The Members of Indokem Limited
Your Directors have pleasure in presenting the Fifty Fifth Annual Report togetherwith the Audited Accounts for the financial year ended 31st March 2021.
1. Financial Results:
(Rs. in Lakhs)
|Particulars ||For the financial year ended 31.03.2021 ||For the financial year ended 31.03.2020 |
|A - Income from Continuing Operations ||7924 ||8961 |
|Profit / (Loss) Before Interest Depreciation & Taxes ||537 ||294 |
|Less: Interest ||123 ||131 |
|Depreciation ||115 ||112 |
|Profit / (Loss) Before Tax ||299 ||51 |
|Less: Provision for Tax ||- ||- |
|Less: Excess / Short Provision of previous year ||3 ||- |
|Profit / (Loss) After Taxes ||296 ||51 |
|B - Income from Discontinuing Operations ||- ||- |
|Profit / (Loss) for the year ||296 ||51 |
|Total other comprehensive income ||(6) ||15 |
|Total comprehensive income / (loss) for the year ||290 ||66 |
|Profit / (Loss) Brought Forward from last year ||(1662) ||(1728) |
|Surplus / (Deficit) carried to Reserves ||(1372) ||(1662) |
Considering the accumulated losses the Board of Directors of your Company does notconsider it appropriate to recommend any Dividend for the financial year ended 31stMarch 2021.
3. Operational Performance:
EBITDA at Rs. 537 lakhs registered an increase over EBITDA of Rs. 294 lakhs in F. Y.2019-20. PAT for the year was Rs. 296 lakhs registering an increase over the PAT of Rs. 51lakhs in F. Y. 2019-20. From March 2020 India saw a rapid spread of COVID-19 and as aconsequence revenue from operations for F. Y. 2020-21 at Rs.7924 lakhs was lower by 12%over previous year Rs. 8961 lakhs.
The COVID-19 pandemic developed rapidly into a global crisis forcing governments toenforce lock-downs for first half of the FY 2020-21 of all economic activity. For theCompany the focus immediately shifted to ensuring the health and well-being of allemployees and on minimizing disruption to services for all our customers globally. Duringthe FY 2020-21 the Company's head Office was mostly work from home as per guidelines.
5. Transfer to Reserves:
Pursuant to provisions of Section 134(3)( j) of the Companies Act 2013 in view ofinadequate profits for the year under review no amount has been transferred to thereserves.
6. Directors and Key Managerial Personnel:
Pursuant to the provisions of Section 149 of the Act Mr. Kailash Pershad (DIN:00503603) Mr. Rajagopalan Sesha (DIN: 00289643) and Mr. Bhalchandra Sontakke (DIN:01225753) were appointed as Independent Directors of the Company at the AGM convened on 28thSeptember 2018. They have submitted a declaration that each of them meets the criteria ofindependence as provided in Section 149(6) of the Act and there has been no change in thecircumstances which may affect their status as Independent Director during the year.
We regret to inform you of the sudden and sad demise of Mr. Rajagopalan SeshaIndependent Director on the Board of Indokem Limited on Monday 27th July2020 due to cardiac arrest. The Company immensely benefited from his knowledge andexperience during his tenure. The Board places on record its sincere appreciation for thevaluable guidance provided by Mr. Rajagopalan during his tenure as Independent Director ofthe Company. All the directors and employees of the Company conveyed deep sympathy sorrowand condolences to his family.
Pursuant to the recommendation of the Nomination and Remuneration Committee the Boardof Directors of the Company passed a resolution on 25th August 2020 approvingappointment of Mr. Rahul Singh (DIN: 07477748) as additional Independent Non-executiveDirector on the Board of the Company to fill casual vacancy created due to sad demise ofMr. Rajagopalan Sesha Independent Director. Further Mr. Rahul Singh was appointed asNon-executive Independent Director of the Company for a period of Five (5) years at the 54thAnnual General Meeting held on 29th September 2020.
Mr. Manish M. Khatau was re-appointed as Whole-time Director for a period of Three (3)years with effect from 1st March 2021.
Mrs. Asha M. Khatau retires by rotation and being eligible has offered herself forre-appointment.
During the year the Non-executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees and reimbursementof expenses incurred by them for attending meetings of the Company.
