trivedi (DIN: 00231288) beyond the age of seventy- ve years which is also placed for approval by Members by way of special resolution at the ensuing AGM.
Pursuant to the provisions of Section 203 of the Act Mr. Sameer V. Shah Chairman and Managing Director Mr. Nirmal V. Shah Vice Chairman and Managing Director Mrs. Rashmi Gavli Chief Financial officer and Mrs. Suchita Singh Company Secretary are the Key Managerial Personnel of the Company as on the date of this Report.
Due to the unprecedented Covid-19 pandemic and the subsequent lockdown the Directors of the Company have voluntarily decided to take deduction of 25% in their remuneration and sitting fees till further notice.
Inter-se relationship between Directors
Mr. Sameer V. Shah Chairman and Managing Director and Mr. Nirmal V. Shah Vice Chairman and Managing Director are relatives (siblings). Apart from this none of the Directors of the Company are in any way related to each other.
Declaration by Independent Directors
All the Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1) (b) and Regulation 25 of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (`the Listing Regulations'). In the opinion of the Board all the Independent Directors possess the integrity expertise and experience including the proficiency required to be Independent Directors of the Company ful l the conditions of independence as speci ed in the Act and the Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV of the Act.
As per the noti cation of Ministry of Corporate Affairs the Independent Directors of your Company have registered themselves with Indian Institute of Corporate Affairs (IICA).
Policy on Directors appointment and Remuneration
The Company has put in place an appropriate policy on appointment and remuneration of Directors and other matters provided under Section 178 (3) of the Act. This policy is uploaded on the Company's website http://www.chembondindia.com/policy.html. Salient features of the policy on remuneration of Directors have been disclosed in the Corporate Governance section of this Report.
Number of Board Meetings
Five (5) meetings of the Board were held during the year details of which are furnished in the Corporate Governance Report.
Performance evaluation and its criteria
The Board of Directors carried out an evaluation of its own performance of the Board Committees and of the individual Directors pursuant to the provisions of the Act and Corporate Governance requirements as prescribed by the Listing Regulations.
The performance of the Board and its Committees was evaluated by the Board after seeking inputs from the Board / Committee Members based on criteria such as composition of the Board / Committees and structure effectiveness of the Board / Committee processes providing of information and functioning etc. The Board and the Nomination and Remuneration Committee reviewed the performance of individual Directors based on criteria such as attendance in Board / Committee meetings contribution in the meetings like preparedness on issues to be discussed etc.
The Independent Directors at its separate meeting held on 19 February 2020 reviewed the performance of Non-Independent Directors and performance of the Board as a whole performance of the Chairman of the Company taking into account the views of Executive and Non-executive Directors and assessed the quality quantity and timeliness of flow of information to the Board to perform their duties effectively and reasonably.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Act the Board of Directors to the best of their knowledge and ability in respect of the year ended 31 March 2020 confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards have been followed and there are no material departures;
(b) they selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) they took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) they prepared the annual accounts on a going concern basis;
(f) they devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The details in respect of role/powers/composition of the Audit Committee and other information are included in the Corporate Governance Report.
Auditor's and Auditor's Report
M/s. Bathiya & Associates LLP Chartered Accountants (FRN:101046W/W100063) were appointed as the Statutory Auditor of the Company for a period of 5 consecutive years at the 43 Annual General Meeting (AGM) held on 11 August 2018 until the conclusion of 48 AGM to be held in the FY 2023 on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditor.
As per the requirement officentral Government and pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit) Rules 2014 as amended from time to time your Company has been carrying out audit of cost records every year.
The Board of Directors on the recommendation of Audit Committee as a practice of good governance decided to change the Cost Auditors and have appointed M/s. Jitendrakumar & Associates Cost & Management Accountants Mumbai (FRN. 101561/Membership No. 30106) in place of Mr. R. Srinivasaraghavan Practicing Cost Accountant Pune (FRN. 100098) as the Cost Auditor to audit the cost records of the Company for FY 2020-21. The Company is seeking the rati cation/approval of the Members for the remuneration to be paid to M/s. Jitendrakumar & Associates Cost & Management Accountant for the FY ending 31 March 2021.
The relevant Cost Audit Report for the FY 2018-19 was led with Ministry of Corporate Affairs on 9 September 2019 in Form CRA-4.
Secretarial Auditor & Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder the Board of Directors of the Company has appointed Mr. Virendra G. Bhatt Practicing Company Secretary (C.P. No.: 124) to undertake the Secretarial Audit of the Company for the year ended 31 March 2020. The Secretarial Audit Report in Form MR- 3 for the Financial Year ended 31 March 2020 has been annexed as Annexure 1.
There are no Secretarial Audit quali cation for the year under review.
Subsidiaries and Step-down subsidiaries
The Company has been carrying on its domestic and international operations through its subsidiaries and step-down subsidiaries as detailed below:
Your Company has eight subsidiaries and two step-down subsidiaries namely;
i. Chembond Biosciences Limited
ii. Chembond Calvatis Industrial Hygiene Systems Limited
iii. Chembond Clean Water Technologies Limited
iv. Chembond Distribution Limited
v. Chembond Material Technologies Private Limited
vi. Chembond Polymers and Materials Limited
vii. Chembond Water Technologies Limited
viii. Chembond Water Technologies (Malaysia) Sdn. Bhd. (Step Down Subsidiary)
ix. Gramos Chemicals India Private Limited (Step Down Subsidiary).
x. Phiroze Sethna Private Limited and
The details of financial performance of the subsidiaries and step-down subsidiaries are given in AOC-I as Annexure 2.
