The Board of Directors are pleased to present the Company's Thirty-Ninth Annual Reportand the Company's audited financial statements (consolidated and standalone) for thefinancial year ended 31st March 2020.
1. OPERATING RESULTS
The operating results of the Company for the year ended 31st March 2020 are asfollows:
(' in Lakhs)
| ||Year ended 31st March 2020 (Standalone) ||Year ended 31st March 2019 (Standalone) ||Year ended 31st March 2020 (Consolidated) ||Year ended 31st March 2019 (Consolidated) |
|Revenue from Operations ||15218.09 ||15317.43 ||15168.64 ||15317.43 |
|Profit before tax from continuing operations ||1435.31 ||2756.65 ||1207.23 ||2756.65 |
|Tax Expenses (Including Deferred Tax) ||-374.95 ||-743.97 ||-373.70 ||-743.97 |
|Profit after Tax ||1060.36 ||2012.68 ||833.52 ||2012.68 |
|Total Comprehensive Income for the year ||1038.53 ||2008.12 ||811.69 ||2008.12 |
2. TRANSFER TO RESERVES
There are no transfers to any specific reserves during the year.
3. THE STATE OF THE COMPANY'S AFFAIRS
During the year under review your company achieved total revenue from operations of '15218.09 Lakhs (previous year ' 15317.43 Lakhs) resulting in decrease of 0.65% over theprevious year. The profit before tax (including other comprehensive income) is at '1038.53 Lakhs (previous year ' 2008.12 Lakhs) resulting in a decrease of 41.40%.
In the expansion project commissioned last year validation of new products has beenundertaken. The process of validation of batches in pharmaceutical manufacture is a timeconsuming process and takes up to 12-15 months in some cases. The validation of part ofthe products planned in that facility is completed and the balance are expected to becompleted by Q2 2020-21. The Company acquired Macrotech Polychem Private Limited (Whollyowned Subsidiary) on 15th May 2019.
Due to the Covid 19 pandemic the Company's operations have been affected. Theoperations were closed from 22nd March 2020 as per the Government of Maharashtradirectives. Exports were affected from early March 2020 as the pandemic spread across theworld and flights and ships were affected. The logistics were partially restored about midMay 2020 and dispatches were resumed. The company's operations were partially normalisedin early June 2020. However disruptions continue to affect the operations due tolimitations in transportation of men and materials and are expected to last until thevarious restrictions continue.
Your directors recommend dividend of ' 1.75 per fully paid up equity share of ' 5/-each per fully paid up equity share aggregating to ' 108.12 Lakhs.
5. CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required under Regulation 34 of the Listing Regulations a Cash Flow Statement andconsolidated Financial Statement is part of the Annual Report.
6. FUTURE PROSPECTS
In view of the Covid 19 pandemic the Company expects the current year to be subdued interms of sales. There is a bit of uncertainty about the recovery and how it will affectthe various sectors. Pharmaceuticals have typically been largely unaffected by sectoralcycles. However with a lockdown of such magnitude which has touched almost every countryin the world the impact on the pharmaceutical industry is also yet to be seen.
Your directors have tried to ensure that the operations of the Company were restored asquickly as possible. The plant was operational from 1st April 2020 though at very lowmanufacturing levels due to constraints of men and materials. Production has been slowlyincreased though still not at optimal levels. The interruptions due to logistical issuesand the governments different measures will have an impact until the restrictions are fulllifted. Your Directors will strive to ensure that the adverse impact of these occurrencesare minimised on the Company.
7. THE CHANGE IN THE NATURE OF BUSINESS IF ANY;
There is no change in the nature of business of the Company.
8. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND.
There was no transfer during the year to the Investor Education and Protection Fund interms of Section 125 of the Companies Act 2013.
9. CONSERVATION OF ENERGY-TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE ETC.
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished as AnnexureB to Director's Report.
10. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OFTHE COMPANY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed also discussed at the meetings of the Audit Committee and theBoard of Directors of the Company. The Company has voluntarily constituted Risk ManagementCommittee and risk management policy is available on the website of the Company:www.nglfinechem.com
The company has implemented special Covid-19 sanitization and decontamination measuresat all the units to ensure safety of personnel operating on premises. Social distancing tomitigate and reduce contact between personnel has also been implemented. Safety at work isthe motto that is being followed at all times.
