To the members of Mangalam Organics Limited
Your Directors have pleasure in presenting the Thirty Seventh Annual Report on theperformance of the Company together with the audited financial statements for theFinancial Year ('FY') ended March 31 2019.
The financial performance of your Company for the year ended March 31 2019 issummarized below:
|Particulars ||2018-19 ||2017-18 |
| ||(Rs. in Lakhs) ||(Rs. in Lakhs) |
|Revenue from operations ||42462.48 ||24423.73 |
|Other income ||179.97 ||124.67 |
|Total revenue ||42642.45 ||24548.41 |
|Profit before depreciation and finance costs ||11044.28 ||2645.44 |
|Depreciation and amortization expense ||621.17 ||550.28 |
|Finance Cost ||363.41 ||256.27 |
|Profit after depreciation finance costs and exceptional items and before tax ||10162.58 ||1838.89 |
|Tax expense ||2896.83 ||393.32 |
|Profit for the year ||7265.75 ||1445.56 |
|Other comprehensive income ||26.24 ||13.23 |
|Total comprehensive income for the Year ||7239.51 ||1432.33 |
NATURE OF BUSINESS AND FINANCIAL PERFORMANCE
Your Company is in the business of chemicals manufacturing and has Terpenes andSynthetic Resins as primary segment which falls under a single segment of chemicals. YourCompany has performed well in F.Y. 2018-19. Your Company has achieved Net Sales Turnoverof Rs. 424.62 Cr. with a Profit after Tax of Rs. 72.39 Cr. during F.Y. 2018-19.Approximately 95% of the revenue has come from Terpene Chemicals. There was no change innature of the business of the Company during the year under review.
The Directors are pleased to recommend a dividend of Re.1 per equity share of the facevalue of Rs. 10/- each for the year ended March 31 2019 (previous year: Re.1 per EquityShare). The dividend as recommended by the Board if declared at the ensuing AnnualGeneral Meeting will be paid to those members whose names appear in the Register ofMembers at the end of business hours on September 13 2019. In respect of shares held indematerialized form the dividend will be paid on the basis of beneficial ownership asper the details to be furnished for the purpose by National Securities Depository Limited(NSDL) and Central Depository Services (India) Limited (CDSL) as at the end of businesshours on September 13 2019.
UNCLAIMED AND UNPAID DIVIDEND AND TRANSFER OF SHARES TO IEPF
As on March 31 2019 amount of Rs. 386213/- was lying in the unpaid equity dividendaccount of the Company in respect of the dividends for FY 2017-18. Members who have notyet received/ claimed their dividend entitlements are requested to contact the Company orthe Registrar and Transfer Agents of the Company. The list of such shareholders for unpaidand unclaimed dividend for FY 2017-18 is placed on the Company's websitewww.mangalamorganics.com.
Pursuant Section 124 of the Companies Act 2013 read with the Investor EducationProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016("Rules") all dividends remaining unpaid or unclaimed for a period of sevenyears and also the shares in respect of which the dividend has not been claimed by theshareholders for seven consecutive years or more are required to be transferred toInvestor Education Protection Fund in accordance with the procedure prescribed in theRules. In this regard all dividends remaining unpaid or unclaimed for a period of sevenyears and also the shares in respect of which the dividend have not been claimed by theshareholders for seven consecutive years for FY 2010-11 have been transferred to InvestorEducation Protection Fund (IEPF) account on November 2 2018 and February 15 2019respectively. The members can claim the transfer of such shares from IEPF in accordancewith the procedure and on submission of the documents as prescribed from time to time. Thelist of such shareholders whose shares and dividend has been transferred to IEPF is placedon the Company's website www.mangalamorganics.com.
TRANSFER TO RESERVE:
The Board of Directors have decided to retain the entire amount of profits for FY2018-19 in the Retained Earnings.
