The Board of Directors are pleased to submit its report on the performance of theCompany along with the audited Standalone as well as Consolidated financial statements forthe financial year ended March 31 2020.
FINANCIAL SUMMARY AND STATE OF AFFAIRS:
(Rs in lakhs)
|Particulars ||Standalone ||Consolidated |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|REVENUE & PROFITS || || || || |
|Total Revenue from operations ||102622.30 ||104397.20 ||103807.97 ||106033.28 |
|Profit before Interest Tax & Depreciation ||25659.14 ||24248.17 ||25559.83 ||25007.04 |
|Less : Interest & Finance Charges ||478.12 ||179.05 ||482.11 ||183.92 |
|Less : Depreciation ||3465.07 ||1744.84 ||3465.53 ||1745.37 |
|Profit for the year before Tax ||21715.95 ||22324.28 ||21612.19 ||23077.75 |
|Less : Provision for Taxation || || || || |
|- Current ||5609.49 ||8000.00 ||5666.23 ||8089.35 |
|- Deferred ||(543.71) ||696.68 ||(534.05) ||636.64 |
|Short (Excess) provision for earlier years ||- ||726.23 ||- ||726.23 |
|Net Profit/(Loss) after Tax ||16650.17 ||12901.37 ||16480.01 ||13625.53 |
|Other Comprehensive Income ||(351.58) ||(318.88) ||(351.58) ||(318.88) |
|Total Comprehensive Income ||16298.59 ||12582.49 ||16128.43 ||13306.65 |
|RETAINED EARNINGS || || || || |
|Opening Balance of Retained Earnings ||48508.64 ||38190.39 ||48016.17 ||36978.32 |
|Add: Profit for the year ||16650.17 ||12901.37 ||16480.01 ||13625.53 |
|Less: Appropriations: || || || || |
|Final Dividend ||3372.60 ||2146.20 ||3372.60 ||2146.20 |
|Corporate Dividend Tax on Dividend ||693.25 ||436.92 ||693.25 ||436.92 |
|Transferred to Other Reserve/Non-Controlling Interest ||- ||- ||1.88 ||4.56 |
|Balance as at end of the Year ||61092.96 ||48508.64 ||60428.45 ||48016.17 |
The financial results and the results of operations have been further discussed indetail in the Management Discussion and Analysis section.
The Standalone as well as the Consolidated financial statements have been prepared inaccordance with the Indian Accounting Standards ( Ind AS').
During the year under review there was no change in the share capital of the Company.The Paid up share capital of the Company as on March 31 2020 is Rs 1533.00/- lakhsdivided into 30659976 equity shares of Rs 5/- each.
Your Directors are pleased to recommend a Final Dividend of Rs 3/- per equity share ofthe face value of Rs 5/- each as the final dividend for the financial year 2019-20. TheFinal Dividend subject to the approval of Members at the Annual General Meeting onFriday September 18 2020 will be paid to those members whose name appears in theregister of beneficial owners/register of members as at the close of business hours onSeptember 11 2020. Pursuant to the approval of the Board on February 11 2020 yourCompany paid an interim dividend of Rs 4/- per equity share of face value of Rs 5/- eachto shareholders whose names appeared in the register of beneficial owners/register ofmembers as on February 21 2020 being the record date fixed for this purpose.
The total dividend for the financial year including the proposed Final Dividendamounts to Rs 7/- per equity share of the face value of Rs 5/- each and will absorb Rs2398.29 Lakhs (including Dividend Distribution Tax of Rs 252.09 Lakhs on InterimDividend). In view of the changes made under the Income-tax Act 1961 by the Finance Act2020 dividends paid or distributed by the Company shall be taxable in the hands of theShareholders. Your Company shall accordingly make the payment of the Final Dividendafter deduction of tax at source as applicable.
TRANSFER TO RESERVES
The closing balance of the retained earnings of the Company for the financial year2019-20 after all appropriation and adjustments was Rs 61092.96 Lakhs.
SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
As on March 31 2020 the Company has two subsidiaries i.e. Fine Organics (USA) Inc.and Fine Organics Europe BV and two joint venture companies i.e. Fine Zeelandia PrivateLimited and FineADD Ingredients GmbH. Pursuant to the provisions of Section 129(3) of theAct a statement containing the salient features of financial statements of the Company'ssubsidiaries and joint ventures in Form AOC-1 is attached to the financial statements ofthe Company. The separate financial statements of the subsidiaries are also available onthe website of the Company at www. for inspection by the Members at the Registered Officeof the Company during business hours on all working days as required under Section 136 ofthe Act. Any member desirous of obtaining a copy of the said financial statements maywrite to the Company Secretary at the Registered Office of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (3) (c) read with Section 134 (5) of the Companies Act 2013the Board of Directors to the best of its knowledge and ability confirm that:
a) in the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards have been followed and there are no material departuresfor the same;
b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as on March 31 2020 and of the profit ofthe Company for that period;
c) the directors have 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) the directors have prepared the annual accounts on a going concern basis;
e) the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Board of Directors of the Company comprises 5 (five) Executive Directors and 5 (five)Non Executive - Independent Directors including one woman Independent Director. During theperiod under review there has been no change in the Board of Directors.
Mr. Tushar Shah retires by rotation and being eligible offers himself forre-appointment. A resolution seeking shareholders' approval for his re-appointment formspart of the Notice. The brief details of Mr. Tushar Shah who is proposed to bere-appointed as required under Secretarial Standard 2 ("SS-2") andRegulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended (the "Listing Regulations") is being provided in theNotice convening the Annual General Meeting of the Company.
Pursuant to the provisions of Section 149 of the Act the Independent Directors havesubmitted declarations that each of them meet the criteria of independence as provided inSection 149(6) of the Act along with Rules framed there under and Regulation 16(1)(b) ofthe Listing Regulations. During the year under review the non-executive IndependentDirectors of the Company had no pecuniary relationship or transactions with the Companyother than sitting fees and reimbursement of expenses incurred by them for the purpose ofattending meetings of the Board/Committee of the Company.
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2020 are: Prakash Kamat - Chairman and Whole Time DirectorMukesh Shah - Managing Director Jayen Shah - Whole Time Director and Chief ExecutiveOfficer Tushar Shah - Whole Time Director and Chief Financial Officer Bimal Shah - WholeTime Director and Pooja Lohor - Company Secretary.
NUMBER OF BOARD MEETINGS
The Board met four times during the year under review. The maximum gap between twoBoard meetings did not exceed 120 days. The details of the Board meetings and theattendance of Directors thereat are provided in the Corporate Governance Report formingpart of the Annual Report.
COMMITTEES OF THE BOARD
As required pursuant to the Act and the Listing Regulations the Company has formed allthe statutory committees namely the Audit Committee the Nomination and RemunerationCommittee the Stakeholders' Relationship Committee the Corporate Social ResponsibilityCommittee and the Risk Management Committee. In addition the Company has an ExecutiveCommittee.
There have been no instances where the Board did not accept the recommendations of theAudit Committee.
Detailed information of these Committees and relevant information for the year underreview are set out in the Corporate Governance Report.
ANNUAL EVALUATION OF DIRECTORS COMMITTEES AND BOARD
The annual evaluation of Directors Committees and Board as a whole was carried out onthe basis of various criteria as recommended by the Nomination and Remuneration Committeeof the Company (NRC').
The performance of the Board and individual Directors was evaluated after seekinginputs from all the Directors. The criteria for performance evaluation of the Board wasbased on the Guidance Note issued by SEBI on Board Evaluation which included aspects suchas Board composition and structure effectiveness of Board processes contribution in thelong term strategic planning etc.
In a separate meeting of independent directors performance of non-independentdirectors the board as a whole and the Chairman of the Company was evaluated by theIndependent Directors.
