The Directors of the Company condole the sad demise and pay respects to Dr. Vinod D.Shah the Founder and Promoter of Chembond Chemicals Limited. A visionary and self-mademan Dr. Shah was an achiever from the early days of his life. He developed into becominga dynamic technocrat an entrepreneur and a fine human being touching many lives. TheCompany owes its existance to him and the Board Commits itself to building on the valuesinstilled by him.
Your Directors take pleasure in presenting the 43rd Annual Report on the business andoperations of your Company together with the Audited Financial Statements for the yearended 31st March 2018.
1. State of Company's Affairs
The financial performance of your Company is as summarized below for the year underreview:
| || || |
(Rs. In lakhs)
|Particulars ||Standalone ||Consolidated |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Revenue from Operations ||23779.03 ||24367.32 ||33422.81 ||32086.11 |
|Less : Excise Duty ||561.87 ||2507.60 ||675.52 ||3006.93 |
|Revenue from Operations (Net of Excise Duty) ||23217.16 ||21859.72 ||32747.29 ||29079.18 |
|Profit for the year ||1359.31 ||1451.50 ||2197.23 ||1933.01 |
|Add: Balance as per last year ||19522.79 ||18071.29 ||20644.31 ||18548.85 |
|Add: Effect of previous year transaction ||- ||- ||- ||238.20 |
|Less: Deduction during the year ||- ||- ||108.12 ||5.75 |
|Total ||20882.10 ||19522.79 ||22733.41 ||20714.31 |
|Appropriations || || || || |
|General Reserves ||- ||- ||- ||70.00 |
|Set off of Dividend Tax in respect of dividend from ||(45.17) ||- ||(45.17) ||- |
|Subsidiary Company || || || || |
|Dividend Paid ||221.90 ||- ||221.90 ||- |
|Tax on Dividend Paid ||45.17 ||- ||92.03 ||- |
|Balance carried to Balance Sheet ||20660.20 ||19522.79 ||22464.66 ||20644.31 |
|Total ||20882.10 ||19522.79 ||22733.41 ||20714.31 |
2. Results of Operations
During the year under review consolidated revenue from operations was ` 32747.29Lakhs compared to ` 29079.18 Lakhs in previous year. On the standalone basis yourCompany's revenue from Operations was ` 23217.16 Lakhs as compared to ` 21859.72 Lakhsin the previous year.
Profit Before Tax
Consolidated Profit Before Tax for the year was ` 2790.28 Lakhs as against `3021.42 Lakhs in the previous year. On the standalone basis your Company's Profit BeforeTax for the current year was ` 1406.12 Lakhs as against ` 1729.97 Lakhs in the previousyear.
Profit After Tax
Consolidated Profit After Tax for the year was ` 2356.77 Lakhs as against `2285.73 Lakhs in the previous year. On the standalone basis your Company's Profit AfterTax for the current year was ` 1359.31 Lakhs as against ` 1451.50 Lakhs in the previousyear.
3. Recent Developments at Micro and Macro Economic Levels
The Indian economy expanded 7.7 percent year-on-year in the first three months of2018 higher than a downwardly revised 7 percent advance in the previous quarter andbeating market forecasts of a 7.3 percent growth. On the production side manufacturingagriculture and construction were the main contributors to growth. Exports accounted for19.5 percent while imports subtracted 20.9 percent. The Chemical sector in India hasregistered a growth due to structural advantage high domestic consumption diversifiedindustry and promising export potential. The Government policies in recognizing Chemicalindustry as a key growth element of Indian economy and allowing 100% FDI has shownconsiderable positive response. Manufacture of most of chemical products is delicensed.The Indian Chemical Industry comprises both small and large-scale units and presentlythere are about 70000 chemical manufacturing units located in the country and a majorcomponent (in numbers) are covered in the small-scale sector. As per statistics India iscurrently the world's 3rd largest consumer of polymers & 3rd largest producer ofagrochemicals. In terms of value and production volume Indian chemical industry is the3rd largest producer in Asia & 6th by output in the world. Indian specialty chemicalmarket is expected to reach USD70 billion by 2020.
The Board of Directors has recommended final dividend of ` 1.85/- per share for thefinancial year ended 31st March 2018. The outflow on account of dividend payment amountsto ` 248.79 Lakhs.
5. Share Capital
The movement of Equity Capital is as under:
|Particulars ||No. of Equity Shares |
|Equity Capital as on 1st April 2017 ||13448288 |
|Increase/ Decrease during the year ||Nil |
|Equity Capital as on 31st March 2018 ||13448288 |
Your Company has only one class of Equity Share and it has neither issued shares withdifferential rights as to dividend voting or otherwise nor issued shares (including sweatequity 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 theAct and rules framed thereunder.
