Your Directors have pleasure in presenting their report on the business and operationsof the Company for the year ended 31st March 2019.
FINANCIAL RESULTS Rs Lakhs
STANDALONE CONSOLIDATED2018-19 2017-18 2018-19 2017-18
| || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from operations ||39408 ||33946 ||40572 ||34684 |
|Other income ||134 ||105 ||113 ||96 |
|Total income ||39542 ||34051 ||40685 ||34780 |
|Profit before Finance cost depreciation & Tax ||7328 ||6452 ||7145 ||6262 |
|Finance cost ||709 ||411 ||757 ||475 |
|Depreciation ||1473 ||1184 ||1610 ||1315 |
|Profit before exceptional items and tax ||5146 ||4857 ||4778 ||4472 |
|Provision for current tax ||1303 ||1393 ||1303 ||1393 |
|Provision for deferred tax ||283 ||295 ||283 ||295 |
|Exceptional items ||1150 ||- ||- ||- |
|Net profit (After Tax) ||2410 ||3169 ||3192 ||2784 |
|Other comprehensive income (net of tax ) ||(30) ||(7) ||(30) ||(7) |
|Profit brought forward from previous years ||6523 ||4333 ||5866 ||4061 |
|Amount available for appropriation ||8903 ||7495 ||9028 ||6838 |
|Less: Appropriation || || || || |
|Transferred to general reserve ||- ||405 ||- ||405 |
|Dividend on equity shares (excluding tax) ||1107 ||443 ||1107 ||443 |
|Tax on dividends ||228 ||90 ||228 ||90 |
|Other adjustments ||- ||34 ||- ||34 |
|Closing Balance of retained earnings ||7568 ||6523 ||7693 ||5866 |
Your Company has shown a healthy performance at consolidated level in terms of revenueEBIDTA & PAT. Your Company has achieved a total revenue of '40572 lakhs from '34684lakhs in the previous year with a growth rate of 16.98%. The operating profit (EBIDTA)increased by 14% from '6262 lakhs to '7145 lakhs overall resulting into a reasonableincrease in net profits by 14.66% amounting
to '3192 lakhs as against the profit of '2784 lakhs for financial year 2017-18. The EPSon weighted average equity has increased from '10.05 in the financial year 2017-18 to'11.53 in the financial year 2018-19 leading to an increase of 14.66%.
Your Company's new manufacturing facilities at Mysore and Vizag (Pudi) have juststarted their commercial operations in the month of March 2019 for Mysore and in themonth of May 2019 for Vizag. Mainly these two plants are cater to the plastic packagingcontainers requirement of Asian Paints Limited and other clients in the South and East.Initial production capacity of each plant is 3000 Mts per annum and it may reach to 7000Mts per annum by 2022-23. At present peak capacity these plants can add '120 crores tothe top line. Your Company's initial investment is around '45 crores for both plants. Bothplants have equipped with world class Injection Molding Machines and Robotic IMLdecoration apart from HTL and screen printing equipment.
Your Company has invested a huge amount of '80.87 crores in 2018-19; including previous2 years investments the overall assets have gone up by more than 100% from '131.96 croresin 2015-16 to '260.44 crores in 2018-19. These new capacities are becoming productive andexpected to add growth in volumes from the financial year 2019-20 onwards.
Your Company has recommended a final dividend of '2 per equity share i.e. @40% of facevalue of '5 each in addition to interim dividend of '2 (40%) per equity share hithertodeclared making a total of '4 (80%) per equity share (previous year: '4 per equity share@80% of face value of '5 each) for the financial year ended 31st March 2019.The final dividend if approved will be paid to those Members whose names appear inRegister of Members as on 20th September 2019. In respect of shares held indematerialized form it will be paid to Members whose names are furnished by NationalSecurities Depository Limited and Central Depository Services (India) Limited asbeneficial owners as on that date.
This will entail an outflow of '667.66 lakhs (Inclusive of dividend tax).
The dividend payout for the year under review has been formulated keeping in view yourCompany's need for capital and rewarding shareholders.
Equity shares that may be allotted on or before the Book Closure will rank pari passuwith the existing shares and will be entitled to receive the dividend.
AUTHORIZED SHARE CAPITAL
The Authorized Share Capital of the Company as on 31st March 2019 stands at'145000000 (Rupees Fourteen crore fifty lakhs only) divided into 29000000 (Two croreninety lakhs) equity shares of '5 (Rupees Five only) each. During the year there has beenno change in the authorized share capital of the Company.
PAID UP SHARE CAPITAL
There has been no change in share capital during the financial year. The paid up sharecapital of the Company was Rs138455260 divided into 27691052 shares of Rs 5 each ason 31st March 2019.
Your Company has received credit rating from two agencies D&B Rating and ICRA.
The credit rating is 5A1 and condition is stated as Good.
D&B Indicative Risk Rating of 5A1 implies that the Company has a tangible net worthof '89859 lakhs and above as per the latest available financial statements. CompositeAppraisal 2 indicates that the overall status of the Company is strong.
