Your Directors have pleasure in presenting their Thirty Fifth Annual Report togetherwith the Audited Statement of Accounts for the financial year ended 31st March 2017.
FINANCIAL RESULT: The summarized financial results of the Company for the yearended 31st March 2017 are presented below:
| ||2016-2017 ||2015-2016 |
| ||Rupees in Lacs ||Rupees in Lacs |
|Gross Sales including other Income ||19737.41 ||21981.62 |
|Add: Excise Duty Refund ||0.00 ||0.00 |
|Gross Profit before interest Depreciation and Taxation ||1263.42 ||443.63 |
|Interest ||446.34 ||644.42 |
|Depreciation ||529.69 ||530.10 |
|Provision for Taxation ||90.00 ||0.00 |
|Less: MAT Credit ||0.00 ||0.00 |
|Deferred Tax (Income) / Expenses ||279.85 ||-303.22 |
|Tax Adjustment of earlier year ||0.00 ||0.00 |
|Net Profit for the year ||477.24 ||-1034.11 |
|Surplus brought forward from previous year ||2276.20 ||3310.31 |
|Balance Available for Appropriation ||2753.44 ||2276.20 |
|Appropriations || || |
|a) General Reserve || ||- |
|b) Dividend || ||- |
|c) Dividend Tax || ||- |
|Balance carried forward to Balance Sheet ||2753.44 ||2276.20 |
The Performance Plans and Prospects of your Company
Your company is a Chemicals manufacturer and has Synthetic Resin and Terpenes asprimary segments. Both segments of the Company have performed well during F. Y. 2016-2017.It has achieved sales turnover of Rs. 197 Crores during F. Y. 2016-17 approximately 10 %of revenue came from Synthetic Resin and 90 % from Terpenes.
Going forward we have planned to focus our energies on both divisions. We haverealigned our business to ensure profitable growth with greater capital efficiency andhigher return on capital employed.
Your company has been certified by DNV for ISO 9001/14001/OHSAS 18001 CertifiedCompany and is proud of this achievement.
Post the unfortunate fire in the synthetic resin segment during June 2015 productionwas stopped. Consequentially your Company faced difficulties with blocked working capitaldue to unutilized raw material and delayed receivables as well as implications of variousforce majeure clauses. Due to the hard efforts of the employees and support fromshareholders over the past 2 years your Company has been able to selectively restart theproduction of few high margin synthetic resins. We have chosen those products which arenot commoditized where we have a competitive edge and a cost advantage by way of ourchemistry process capabilities. These products are used in the Adhesives Rubber Tyreindustries. Our goal is to grow this business steadily in the coming years.
Going forward your Company is increasing its investment in R&D and is workingclosely with technology consultants to provide superior products to the Adhesives Rubberand Inks industries. Our goal is to capture market share by substituting imports byproviding higher quality products at competitive prices.
Your Company manufactures a range of products under the Terpene segment namelyCamphor Dipentine and Sodium Acetate. We are undertaking measures to scrutinize each stepof the manufacturing process and bring improvements through reduction in time cyclesincrease in yields and reduction in energy costs. Various efforts have already broughtresults which give us the confidence to continue in this direction. The company is workingwith global technologists and scientists to overcome age old bottlenecks which have led toincreased production outputs and superior quality.
Camphor is our primary product in this segment contributing 80% of Terpene sales. Asit is a naturally derived product that completely burns off with no residue it finds itswidest application in religious use in the domestic market as it imparts a sense ofcomplete purity to the religious devotee. We are pleased with our performance in thismarket and are confident of continuing growth in the years to come as we strive hard tocapture larger market share. We are increasing our presence with distributors and retailoutlets in which we are now present with our own brand "Mangalam". We are alsopursuing contract manufacturing and private labeling opportunities as suitable.
Dipentene a by-product in the manufacturing is used as a solvent in the paintindustry. Demand for Dipentene grows in line with the demand for paint. Therefore we seethis product as being a contributor to growth for the foreseeable future in India.Dipentene is also gaining interest in the export market as a substitute for"Limonene" (obtained from orange oil). Dipentene is a ready substitute informulations of cleaning and degreasing agents as Limonene supply shortages get moreacute.
Sodium Acetate a by-product manufactured is used as a dye intermediate to increasealkaline content by Dye manufacturers. It has wide range of application in the leathertanning industries and is being exported to Europe. Your Company is exploringopportunities to increase this export business.
Going forward your company will work to increase its production quantities of camphorand its related products explore opportunities in derivates of intermediate products(fragrance and flavor Industry) improve its quality to compete with China in theinternational market and invest further in its retail brand of camphor tablets"Mangalam" which is already gaining prominence in Modern Trade. Our goal is togrow this segment in the coming years.
