Your Directors have pleasure in presenting their report on the business and operationsof the Company for the year ended 31st March 2020.
FINANCIAL RESULTS Rs in Lakhs
| ||STANDALONE || ||CONSOLIDATED || |
|Particulars ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Revenue from operations ||43744 ||39408 ||43820 ||40572 |
|Other income ||116 ||134 ||116 ||113 |
|Total income ||43860 ||39542 ||43936 ||40685 |
|Profit before Finance cost depreciation & tax ||8120 ||7328 ||7794 ||7145 |
|Finance cost ||1019 ||709 ||1040 ||757 |
|Depreciation ||1907 ||1473 ||1921 ||1610 |
|before exceptional items and tax Profit ||5194 ||5146 ||4833 ||4778 |
|Provision for current tax ||1218 ||1303 ||1218 ||1303 |
|Provision for deferred tax ||(129) ||283 ||(129) ||283 |
|Exceptional items ||286 ||1150 ||- ||- |
|Net profit (After Tax) ||3819 ||2410 ||3744 ||3192 |
|Other comprehensive income (net of tax) ||(47) ||(30) ||(47) ||(30) |
|Profit brought forward from previous years ||7568 ||6523 ||7693 ||5866 |
|Amount available for appropriation ||11340 ||8903 ||11390 ||9028 |
|Less: Appropriation || || || || |
|Dividend on equity shares (excluding tax) ||2494 ||1107 ||2494 ||1107 |
|Tax on dividends ||513 ||228 ||513 ||228 |
|Closing Balance of retained earnings ||8333 ||7568 ||8383 ||7693 |
Your Company has shown a healthy performance at Standalone level in terms of revenueEBIDTA & PAT. Your Company has achieved a total revenue of Rs43744 lakhs from Rs39408lakhs in the previous year with a growth rate of 11%.
The operating profit (EBIDTA) increased by 10.81% from
Rs7328 lakhs to Rs8120 lakhs overall resulting into a healthy increase in net profitsby 58.46% amounting to Rs3819 lakhs as against the profit of Rs2410 lakhs for financialyear 2018-19. The EPS on weighted average equity has increased from Rs8.70 in thefinancial year 2018-19 to Rs13.78 in the financial year 2019-20 leading to an increase of58.46%.
Your Company plans to change the packaging landscape by creating sustainable andintelligent packaging solutions. Your Company is planning to set up an exclusive lotionpump project with capital outlay of Rs15 crores at Hyderabad. It may start productionaround November 2020 to widen our product range and entry into personal care products.
Demand for our Square packs continue to grow and are on the way to create a major trendin the edible oil market. Conversion from tin to plastic by major edible oil players likeN.K Protein Goyal Damani Gulab Halder Group etc has majorly aided the growth of oursquare packs. The Company has successfully added/increased capacity for these packs.Capacity shifted from RAK has been mainly allocated to these packs and other food packingproducts. We have also found demand for these packs from other consumer and agro-products.Ice Cream sales have dropped drastically this summer due to the pandemic hit. But there isalso a perceptible increase in demand for food packaging products from many SMEs apartfrom major players. Once the Impact of Covid on the economy is lifted we anticipate normalor better demand for our products.
IMPACT ASSESSMENT OF THE GLOBAL HEALTH PANDEMIC COVID 19 AND RELATED ESTIMATIONUNCERTAINTY:
During the last few months the spread of Covid 19 has affected the business whichculminated into scaling down of the Company's operations. The Company has taken variousmeasures in consonance with Central and State Government advisories to contain thepandemic closing of 6 out of 9 manufacturing facilities in April 2020 and adopting workfrom home policy wherever possible for employees across the locations. Given theuncertainty of quick turnaround to normalcy post lifting of the lock down the Companyhas carried out a comprehensive assessment of possible impact on its business operationsfinancial assets contractual obligations and its overall liquidity position based on theinternal and external sources of information and application of reasonable estimates. Thenegative impact on sales is expected to continue in FY 2020-21. The Company is trying toreduce the fixed overheads to the best possible extent to sail through the difficult timesto ahead. Although it is difficult to estimate the impact of COVID-19 on future operationsat this point of time the Company believes the sales for discretionary products likepaints would significantly be impacted in short term. In view of lock down theperformance of the Company may be adversely affected in 1st Quarter in FY 2020-21 byaround 40%.
The Company's net cash position as on 31 March 2020 is sufficient to meet therequirements in case of any emergency and do not foresee any liquidity crunch. The Companydoes not foresee significant impact in respect of its existing contracts and agreementswhere the non-fulfilment of obligations would lead to material financial claim against theCompany. The Company endeavours to ensure that all contractual commitments shall behonoured.
TRANSFER TO RESERVES:
The Board of Directors of the Company have not recommended for transfer of any amountto the General Reserve for the financial year ended 31st March 2020.
Your Company has recommended Interim Dividend of Rs5 per equity share i.e. @100% offace value of Rs5 each (previous year: Rs4.00 per equity share @80% of face value of Rs5each) for the financial year ended 31st March 2020. Considering the Covid-19 impact onthe business your Company has decided not to declare any further final dividend. Thiswill entail an outflow of Rs1671.26 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 2020stands at Rs145000000 (Rupees Fourteen crore fifty lakhs only) divided into 29000000(Two crore ninety lakhs) equity shares of Rs5 (Rupees Five only) each. During the yearthere has been no change in the authorized share capital of the Company.
