To The Members of Nikhil Adhesives Limited
The Board of Directors are pleased to present the thirty fourth Annual Report togetherwith the Audited Accounts for the financial year ended 31st March 2020.
In Financial Year 2019-20 your Company has continued the phase of positive outlook andoptimism in the country due to government policies which had resulted in an overallimprovement in the economic outlook. Even though the global economy remained lukewarm dueto several factors your Company has nevertheless improved its profitability.
Summary of the Financial Results for the year is as under:
| || ||( in Lakhs) |
|Particulars ||31st March 2020 ||31st March 2019 |
|Profit Before Depreciation and Tax ||1202.47 ||950.41 |
|Less: Depreciation ||287.85 ||207.22 |
|Profit Before Tax ||914.62 ||743.19 |
|Less: Provision for Tax || || |
|Current Tax ||207.00 ||166.98 |
|Deferred Tax ||5.34 ||54.74 |
|Profit After Tax ||702.28 ||521.47 |
The Board of Directors has recommended a dividend of 1/- (Rupee One only) per equityshare of face value of 10/- (Rupee Ten only) for the Financial Year ended March 31 2020subject to approval of shareholders.
RESULT OF OPERATIONS
|Particulars ||2019-20 ||2018-19 ||% |
|Sales Turnover ||421.71 ||446.36 ||(5.52) |
|Other Income ||0.75 ||0.86 ||(12.79) |
|Operating Profit ||19.86 ||17.44 ||13.88 |
|Total Comprehensive Income(Net Profit) ||6.80 ||5.11 ||33.07% |
Detailed analysis of the performance of your Company is presented in the ManagementDiscussion and Analysis Report forming part of this Annual Report.
During the year your Company accepted deposits amounting to 156.55 Lakhs from itsmembers.
There has been no default in repayment of deposits or payment of interest during theyear. No deposit has been unclaimed as at the end of the year. All the deposits acceptedby the Company are in compliance with the requirements of Chapter V of the Companies Act2013.
TRANSFER TO RESERVES
There is no transfer made to reserves during the year.
There was no change in the Authorized and Paid-up Share Capital of the Company duringthe year.
The Authorised Share Capital of the Company is 50000000/- (Rupees Five Crores only)divided into 4950000 (Forty Nine Lakhs and Fifty Thousand ) Equity Shares of 10/-(Rupees Ten) each and 50000 (Fifty Thousand) 8% Preference Shares of 10/- (Rupees Ten).
The Paid-up Share Capital of the Company is 46049603 /- (Rupees Four Crores SixtyLakhs Forty Nine Thousand and Six Hundred Three only) divided into 4594300 (Forty FiveLakhs Ninety Four
Thousand and Three Hundred) Equity Shares of 10/- (Rupee Ten) each and 21320 forfeitedshares amounting of 106603/- (One Lakh Six Thousand Six Hundred and Three Only).
The Management Discussion and Analysis Report on Corporate Governance and a Certificateby the Managing Director conforming compliance by all the Board Members and SeniorManagement Personnel with Company's Code of Conduct Joint Certification by the ManagingDirector and CFO to the Board and Auditors' Certificate regarding compliance of conditionsof Corporate Governance are made a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board at meeting held on 14th February 2020 noted that accordance with theprovisions of Section 135 of the Companies Act 2013 and the Companies (Corporate SocialResponsibility Policy) Rules 2014. The Company is statutorily required to contribute Rs.1052378 amounts towards CSR for the financial year 2019-20. However the Company hasunspent Rs. 537978.The CSR report is forming part of this attachment in Annexure V andCSR policy is placed on the website of the company www.nikhiladhesives.com.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a. That in the preparation of the annual
Financial statements for the year ended 31st March 2020 the applicable accountingstandards read with requirements set out under Schedule III to the Companies Act 2013have been followed and there are no material departures from the same; b. That suchaccounting policies as mentioned in Notes to the Financial Statements have been selectedand applied consistently and judgment and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atMarch 31 2020 and the profit of the Company for the year ended on that date; c. Thatproper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; d.That the annual Financial statements have been prepared on a going concern basis; e. Thatproper internal financial controls were in place and that the financial controls wereadequate and were operating effectively; f. That the systems to ensure compliance with theprovisions of all applicable laws were in place and were adequate and operatingeffectively.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company's system of financial and compliance controls with reference to thefinancial statements and risk management is embedded in the business process by which theCompany pursues its objectives. The Company uses foreign exchange forward contracts tohedge its exposure for movements in foreign exchange rate. The use of this foreignexchange forward contract reduces the risk to the Company. The Company does not use thesefor trading or speculative purpose. Additionally the Audit Committee and the Board ofDirectors provide risk over sight through their review of potential risks which couldnegatively impact the operations the proposed budget and plan the Company's strategicframework and any risks that may negatively impact it. The management is committed toensure an effective internal control environment commensurate with the size scale andcomplexity of the operations which provides assurance on the efficiency of the Company'soperations and safety/security of its assets besides orderly and legitimate conduct ofCompany's business in the circumstances which may reasonably be foreseen. The Company hasdefined organization structure authority levels delegated powers internal proceduresrules and guidelines for conducting business transactions.
