Your Directors have pleasure in presenting the Thirty-Eighth Annual Report with theAudited Balance Sheet as on 31st March 2019 together with the Statement ofProfit & Loss Cash Flow Statement and the notes and schedules thereon for the yearended 31st March 2019.
1. OPERATING RESULTS
The operating results of the Company for the year ended 31st March 2019 areas follows:
| ||Year ended on 31.03.2019 ||Year ended on 31.03.2018 |
|Revenue from Operations ||15317.43 ||11567.81 |
|Profit before tax from continuing operations ||2756.65 ||1780.28 |
|Tax Expenses (Including Deferred Tax) ||743.97 ||520.98 |
|Profit after Tax. ||2012.68 ||1259.29 |
|Total Comprehensive Income for the year ||2008.12 ||1263.19 |
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 a sale of र 1 5317.43 lakh (previousyear र 1 1567.81 lakh) resulting in an increase of 32.41% over the previous year. The profitbefore tax (incl other comprehensive income) is at र 2008.12 lakh previous year र 1 263.19lakh resulting in an increase of 58.97%.
The company was able to utilise the plant capacity better than the previous yearleading to a rise in sales. Costs were controlled better leading to a higher increase inprofits.
The company had a fire at its new plant at Tarapur in June 2018 information of the samewas duly conveyed to the stock exchange. The reinstatement of the plant has been completedafter taking all the necessary precautions and as on date and commercial production hasbegun.
Your directors recommend dividend of र 1 .75 per fully paid up equity share of र 5 /- each(excluding dividend distribution tax) aggregating to र 1 08.12 Lakhs. The dividenddistribution tax on this amounts to र 22.62 Lakhs. The total outflow on account of dividendand dividend distribution tax amounts to र 1 30.74 Lakhs.
5. CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS
As required under Regulation 34 of the Listing Regulations a Cash Flow Statement ispart of the Annual Report. The Company does not have any subsidiaries as on 31stMarch 2019 and hence not required to publish Consolidated Financial Statements.
6. FUTURE PROSPECTS
The company has acquired 100% equity shareholding in Macrotech Polychem Private Limitedin May 2019 for an inclusive consideration of र 700 Lakhs which includes the value ofequity shares and loan given to Macrotech to repay its existing liabilities. Macrotech isengaged in manufacture of pharmaceutical intermediates. This will help the company toenlarge the range of its products and also to further backward integrate production ofpharma intermediates.
With the new plant also commissioned the company expects to maintain its high growthrates over the next 2-3 years.
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 EDUCTION 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 AnnexureA 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
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. Significant audit observations and follow up actions thereon are reported to theAudit Committee.
12. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY 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 attachedAnnexure B to Director's Report.
13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
The particulars of investment made under Section 186 of the Companies Act 2013 hasbeen disclosed in the financial statements in note 8 of the Balance Sheet.
The Company has not given any loans or given any guarantees.
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 Annexure C interms 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 in the Company'sfinancial 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 ofthe transactions.
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 Annexure Dto Director's Report. The annual Return is also available on the website of the Companywww.nglfinechem.com .
17. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the financial year the Board had met four times on 18th May 201810th August 2018 2nd November 2018 and 8th February2019.
18. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act 2013 The Board of Directors of theCompany hereby confirm: oo That in the preparation of the annual accounts theapplicable accounting standards have been followed and there has been no materialdeparture.
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 March2019 and that of the profit of the Company for the year ended on that date.
That proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
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 asAnnexure E 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 18th May 2018 that the remuneration is as per the remuneration policyof the Company. The policy is available on the company's website: www.nglfinechem.com
Mr. Milind Shinde (DIN: 0159356) who was appointed as an Independent Director and whoholds office up to the date of this Annual General Meeting and being eligible offershimself for reappointment. Your Directors recommend his re-appointment.
Mr. Rahul Nachane is liable to retire by rotation in this Annual General Meeting andbeing eligible he has offered himself for reappointment. Your Directors recommend hisre-appointment.
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 of 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 revised remuneration of Rahul Nachane ManagingDirector and Rajesh Lawande Whole-time director & CFO subject to approval of membersin the ensuing 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 familiarisation 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 familiarisation program also seeks to update the Directors on the rolesresponsibilities rights and duties under the Act and other statutes. The policy onCompany's familiarisation 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 and has beenawarded BBB+(Stable) and short term rating is A2 reaffirmed.
26. STATUTORY AUDITORS
The Board of Directors of your Company at its meeting held on Friday 5thMay 2017 appointed M/s Manek & Associates Chartered Accountants (FRN: 126679W) asStatutory Auditors of your Company for a period of 5 years from the conclusion of theensuing Annual General Meeting till the conclusion of the Annual General Meeting to beheld in the year 2022 based on the recommendation of the Audit Committees and subject tothe approval of the members.
The company has not proposed an Ordinary Resolution for ratification of StatutoryAuditor for the Financial Year 2019-2020bec use 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 2019-20.
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 2019-20and 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.
29. COST AUDITORS
During the financial year 2019-2020 cost audit is not applicable to the Company as theexport turnover is more than 75% of the total turnover. Hence the company has notappointed Cost Auditors.
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 F which forms part ofthis 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 (ListingObligation and Disclosure Requirement) Regulation 2015 is annexed to this Annual Report.
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 the SEBI (Listing Obligation and DisclosureRequirement) Regulation 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 Obligation and Disclosure Requirement) Regulation 2015 is also published in thisAnnual Report.
33. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have any subsidiary joint venture or associate company as on 31stMarch 2019 and therefore provision with respect to Section 129 of the Companies Act 2013are not applicable to the Company.
34. REPORT ON CORPORATE GOVERNANCE
Corporate Governance Report prepared by M/s. H.S. Associates Company Secretaries isannexed hereto as Annexure G 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
The above composition of the Audit Committee consists of Independent Directors viz.Mr. Jayaram Sitaram and Mr. Milind Shinde 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 victimisation 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 co-employees and the Company. The VigilMechanism Policy is available at the website of the company: www.nglfinechem.com .
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.
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. 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
43. 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.
44. 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 organisational 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 maximising Long-term value for shareholders.
45. 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.
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 24th May 2019 ||Chairman |