11. INTERNAL CONTROL SYSTEM
The Company's internal controls system has been established on values of integrity andoperational excellence and it supports the vision of the Company To be the mostsustainable and competitive Company in our industry. The Company's internal controlsystems are commensurate with the nature of its business and the size and complexity ofits operations. These are routinely tested and certified by Statutory as well as InternalAuditors and their significant audit observations and follow up actions thereon arereported to the Audit Committee.
12. DETAILS OF POLICY DEVELOPED AND
IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013 read with Companies CorporateSocial Responsibility (Policy) Rules 2014. The Committee consists of following Directors:
| Mr. Milind Shinde ||Chairman |
| Mr. Rajesh Lawande ||Member |
| Mrs. Ajita Nachane ||Member |
As per provision of Section 135 of the Companies Act 2013 read with Rule 8 ofCompanies Corporate Social Responsibility (Policy) Rules 2014 the Board has approved CSRPolicy and the Company has spent towards CSR activities details provided in attached AnnexureC to Director's Report.
13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
The particulars of loans given and investment made in subsidiaries has been disclosedin the financial statements in notes 6 and 7 of the standalone financial statements.
14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. There are no materially significant related party transactions made by the Companywith Promoters Directors or Key Managerial Personnel etc. which may have potentialconflict with the interest of the Company at large or which warrants the approval of theshareholders. Accordingly transactions are being reported in Form AOC-2 i.e. AnnexureD in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts)Rules 2014. However the details of the transactions with Related Party are provided inthe Company's financial statements in accordance with the Accounting Standards.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee
on a quarterly basis specifying the nature value and terms and conditions of thetransactions.
The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website at www.nglfinechem.com
15. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
The Company has zero tolerance towards sexual harassment at the workplace and towardsthis end has adopted a policy in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.All employees (permanent contractual temporary trainees) are covered under the saidpolicy. The Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 which redresses complaints received on sexualharassment. During the financial year under review the Company has not received anycomplaints of sexual harassment from any of the women employees of the Company.
16. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and Administration) Rules 2014 is furnished as AnnexureE to Director's Report. The annual Return is also available on the website of theCompany www.nglfinechem.com
17. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the financial year the Board had met four times on 24th May 2019 31st July2019 14th November 2019 and 7th February 2020.
18. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 The Board of Directors of theCompany hereby confirm:
That in the preparation of the annual accounts the applicable accountingstandards have been followed and there has been no material departure.
That the selected accounting policies were 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 on 31st March 2020 and thatof the profit of the
Company for the year ended on that date.
That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
That the annual accounts have been prepared on a going concern basis.
The Board has laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Company has neither accepted nor renewed any deposits during the year under review.
20. PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given as AnnexureF to this report.
In terms of provisions of Section 197(12) of the Companies Act 2013 read with Rules5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 a statement showing the names and other particulars of employees drawingremuneration in excess of the limits set out in the said Rules if any forms part of theReport.
The Nomination and Remuneration Committee of the Company has affirmed at its meetingheld on 22nd May 2020 that the remuneration is as per the remuneration policy of theCompany. The policy is available on the Company's website: www. nglfinechem.com
Mr. Jayaram Sitaram (DIN: 00103676) who was appointed as an Independent Director andwho holds office up to 4th August 2020 and being eligible offers himself forreappointment. Your Directors recommend his re-appointment.
Mr. Rajesh Lawande is liable to retire by rotation in this Annual General Meeting andbeing eligible he has offered himself for reappointment. Your Directors recommend hisre-appointment.
Mr. Rahul Nachane Managing Director of the Company holds office up to 31st May 2020as Managing Director being eligible offers himself for reappointment. Your Directorsrecommended his reappointment as Managing Director.
During the year based on recommendation of Nomination and Remuneration Committee theBoard of Directors appointed Mr. K.V. Subramanian (DIN: 07842700) as an AdditionalDirector with effect from 25th February 2020 to hold office up to the date of theforthcoming Annual General Meeting. The Board considered the knowledge and experience ofMr. K.V. Subramanian in the areas of banking and governance while approving hisappointment as Independent Director on the Board of the Company. The Board is of theopinion that Mr. K.V. Subramanian Additional Independent Director possess requisitequalification experience expertise and holds high standards of integrity. Being eligibleMr. K.V. Subramanian offers himself to be appointed as Independent Director of theCompany. Your Directors recommend his appointment.
Pursuant to the provisions of Section 149 of the Act the Independent Directors havesubmitted declarations that each of them meet the criteria of independence as provided inSection 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) ofthe SEBI Listing Regulations. There has been no change in the circumstances affectingtheir status as Independent Directors of the Company.
