The Directors of Haryana Leather Chemicals Ltd. are pleased to present the 36thAnnual Report and Audited Statement of the Company's accounts for the year ended on 31stMarch 2021.
A summary of the financial results for the year 2020-21 is given below:
| ||2020-21 ||2019-20 |
| ||(Rs. in Lacs) ||(Rs. in Lacs) |
|Sales Turnover (Net of Excise) ||2784.18 ||3502.59 |
|Gross Profit ||294.65 ||359.03 |
|Deductions: || || |
|Depreciation ||76.22 ||71.44 |
|Interest ||1.86 ||5.01 |
|Profit before tax ||216.57 ||282.58 |
|Less: Provision for Income Tax for the year ||48.76 ||61.49 |
|Add: Provision for Income Tax written back ||-3.05 ||0.72 |
|Less: Previous year's adjustment ||- ||- |
|Less/(Add): Deferred tax liability ||10.93 ||10.99 |
|Profit after tax and available for appropriation ||159.93 ||209.38 |
|Less: Provision for dividend ||0.00 ||0.00 |
|Less: Provision for dividend tax ||0.00 ||0.00 |
|Less: Transfer to general reserve ||0.00 ||0.00 |
|Profit Carried to Balance Sheet ||159.93 ||209.38 |
During the year there is a decrease in sales turnover which stands at Rs. 2784.18lakhs against Rs. 3502.59 lakhs of the previous year. The decrease in profit of Rs.159.93lakhs as against Rs. 209.38 lakhs of the previous year is due to impact of Covid -19 onbusiness.
The Pandemic "COVID-19" spread has severely impacted business around theworld including India. There has been severe disruption in regular business operations dueto lockdown and emergency measures taken by the Government. The Company's management hasmade initial assessment of adverse impact on business and financial risks on account ofCOVID-19. It is well appreciated that the situation as well as its assessment iscontinuously evolving and the way ahead is to avoid living in denial leading to acceptance& pro-active measures. The Company management currently believes that the impact islikely to be short term in nature. Given the severity of impact this financial year islikely to get affected but also given the measures from Government and inherentresilience in Indian Economy next year onwards are expected to show normal growthscenarios.
Looking at the prevailing market conditions due to Covid-19 the Company sales andoperations have been hit badly. To secure long term operations of the Company the Boardof Directors has decided to skip dividend for the financial year ended March 31 2021.
The composition of the Board of Directors of the Company is furnished in the CorporateGovernance Report annexed to this report. Pursuant to the provisions of the Articles ofAssociation of the Company the Directors- Dr. K. S.V. Menon (DIN:00920088) Dr. MassimoMedini (DIN: 000926147) Mr. Pradeep Behl (DIN: 00703855) Mr. Marco Medini (DIN:03709885) and Mr. Kanishk Gupta (DIN: 02243899) are the Directors who are Non-Executiveand Independent and are not eligible for retire by rotation. Mr. N. K. Jain (DIN:00486730) is liable to be retire by rotation at the forthcoming Annual General Meeting tobe held on 25th September 2021 and being eligible offers himself forre-appointment.
Mr. Pankaj Jain (DIN: 00206564) being the Managing Director of the Company and Mr. N.K. Jain (DIN: 00486730) is the Director cum Chairman of the Company and Mrs. Sippy Jain(DIN: 03189151) is the Director in the Company. Mr. Sukanto Choudhury is CFO in theCompany.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from the Independent Directorsconfirming that they meet the criteria of independence as prescribed under the CompaniesAct 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.Independent Directors are in compliance with the Code of Conduct prescribed under ScheduleIV of the Companies Act 2013.
The members had at the 35th AGM of the Company appointed AKR &Associates Chartered Accountants (Firm Registration No. 021179N) Panchkula as StatutoryAuditors of the Company to hold the office from the close of the 35th AGM tillthe conclusion of the 38th AGM not subject to their appointment being ratifiedby the members in every AGM has been appointed for a further term of three years. Themembers of the Company approved deletion of the requirement of seeking ratification ofappointment of Statutory Auditors at every AGM pursuant to amendment brought by theCompanies Amendment Act 2017.
The Auditors' Report for FY 2020-21 forms part of this Annual Report and does notcontain any qualification reservation or adverse remark.
Auditor's report does not need any comments from the Directors.
MEETINGS OF THE BOARD COMMITTEES & COMPLIANCE TO SECRETARIAL STANDARDS
The Board meets at regular intervals with gap between two meetings not exceeding 120days. During the year under review the Board met five times.
The Board has three Committees namely Audit Committee (AC) Nomination and RemunerationCommittee (NRC) and Stakeholders Relationship Committee (SRC). A detailed note on thecomposition of the Board and its Committees (AC NRC and SRC) is provided in the CorporateGovernance Report included in this Annual Report. The minutes of the meetings are reviewedat every Board meeting.