The NRC reviewed the performance of the Board its Committees and of the Directors. Thesame was discussed in the Board Meeting that followed the meeting of the IndependentDirectors and NRC at which the feedback received from the Directors on the performance ofthe Board and its Committees was also discussed. The Board was satisfied with theperformance of the Board Board Committees and individual directors.
NOMINATION REMUNERATION POLICY
The Company has in place a Nomination Remuneration Policy for the Directors KMP andother employees pursuant to the provisions of the Act and the Listing Regulations which isavailable on website of the Company i.e. https://www.com/investor-relations/corporate-governance/ policies
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has an adequate system of internal financial controls that is commensuratewith the size scale and nature of its operations. These have been designed to providereasonable assurance with regard to recording and providing reliable financial andoperational information complying with applicable accounting standards safeguarding ofits assets prevention and detection of errors and frauds timely preparation of reliablefinancial informations. The Company uses an Enterprise Resource Planning (ERP) system thatconnects all parts of the organization to record day to day transactions for accountingand financial reporting.
The Company has an internal audit function to assess effectiveness of its internalcontrols across multiple functions and locations. The internal audit plan is approved bythe Audit Committee at the beginning of every year. Every quarter the Audit Committee ispresented with key control issues and the actions taken on issues highlighted in theprevious reports. Your Company has adopted the policies and procedures for ensuring theorderly and efficient conduct of business.
I. Statutory Auditors
M/s. B Y & Associates Chartered Accountants Mumbai (Firm Registration No.123423W) were appointed as the Statutory Auditors of the Company to hold office for a termof 5 years from the conclusion of the 15th Annual General Meeting held on July10 2017 until the conclusion of the 20th Annual General Meeting of the Companyto be held in the year 2022. As per the provisions of Section 139 of the Act they haveconfirmed that they are not disqualified from continuing as Auditors of the Company.Further the report of the Statutory Auditors along with notes to Schedules is a part ofthe Annual Report.
The Auditors' Report does not contain any qualification reservation or adverse remark.
II. Cost Auditors:
M/s Y. R. Doshi & Associates Cost Accountants in practice were appointed as theCost Auditors of the Company to audit the cost records for the Financial Year 2020-21. Interms of Rule 14 of the Companies (Audit and Auditors) Rules 2014 the remunerationpayable to the Cost Auditors is required to be ratified by the shareholders. Accordinglya resolution seeking members for the remuneration is ratification listed as Item No. 4 ofthe AGM Notice as an Ordinary Resolution.
III. Secretarial Auditors:
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 KS & Associates Practising Company Secretaries to undertake theSecretarial Audit of the Company for Financial year 2020-21. Further the report of theSecretarial Auditor for the Financial Year 2019-20 is appended as "AnnexureA" to this report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
Pursuant to provisions of Section 143 (12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the Audit Committee during the yearunder review.
RISK MANAGEMENT FRAMEWORK
Risk Management is an integral part of the Company's operations. Mechanisms foridentification and prioritization of risks include scanning the business environment andcontinuous monitoring of internal risk factors. The Board of Directors of the Company hasformed a Risk Management Committee to frame implement and monitor the risk managementplan for the Company. The Audit Committee has additional oversight in the area offinancial risks and control. Major risks identified by the Company's business andfunctions are systematically addressed through mitigating actions on a continuing basis. Adetailed note on risk management is given under financial review section of the ManagementDiscussion and Analysis of this Annual Report
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Particular of loans guarantees and investments covered under Section 186 of theCompanies Act 2013 form part of the notes to the Standalone Financial Statementsprovided in this Annual Report.
RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of Section 188(1)of the Act. The information on transactions with related parties pursuant to Section134(3) (h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 aregiven in "Annexure B" in Form No. AOC-2 and the same forms part of thisreport.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors has constituted Corporate Social Responsibility Committeecomprising members viz.