With a view to conserve the resources in long run your Directors have not recommendedany dividend for the year ended 31st March 2017.
TRANSFER TO RESERVE:
Your Company proposes to transfer Rs. Nil to General Reserves out of the amountavailable for appropriations during the financial year 2016-2017 (as compared to Rs. Nilin the previous financial year).
MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW
The Company is engaged in the manufacturing and selling activities of Camphor SodiumAcetate and by products Terpene Chemicals and Synthetics Resins at its Units located atKumbhivali Village Taluka Khalapur Khopoli District Raigad Maharashtra
A calendar of meeting is prepared and circulated in advance to the Directors.
During the year five meetings were convened and held the details of which are given inthe Corporate Governance Report.
The Board has on the recommendation of the Nomination and Remuneration Committeeapproved policy for selection appointment and remuneration of Directors and seniormanagement.
Audit Committee of the Board has been constituted in terms of Listing Regulations andSection 277 of the Companies Act 2013 constitution and other details of the AuditCommittee are given in Corporate Governance Report.
The Board has carried out the annual evaluation of its own performance and each of theDirectors individually including the independent Directors as well as the working of itsCommittees.
DETAILS OF THE SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
Pursuant to Section 148(2) of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules and 2014 your company is required to get its costaccounting records audited by a Cost Auditor Accordingly the Board at its meeting held on6 May 2017 has on the recommendation of the Audit Committee appointed M/s. NKJ &Associates (Cost Accountants) to conduct the Audit of the cost accounting records of theCompany for F. Y. 2017-2018 on a remuneration of INR 50000/- plus taxes as applicableand reimbursement of actual travel and out of pocket expenses. The remuneration is subjectto the ratification of the members in terms of Section 148 read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014 and is accordingly placed for yourratification. The due date for filing the cost Audit Report of the Company for theFinancial Year ended 31st March 2016 was 30 September 2016 and the Cost Audit Report wasfiled in XBRL mode on 28 September 2016.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
There is a change in the Board of Directors of the Company. At present there are fiveDirectors on the Board i.e. Mr. Kamalkumar Dujodwala Mr. Pannkaj Dujodwala and threeIndependent Directors i.e. Mr. Rajkumar Jatia Sharad Saraf and Mrs. Anita Shriya thedetails of which are given in the Corporate Governance. Mr. Rajkumar Saraf has resigned on19th July 2017 and Mr. S. N. Baheti has joined the Board on 14th August 2017 as anadditional Director
The Independent Directors are not liable to retire by rotation and the ManagingDirector is appointed for a period of 5 years. Hence the Company has only one Director onthe Board to retire by rotation. In accordance with the provisions of the Companies Act2013 and the Company's Articles of Association Mr. Kamalkumar Dujodwala retires byrotation at the ensuing AGM and being eligible offer himself for reappointment asDirector.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of section 134(3) (c) of the Companies Act 2013 your Directors to the bestof their knowledge and belief and according to the information and explanations obtainedby them in the normal course of their work state that in all material respects;
a) That in the preparation of the annual financial statements for the year ended March2017 the applicable accounting standards have been followed;
b) That appropriate accounting policies have been selected applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company as at March 31 2017 and of theprofit of the company for the year ended on that date
c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions Companies Act 2013 for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities.
d) That the annual financial statements have been prepared on a going concern basis.
e) That proper internal financial controls were in place and the financial controlswere adequate and operating effectively; and
f) That systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
During the year the company has not accepted deposits from the Shareholders and othersand that the Company has complied with the provisions of Section 73 of the Companies Act2013 and the rules made there under.
M/s. NGST & Associates Chartered Accountants (Firm Registration No. 135159W) wereappointed as statutory Auditors of the Company at the last Annual General Meeting till theconclusion of 39th Annual General Meeting of the Company. They are eligible to continue asstatutory Auditors at the ensuing Annual General Meeting. Your Directors recommend theirre-appointment as statutory auditors at the ensuing Annual General Meeting.
The observation and comments given in the Auditors report read together with the notesto the accounts are self explanatory and hence do not call for any further information andexplanation under Section 134(3) of the Companies Act 2013.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY THE COMPANY
The Company has not given any loans or guarantees or investments covered under theProvisions of Section 186 of the Companies Act 2013
RELATED PARTY TRANSACTION:
All related party transactions that were entered into during the financial year were atan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the company with the promoters directorskey managerial personnel or other designated persons which may have a potential conflictwith the interest of the company at large.