The outlook on the long-term rating from ICRA has also been upgraded from stable topositive. The rating details are as follows:
|Instrument ||Rating |
|Term loan ||[ICRA] A- (Stable) |
|Long-term loans fund based ||[ICRA] A- |
|Short-term non- fund based ||[ICRA]A2+ |
|Long-term/short- term proposed ||[ICRA]A- |
CHANGE IN THE NATURE OF BUSINESS IF ANY
No change in the nature of Business
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year to which the financial statementsrelate and the date of this Directors' Report.
Your Company has decided to substantially wind down the operations of the wholly ownedsubsidiary "Mold- Tek Packaging FZE UAE" in view of the reduced viability.
The Company is not expecting to realize the investment made and accordingly theinvestment of '1003.20 lakhs is impaired and fully provided for. Further a provision of'146.83 lakhs is also made towards expected loss on the realization of the tradereceivables.
The consolidated financial statements of the Company prepared in accordance withapplicable Accounting Standards as specified in the Companies (Accounts) Rules 2014 formpart of the annual report. Pursuant to the provisions of Section 129(3) of the CompaniesAct 2013 (the Act) a statement containing salient features of financial statements ofsubsidiary in Form AOC 1 forms part of Board's Report.
Separate audited financial statements in respect of the subsidiary company shall bekept open for inspection at the Registered Office of the Company during working hours fora period of 21days before the date of the Annual General Meeting. Your Company will alsomake available these documents upon request by any Member of the Company interested inobtaining the same. The separate audited financial statements in respect of the subsidiarycompany is also available on the website of your Company at: http:// www.moldtekgroup.com.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Act form part of thenotes to the financial statements provided in this Annual Report.
The Company has neither accepted nor renewed any deposits from public within themeaning of Section 73 of the Act read with Companies (Acceptance of Deposits) Rules 2014during the year under review.
INTERNAL CONTROLS SYSTEMS AND ADEQUACY
The Company's internal audit systems are geared towards ensuring adequate internalcontrols commensurate with the size and needs of the business with the objective ofefficient conduct of operations through adherence to the Company's policies identifyingareas of improvement evaluating the reliability of financial statements ensuringcompliances with applicable laws and regulations and safeguarding of assets fromunauthorized use.
Details of the internal controls system are given in the Management Discussion andAnalysis Report which forms part of the Board's Report.
DETAILS OF DIRECTORS/KEY MANAGERIAL PERSONNEL
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and Regulation 16 of Securities
and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. In the opinion of the Board they fulfill the conditions ofindependence as specified in the Act and the Rules made thereunder and are independent ofthe management.
Based on the confirmations received none of the Directors are disqualified for beingappointed/re-appointed as directors in terms of Section 164 of the Companies Act 2013.
In accordance with the provisions of Section 152 of the Act Mr. P. Venkateshwara RaoDeputy Managing Director (DIN: 01254851) of the Company is liable to retire by rotationand is eligible for re-appointment.
On the recommendations of the Nomination and Remuneration Committee the Board proposedto reappoint Mr. Talupunuri Venkateswara Rao and Mr. Venkata Neeladri Varma Nadimpalli asIndependent Directors for a second term.
Mr. Vasu Prakash Chitturi Non-Executive Independent Director has resigned from thepost of Independent Director of the company w.e.f. 24th August 2019 and theBoard accepted the resignation of Mr. Vasu Prakash Chitturi in the Board meeting held on31st August 2019.The Board has placed its sincere appreciation for theservices rendered by him during his tenure.
Pursuant to the provisions of regulation 36 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Secretarial Standard 2 on General Meetingsissued by ICSI brief particulars of the directors proposed to be appointed/ re-appointedare provided as an annexure to the notice convening the AGM.
EMPLOYEE STOCK OPTION SCHEME
The Company has in operation Mold-Tek Packaging Employees Stock Option Scheme-2016 forgranting stock options to the employees of the Company in accordance with the SecuritiesExchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999 and Securities Exchange Board of India (Share Based employee benefits)Regulations 2014.
The Company has granted the options under this scheme in the Board meeting held on 20thJuly 2018 in the financial year 2018-19.
There have been no changes in the Scheme.
Disclosures pursuant to Regulation 14 of the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 are enclosed as Annexure-A to thisreport.
The Annexure-A is also available on website of the Company at www.moldtekgroup.com
The Company has adopted Governance Guidelines or code of conduct on Board IndependentDirector Key Managerial Personnel and senior managerial personnel. The GovernanceGuidelines or code of conduct cover aspects relating to Board diversity definition ofindependence and duties of independent directors Code of Conduct moral ethics andprinciples to be followed.
STATEMENT ON COMPLIANCE WITH APPLICABLE SECRETARIAL STANDARDS
It is hereby stated that the Company has duly complied with applicable SecretarialStandards for the year 2018-19.
NOMINATION REMUNERATION AND PERFORMANCE EVALUATION POLICY
The requisite details as required by Section 134(3)Section 178(3) & (4) of the Actand Regulation 34(2) of Securities and Exchange Board of India(Listing Obligations andDisclosure Requirements) Regulations 2015 is provided in the Report on CorporateGovernance.