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company are Mr. Mahendra K. Khatau as Chairman and Managing Director Mr. Manish M.Khatau as Whole-time Director Ms. Rupal B. Parikh as Chief Financial Officer and Mr.Rajesh D. Pisal as Company Secretary. During the year there were no changes to the KeyManagerial Personnel.
7. Appointment of Director:
Mrs. Asha M. Khatau Non-executive Director of your Company retires by rotation andbeing eligible offers herself for re-appointment. The details regarding Mrs. Asha M.Khatau as required under Regulation 17 of SEBI Listing Regulations 2015 are disclosed inthe notice of the Annual General Meeting. None of the other Directors are related inter seexcept Mr. Mahendra K. Khatau and Mr. Manish M. Khatau who are related to each other.
8. Remuneration of Directors and Key Managerial Personnel:
Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the details of remuneration of Directors and Key ManagerialPersonnel are as furnished in Annexure A.
9. Statutory Auditors:
Pursuant to the provisions of Section 139 of the Companies Act 2013 CNK &Associates LLP Chartered Accountants Mumbai were appointed as the Statutory Auditors ofthe Company on 29th September 2017 for a period of five years to hold officeuntil the conclusion of the 56th Annual General Meeting. They have confirmedthat they are not disqualified from continuing as Auditors of the Company.
The on financial statements referred to in the Auditor's Report are self-explanatoryand do not call for any further comments. The Auditor's Report does not contain anyqualification reservation adverse remark or disclaimer.
10. Secretarial Audit Report:
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. Ragini Chokshi & Co. Company Secretaries Mumbai to undertakeSecretarial Audit of the Company for the financial year ended 31st March 2021.The Secretarial Audit Report in the prescribed Form MR-3 issued by Ragini Chokshi& Co. (Company Secretaries) forms part of this Annual Report.
In addition to Secretarial Audit Report SEBI has introduced Annual SecretarialCompliance Report for listed Companies. The said report was issued by the M/s. RaginiChokshi & Co. Company Secretaries.
11. Instances of fraud if any reported by the Auditors:
There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Companies Act 2013.
12. Statement on compliance of applicable Secretarial Standards:
The Company complies with all applicable mandatory provisions of Secretarial Standardsissued by the Institute of Company Secretaries of India.
13. Corporate Governance:
The Company has taken appropriate steps and measures to comply with all CorporateGovernance regulations and related requirements as envisaged under Regulation 27 ofListing Regulations. A separate report on Corporate Governance along with a certificatefrom Ragini Chokshi and Co. Practicing Company Secretaries with regard to compliance ofconditions of Corporate Governance as stipulated in Regulation 34(3) of the ListingRegulations forms part of this Annual Report.
A certificate from Ragini Chokshi and Co. Practicing Company Secretaries has alsobeen received stating that none of the Directors on the Board of the Company have beendebarred or disqualified from being appointed or continuing as Directors of the Company bySEBI Ministry of Corporate Affairs (MCA) or any such statutory authority.
14. Training and Familiarization Programme for Directors:
The Company has provided information and made the Independent Directors aware about themajor developments in legal and regulatory areas particularly regarding Companies Act2013 and Regulation 25 (7) of SEBI Listing Regulations 2015. The details ofFamiliarization Programme for the Independent Directors are available on the website ofthe Company at www.indokem.co.in.
15. Statement of declaration given by Independent Directors:
All the Independent Directors have submitted their declaration to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013and pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015so as to qualify themselves to be appointed as Independent Directors under the provisionsof the Companies Act 2013 and the relevant rules.
16. Particulars of Employees:
None of the employees of the Company fall under the limits laid down in Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
17. Directors' Responsibility Statement:
Pursuant to Section 134(3)(c) read with 134(5) of the Companies Act 2013 yourDirectors hereby confirm that:
(i) In the preparation of the Annual Accounts the applicable accounting standards havebeen followed and there are no material departures;
(ii) Appropriate accounting policies have been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theProfit of the Company for that period;
(iii) Proper and sufficient care had been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theAssets of the Company and for preventing and detecting fraud and other irregularities;
(iv) The Annual Accounts had been prepared on a going concern basis;
(v) The Internal Financial Controls had been laid down to be followed by the Companyand the such internal financial controls are adequate and are operating effectively; and
(vi) In order to ensure compliance with the provisions of all applicable laws propersystems had been devised and that such systems were adequate and operating effectively.