22. ATTRIBUTES QUALIFICATIONS & INDEPENDENCE OF DIRECTORS THEIR APPOINTMENT ANDREMUNERATION
The Nomination & Remuneration Committee of Directors have approved a Policy forSelection Appointment and Remuneration of Directors which inter-alia requires thatcomposition and remuneration is reasonable and sufficient to attract retain and motivateDirectors KMP and senior management employees and the Directors appointed shall be ofhigh integrity with relevant expertise and experience so as to have diverse Board and thePolicy also lays down the positive attributes/criteria while recommending the candidaturefor the appointment as Director. The board has on the recommendation of Nomination &Remuneration Committee approved the reappointment of Mr. Rahul Nachane as ManagingDirector for 5 consecutive years Re-appointment of Mr. Jayaram Sitaram as IndependentDirector for second term of 5 consecutive years and Appointment of Mr. K.V. Subramanianas an Independent Director for 5 consecutive years' subject to approval of members in theensuing Annual General Meeting.
23. DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(7) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.
24. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The familiarization program aims to provide Independent Directors with thepharmaceutical industry scenario the socio-economic environment in which the Companyoperates the business model the operational and financial performance of the Companysignificant developments so as to enable them to take well informed decisions in a timelymanner. The familiarization program also seeks to update the Directors on the rolesresponsibilities rights and duties under the Act and other statutes. The policy onCompany's familiarization program for Independent Directors is posted on Company's websiteat www.nglfinechem.com.
The company has been rated by Crisil Ltd for SME and bank rating. The SME rating hasbeen awarded SME 1 indicating Highest level of credit worthiness adjudged inrelation to other SMEs. The long-term rating is Crisil BBB / Stable and short-term ratingis Crisil A3+. The company has also been rated by ICRA Ltd for bank borrowing andlong-term rating has been reaffirmed is BBB+(Outlook Long Term rating is Stable) and hasreaffirmed the short-term rating is A2.
26. STATUTORY AUDITORS
The Board of Directors of your Company at its meeting held on Friday 5th May 2017appointed M/s Manek & Associates Chartered Accountants (FRN: 126679W) as StatutoryAuditors of your Company for a period of 5 years from the conclusion of the ensuing AnnualGeneral Meeting till the conclusion of the Annual General Meeting to be held in the year2022 based on the recommendation of the Audit Committees and subject to the approval ofthe members.
The company has not proposed an Ordinary Resolution for ratification of StatutoryAuditor for the Financial Year 2020-2021 because pursuant to the Companies (Amendment)Act 2017 the same is omitted with effect from 7th May 2018.
27. INTERNAL AUDITORS
The company has appointed M/s R. Devarajan & Co. Chartered Accountants Mumbai(ICAI firm registration number 102415W) as internal auditors for financial year 2020-21.
28. SECRETARIAL AUDITORS
The Company has appointed M/s. H.S. Associates Company Secretaries as SecretarialAuditors of the Company to carry out the Secretarial Audit for the Financial Year 2020-21and to issue Secretarial Audit Report as per the prescribed format under rules in terms ofSection 204(1) of the Companies Act 2013 and Rule 9 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. Secretarial Audit is not applicable tothe Subsidiary not being a material subsidiary.
29. COST AUDITORS
The Company has appointed M/s. Sanghavi Randeria & Associates as Cost Auditors ofthe Company for the Financial Year 2020-21.
30. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The Auditors' Report does not contain any qualifications reservations or adverseremarks. Report of the secretarial auditor is given as an Annexure G which formspart of this report.
31. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management's Discussion and Analysis Report for the year under review asstipulated under regulation 34 (3) and Part B of schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed to this AnnualReport.
32. CORPORATE GOVERNANCE
The Company is committed towards maintaining the highest standards of CorporateGovernance and adhering to the -Corporate Governance requirements as set out by Securitiesand Exchange Board of India. The Report on Corporate Governance as stipulated underregulation 34 (3) and Part C of schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report. The Certificate from thepracticing Company Secretary confirming compliance with the conditions of CorporateGovernance as stipulated under regulation 34 (3) and Part E of schedule V
of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is alsopublished in this Annual Report.
33. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
Macrotech Polychem Private Limited is a wholly owned subsidiary of the Company. TheConsolidated Financial Statement of your Company form part of this Annual Report. AnnualReport of your Company does not contain the Financial Statements of its Subsidiary. TheAudited Annual Accounts and related information of the Company's Subsidiary will be madeavailable upon request. These documents will be available for inspection during all daysexpect Saturdays Sundays and public holidays from 10.00 a.m. to 4 p.m. at the Company'sRegistered Office. Further a statement containing the salient features of the financialstatements of our subsidiary in the prescribed format AOC-1 is appended as Annexure A tothe Board's report. The Subsidiary Companies Audited Accounts are available on theCompany's Website: www.nglfinechem.com. Other than this the Company does not have anysubsidiary joint venture or associate company as on 31st March 2020.
34. REPORT ON CORPORATE GOVERNANCE
Corporate Governance Report prepared by M/s. H.S. Associates Company Secretaries isannexed hereto as Annexure H to this report.
35. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM
The Audit Committee consists of the following members:
Mr. Milind Shinde - Chairman
Mr. Jayaram Sitaram - Member
Mr. Rajesh N. Lawande - Member
Mr. K. V. Subramanian - Member
The above composition of the Audit Committee consists of Independent Directors viz.Mr. Jayaram Sitaram Mr. Milind Shinde and Mr. K. V. Subramanian who form the majority.
The Company has established a vigil mechanism policy to oversee the genuine concernsexpressed by the employees and other Directors. The Company has also provided adequatesafeguards against victimization of employees and Directors who express their concerns.The Company has also provided direct access to Mr. Rahul Nachane Chief Ethics Counselloron reporting issues concerning the interests of coemployees and the Company. The VigilMechanism Policy is available at the website of the Company:
36. REPORTING OF FRAUD BY AUDITORS
During the year under review the Statutory Auditors and Secretarial Auditor have notreported any instances of frauds committed in the Company by its Officers or Employees tothe Audit Committee under section 143(12) of the Act details of which needs to bementioned in this Report.
37. ANNUAL EVALUATION BY THE BOARD
In compliance with the Companies Act 2013 and Regulation 17 of the ListingRegulations the performance evaluation of the Board and its Committees were carried outduring the year under review. More details on the same are given in the CorporateGovernance Report.
38. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There are no material changes and commitments affecting the financial position of theCompany occurred during the financial year other than the impact of the Covid -19pandemic which has been covered in this report.
39. THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTSOR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the year there has been no significant material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and company's operations infuture.
40. COMMITTEES OF THE BOARD
In accordance with the Companies Act 2013 the Board has also formed a Risk ManagementCommittee on voluntary basis. There are currently six Committees of the Board as follows:
Corporate Social Responsibility Committee
Nomination and Remuneration Committee
Stakeholders' Relationship Committee
Risk Management Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the Report on Corporate Governance a part ofthis Annual Report.
41. COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 was applicable for the businessactivities carried out by the Company however the exemption for requirement for costaudit under these rules was claimed by the Company based on turnover for Financial Yearended 2019 as the revenue from exports in foreign exchange exceeded seventy five percent of its total revenue for the financial year ended 31st March 2020. Accordingly suchaccounts and records are made and maintained by the Company.
42. OTHER DISCLOSURES
The company does not have any Employees Stock Option Scheme in force and henceparticulars are not furnished as the same are not applicable.
The Company seeks to promote highest levels of ethical standards in the normal businesstransactions guided by the value system. The SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 mandates formulation of certain policies for ListedCompanies. The Policies are reviewed periodically by the Board and are updated based onthe need and compliance as per the applicable laws and rules and as amended from time totime. The policies are available on the website of the Company at www. nglfinechem.com
44. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS
Your Directors hereby confirm that the Company has complied with the necessaryprovisions of the revised Secretarial Standard 1 and Secretarial Standard 2 to the extentapplicable to the Company.
45. ENHANCING SHAREHOLDER VALUE
Your company firmly believes that its success the marketplace and a good reputationare among the primary determinants of value to the shareholder. The organizational visionis founded on the principles of good governance and delivering leading-edge productsbacked with dependable after sales services. Following the vision Your Company iscommitted to creating and maximizing Long-term value for shareholders.
46. 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 operation include global and domestic demand and supply conditionsaffecting selling prices of Raw Materials Finished Goods input availability and priceschanges in government regulations tax laws economic developments within and outside thecountry and various other factors. The current Covid 19 pandemic has also affected theoperations of the Company.
Your Directors take this opportunity to express their sincere appreciation andgratitude for the continued co-operation extended by shareholders employees customersthe Government Banks suppliers and other business associates.
For and on behalf of the Board of Directors
| ||Sd/- |
| ||Milind Shinde |
|Mumbai: 29th June 2020 ||Chairman |