7. Transfer to Reserves
Your Company does not propose to transfer any amount from the current year'sprofits to the General Reserve. (Previous year Nil ).
8. Directors and Key Managerial Personnel
At present your Company has Eight (8) Directors consisting of Four (4) IndependentDirectors including Woman Director Two (2) are Executive Directors and Two (2)Non-Executive Directors. In accordance with the provisions of Section 152(6) of the ActMr. Nirmal V. Shah (DIN: 00083853) Vice Chairman and Managing Director retires byrotation and being eligible offers himself for re-appointment. His background is given inthe Corporate Governance Report which forms part of this Report. During the period underreview Mr. Jawahar I. Mehta (DIN: 00128995) resigned as a Director (Independent) of theCompany with effect from 14th December 2017 due to personal reasons. The Board places onrecord its appreciation and gratitude for the valuable contribution received by us fromMr. Mehta during his association with the Company. During the year Mr. Jay Mistryresigned as the Company Secretary and Compliance Officer of the Company w.e.f. 2ndJanuary 2018. Mrs. Suchita Singh was appointed as the Company Secretary and ComplianceOfficer of the Company w.e.f. 15th March 2018. Pursuant to the provisions of Section 203of the Act Mr. Sameer V. Shah Chairman and Managing Director Mr. Nirmal V. Shah ViceChairman 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 thedate 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 siblings.
10. Declaration by Independent Directors
All the Independent Directors of the Company have furnished a declaration to theeffect that they meet the criteria of Independence as provided in Section 149(6) of theAct and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (the Listing Regulations').
11. Policy on Directors Appointment and Remuneration
The Company has put in place appropriate policy on Directors' appointment andremuneration and other matters provided in Section 178(3) of the Act which has beenuploaded on the Company's website www.chembondindia.com/policy.html Further salientfeatures of the Company's Policy on Directors' Remuneration have been disclosed in theCorporate Governance Report which forms part of this Report.
12. Number of Board Meetings
Nine (9) meetings of the Board were held during the year details of which arefurnished in the Corporate Governance Report that forms part of this Report.
13. Performance evaluation and its criteria
The Board of Directors carried out an Annual evaluation of its own performanceBoard Committees and Individual Directors pursuant to the provisions of the Act andCorporate Governance requirements as prescribed by the Listing Regulations. Theperformance of the Board and its Committees was evaluated by the Board after seekinginputs from the Board / Committee Members based on criteria such as Composition of theBoard / Committees and structure effectiveness of the Board / Committee processesproviding of information and functioning etc. The Board and Nomination and RemunerationCommittee also reviewed the performance of individual Directors based on criteria such asattendance in Board / Committee meetings contribution in the meetings like preparednesson issues to be discussed etc.
The Independent Directors at its separate meeting held on 28th March 2018 reviewedthe performance of Non-Independent Directors and performance of the Board as a wholeperformance of the Chairman of the Company taking into account the views of Executive andNon-executive Directors and assessed the quality quantity and timeliness of flow ofinformation between the Company Management and the Board and that is necessary for theBoard to effectively and reasonably perform their duties.
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 2018 confirm that: (a) inthe preparation of the annual accounts the applicable accounting standards have beenfollowed and there are no material departures; (b) they had selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit and loss of the Company forthat period; (c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; (d)they had prepared the annual accounts on a going concern basis; (e) they had laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively; and (f) they had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
15. Audit Committee
The details in respect of composition of the Audit Committee are included in theCorporate Governance Report which forms part of this Report.
16. Auditor's and Auditor's Report
In terms of the requirements of Section 139 of the Act read with the Companies(Audit and Auditors) Rules 2014 the Board of Directors of the Company on therecommendation of the Audit Committee appointed M/s. B. D. Jokhakar & Co. CharteredAccountants (FRN. 104345W) as the Statutory Auditors of the Company at its Board Meetingheld on 24th May 2017 for a term of 5 (five) consecutive years commencing from theconclusion of the 42nd Annual General Meeting (AGM) till the conclusion of the 47th AGM tobe held in the year 2022 which was approved by the shareholders' in the 42nd AGM held on24th June 2017. M/s. B. D. Jokhakar & Co. Chartered Accountants vide their letterdated 17th July 2018 resigned as the Statutory Auditor of the Company due topre-occupation with other professional work w.e.f. 17th July 2018. On the recommendationof the Audit Committee the Board of Directors at its meeting held on 17th July 2018appointed M/s. Bathiya & Associates LLP Chartered Accountants (FRN:101046W/W100063)as the Statutory Auditors of the Company from 17th July 2018 till the ensuing AGM to fillin the casual vacancy caused due to the resignation tendered by M/s. B. D. Jokhakar &Co. Chartered Accountants subject to approval by Members at the ensuing AGM.