All related party transactions are placed before the Audit Committee for approval.Prior Omnibus approval of the Committee is obtained on a quarterly basis for thetransactions which are of a foreseen and repetitive nature.
Details of the related party transaction during the year as required under ListingRegulations and Accounting Standards 18 are given in Note No. 31 in the financialstatements.
ESTABLISHMENT OF VIGIL MECHANISM
The Company has in place a vigil mechanism pursuant to which a Whistle Bowler Policyhas been in force. The Policy was approved on 06.01.2015. This policy inter alia providesa direct access to Whistle Bowler to the Chairman of the Audit Committee on his dedicatedemail-id firstname.lastname@example.org. The Whistle Bowler Policy covering all employees anddirectors is hosted on the Company's website at www.mangalamorganics.com.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company has designed and implemented a process driven framework for internalfinancial controls ("IFC") within the meaning of the explanation to Section134(5) (e) of the Companies Act 2013
For the year ended 31st March 2017 the Board is of the opinion that the Company hassound IFC commensurate with the nature and size of its business operations whereincontrols are in place and operating effectively and no material weaknesses exist. TheCompany has a process in place to continuously monitor the existing controls and identifygaps if any and implement new and / or improved controls wherever the effect of such gapswould have a material effect on the company's operation.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of women at the workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment.
All employees (Permanent contractual temporary trainees) are covered under thispolicy. The following is a summary of sexual harassment complaints received regardingsexual harassment.
|- No. of complaints received ||: Nil |
|- No. of complaints disposed off ||: Nil |
EXTRACT OF THE ANNUAL RETURN
In accordance with Section 134(3) and Section 92 of the Act an extract of the AnnualReturn as of 31st March 2017 in Form MGT-9 forms part of this Report as Annexure - B
SECRETARIAL AUDIT REPORT
Pursuant to the Provisions of Section 204 of the Companies Act 2013 Mr. YogeshSharma the Practicing Company Secretary (COP 12366) has been appointed to undertake theSecretarial Auditor for financial year ended 31.03.2017. The Secretarial Audit reportforms part of this Annexure - D
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
As required under Section 134 (3) (m) of the Companies Act 2013 read with Rule 8 ofthe Companies (Accounts) Rules 2014 the particulars relating to conservation of energytechnology absorption and foreign exchange earnings and outgo are given in Annexure"A" hereto and forms part of this report.
The Company's policy on programmes and measures to familiarize Independent Directorsabout the Company its business updates and development includes various measures viz.issue of appointment letters containing terms duties etc. management informationreports presentation and other programs as may be appropriate from time to time. Thepolicy and programme aims to provide insights into the Company to enable IndependentDirectors to understand the business functionaries business model and other matters. Thesaid policy and details in this respect is displayed on the Company's website.
The relation between the Company and its employees continue to be cordial. There wereno employees during the year drawing remuneration more than prescribed ceiling undersection 134 of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules2014.
CORPORATE GOVERNANCE REPORT
The Company has complied with the Corporate Governance requirements under the Act andas stipulated under the Listing Regulations. A report on the Corporate Governance alongwith the certificate from the statutory auditors is separately given in the annual report.
CORPORATE SOCIAL RESPONSIBILITY:
Pursuant to Section 135 of the Companies Act 2013 and the Rules made there under theBoard of Directors has constituted the Corporate Social Responsibility (CSR) Committeeunder the Chairmanship of Mr.Sharad Saraf an Independent Director. The projects areidentified and adopted as per the activities included and amended from time to time inSchedule VII of the Companies Act 2013. Accordingly the company operates CSR Policy inthe areas of promoting social welfare schemes in villages for the uplift of standard ofliving of poor people. It also operates in area of providing free drinking water. TheCorporate Social responsibility Policy recommended by the CSR Committee of the Directorshas been approved by the Board of Directors of the Company. The same is available on thewebsite of the Company.
The disclosure relating to the amount spent on Corporate Social Responsibilityactivities of the Company for the financial year ended 31st March 2017 is attached tothis report as "Annexure-C".
Your Directors state that the Company has made disclosures in this report for the itemsprescribed in Section 134(3) of the Act read with Rule 8(3) of the Companies (Accounts)Rules 2014 to the extent the transactions took place on those items during the year.
There are no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this report.
The Board of Directors express their appreciation for the sincere co-operation andassistance of Government Authorities Bankers Customers suppliers Business Associatesand the efforts put in by all the employees of the Company. The Board of Directorsexpresses their gratitude to all our valued shareholders for their confidence andcontinued support to the Company.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Kamalkumar Dujodwala |
| ||Chairman |
|Place: Mumbai || |
|Date: 14th August 2017 || |