During the year under the review the Company has complied with the provisions ofSecretarial Standard 1 (relating to meeting of the Board of Directors) and SecretarialStandard 2 (relating to General meeting).
PARTICULARS OF EMPLOYEES u/s 134 (3) of the Companies Act 2013
The information required pursuant to Section 134 read with Rule 5 (1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors Key Managerial Personnel (KMP) and Employees of the Company are provided asfollows:
The Company did not employ any person drawing a remuneration of Rs.500000.00 or abovefor one month or part of the month or Rs. 6000000.00 or above for one year whoseparticulars are required to be mentioned u/s 197 of the Companies Act 2013.
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. Neeraj Gupta & Associates a firm of Company Secretaries in Practice(CP No. 4006) to undertake the Secretarial Audit of the Company for the financial yearended 2020-21. The report on the Secretarial Audit carried out for the year 2020-21 isannexed herewith as Annexure-B'. The Secretarial Audit Report does not contain anyqualification reservation adverse remark or disclaimer.
COST AUDITOR'S COMPLIANCE
The Central Government has directed that a cost audit of the Company should beconducted in the manner specified in MCA order 52/26/CAB-2010 Dt. 24-01-2012 or anyamendment thereof by a Cost Accountant within the meaning of the Cost and WorksAccountants Act 1959 as amended thereof.
However as per Companies (cost records and audit) Rules 2014 notified by Ministry ofCorporate Affairs cost audit is not applicable to the Company by virtue of its turnoverbeing less than the prescribed limits. Therefore the Board did not proceed with theappointment of cost auditor and cost audit for the year 2020-21.
The Company is properly maintaining its cost Record internally.
CORPORATE SOCIAL RESPONSIBILITY
With the enactment of the Companies Act 2013 India has become the forerunner tomandate spend on Corporate Social Responsibility (CSR) activities through a statutoryprovision.
The new CSR provisions put formal and greater responsibility on Companies in India toset out clear framework and processes to ensure strict compliance. However what theCompanies Act does is bring more Companies into the fold and increase the total CSR spend.
Section 135 (1) of Company Act 2013 mandates the CSR expenditure/CSR Applicability forthe following Companies- Every Company having
a) Networth of Rs.500 crore
b) Turnover of Rs.1000 crore
c) or net profit of Rs. 5.00 crore where net profit excludes income from overseasbranch & divided distributed by Company on which this section apply.
As the Company Haryana Leather Chemicals Limited doesn't fall under any of thecategories as mentioned above the Company was not required to constitute any CSR policyor to make any expenditure towards CSR funds.
In terms of Section 149 of the Act 2013 read with Rule 3 of the Companies (Appointmentand Qualification of Directors Rules 2014 and SEBI Listing Obligations and DisclosureRequirements) Regulations 2015 the Company is required to have a woman Director on itsBoard. Mrs. Sippy Jain is already appointed as the Director of the Company.
PROTECTION OF WOMEN AGAINST SEXUAL HARASSMENT AT WORK PLACE
The Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 [14 of 2013].
TRANSFER OF FUNDS TO INVESTOR EDUCATION AND PROTECTION FUND
The Company is distributing dividend to its shareholders since 2006 on recommendationof the shareholders of the Company. And pursuant to the provisions of sections 124 and 125of the Companies Act 2013 and Invest or Education and Protection Fund (Accounting AuditTransfer and Refund) Rules 2016 as amended from time to time for the unclaimed dividendfor the year 2012-2013 amounting Rs.282693/- the Board has taken necessary steps totransfer the unpaid/unclaimed dividend of Equity Shareholders for the year 2012-13 to theInvestor Education and Protection Fund (IEPF) of the Central Government established undersection 124 and 125 of the Companies Act 2013.
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Committee of Directors (NRC) reviews the composition ofthe Board of Directors of the Company to ensure that there is an appropriate mix ofabilities qualifications experience and diversity to serve the interests of allshareholders and the Company.
During the year in accordance with the requirements under Section 178 of the CompaniesAct 2013 and relevant clause of Listing Agreement the NRC formulated a Nomination andRemuneration Policy to govern the terms of nomination/appointment and remuneration of
ii) Key Managerial Personnel (KMPs) and
iii) Senior Management Personnel (SMPs) of the Company
iv) The same was approved The NRC also reviews succession planning of both SMPs andBoard. The Company's approach in recent years is to have a greater component ofperformance linked remuneration for SMPs. The process of appointing a Director/KMPs/SMPsis that when a vacancy arises or is expected the NRC will identify ascertain theintegrity qualification appropriate expertise and experience having regard to theskills that the candidate will bring to the Board/Company and the balance of skills addedto that of which the existing members hold.