TRANSACTIONS WITH RELATED PARTIES
The requisite details as required by Sections 134 & 188 of the Act and Regulation23 34(3) of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is provided in the Report on Corporate Governance andfinancial statements.
BOARD AND COMMITTEE MEETINGS
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Section 173(1) of the Act and Regulation 17(2) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and the reviews performed by management and the relevant BoardCommittees including the Audit Committee the Board is of the opinion that the Company'sinternal financial controls were adequate and effective during the financial year 2018-19.
Accordingly pursuant to Section 134(3)(c) and 134(5) of the Act the Board ofDirectors to the best of their knowledge and ability confirm that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
ii. they have selected such accounting policies and applied them consistently and madejudgments 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. they have taken proper and sufficient care 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. they have prepared the annual accounts on a going concern basis;
iv. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
v. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 the Company has constituteda CSR Committee. The Corporate Social Responsibility Committee comprises of 3 ExecutiveDirectors and one independent Director chaired by J. Lakshmana Rao. The composition ofthe Corporate Social Responsibility Committee meets the requirements of Section 135 of theAct. The Board of Directors based on the recommendations of the Committee formulated aCSR Policy. The requisite details on CSR activities pursuant to Section 135 of the Act andas per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules2014 are annexed as Annexure-B to this Report.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adoptedaPolicy onPreventionProhibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to inquire into complaints
of sexual harassment and recommend appropriate action. In the financial year 2018-19the Company has not received any complaint which falls within the scope of this policy.The policy is available on website of the Company at: http://moldtekpackaging.com/pdf/corporate-governance/MPL- Policy-of-SH.pdf
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The requisite details as required by Section 177 of the Act and Regulation 22 &34(3) of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is provided in the Report on Corporate Governance.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant material orders have been passed by the regulators or courts ortribunals which would impact the going concern status of the Company and its futureoperations.
a. Statutory Auditors
M/s. Anandam & Co. Chartered Accountants (Firm Registration Number 000125S) wereappointed as the Statutory Auditors by the Members of the Company at the 20thAnnual General Meeting (AGM) to hold office from the conclusion of the 20th AGMuntil the conclusion of the 25th AGM of the Company (subject to ratification bythe Members at every subsequent AGM) in accordance with the provisions of the Act.
The first year of audit was of the financial statements for the year ending 31stMarch 2018 which included the Audit of the quarterly financial statements for the year.Accordingly the appointment of M/s. Anandam & Co. Chartered Accountants is beingplaced before the shareholders for ratification till the conclusion of the 25thAGM i.e. up to the financial year ending as on 31st March 2022.
b. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed Mr. Ashish Kumar Gaggar Practicing Company Secretary in to undertake theSecretarial Audit of the Company for the year ended 31st March 2019. TheSecretarial Audit Report is annexed as Annexure-C. The Auditors' Report and theSecretarial Audit Report for the financial year ended 31st March 2019 do notcontain any qualification reservation adverse remark or disclaimer.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed as Annexure-D.
PARTICULARS OF REMUNERATION
The information required under Section 197 (12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedas Annexure-E.
The information required under Rule 5(2) and (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure forming partof the Report.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 the extract of Annual Return in form MGT-9 is annexed asAnnexure-F.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
The Management Discussion and Analysis Report and the Report on Corporate Governanceas required under Regulation 34(2) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the AnnualReport.
Your Company is committed to the tenets of good corporate governance and has takenadequate steps to ensure that the principles of corporate governance as required underSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 are complied with.
A Company Secretary in Practice has certified that conditions of Corporate Governanceas stipulated under Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 have been complied with by your Company and hiscertificate is annexed to the Report on Corporate Governance.
A declaration of Code of Conduct from J. Lakshmana Rao Chairman & ManagingDirector forms part of the Corporate Governance Report.
J. Lakshmana Rao Chairman & Managing Director and A. Seshu Kumari FinancialController & Chief Financial Officer of the Company have given a certificate to theBoard as contemplated in Regulation17(8) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.
All assets of your Company and other potential risks have been adequately insured.
The relationship with the workmen and staff remained cordial and harmonious during theyear and the management received full co-operation from the employees.
In the terms of provision of Section 134 (3) (ca) of the Companies Act 2013 during theyear under review there was no case of offense of fraud detected by the Auditors undersub section (12) of section 143.
MAINTENANCE OF COST RECORDS
The Central Government has not prescribed the maintenance of cost records under subsection (1) of section 148 of the Companies Act 2013 for the products/services of thecompany.
Your Directors wish to place on record their appreciation and gratitude for all theassistance and support received from Citibank Yes Bank HSBC ICICI Bank and officials ofconcerned government departments for their co-operation and continued support extended tothe Company. They also thank the Members for the confidence they have reposed in theCompany and its management.
| ||J. LAKSHMANA RAO |
|Place: Hyderabad ||Chairman & Managing Director |
|Date : 31st August 2019 ||DIN:00649702 |