Remuneration to Directors and Key Managerial Personnel
The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended is given in Annexure 3.
Particulars of employees
The statement containing particulars of employees as required under Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended will be provided upon request to the Company. None of the employees of the Company are being paid remuneration exceeding the prescribed limit under the said provisions and rules.
Remuneration to Managing Director from wholly owned subsidiary
During the financial year 2019-20 Mr. Sameer V. Shah Chairman and Managing Director received remuneration of Rs 29.03 lakhs from Chembond Biosciences Limited WOS Company and Rs 16.59 lakhs as remuneration from Chembond Material Technologies Private Limited WOS Company and Mr. Nirmal V. Shah Vice - Chairman & Managing Director received remuneration of Rs 44.55 lakhs from Chembond Water Technologies Limited WOS Company.
Policies and Disclosure Requirements
In terms of provisions of the Act and the Listing Regulations the Company has adopted all the applicable policies. The policies are available on the website of the Company at http://www.chembondindia.com/policy.html.
All Directors and Senior Management Personnel have affirmed their adherence to the provisions of the Code of Conduct during the financial year 2019-20.
The Company's policy on Directors' appointment remuneration and other matters provided in Section 178(3) of the Act forms part of Nomination and Remuneration Policy and has been disclosed in the Corporate Governance Report.
The Company has its Risk Management Plan & Policy in place which is also displayed on the website of the Company. In the opinion of the Board during the financial year 2019-20 no elements of risk which may threaten the existence of the Company were noticed by the Board. The Committee monitors the risk management plan and ensures its effectiveness. The details of Committee are set out in the Corporate Governance Report.
Internal Financial Control System
The Board is responsible for establishing and maintaining adequate internal financial control as per Section 134 of the Act.
Your Company has in place an adequate system of internal controls to ensure compliance with various policies practices and statutes. It has procedures covering all financial and operating functions and processes. These have been designed to provide a reasonable assurance with regards to maintaining of proper accounting controls for ensuring reliability of financial reporting monitoring of operations protecting assets from unauthorized use or losses and compliance with regulations. Key controls have been tested during the year and corrective and preventive actions are taken for any weakness. During the year no frauds have been detected or reported to Audit Committee of the Company.
Corporate Governance & Vigil Mechanism
A separate Corporate Governance Report on compliance with Corporate Governance requirements as required under Regulation 34(3) read with Schedule V to the Listing Regulations forms part of this Report. The same has been reviewed and certified by Mr. Virendra G. Bhatt Practising Company Secretary the Secretarial Auditor of the Company and Compliance Certificate in respect thereof is attached as Annexure 4.
The Company has formulated a Whistle Blower Policy details of which are furnished in the Corporate Governance Report thereby establishing a vigil mechanism for Directors and permanent employees for reporting genuine concerns if any. The vigil mechanism / whistle blower policy is available on Company's website http://www.chembondindia.com/policy.html.
Corporate Social Responsibility (CSR)
The criteria prescribed under Section 135 of the Act with respect to constituting CSR Committee adopting CSR policy and spending amount on CSR activities in accordance with the Act is applicable to your Company from FY 2019-20.
The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale Impact and Sustainability.
During the year the Company has spent Rs 13.75 lakhs on CSR activities. The Company has identi ed focus areas of engagement which 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.
Particulars of Related Party Transactions
All transactions entered into with related parties during the financial year were in the ordinary course of business and on arm's length basis and do not attract the provisions of Section 188(1) of the Act. Suitable disclosures as required by the Indian Accounting 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. There were no material Related Party Transactions during the year. Accordingly Form No. AOC-2 prescribed under the provisions of Section 134 (3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules 2014 for disclosure of details of Related Party Transactions which are not not at arm's length basis and also which are material and arm's length basis is not provided as an annexure to this Report as it is not applicable.
The Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption and foreign exchange earnings and outgo as required to be disclosed under the Act are provided in Annexure 6.
Particulars of Loans Guarantees and Investments
Details of Loans Guarantees and Investments have been disclosed in the Financial Statements.
The Promoter Groups holding in the Company as on 31 March 2020 was 64.59 % of the Company's paid-up Equity Capital. The members may note that the shareholding and other details of Promoters has been provided in Extract of Annual Return as mentioned in point no. 31 below.
Extract of the Annual Return as on 31 March 2020
The details forming part of the extract of the Annual Return in Form MGT-9 as required under Section 92 of the Act is annexed as annexure 7 to this report.
Management Discussion and Analysis Report
Management's Discussion and Analysis Report for the year under review as stipulated under the Listing Regulations is presented in a separate section forming part of this Report.
Prevention Prohibition and Redressal of Sexual Harassment of Women
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013. The policy for Prevention of Sexual Harassment at Workplace is available on the website of the company http://www.chembondindia.com/policy.html. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent contractual temporary and trainees) are covered under this policy who are also provided training about the Act.
During the year under review no complaint was received.
Business Responsibility Report
The Business Responsibility Report for the year ended 31 March 2020 as stipulated under Regulation 34 of the Listing Regulations is annexed as Annexure 8.
Material changes and commitment
Except as disclosed elsewhere in the Report there have been no material changes and commitment affecting the financial position of your Company which have occurred between the end of the financial year of the Company and the date of this Report.
Significant and Material Orders
No significant and material order has been passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.
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 gratitude the support and cooperation extended by the Government authorities Bankers customers vendors employees and members during the year under review and look forward to their continued support.