The NRC will review the profile of persons and the most suitable person is eitherrecommended for appointment by the Board or is recommended to share holders for theirelection. The NRC has discretion to decide whether qualification expertise and experiencepossessed by a person are sufficient/satisfactory for the concerned position.
NRC will ensure that any person(s) who is/are appointed or continues in the employmentof the Company as its Executive Chairman Managing Director whole-time Director shallcomply with the conditions as laid out under Schedule V to the Act 2013.
NRC will ensure that any appointment of a person as an independent Director of theCompany will be made in accordance with the provisions of Section 149 read with Schedule Vof the Act 2013 alongwith any other applicable provisions and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
While every employee's contract of employment stipulates that he will not discloseconfidential information about the employer's affairs in order to bring aboutaccountability and transparency there should be a mechanism to enable employees to voicetheir concerns where they discover information which they believe shows seriousmalpractice impropriety abuse or wrong doing within the organization. The employeesshould be encouraged and assisted to raise concerns without any fear of victimizationsubsequent discrimination or disadvantage. If the employee has acted in good faith it doesnot matter if one is mistaken and the Company shall ensure protection from any harassmentor victimization of/against the disclosing employee.
The Company has adopted a Whistle Blower Policy which applies to all permanentemployees of the Company including those who are on probation and comes in to effect fromApril 1 2014 to provide a formal mechanism to the Directors and employees to reporttheir concerns about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy. The Policy provides for adequate safeguardsagainst victimization of employees who avail of the mechanism and also provides for directaccess to the Chairman of the Audit Committee. It is affirmed that no personnel of theCompany has been denied access to the Audit Committee.
1. Policy and Procedure for disclosure enquiry and disciplinary action
1.1 Concerns which may be raised-illustrative list
A whole variety of issues could fall under malpractice impropriety abuse and wrongdoing some of which are listed below:
Breach of any Policy or Manual or Code adopted by the Company.
Fraud and corruption (e.g. receiving bribes).
Health and safety risks including risks to the public as well as otheremployees e.g. faulty electrical equipment).
Any sort of financial malpractice.
Abuse of power (e.g. Bullying/harassment).
Any unlawful act including failure to comply with legal or statutory obligationfor and on behalf of the Company.
Any other unethical or improper conduct.
1.2 Concerns- how to raise/whom to disclose
The concern should be disclosed through letter e-mail telephone fax or any othermethod to any of the following persons who shall comprise the Corporate ComplianceCommittee headed by the Managing Director & Chairman reporting directly to the AuditCommittee of the Board.
The Corporate Compliance Committee comprises the Managing Director & Chairman theExecutive Director & Company Secretary the CEO and the HR.
All relevant information regarding the concern should be disclosed not later than 1year from the date on which the employee came to know of the concern. Up on receipt of thedisclosure the member of the Compliance Committee receiving the same shall furnish a copyto the Managing Director & Chairman who shall decide which member shall be responsiblefor the investigation.
1.3 Procedure for investigation
Obtain full details and clarifications of the complaint.
Consider the involvement of the Company's Auditors or any other external investigationagency or person. Fully investigate into the allegation with the assistance whereappropriate of other individuals/bodies. Prepare a detailed written report and submit thesame to the Compliance Committee not later than 30 days from the date of disclosure of theconcern.
Based on the findings in the written report and after conduct of such furtherinvestigation as it may deem fit the Compliance Committee shall take a decision in thematter not later than 30 days from the date of the written report. If the complaint isshown to be justified then they shall invoke disciplinary or other appropriate actionagainst the defaulting employee. A copy of all decisions of the Compliance Committee shallbe placed before the Audit Committee at the meeting held immediately after such finaldecision.
The employee making the disclosure as well as all other persons involved in theinvestigation and the members of the Compliance Committee shall not make public theConcern disclosed except with the prior written permission of the Audit Committee exceptwhere the employee is called up on to disclose this by any judicial process.
The Company has not accepted/renewed any fixed deposits during the period under review.
The Company has taken the requisite steps to comply with the recommendations concerningCorporate Governance. A separate statement on Corporate Governance together with acertificate on the compliance of conditions of corporate governance as stipulated underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been obtainedfrom the Statutory Auditors of the Company and the same has been given below as Annexure.
DIRECTORS' RESPONSIBILITY STATEMENT AS PER SECTION 134 (5) OF THE COMPANIES ACT 2013.
The Board of Directors acknowledges the responsibility for ensuring compliances withthe provisions of section 134 (3)(c) read with section 134 (5) of the Companies Act 2013in the preparation of Annual Accounts for the financial year ended on 31st March 2021.
