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Hipolin Ltd.

BSE: 530853 Sector: Consumer
NSE: N.A. ISIN Code: INE963A01011
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NSE 05:30 | 01 Jan Hipolin Ltd
OPEN 21.55
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VOLUME 1199
52-Week high 32.50
52-Week low 19.95
P/E
Mkt Cap.(Rs cr) 7
Buy Price 21.55
Buy Qty 1.00
Sell Price 23.70
Sell Qty 200.00
OPEN 21.55
CLOSE 21.55
VOLUME 1199
52-Week high 32.50
52-Week low 19.95
P/E
Mkt Cap.(Rs cr) 7
Buy Price 21.55
Buy Qty 1.00
Sell Price 23.70
Sell Qty 200.00

Hipolin Ltd. (HIPOLIN) - Director Report

Company director report

To

The Members

Your Directors present the Twenty Sixth Annual Report and Audited Accounts of theCompany for the financial year ended March 312019.

Financial Results

Amount (Rs. in Lakhs)

Particulars

Year ended on

31-03-2019 31-03-2018
1 Total Income 1674.41 1715.70
2 Profit/(Loss)before Interest Depreciation & Taxation (41.01) (64.58)
Less : Interest (2.80) (5.18)
3 Profit/(Loss) before Depreciation and Taxation (43.81) (69.76)
Less : Depreciation (28.55) (25.33)
4 Profit/(Loss) before Tax for the year (72.36) (95.09)
Less : Provision for Taxation : - -
(a) Current Tax - -
Add (b) Deferred Tax - -
(c) Tax Adjustment of earlier years (Net) - -
Sub-total - -
5 Profit/(loss) after Tax for the year (72.36) (95.09)
6 Other Comprehensive Income - OCI 18.36 (11.49)
7 Net Profit/(loss) after Tax for the year (53.99) (106.58)
8 Earning per share (EPS) of Rs. 10/- each (2.31) (3.04)

1. OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

(A) Sales and Profit:

The sales and other income of the Company during 2018-19 were lower to Rs. 1674.41Lakhs compared to Rs. 1715.70 Lakhs of the previous year. The loss incurred Rs.72.36 Lakhsduring the year 2018-19 as compared to Rs. 95.09 Lakhs of the previous year.

(B) Raw Material:

Required quantities of the Raw materials were available from within India.

(C) Export:

Company has not made any exports during the year. (No exports were made during theprevious year).

2. DIVIDEND:

In view of loss incurred during the year under review Board of Directors does notrecommend any dividend for the financial year 2018-19.

3. RESERVES:

Your Directors have decided not to transfer any amount to the Reserves for the yearunder review in view of losses.

4. FIXED DEPOSITS:

During the year Company has not accepted any Fixed Deposits.

5. INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to the provisions of section 124 of the Companies Act 2013 and rules madethereunder during the year no equity shares whose dividend had remained unclaimed /unpaid for a consecutive period of seven years were transferred to IEPF.

6. MATERIAL CHANGES AND COMMITMENTS:

There have been no material changes and commitments which have occurred between the endof financial year to which the financial statements relate and the date of this Reportaffecting the financial position of the Company.

7. TECHNICAL ACHIEVEMENT:

The Company keeps on exploring the possibility of technical improvement and processoptimization for better yields / product mix / energy efficiency.

8. PARTICULARS OF LOANS GIVEN GUARANTEES GIVEN INVESTMENTS MADE AND SECURITIESPROVIDED :

The Company has not given any loan made investment given any guarantee or providedany security - covered U/s 186 of The Companies Act 2013 - to anyone.

9. LISTING:

The Company's securities are listed on BSE Limited Mumbai. The Company has paid thelisting fees for F.Y. 2019-20 on the paid up equity share capital.

10. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 of the Companies Act 2013 with respect toDirectors' Responsibility Statement the Directors hereby confirm

a) that in the preparation of the financial statements for the year ended March312019 the applicable accounting standards read with requirements set out under ScheduleIII of the Companies Act have been followed and there are no material departures from thesame;

b) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2019 andof the loss of the Company for that period;

c) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the Directors have prepared the annual accounts on a 'Going Concern' basis;

e) that 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) that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

11. DIRECTORS:

Shri Subhash B. Shah resigned as a Director (Whole Time Director) with effect fromApril 012018. Shri Virendra B. Shah resigned as a Director (Independent) with effect fromMay 16 2018. The Board places on record its appreciation for contributions made by themduring their respective tenure as a Director of the Company. On demise of Shri Bharat J.Shah (Whole Time Director) on 24th March 2019 the Board convey deep sympathysorrow and condolences to his family and also appreciated his duty as a Whole TimeDirector of the Company.