PAID UP SHARE CAPITAL
The paid up share capital of the Company is Rs138630135 divided into 27726027shares of Rs5 each as on 31st March 2020.
During the year 2019-20 the Company has issued 34975 Equity Shares under theMTPL-ESOP Scheme 2016.
CREDIT RATING ICRA
The rating details are as follows:
|Instrument ||Rating |
|Long-term Term loan ||[ICRA] A (Stable) |
|Long-term loans fund based ||[ICRA] A (Stable) |
|Short-term non- fund based ||[ICRA]A1 |
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 closed down the operations of the wholly owned subsidiary Mold-TekPackaging FZE UAE pending winding up formalities. The entire machinery was withdrawn fromsubsidiary and installed in Indian facilities. The Company has made an additionalprovision of Rs286. 10 lakhs towards loan given.
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 for a period of 21 days beforethe date of the Annual General Meeting. Your Company will also make available thesedocuments upon request by any Member of the Company interested in obtaining the same. Theseparate audited financial statements in respect of the subsidiary company is alsoavailable 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 the notes to the financial statements provided in thisAnnual 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 Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015. In the opinion of the Board they fulfill the conditions of independence asspecified in the Act and the Rules made thereunder and are independent of the 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. Inaccordance with the provisions of Section 152 of the Act Mr. A Subramanyam DeputyManaging Director (DIN: 00654046) of the Company is liable to retire by rotation and iseligible for re-appointment. In the Board Meeting held on 27th January 2020Sri. Togaru Dhanraj Tirumala Narasimha and Sri. Ramakrishna Bonagiri were appointed as anAdditional Director (Independent) of the company. Further they are proposed to beappointed as Director (Independent) of the company under Section 161 of the Companies Act2013 at the ensuring 23rd Annual General Meeting. Further in the Board Meetingheld on 11th March 2020 Mrs. Madhuri Venkata Ramani Viswanadham was appointedas an Additional Director (Independent Woman Director) of the company. Further Sheproposed to be appointed as Director (Independent Woman Director) of the company underSection 161 of the Companies Act 2013 at the ensuring 23rd Annual GeneralMeeting. Mr. Venkata Neeladri Varma Nadimpalli (DIN: 02861521) Independent Non-ExecutiveDirector of the Company has not attained the 75 % of voting for his re-appointment on theboard for second term of five consecutive years in the Annual General Meeting held on 30thSeptember 2019 accordingly he vacated the office from the Board of Directors w.e.f. 30thSeptember 2019.
Mr. Ramakrishna Bonagiri Non-Executive Independent Director has resigned from the postof Independent Director of the company w.e.f. 29th August 2020 and the Board accepted theresignation of Mr. Ramakrishna Bonagiri in the Board meeting held on 2nd September2020.The Board has placed its sincere appreciation for the services rendered by him duringhis 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 atwww.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 of independence and duties of independent directors Codeof Conduct moral ethics and principles 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 2019-20.
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 2019-20.
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 preparationof the annual accounts the applicable accounting standards have been followed and thatthere are no material departures; ii. they have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit of the Company for that period; iii. they havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; iv. they have prepared theannual accounts on a going concern basis; iv. they have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively; v. they have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand 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 the Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed as Annexure-Bto this Report.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at work place and has adopted aPolicy on Prevention Prohibition 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 recommendappropriate action. In the financial year 2019-20 the Company has not received anycomplaint which falls within the scope of this policy. The policy is available on websiteof 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.
AUDITORS 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 20th AnnualGeneral Meeting (AGM) to hold office from the conclusion of the 20th AGM until theconclusion of the 25th AGM of the Company (subject to ratification by the Members at everysubsequent
AGM) in accordance with the provisions of the Act. In the 22nd AGM of theCompany held on 30th September 2019 the appointment of Anandam &
Co. Chartered Accountants has been ratified up to the conclusion of 25th AnnualGeneral meeting of the Company.
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 to undertake theSecretarial Audit of the Company for the year ended 31st March 2020. The SecretarialAudit
Report is annexed as Annexure-C. The Auditors'
Report and the Secretarial Audit Report for the financial year ended 31st March 2020do not contain any qualification reservation adverse remark or disclaimer except theobservations provided thereunder.
Pursuant to the provisions of Regulation 24A of the SEBI (LODR) Regulations 2015 theBoard of Directors of the Company had appointed Mr. Ashish Kumar Gaggar PracticingCompany Secretary to undertake the audit of Annual Secretarial Compliance of the Companyfor the year ended 31st March 2020. The Annual Secretarial Compliance Report is annexedas Annexure-C (1). The Annual Secretarial Compliance
Report for the financial year ended 31st March 2020 do not contain any qualificationreservation adverse remark or disclaimer except the observations provided thereunder.
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 as
MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE AND THE BUSINESSRESPONSIBILITY REPORT
The Management Discussion and Analysis Report and the Report on Corporate Governancealong with the Business Responsibility Report as required under Regulation 34(2) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of the Annual Report.
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 the
Board as contemplated in Regulation 17(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.
BOARD'S OPINION OF INDEPENDENT DIRECTOR APPOINTED DURING THE YEAR:
As per Rule 8 (5) (iiia) of Companies (Accounts) Rules 2014 it is in the opinion ofthe Board that integrity exper-tise and experience (proficiency yet to be ascertainedfrom the online proficiency self-assessment test conducted by the IICA) of the independentdirectors appointed during the year has been fulfilled.
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.