As required under Regulation 34(2) read with Schedule V of SEBI Listing Regulations2015 the Management Discussion and Analysis is enclosed as a part of the AnnualReport.
The Company has taken necessary steps to adhere to all the requirements of SEBI ListingRegulations 2015.
A report on Corporate Governance together with the Certificate of the StatutoryAuditors confirming compliance with the conditions of Corporate Governance as stipulatedin Regulation 34(3) read with Schedule V of SEBI Listing Regulations 2015 is included asa part of the Annual Report.
19. Extract of Annual Return:
Pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of Annual Return in theprescribed Form MGT-9 for the financial year ended 31st March 2021 is hostedon the Company's website and can be accessed at https://www.indokem. co.in.
20. Number of Meetings of the Board:
During the year four Board Meetings and four Audit Committee Meetings were convenedand held. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013. The Requisite quorum was present during all the Meetings.Intimation of the Board meetings and Committee meetings are given well in advance andcommunicated to all the Directors. Normally Board meetings and Committee meetings areheld at the Registered Office of the Company. The agenda along with the explanatory aresent in advance to all the Directors in accordance with the Secretarial Standard-1 issuedby the Institute of Company Secretaries of India. Senior Executives are invited to attendthe Board meetings as and when required. For details of the meetings of the Board pleaserefer to the Corporate Governance Report which forms part of this report.
21. Performance Evaluation of the Board:
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and theCorporate Governance requirements as prescribed under SEBI Listing Regulations 2015. Theperformance of the Board was evaluated by the Board after seeking inputs from all theDirectors on the basis of the criteria such as the Board composition and structureeffectiveness of Board processes information and functioning etc.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee members on the basis of the criteria such as the composition of Committeeseffectiveness of Committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Directors on the basis of the criteria such as contributions of individualDirector to the Board and Committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the Chairman was also evaluated on the key aspects of his role.
A separate meeting of Independent Directors was convened in the month of February2021 to discuss the following:
(i) Review the performance of Non-independent Directors and the Board as a whole;
(ii) Review the performance of the Chairman of the Company taking in to account theviews of Executive Directors and Non-executive Directors;
(iii) Assess the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
All Independent Directors were present at the Meeting and discussed the above andexpressed their satisfaction.
22. Policy on Directors' Appointment and Remuneration and other details:
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this report.
23. Internal Financial Control Systems and their Adequacy:
Company has established Internal Financial Control over financial reporting in thefinancial year 2016-17.
The details in respect of Internal Financial Control and their adequacy are included inthe Management Discussion and Analysis which forms part of this report.
24. Disclosure of composition of Audit Committee and providing Vigil Mechanism /Whistle Blower:
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report. The composition of the Audit Committeeconsists of majority of Independent Directors.
The Company has established a vigil mechanism and overseas through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the Chairman of the AuditCommittee on reporting issues concerning the interests of employees and the Company. TheCompany has a vigil mechanism named Vigil Mechanism / Whistle Blower Policy to deal withinstance of fraud and mismanagement if any. The detail of the Policy is posted on thewebsite of the Company.
25. Share Capital:
During the year under review the Company has not issued any shares. There is no changein share capital structure of the Company during the financial year 2020-21. There was nopublic rights preferential or bonus shares issued during the year. The Company hasneither issued any shares with differential voting rights sweat equity shares nor has itgranted any stock options. The Company has not bought back any of its securities duringthe year under review.
26. Code of Conduct:
The Company has laid down a Code of Conduct applicable to the Board of Directors andsenior management which is available on Company's website. All Board members and seniormanagement personnel have affirmed compliance with the Code of Conduct.
27. Insider Trading Policy:
As required under the new Insider Trading Policy Regulations of SEBI your Directorshave framed Insider Trading Regulations and Code of Internal Procedures and Conducts forRegulating Monitoring and Reporting of Trading by Insider. For details please refer tothe Company's website.