The Board of Directors of the Company confirms that:
a. During the preparing of the annual accounts the applicable accounting standardshave been followed and no material departure has taken place.
b. The selected accounting policies were applied consistently and the Directors madejudgments and estimates that are reasonable and prudent so as to give an accurate view ofthe state of affairs of the Company as on March 31 2021 and of the profit of the Companyfor the year ended on that date.
c. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
d. Annual accounts have been prepared on an ongoing concern basis.
e. The Directors have devised proper systems to ensure compliance with the provision sofall applicable laws and that such systems were adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Related Parties which mayhave a potential conflict with the interest of the Company at large. All Related PartyTransactions are placed before the Audit Committee as also the Board for approval.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference toFinancial Statements. During the year under review such controls we retested by theAuditors and no reportable material weakness was observed.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedhere with in the Annual Report.
The quality control set of the company is aligned with the best international standardswith highly agile customer cantered approach. A persistent feedback from the customer baseis utilized to fine tune the internal systems. ISO 9001:2008 and ISO 14001:2004 systemsundergo regular internal and external audits and have ensured very tight quality control.Quality variances and complaints are minimized to near zero. The addition of new tests onvarious sensitive inputs has significantly reduced any chance of quality errors from batchto batch.
The Company regularly updates guidelines on Restricted Substances (RS) applicable toleather industry from time to time. Company's "Green -Trek" safety andenvironmental ethos have been widely recognized by the customers. Internal screeningcalibrated with external testing has ensured zero incidence of detection of any of bannedsubstances listed under REACH (Registration Evaluation and Authorization of Chemicals).
The Company has been under pressure to meet its export targets in the backdrop ofongoing pandemic. However Inspite of serious disruptions in many countries the Companycontinues to maintain its dealer and customer base. New customers have been generated inChina which will remain focus of export growth and the Company is maintaining its closeties with all old and new distributors. But travel restrictions remain a big challenge.Company's new moves in Bangladesh seem to yield results and some lost customers have beenrevived.
Company has sustained its push in Latin American countries and repeat orders fromBrazil have been encouraging with significant growth prospects in near future. Exports toTurkey and CIS countries remains steady with encouraging response to some new products.The company is hoping that if the travel restrictions ease off the export targets can berealized.
The company successfully developed detection technologies for un-reacted ingredientsat trace level to improve safety and volatile emission at the user's end. Pursuing thesegoals detection of free Hydrazine in Polyurethane dispersions using High pressure liquidchromatography (HPLC) was established with very accurate results. Based on detectionlevels the strategy to neutralize unreacted Hydrazine has been implemented will highlyreliable results. HPLC techniques were also successful tested to detect Free Monomer inAcrylic Dispersions. Methods to reduce unreacted monomer during process are under progresswith promising result. The remaining work to neutralize free monomer is likely to becompleted during next year.
These cutting-edge technologies will render company's products even safer during theirusage improve users experience consolidate company's brand image as an environmentallyresponsible company.
The Board of Directors have decided to not to recommend the dividend to augment itscash flow for the financial year ended March 31 2021.
PERSONNEL & INDUSTRIAL RELATION:
The employees of the Company participated very keenly and responsibly in implementingvarious Covid Safety measures and work ethos. The staffs they demonstrated exemplarycourage to fulfil delivery targets during reduced shift hours -yet ensuring socialdistancing and other covid safety protocols. Employee -employer relations now have adeeper bond of trust and commitment to safety.
ENVIRONMENT & POLLUTION CONTROL MEASURES:
Company's environment control strategies are built around latest trends on Zero LiquidDischarge (ZLD) wastewater minimization highest standard in clean and safe manufacturingpractices. Frank conversations about product safety safety at workplace and transparencyin operations with its employees have yielded more energy efficient work practices andfurther lowering of waste. Company has successfully installed CEMS (Continuous Emission/Effluent Monitoring System) to provide continuous information to HSPCB.
The company's environment and pollution control measures rely on company's legacy ofinnovation leadership and action in sustainability. The company remains committed notonly to excelling on its products and solutions but also to its sustainability goals thatgo beyond statutory regulations by setting a higher bar for social and environmentalneeds.
The Directors extend their most sincere thanks to all employees for their courage andsupport to mitigate the unprecedented challenges of pandemic. Company's suppliersdealers service providers and technical consultants have continued their wholeheartedsupport and the Directors deeply appreciate their role. The Directors are thankful to theesteemed shareholders for their continued support and the confidence reposed in theCompany and its management
For and on behalf of the Board of Directors of Haryana Leather Chemicals Limited
| || |
For and on behalf of the Board of Directors
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of Haryana Leather Chemicals Limited
|Place:Gurugram ||NARENDRA KUMAR JAIN ||PANKAJ JAIN |
|Date: 12st August 2021 ||Chairman ||Managing Director-cum-ViceChairman |