Consequent upon the completion of the buyback of shares by the Company on May 08 2018the paid up equity share capital changed from Rs. 90526800/- divided into 9052680Equity shares of the face value of Rs. 10/- each to Rs. 85644400/- divided into8564440 Equity shares of the face value of Rs. 10/- each.
During the year under review your Company neither accepted any deposits nor there wereany amounts which were classified as 'Deposits' in terms of Section 73 of the CompaniesAct 2013 read with the Companies (Acceptance of Deposit) Rules 2014.
SUBSIDIARY/JOINT VENTURES / ASSOCIATES COMPANIES:
The Company does not have any subsidiary/ joint venture or associate Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Board of Directors and Key Managerial Personnel
The Board of Directors of the Company comprises 6(Six) Directors. Out of the saidDirectors 4(Four) are Independent Directors including a Woman Director and 2(Two) areExecutive Directors. There was no change in the composition of Board of Directors duringthe year under review.
During the year the Board of Directors appointed Mr. Sanjay Bhardwaj as the ChiefExecutive Officer with effect from March 19 2019 and Ms. Heena Tank as the CompanySecretary & Compliance Officer with effect from March 19 2019. Mr. Ankur Gala ceasedto be the Company Secretary and Compliance Officer with effect from March 6 2019. As onthe date of this report the Company has following Key Managerial Personnel:
1. Mr. Kamalkumar Dujodwala Executive Director
2. Mr. Pannkaj Dujodwala Managing Director
3. Mr. Sanjay Bhardwaj Chief Executive Officer
4. Mr. Shrirang Rajule Chief Financial Officer
5. Ms. Heena Tank Company Secretary
In accordance with the provisions of Section 152 read with Section 149(13) of theCompanies Act 2013 Mr. Pannkaj Dujodwala is liable to retire by rotation. The saidDirector has offered himself for reappointment and resolution for his reappointment isincorporated in the Notice of the ensuing Annual General Meeting.
Declarations by Independent Directors
Pursuant to the provisions of sub-section (7) of Section 149 of the Companies Act2013 the Company has received individual declarations from all the Independent Directorsconfirming that they fulfill the criteria of independence as specified in Section 149(6)of the Companies Act 2013.
In accordance with the provisions of Sections 149 150 152 and any other applicableprovisions of the Companies Act 2013 ("the Act") and the Companies (Appointmentand Qualification of Directors) Rules 2014 (including any statutory modification(s) orre-enactment thereof for the time being in force) read with Schedule IV to the Act andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI(Listing Regulations)") as amended from time to time Mr. Sharad Kumar Saraf (DIN:00035843) and Mr. Rajkumar Jatia (DIN: 00136303) who were appointed as an IndependentDirectors of the Company for a term of five years up to September 18 2019 by the membersat the 32th Annual General Meeting in terms of Section 149 of the Companies Act 2013are eligible to be re-appointed as an Independent
Director of the Company to hold office for further term of five years with effect fromSeptember 19 2019 to September 18 2024 and resolution for their reappointment isincorporated in the Notice of the ensuing Annual General Meeting.
Annual Evaluation of Directors Committee and 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 SEBIListing Regulations. The performance evaluation was carried out by way of obtainingfeedback from the Directors through a structured questionnaire prepared in accordance withthe policy adopted by the Board and also taking into consideration the Guidance Note onBoard Evaluation issued by SEBI. The structured questionnaire prepared to evaluate theperformance of the board included criteria such as the board composition and structureeffectiveness of board processes information and functioning etc. The evaluation ofperformance of individual directors was carried out on the basis of criteria such as thecontribution of the individual director to the board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. The questionnaire for performance of the committees includedcriteria such as the composition of committees effectiveness of committee meetings 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 taking intoaccount the views of executive directors and nonexecutive directors.
DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES
The Board of Directors met 6 times during the financial year ended March 31 2019 inaccordance with the provisions of the Companies Act 2013 and rules made there under. Thedetails of the meetings of Board are given separately in the Corporate Governance Reportforming part of this Annual Report.