28. Disclosure under Sexual Harassment of Women At Workplace (Prevention ProhibitionAnd Redressal) Act 2013:
In line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has set up InternalComplaints Committees at its workplaces to redress complaints received regarding sexualharassment. No complaints have been reported during the financial year 2020-21. Allemployees (permanent contractual temporary trainees) are covered under this policy.
29. Particulars of Loans Guarantees or Investments:
Pursuant to Section 186 of the Companies Act 2013 the details of loans giveninvestments made or guarantees given are given in Note No. 28 to the financial statementsfor the financial year 2020-21.
The loans investments guarantees and securities provided by the Company during thefinancial year ended 31st March 2021 together with the existing loansinvestments guarantees and securities do not exceed the limits prescribed under Section186(2) of the Act.
30. Fixed Deposits:
The Company has neither accepted nor renewed any deposits falling within the purview ofSection 73 of the Companies Act 2013 read with Rule 2(c) of the Companies (Acceptance ofDeposits) Rules 2014 as amended from time to time and as such no amount of principal orinterest was outstanding as of the date of the Balance Sheet. The Company had no unpaid /unclaimed deposit(s) as on 31st March 2021. Therefore details mentioned inRule 8(5) (v) & (vi) of Companies (Accounts) Rules 2014 relating to deposits coveredunder Chapter V of the Act is not required to be given.
31. Transactions with Related Parties:
All Related Party Transactions that were entered into during the financial year were onan arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Act and the Listing Regulations. None of the transactionswith related parties fall under the scope of Section 188(1) of the Companies Act 2013.All Related Party Transactions are placed before the Audit Committee and before the Boardfor their prior approval. Prior approval of the Audit Committee is obtained on a yearlybasis for the transactions which are of a foreseen and repetitive nature. The Company hasalso sought approval of the Members for approval of such related party transactions as perthe requirements of the Listing Regulations. The policy on Related Party Transactions asapproved by the Board is uploaded on the Company's website. All the Related PartyTransactions as entered into by the Company were on arm's length basis and in the ordinarycourse of business. 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 arestated in Annexure B in Form AOC-2 which forms part of this report.
All the properties and insurable interests of the Company including the buildingsplant and machineries and stocks have been adequately insured.
33. Corporate Restructuring:
The Board of Directors of the Company at its meeting held on 27th July2021 have considered and approved a Scheme of Amalgamation (the "Scheme")between the Company and Refnol Resins and Chemicals Limited ("RRCL"). The schemecontemplates the amalgamation of RRCL with the Company. The appointed date for the schemeis 1st April 2021 or such other date as may be fixed or approved by theNational Company Law Tribunal ("NCLT") as and when applicable.
The Scheme is subject to receipt of approvals of shareholders and creditors of theCompanies involved and approval of other regulatory authorities as may be requiredincluding those of the BSE Limited Securities and Exchange Board of India("SEBI") and the National Company Law Tribunal Mumbai Bench ("NCLT").
The corporate restructuring is viewed as a potential value creator for all shareholderscombined with an objective of consolidating the business activities expand the businessand achieve larger product portfolio economies of scale efficiency optimisation oflogistics and distribution network. It also creates an opportunity for pooling ofresources resulting in stronger balance sheet and net worth to meet future investmentrequirements. Once the scheme is made effective after due regulatory and other approvals(as may be required).
34. Material Changes and Commitments:
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the report.
35. State of Company's Affairs:
There is no change in the nature of business during the year under review. No order hasbeen passed by any Regulatory Court or Tribunal which can impact the going concern statusof the Company and its operations in future.
36. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:
Your Company is engaged in the continuous process of energy conservation by way ofimproved operational and maintenance practices:
A. Conservation of Energy:
(a) Energy Conservation measures taken:
(i) Electrical Energy:
Regular preventive / predictive maintenance of electrical system is carried outto ensure minimum loss of energy / power supply.
Regular upgradation in electrical system is done so as to minimize consumptionof electrical power supply.
(ii) Furnace Oil / LDO Consumption:
There is no major consumption of Furnace Oil / Light Diesel Oil. However there aresome processing activities carried out limiting the consumption of energy.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy:
Apart from the above mentioned strategies your Company is in the process to upgradeand install new machineries which will altogether result in energy saving and will add tooperational efficiency in coming years.