Shri Shailesh J. Shah (DIN: 00777653) and Shri Bhupendra J. Shah (DIN: 00325446) shallretire at the forthcoming Annual General Meeting and being eligible offer themselves forreappointment.

The term of Shri Ajay R. Gandhi and Shri Umesh P. Mehta the Independent Directors ofthe company who were appointed for a term of 5 (five) consecutive years expires onDecember 07 2019. The Nomination and Remuneration Committee of the Board of Directors onthe basis of the report of performance evaluation of Independent Directors hasrecommended reappointment of Shri Ajay R. Gandhi (DIN:07035675) and Shri Umesh P. Mehta(DIN:07027282) as Independent Directors for another term of 5 (five) consecutive years onthe Board of the Company.

A brief resume and other relevant details of the Directors proposed to be appointed/reappointed are given in the Explanatory Statement to the Notice convening 26thAnnual General Meeting.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors of theCompany inter alia confirming that they meet the criteria of Independence as prescribedunder Section 149 of the Companies Act 2013 and Regulation 16(1)(b) of SEBI (LODR)Regulations 2015.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FORDETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR ETC.:

Pursuant to the provisions of Section 178 and other applicable provisions if any ofthe Companies Act 2013 read with the Rules made thereunder and Clause 49 of the ListingAgreement now regulation 19 of SEBI (LODR) Regulations 2015 the Board of Directors hadapproved and adopted the Remuneration and Nomination Policy as recommended by theNomination and Remuneration Committee. The salient features of the said policy coveringthe policy on appointment and remuneration and other matters have been explained in theCorporate Governance Report.

12. BOARD EVALUATION:

Based on the criteria for evaluation of Independent Directors and the Board asrecommended by the Nomination and Remuneration Committee and as adopted by the BoardBoard carried out evaluation of its own performance and that of the individual Directors.

13. MEETINGS OF THE BOARD AND COMMITTEES:

During the Financial year 2018-19 5 (five) meetings of the Board of Directors tookplace. The details of which are given in the Report on Corporate Governance that forms thepart of this Annual Report. The intervening gap between the meetings was within the periodprescribed under the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. Details of meetings of all the Committees of the Board have been givenin the Report on Corporate Governance.

14. CONFIRMATION OF COMPLIANCE OF SECRETARIAL STANDARDS:

The Company has complied with the provisions of 'revised' SS-1—SecretarialStandards on meetings of the Board of Directors which has come into effect from October012017 and also SS-2— Secretarial Standard on General Meetings during the year.

15. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE:

There was no employee drawing an annual salary of Rs. 102.00 lakhs or more whereemployed for full year or monthly salary of Rs. 8.50 Lakhs or more where employed for partof the year and therefore information pursuant to the provisions of Rule 5 (2) and (3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is NIL.

Disclosure with respect to remuneration of the Directors and employees as requiredunder Section 197 of the Act and the Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 have been annexed herewith as Annexure Ato this Report.

16. AUDITORS:

• Statutory Auditors

The shareholders had at the Twenty Fourth AGM of the Company appointed M/s. Borkar& Muzumdar Chartered Accountants as Statutory Auditors of the Company to hold officefrom the conclusion of the Twenty Fourth AGM till the conclusion of the Twenty Nineth AGM.

The Auditors' Report for FY 2018-19 form a part of this Annual Report and does notcontain any qualification reservation or adverse remark.

• Secretarial Auditors

Pursuant to Section 204 of The Companies Act 2013 read with Rules thereof the Boardof Directors had appointed M/s. M. P. Mehta & Co. Company Secretaries Ahmedabad asSecretarial Auditor of the Company for the FY 2018-19. A Secretarial Audit Report for FY2018-19 is annexed herewith as Annexure B to this Report.

The said report does not contain any qualification reservation or adverse remark.

• Cost Auditor:

The company is registered under MSME Act 2006. As per the Company's (Cost Records andAudit) Rules 2014 as amended by Companies (Cost Records and Audit) Amendment Rules 2014issued by the Central Government the company is not required to maintain the costrecords hence the provisions of (vi) is not applicable to the company.

17. INTERNAL CONTROL AND ITS ADEQUACY:

The Company had commensurated with its size single operational location and resultantrequirement Internal Control System. The firm of practicing Chartered Accountant hascarried out the internal audit of the said system. Based on recommendation / report of thesaid Internal Auditor which is presented to the Audit Committee required correctiveactions were initiated / taken by the Company.