The appointment of M/s. Bathiya & Associates LLP Chartered Accountants (FRN:101046W/W100063) as the Statutory Auditors for fresh term of 5 years was also recommendedby the Audit Committee and approved by the Board of Directors respectively in theirmeeting held on 17th July 2018 subject to the approval by the Members to hold office fora term of 5 (five) consecutive years until the conclusion of 48th AGM to be held in theF.Y. 2023.
M/s. Bathiya & Associates LLP Chartered Accountants (FRN: 101046W/W100063) haveconfirmed that their appointment if made would be within the limits specified underSection 141(3)(g) of the Act and that they are not disqualified to be appointed asStatutory Auditor in terms of the provisions of Section 139(1) Section 141(2) and Section141(3) and any other applicable provisions if any of the Act and the provisions of theCompanies (Audit and Auditors) Rules 2014. The Audit Report submitted by M/s. B. D.Jokhakar & Associates for F.Y. 2017-18 does not contain any qualification reservationor adverse remark or disclaimer.
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 ofDirectors on the recommendation of Audit Committee has appointed Mr. R. S. RaghavanPracticing Cost Accountant Pune (Firm Regn. No.: 100098) as the Cost Auditor to audit thecost records of the Company for Financial Year 2018-19. The Company is seeking theratification / approval of the Shareholders for the remuneration paid / to be paid to Mr.R. S. Raghavan Practicing Cost Accountant for the F.Y. ended 31st March 2018 and F.Yending 31st March 2019 respectively. The relevant Cost Audit Report for the F.Y. 2016-17was filed with Ministry of Corporate Affairs on 16th September 2017.
Secretarial Auditor & Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Board of Directors of theCompany had appointed M/s. Virendra G. Bhatt Practicing Company Secretary (C.P. No.: 124)to undertake the Secretarial Audit of the Company for the year ended 31st March 2018. TheSecretarial Audit Report for the Financial Year ended 31st March 2018 has been annexed asAnnexure 1 and forms an integral part of this Report. There are no observations / remarksin the Secretarial Audit Report.
17. Subsidiaries Joint Venture and Associate Companies
The Company has been carrying on its domestic and international operations throughits subsidiaries / associates as detailed below : i. Chembond Water TechnologiesLimited (formerly known as Chembond Solenis Water Technologies Limited)* ii. ProtochemIndustries Private Limited iii. Chembond Industrial Coatings Limited iv. ChembondClean Water Technologies Limited v. Chembond Polymers and Materials Limited(formerly known as Chembond Enzyme Company Limited) vi. Chembond CalvatisIndustrial Hygiene Systems Limited vii. Chembond Chemicals (Malaysia) Sdn. Bhd.(formerly known as IChembond Water Sdn. Bhd.) viii. Phiroze Sethna PrivateLimited** ix. Gramos Chemicals India Private Limited (Step Down Subsidiary)** and x.Chembond Distribution Limited (Associate).
* In the month of April 2017 Your Company acquired additional 45% stake from erstwhileJV partner Solenis thus making it your Company's Wholly Owned Subsidiary (WOS). ** In themonth of November 2017 your Company entered into a Share Purchase Agreement to acquire100% stake in Phiroze Sethna Private Limited and its WOS Gramos Chemicals India PrivateLimited thus making it a WOS / step down subsidiary of your Company.
The details of financial performance of the subsidiaries associate and joint ventureCompanies are given in AOC-I (Annexure 2 to this Report).
18. Remuneration to Directors and Key Managerial Personnel
The information required under Section 197(12) of the Act read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended is given in Annexure 3 to this Report.
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.
20. Remuneration to Managing Director from Wholly Owned Subsidiary
During the financial year 2017-18 Mr. Nirmal V. Shah Vice - Chairman &Managing Director received remuneration of ` 44.47 Lakhs from Chembond Water TechnologiesLimited (formerly known as Chembond Solenis Water Technologies Limited) (CWTL) WOS of theCompany. CWTL previously a subsidiary became a WOS of the Company in the month of April2017 pursuant to acquisition of additional 45% shares by your Company.
21. Policies and Disclosure Requirements
In terms of the provisions of the Act and the SEBI Listing Regulations the Companyhas adopted all the applicable policies. The policies are available on the Company'sweblink http://www.chembondindia.com/policy.html All Directors and SeniorManagement Personnel have affirmed their adherence to the provisions of the Code ofConduct during the financial year 2017-18.