(c) Impact of the measures at (a) and (b) for reduction of consumption of energy andconsequent impact on the cost of production:
There is no such special impact for the same.
(d) Energy consumption and energy consumption per unit of production:
As per Form- A forming part of Annexure C
B. Technology Absorption:
Your Company has taken positive efforts for technology absorption and its up gradation;
(a) Modification in air conditioning system to improve process conditions.
(b) Modification in existing machines for high value and new products developmentsincluding process simplification.
(c) The Company focused its Research and Development efforts on process and processdevelopment of new products and formulations trouble shooting.
There are various benefits resulted due to above factors and measures been consideredsuch as:
(i) Cost reduction
(ii) Improvement in quality
(iii) Improvement in operating performance
(iv) New product developments
37. Foreign Exchange Earnings and Outgo:
(Rs. in Lakhs)
|PARTICULARS ||31.03.2021 ||31.03.2020 || |
|I. Foreign Exchange Earned || || || |
|F. O. B. Value of Export ||2379 ||2359 || |
|II. Foreign Exchange Outgo || || || |
|C. I. F. Value of Imports of Raw Materials ||671 ||318 || |
|Expenses in Foreign Currency ||2 ||10 || |
|TOTAL ||673 ||328 || |
38. Safety Health and Environment:
The Company encourages a high level of awareness of safety issues among its employeesand strives for continuous improvement. Employees are trained in safe practices to befollowed at work place.
Your Company attaches utmost importance to the health of its employees. Periodiccheckup of employees is done to monitor their health. Health related issues if any arediscussed with visiting Medical Officer.
Company always strives hard to give importance to environmental issues in normal courseof operations. Adherence to environmental and pollution control norms as per MaharashtraPollution Control guidelines is of highest concern to the Company.
39. Risk Management:
The Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. The Company periodically assessesrisks in the internal and external environment along with the cost of treating risks andincorporates risk treatment plans in its strategy business and operational plans. TheCompany through its risk management process strives to contain impact and likelihood ofthe risks within the risk appetite as agreed from time to time with the Board ofDirectors. The Board of Directors has developed and implemented Risk Management Policy forthe Company. There are no risks which in the opinion of the Board threaten the existenceof the Company. However some of the risks which may pose challenges are set out in theManagement Discussion and Analysis Report which forms part of this report.
40. Research and development:
Your Company continuously makes significant investments in research and development(R&D) to develop products that the textile industry needs today and will needtomorrow. Your Company's in-house laboratories have produced a number of products that areused by textile industry around the world.
41. Committees of Directors and Key Managerial Personnel:
Composition of Audit Committee of Directors Nomination and Remuneration Committee ofDirectors and Stakeholders Relationship / Grievance Committee of Directors number ofmeetings held of each Committee during the financial year 2020-21 and meetings attended byeach member of the Committee as required under the Companies Act 2013 are provided inCorporate Governance Report forming part of the report.
42. Corporate Social Responsibility (CSR):
Your Company does not fall under the criteria of Corporate Social Responsibility aslaid down under Section 135 of the Companies Act 2013 and by virtue of above your Companyhas not initiated any initiative for the same.
43. Cost Audit:
Your Company does not fall under the eligibility criteria to conduct Cost Audit.Company has maintained Cost Records as required under Section 148 of the Companies Act2013 during the financial year 2020-21.
44. Cautionary Statement:
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother factors such as litigation and industrial relations.
Your Company's shares are listed with The Bombay Stock Exchange (BSE Limited) MumbaiPhiroze Jeejeebhoy Towers Dalal Street Fort Mumbai - 400 001. (Stock Code - 504092).The Company confirms that it has paid the Annual Listing Fees for the year 2021-22 to BSEwhere the Company's Shares are listed.
The Board of Directors is thankful to the employees customers vendors investors ofthe Company for their continuous support and is grateful for the confidence and faithshown by them. Your Directors take this opportunity to place on record their sinceregratitude to the Banks Central and State Government Departments and the Local Authoritiesfor their guidance and support.
| ||For and on behalf of the Board |
| ||Sd/- |
| ||Mr. Mahendra K. Khatau |
|Place: Mumbai ||Chairman & Managing Director |
|Date: 13th August 2021 ||DIN:00062794 |