Mr. Jayen Shah (Chairman) Mr. Prakash Apte Mr. Kaushik Shah Mr. Mukesh Shah Mr.Tushar Shah. The Corporate Social Responsibility Policy of the Company is available athttps://www.fineorganics.com/investor-relations/corporate-governance/policies.
The Report on Corporate Social Responsibility (CSR) including a brief outline of theCSR Policy and activities undertaken during the financial year 2019-20 as per Rule 8 ofCompanies (CSR Policy) Rules 2014 is enclosed as "Annexure C" to thisReport.
EXTRACT OF ANNUAL RETURN
As per the requirements of Section 92(3) of the Act and Rules framed thereunder theextract of the annual return for the financial year 2019-20 is given in "AnnexureD" in the prescribed Form No. MGT-9 which is a part of this report. The same isavailable on https://www.fineorganics.com/investor-relations.
PARTICULARS OF EMPLOYEES & MANAGERIAL REMUNERATION:
The information required under Section 197 (12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is attached as "Annexure E" to this report. The statement containingparticulars of employees as required under section 197 of the Companies Act 2013 readwith Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 will be provided upon request. In terms of Section 136 of the Companies Act2013 this Report and accounts are being sent to the members and others entitled theretoexcluding the information on particulars of employees which is available for inspection bymembers at the registered office of the Company during business hours on all working days.If any member is interested in obtaining a copy thereof such member may write to theCompany Secretary in this regard.
In compliance with Regulation 34 and other applicable provisions of the ListingRegulations a separate report on Corporate Governance along with the Certificate ofcompliance from the Secretarial Auditor forms an integral part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 of the Listing Regulations the Management Discussion andAnalysis Report capturing your Company's performance industry trends and other materialchanges with respect to your Company and its subsidiaries wherever applicable ispresented in a separate section forming an integral part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report pursuant to Regulation 34 (2) (f) of ListingRegulations is presented in a separate section forming an integral part of this AnnualReport.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the Listing Regulations the Company has adopted aDividend Distribution Policy which is annexed to this Report and also disclosed on theCompany's website at https://www.fineorganics.com/investor-relations/corporate-governance/policies.
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
In accordance with the provisions of Section 177(9) of the Companies Act 2013 andrequirements of Regulation 22 of the Listing Regulations your Company has a vigilmechanism which has been incorporated in the Whistle Blower Policy for Directors andEmployees to report genuine concerns about unethical behaviour actual or suspected fraudor Violation of code of prevention of Insider Trading. The Whistle Blower Policy isuploaded on the website of your Company athttps://www.fineorganics.com/investor-relations/corporate-governance/policies.
PREVENTION OF SEXUAL HARASSMENT
The Company has zero tolerance towards sexual harassment at the workplace and towardsthis end has adopted prevention of Sexual Harassment Policy in line with the provisionsof Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules thereunder. The Policy aims to provide protection to employees at theworkplace and prevent and redress complaints of sexual harassment and for mattersconnected or incidental thereto. All employees (permanent contractual temporarytrainees) are covered under the said policy. An Internal Complaints Committee has alsobeen set up to redress complaints received on sexual harassment. The Company has notreceived any complaint of sexual harassment during the Financial Year 2019-20.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in "AnnexureF" to this report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
Information regarding potential impact of COVID-19 pandemic on your Company's businessoperations and financial position are provided as part of the Management Discussion andAnalysis Report.
DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS WHICHWOULD IMPACT THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant Regulators or Courts or Tribunals impacting the going concernstatus and Company's operations in future.
Your Directors take this opportunity to thank for the continued support andco-operation by customers vendors shareholders government and regulatory authoritiesand stock exchanges during the year under review. The Board of Directors wish to place onrecord its deep sense of appreciation for the committed services by all the employees ofthe Company.
| ||For and On Behalf of the Board |
| ||Prakash Kamat |
|Mumbai June 27 2020 ||Executive Chairman |