Internal Financial Controls

The Directors have laid down policies and procedures which are adopted by the companyfor ensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information;

Frauds

No fraud is reported by the Auditor of the Company.

18. CORPORATE GOVERNANCE REPORT:

As per Regulation 34(3) read with schedule V of the SEBI (LODR) Regulations 2015 theReport on Corporate Governance along with a Certificate from practising Company Secretaryregarding compliance of conditions of Corporate Governance is annexed to this AnnualReport.

19. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As stipulated in Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis is given inseparate section in this Annual Report

20. BUSINESS RESPONSIBILITY REPORT:

The Business Responsibility Report as required under Regulation 34(2)(g) of SEBI(LODR) Regulations 2015 is not applicable to the Company.

21. CORPORATE SOCIAL RESPONSIBILITY REPORT:

The Corporate Social Responsibility Report as required under Section 135 of theCompanies Act 2014 is not applicable to the Company as there is no profit during theyear under review.

22. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions with related parties entered into by theCompany during the financial year with related parties were in the ordinary course ofbusiness and at an arm's length basis. During the year the Company had not entered intoany contract / arrangement / transaction with related parties which could be consideredmaterial in accordance with related party transactions.

23. VIGIL MECHANISM:

As required under Companies Act 2013 and SEBI (LODR) Regulations the Company has putin place Vigil Mechanism/ Whistle Blower Policy for Directors and Employees so that theDirectors can report concerns about unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct Policy. All cases registered under WhistleBlower Policy of the Company if any are reported to and are subject to the review of theAudit Committee. The Whistle Blower Policy has been posted on the website of the Company(www.hipolin.com)

24. RISK MANAGEMENT POLICY:

The Company follows well-established and detailed risk assessment and minimizationprocedures which is periodically reviewed by the Board. The Company has in place abusiness risk management framework for identifying risks and opportunities that may have abearing on the organization's objectives assessing them in terms of likelihood andmagnitude of impact and determining a response strategy.

The Senior Management assists the Board in its oversight of the Company's management ofkey risks including strategic and operational risks as well as the guidelines policiesand processes for monitoring and mitigating such risks under the aegis of the overallbusiness risk management framework.

25. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

The Company firmly believes in providing a safe supportive and friendly environment- aworkplace where our values come to life through the supporting behaviors. Positiveworkplace environment and a great employee experience are integral part of our culture.The Company believes in providing and ensuring a workplace free from discrimination andharassment based on gender.

The Company educates its employees as to what may constitute sexual harassment and inthe event of any occurrence of an incident constituting sexual harassment; the Companyprovides the mechanism to seek recourse and redressal to the concerned individualsubjected to sexual harassment.

During the year there was no complaint of sexual harassment lodged with the Company

26. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUT GO:

A. Conservation of Energy

The Company has not incurred significant amount on electricity as most of the productsof the company are mixing of various ingredients. The percentage of electricity expensesis very negligible to total expenses. However the Company ensures conservation at allpossible levels.

B. Technology Absorption

The Company has established a well-equipped Quality Control Laboratory and Research andDevelopment Laboratory. The Research & Development Laboratory does not require anysophisticated instruments.

The Company has adopted indigenously available technology for its production process.The Company has not adopted any foreign technology.

C. Foreign Exchange Earnings and outgo: NIL ( For the Previous Year: NIL)

27. EXTRACT OF ANNUAL RETURN:

The extract of Annual Return in Form MGT-9 in accordance with Section 92(3) of theCompanies Act 2013 read with Companies (Management & Administration) Rules 2014 isannexed herewith as Annexure C to this Report.

28. ACKNOWLEDGMENTS:

Your Board of Directors wishes to place on record its appreciation to the contributionmade by the employees of the company. The Directors also wish to thank the Governmentauthorities financial institutions banks and shareholders for their cooperation andassistance extended to the company.