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 Board of Directors has formed a Risk Management Committee. The Company has itsRisk Management Plan & Policy in place which is also displayed on the website of theCompany. In the opinion of the Board during the financial year 2017-18 the Board has notnoticed any elements of risk which may threaten the existence of the Company. TheCommittee monitors the risk management plan and ensures its effectiveness. It is importantfor shareowners and investors to be aware of the risks that are inherent in the Company'sbusinesses. The details of Committee are set out in the Corporate Governance Reportforming part of this Report.
23. Internal Financial Control System
The Board is responsible for establishing and maintaining adequate internalfinancial control as per Section 134 of the Act. Your Company has in place an adequatesystem of internal controls to ensure compliance with various policies practices andstatutes in keeping with the organization's pace of growth and increasing complexity ofoperations. It has procedures covering all financial and operating functions andprocesses. These have been designed to provide a reasonable assurance with regards tomaintaining of proper accounting controls for ensuring reliability of financial reportingmonitoring of operations protecting assets from unauthorized use or losses and compliancewith regulations. Key controls have been tested during the year and corrective andpreventive actions are taken for any weakness.
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 Report. The same has been reviewed and certified byVirendra Bhatt Practicing Company Secretary the Secretarial Auditor of the Company andCompliance Certificate in respect thereof is given in Annexure 4 to this Report.
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 constitutingCSR Committee adopting CSR policy and spending amount on CSR activities in accordancewith the Act do not apply to the Company. However the Company has voluntarily framed CSRPolicy and constituted CSR Committee as good corporate governance practice. Thecomposition of the Committee is as follows:
|Mahendra K. Ghelani ||Chairman |
|Sushil U. Lakhani ||Member |
|Sameer V. Shah ||Member |
|Ashwin R. Nagarwadia ||Member |
The Company's CSR Policy is available on the website of the Company athttp://www.chembondindia.com/policy.html
26. Particulars of Related Party Transactions
All transactions entered into with Related Parties during the financial year werein the ordinary course of business and on arm's length basis and do not attract theprovisions of Section 188(1) of the Act. For material transactions with related partiesthe Company has obtained Members' on 24th June 2017 Suitable disclosures as required bythe Indian Accounting Standards (Ind AS-24) have been made in the notes to the FinancialStatements. The Board has a policy for related party transactions which has been uploadedon the Company's website. Necessary disclosures in Form AOC-2 are attached as Annexure 5to this Report.
27. The Conservation of Energy Technology Absorption Foreign Exchange Earnings andOutgo The related information is provided in Annexure 6 which is attached to thisReport.
28. Particulars of Loans Guarantees and Investments
Details of Loans Guarantees and Investments have been disclosed in the FinancialStatements.
29. Promoter Group
The Promoter group holding in the Company as on 31st March 2018 was 64.20% of theCompany's paid-up Equity Capital. The Members may note that the shareholding and otherdetails of Promoter Group has been provided in Annexure 7 to this Report.
30. Extract of the Annual Return as on 31st March 2018
An extract of the annual return in Form MGT-9 is provided in Annexure 7 to thisReport.
31. Management Discussion and Analysis Report
Management's Discussion and Analysis Report for the year under review asstipulated under the Listing Regulations is presented in a separate section forming partof this Report.
32. Credit Rating
The Company's financial discipline and prudence is reflected in the strong creditratings ascribed by rating agencies as given below:
|Total Bank Loan Facilities Rated ||` 19 Crore |
|Long- Term Rating ||CRISIL A- /Stable (Reaffirmed) |
|Short- Term Rating ||CRISIL A1 (Reaffirmed) |
33. Prevention Prohibition and Redressal of Sexual Harassment of Women
The Company has in place an Anti Sexual Harassment Policy in line with therequirements of 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 trainees) are covered under this policy. No complaint has been received duringthe year under review.
34. Material changes and commitment
No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year to which financial statements in thisreport relates and the date of this report.
35. 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.
36. Material changes and commitments
Except as disclosed elsewhere in the Report there have been no material changesand commitment affecting the financial position of your Company which have occurredbetween the end of the financial year of the Company and the date of this Report.
37. Compliance with Secretarial Standards
The Company has complied with the applicable Secretarial Standards.
Your Board wish to place on record their appreciation and acknowledge withgratitude the support and co-operation extended by the Government authorities Bankerscustomers vendors employees and Members during the year under review and look forward totheir continued support.
|On behalf of the Board || |
|Sameer V. Shah ||Nirmal V. Shah |
|Chairman and Managing Director ||Vice - Chairman and Managing Director |
|Mumbai || |
|17th July 2018 || |