Director's Responsibility Statement
In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended March 31 2019 the Board ofDirectors hereby confirms that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanations relating to material departures whereverapplicable;
b) such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates 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 2019 and of theprofits of the Company for the year ended on that date;
c) proper and sufficient care was 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) the annual accounts of the Company have been prepared on a going concern basis;
e) internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Committees of Board
The Company has constituted the following Committees of Board:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders' Relationship Committee
4. Corporate Social Responsibility Committee
The details of the composition terms of reference meetings etc. are given in theCorporate Governance Report forming part of the Annual Report.
I. STATUTORY AUDITORS
M/s. NGST & Associates Chartered Accountants Mumbai (Firm Registration No.135159W) were appointed as the statutory auditors of the Company to hold office for a termof 5 years from the conclusion of the 34th Annual General Meeting held onSeptember 30 2016 until the conclusion of the 39th Annual General Meeting ofthe Company to be held in the year 2021. As per the provisions of Section 139 of the Actthey have confirmed that they are not disqualified from continuing as Auditors of theCompany.
Further the report of the Statutory Auditors along with notes to Schedules is a partof the Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the Auditors in their Report
II. COST AUDITORS:
The Board of Directors based on recommendation of the Audit Committee has appointedM/s. NKJ & Associates Cost Accountants in practice to audit the cost accounts of theCompany for the Financial Year 2019-20. In term of Rule 14 of the Companies (Audit andAuditors) Rules 2014 the remuneration payable to the Cost Auditor is required to beratified by the shareholders. Accordingly a resolution seeking ratification by themembers for the remuneration is listed as Item No. 4 of the AGM Notice as OrdinaryResolution.
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 hadappointed Mr. Yogesh M Sharma Practicing Company Secretary to undertake the SecretarialAudit of the Company for Financial year 2018-19. As required under provisions of Section204 of the Companies Act 2013 the report in respect of the Secretarial Audit carried outby Mr. Yogesh M Sharma Company Secretaries in Form MR-3 for the FY 201819 forms part tothis report. The said report does not contain any adverse observation or qualification ormodified opinion requiring explanation or comments from the Board under Section 134(3) ofthe Companies Act 2013.
The Company has complied with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year underreview are set out in Annexure I of this report in the format prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. For details regarding theCSR Committee please refer to the Corporate Governance Report which is a part of thisreport. The CSR policy is available on www.mangalamorganics.com
MANAGEMENT DISUSSION AND ANALYSIS
Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ('Listing Regulations') the Management Discussion and Analysis ispresented in a separate section forming part of this Annual Report.
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 this AnnualReport.
As on March 31 2019 the Company has following credit ratings from CRISIL:
Long Term Rating: CRISIL A-/Stable (outlook revised from 'BBB+/Positive' and Ratingreaffirmed)
Short Term Rating: CRISIL A2+ (outlook revised from 'A2' and Rating reaffirmed)
DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT 2013
Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Company's financial position have occurred between the end of thefinancial year of the Company and date of this report.
INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Statutory Auditors and the InternalAuditors of the Company on the inefficiency or inadequacy of such controls.
RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS
Adequate internal control systems commensurate with the nature of the Company'sbusiness and size and complexity of its operations are in place and have been operatingsatisfactorily. Internal control systems comprising of policies and procedures aredesigned to ensure reliability of financial reporting timely feedback on achievement ofoperational and strategic goals compliance with policies procedure applicable laws andregulations and that all assets and resources are acquired economically used efficientlyand adequately protected.
DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL
No significant and material orders have been passed by any Regulator or Court orTribunal which can have impact on the going concern status and the Company's operations infuture.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has formulated a Policy on Related Party Transactions and manner of dealingwith related party transactions which is available on the Company's website at the link:www.mangalamorganics.com
Particulars of contracts/arrangements with related parties referred to in Section188(1) of the Companies Act 2013 entered by the Company during the year under review inthe prescribed Form AOC-2 is appended as Annexure II to the Boards' Report
PARTICULARS OF LOANS GUARANTEES INVESTMENTS UNDER SECTION 186
The particulars of loans guarantees and investments given/ made if any during thefinancial year under review and governed by the provisions of Section 186 of the CompaniesAct 2013 has been furnished in financial statements as on March 31 2019.
LOAN FROM DIRECTORS
Pursuant to the provisions of Section 179(3)(d) and any other applicable provisions ofthe Companies Act 2013 read with Rules thereunder your Company has borrowed a sum uptoRs. 7.21 Crore (Rupees Seven Crore Twenty One Lakhs only) from the Directors of theCompany on the terms and conditions as furnished in Annexure III. The aforesaidloan was approved by
the Board in its meeting of May 11 2019. The Company has received a declaration fromthe Directors that the amount to be extended by them to the Company is not being given outof the funds acquired by them by borrowing or accepting loans and deposits from others.
VIGIL MECHANISM FOR THE DIRECTORS AND EMPLOYEES
In compliance with the provisions of Section 177(9) of the Companies Act 2013 theBoard of Directors of the Company has framed the "Whistle Blower Policy" as thevigil mechanism for Directors and employees of the Company.
The Whistle Blower Policy is disclosed in Investors' section on the website of theCompany at www.mangalamorganics.com
The Company has in place a Nomination and Remuneration Policy for the Directors KMPand other employees pursuant to the provisions of the Act and the SEBI Listing Regulationswhich is placed on the website of the Company on www. mangalamorganics.com.
During the year under review no instances of fraud were reported by the StatutoryAuditors of the Company.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information as required under the provisions of Section 197(12) of the CompaniesAct 2013 and Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are set out in Annexure IV attached herewith and whichforms part of this report. The relation between the Company and its employees continue tobe cordial. There were no employees during the year drawing remuneration more thanprescribed ceiling under section 134 of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014.
EXTRACT OF ANNUAL RETURN:
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended March 31 2019 made under the provisions ofSection 92(3) of the Act is attached as Annexure V and which forms part of thisReport.
Other disclosures as per provisions of Section 134 of the Act read with Companies(Accounts) Rules 2014 are furnished as under:
Conservation of energy technology absorption and foreign exchange earnings and outgo:
The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy and technology absorption have been furnished in Annexure VI withrespect to the nature of activities undertaken by the Company during the year underreview.
Service of documents through electronic means
Subject to the applicable provisions of the Companies Act 2013 all documentsincluding the Notice and Annual Report shall be sent through electronic transmission inrespect of members whose email IDs are registered in their demat account or are otherwiseprovided by the members. A member shall be entitled to request for physical copy of anysuch documents.
Internal Complaints Committee
The Internal Complaints Committee of the Company as required under The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 existsfor both Factory and Administrative Office of the Company. The Company is strongly opposedto sexual harassment and employees are made aware about the consequences of such acts andabout the constitution of the said Committee.
During the year under review no complaints were filed with the Committee of theCompany under the provisions of the said Act and no such complaints were outstanding atthe end of the FY 2018-19.
SAFETY ENVIRONMENTAL CONTROL AND PROTECTION
The Company is conscious of the importance to environmental friendly and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliance of environmental regulations and preservationof natural resources. All plants of the Company are fully complied with the lawsregulations and requirements stipulated by the concerned pollution Control Board.
ACKNOWLEDGMENTS AND APPRECIATION:
Your Directors take this opportunity to thank the employees customers suppliersbankers business partners/associates financial institutions and various regulatoryauthorities for their consistent support/ encouragement to the Company.
Your Directors would also like to thank the Members for reposing their confidence andfaith in the Company and its Management.
For and on behalf of the Board of Directors Sd/-
Date: August 12 2019