Date : May 29 2019 For and on behalf of the Board
Place : Ahmedabad Bhupendra J. Shah Shailesh J. Shah
Chairman Managing Director
(DIN:00325446) (DIN: 00777653)

ANNEXURE TO DIRECTORS' REPORT

Annexure A

DISCLOSURE ON MANAGERIAL REMUNERATION

[Pursuant to Section 197(12) read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014]

1. The ratio of remuneration of each Director to the Median Remuneration of allemployees who were on the payroll of the Company and the percentage increase inremuneration of each Director Chief Financial Officer and Company Secretary if anyduring the FY 2018-19:

Sl. No. Directors Designation Category Ratio of Remuneration of Director to Median Remuneration of Employees [subclause (i) of Rule 5(1)] Increase/ (Decrease) in Remuneration (%) [Sub-clause (ii) of Rule 5(1)]
1 Shri Bhupendra J. Shah** Whole Time Director (Chairman) Executive 5.52:1 7.31%
2 Shri Jaykumar J. Shah** Whole Time Director Executive 5.52:1 7.31%
3 Shri Shailesh J. Shah** Managing Director Executive 5.56:1 13.89%
4 Shri Bharat J. Shah** Whole Time Director Executive 5.52:1 7.31%
5 # Shri Subhash J. Shah** Whole Time Director Executive
6 Smt. Nita B. Shah* Independent Director Non- Executive 0.04:1
7 Shri Ajay R. Gandhi* Independent Director Non- Executive 0.06:1
8 Shri Umesh P. Mehta* Independent Director Non- Executive 0.06:1
9 a Shri Virendra B. Shah* Independent Director Non- Executive
10 Shri Nirav D. Shah* Independent Director Non- Executive 0.06:1
11 Ms. Apexa Panchal** Company Secretary 3.15:1 15.95%
12 $ Shri Rumit B. Shah** Chief Financial Officer

* The Non Executive Independent Directors of the Company are entitled to sitting feesas per the statutory provisions and within the limits approved by the shareholders. Thedetails of remuneration of Non Executive Independent Directors are provided in the Reporton Corporate Governance.

** Key Managerial Personnel (KMP).

# Details not given as Shri Subhash J. Shah resigned as a Director as well as a KMPw.e.f. April 012018.

A Details not given as Shri Virendra B. Shah was a Director only for a partof the FY 2018-19 i.e. Resigned w.e.f. May 16 2018.

$ Shri Bharat J. Shah was Whole Time Director as well as Chief Financial Officer of theCompany. He resigned as Chief Financial Officer of the Company w.e.f. September 22 2019.Shri Rumit B. Shah was appointed as Chief Financial Officer w.e.f. October 012018therefore details are not given

2. There is no increase in the median remuneration of employees for the F.Y 2018-19.

3. The number of permanent employees on rolls of the Company: 46

4. Relationship between the average increase in remuneration and Company's performance:

Amount (Rs. in Lakhs)

Change
Particulars

Year ended on

31-03-2019 31-03-2018 (In %)
(1) Total Revenue 1659.78 1701.50 (2.45)
(2) Profit/(Loss)before Depreciation Finance cost & Tax Expenses (41.01) (64.58) 36.50
(3) Profit/(Loss) before Tax for the year (72.36) (95.09) 23.90
(4) Profit/(loss) after Tax for the year (72.36) (95.09) 23.90
(5) Earning Per Share Basic (As per annual reports for respective years) (Rs.) (2.31) (3-04) 24.01
(6) Market Capitalization 735.86 1077.17 (31.69)
(7) Return on Capital Employed (%) (6.62) (13.39) 50.56

5. Average percentile increase already made in salaries of employees other thanmanagerial personnel in last financial year and its comparison with the percentileincrease in managerial remuneration.

The average increase in the remuneration of all employees was 8% for the F.Y. 2018-19.

The average increase in the remuneration of both the managerial and non-managerialpersonnel was determined based on the overall performance of the Company. Further thecriteria for remuneration of non-managerial personnel is based on an internal evaluationof key performance areas (KPAs) while the remuneration of the managerial personnel isbased on the remuneration policy as recommended by the Nomination & RemunerationCommittee and approved by the Board of Directors.

There were no exceptional circumstances which warranted an increase in managerialremuneration which was not justified by the overall performance of the Company.

6. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year.

The market capitalisation of the Company decreased by 31.69 % from Rs. 1077.17 lakhsas at March 312018 to Rs. 735.86 lakhs as at March 312019. The price to earnings ratioon EPS decreased by 10.16% from 11.32 times as at March 312018 to 10.17 times as atMarch 312019.

Affirmation that the remuneration is as per the Remuneration Policy of the Company:

It is affirmed that the remuneration paid is as per the Remuneration Policy forDirectors Key Managerial Personnel and other employees adopted by the Company.

7. Key Parameters for Variable Component of remuneration availed by the Directors:

There was no variable component in form of Commission payment to any Director-whetherExecutive or Non-Executive Directors during F.Y. 2018-19.