The Company's system and process relating to internal control and procedures forfinancial reporting have been designed to provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition ofCompany's assets that could have a material effect on the financial statements and forpreventing and detecting fraud and other irregularities or deliberate miss-statements.Management is responsible for establishing and maintaining adequate disclosure controlsand procedures and adequate internal controls over financial reporting with respect tofinancial statements besides its effectiveness in the context of applicable regulations.The Internal Auditor the Audit Committee as well as the Board of Directors conduct fromtime to time an evaluation of the adequacy and effectiveness of the system of internalcontrols for financial reporting with respect to financial statements.
Industrial relations remained cordial throughout the year. Your Directors recognize andappreciate the sincere and hard work loyalty dedicated efforts and contribution of allthe employees in the growth and performance of the Company during the year.
DIRECTORS & KEY MANAGERIAL PERSONNEL
In terms of Section(s) 149152 and all other applicable provisions of the CompaniesAct 2013 for the purpose of determining the directors liable to retire by rotation theIndependent Directors are not included in the total number of directors of the Company.Accordingly Mr. Tarak. J. Sanghavi (DIN:00519403) Whole Time Director shall retire byrotation at the ensuing Annual General Meeting and being eligible has offered himself forreappointment as a Whole Time Director of the Company.
Pursuant to Section 149 152 read with Schedule IV and all other provisions if any ofthe Companies Act 2013 and Companies (Appointment and Qualification of Directors) Rules2014 and the applicable provisions of Securities and Exchange Board of India (ListingObligations and Disclosures Requirements) Regulations 2015 (including any statutorymodification(s) and/or re-enactment(s) thereof for the time being in force) and based onthe recommendation of the Nomination and Remuneration Committee and approval of the Boardof Directors Mrs. Ishita Gandhi (DIN: 07137098) who was appointed as an Non- ExecutiveIndependent Director of the Company for five consecutive years from 28.03.2015 in the 29thAnnual General Meeting (AGM)and being eligible for re-appointment she is beingappointed subject to approval by members as Non- Executive Independent Director of theCompany for a consecutive second term of 5 years commencing from 28.03.2020 and shall notbe liable to retire by rotation.
The details of Directors seeking re-appointment as required under Regulation 36(3) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are given inthe notice of the ensuing Annual General Meeting which is being sent to the shareholdersalong with Annual Report.
During the year Ms. Rachana Baria has been appointed as a Company Secretary andCompliance Officer effective from 26.08.2019.
COMMITTEES OF THE BOARD
The Company's Board has following committees. The brief of these Committees are givenin section of Corporate Governance Report:
a. Audit Committee; b. Nomination and Remuneration Committee; c. StakeholdersRelationship Committee. d. Corporate Social Responsibility Committee
DECLARATION BY INDEPENDENT DIRECTORS
The Independent Directors of the company have furnished the declaration that they meetthe criteria of Independence as provided in Section 149(6) of the Companies Act 2013.
MEETINGS OF BOARD AND COMMITTEES
During the year under review Seven Board Meetings were convened and held. The detailsthereof are given in the Report on Corporate Governance.
PERFORMANCE EVALUATION OF BOARD COMMITTEES & DIRECTORS
The Listing Agreement the Board of Directors of the Company carried out the formalannual performance evaluation of all the Directors and also its self-evaluation processinternally to assess the skills set and contribution that are desired recognizing thatcompetencies and experiences evolves over time. The process was conducted by allowing theBoard to engage in candid discussions with each Director with the underlying objective oftaking best possible decisions in the interest of the Company and its stakeholders. TheDirectors were individually evaluated based on structured self-assessment and personalinteraction to ascertain feedback on well-defined parameters which internally comprisedof level of engagement and their contribution to strategic planning and other criteriabased on performance and personal attributes of the Directors. During the process ofevaluation the Board of Directors also reviewed and discussed the annual performanceevaluation of Directors carried out by the Nomination and Remuneration Committee. Astatement in detail indicating the manner in which formal annual evaluation has been madeby the Board of Directors is given in the Report on Corporate Governance which forms apart of the Annual Report.
SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee (NRC) has adopted a terms of reference which internally deals withthe manner of selection of Directors and the Key Managerial Personnel of the Company. TheNRC recommends appointment of Director / re-appointment of Managing Director& WholeTime Directors based on their qualifications expertise positive attributes andindependence in accordance with prescribed provisions of the Companies Act 2013 and rulesframed there under. The NRC in addition to ensuring diversity of race and gender alsoconsiders the impact the appointee would have on Board's balance of professionalexperience background viewpoints skills and areas of expertise.
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee has also adopted the Remuneration Policy for the members of theBoard and Executive Management. The said policy earmarks the principles of remunerationand ensures a well-balanced and performance related compensation package taking intoaccount shareholders' interest industry practices and relevant corporate regulations inIndia.
VIGIL MECHANISM /WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism and Whistle-Blower Policy to deal with instances offraud and mismanagement if any and conducting business with integrity including inaccordance with all applicable laws and regulations. The details of the Vigil Mechanismand Whistle Blower Policy are explained in the Report on Corporate Governance and alsoposted on the website of the Company.
The Board of Directors has unanimously agreed to the recommendation of the AuditCommittee to appoint M/s. PPV & Co. Chartered Accountants (Firm Registration No.153929W) for period of 5 years commencing from the ensuing Annual General Meeting till39th Annual General Meeting of the Company in the place of existing auditor M/s. PHD &Associates Chartered Accountant (Firm Registration No. 111236W) whose term of expire inthe ensuing Annual General Meeting. M/s. PPV & Co. Chartered Accountant (FirmRegistration No. 153929W) have given consent to the said appointment and confirmed theirappointment if made would be within the limit specified under section 141(3)(g) of theAct and also confirmed that they are not disqualified to be appointed as statutoryauditor in terms of provisions of the proviso to section 139(1) 141(2) and section 141(3)of the Companies Act and the Companies (Audit and Auditors) Rules 2014.
There are no qualifications or adverse remarks in the Auditors Report except a smalldelay in transfer of shares to Investor Education & Protection Fund pursuant tosection 124 & 125 of the Act
The Board of Directors has appointed Messrs B. F. Modi & Associates CostAccountants (Firm Registration No. 100604) as the Cost Auditors for conducting audit ofthe cost accounts maintained by the Company in respect of the products of the Companycovered under the Companies (Cost Records and Audit) Amendment Rules 2014 and fixed theirremuneration based on the recommendation of the Audit Committee. The remuneration payableto the Cost Auditors is subject to ratification by the shareholders in this Annual GeneralMeeting of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Messrs D. M. Zaveri& Co. Company Secretaries were appointed to undertake the Secretarial Audit of theCompany for the year ended 31stMarch 2020. There are no adverse remarks or observationsmade by Messrs D. M. Zaveri & Co. in the Secretarial Audit Report except the smalldelays in submission of financial result intimations for closure of trading window andtransfer of shares to Investor Education & Protection Fund pursuant to section 124& 125 of the Act.
The small delays are due to inadvertent lapses in the circumstances beyond the control.However the management of the Company shall ensure all timely compliances henceforth.
The Report of the Secretarial Auditor is given in Annexure-I which is attached heretoand forms a part of the Directors' Report.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statement relate and the date of the report.
During the year under report no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.
RELATED PARTY TRANSACTIONS
All related party transactions entered into during the financial year under review bythe Company were on an arm's length basis and in the ordinary course of business. Thereare no material significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. All related party transactions areplaced before the meeting(s) of Audit Committee for approval. Prior omnibus approval ofthe Audit Committee is obtained for the financial year for the transactions which are of aforeseen and repetitive in nature. The statement giving details of all related partytransactions entered into pursuant to the omnibus approval together with relevantdocuments/information are placed before the Audit Committee for review and approval onquarterly basis. The Company has developed a Policy on materiality of Related PartyTransactions and dealing with Related Party Transactions. The Policy on materiality ofRelated Party Transactions and dealing with Related Party Transactions as approved by theBoard is uploaded on the company's website and the same is available at the web linkhttp://www.nikhiadhesives.com
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT 2013
There are no Loans Guarantees or Investment made during the year in pursuance toSection 186 of the Companies Act 2013.
DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.
As required under Section 197(12) read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the details of the ratio of theremuneration of each Director to the median employee's remuneration and such other detailsas prescribed therein are given in Annexure-II which is attached here to and forms a partof the Directors' Report.
EXTRACT OF ANNUAL RETURN
An Extract of Annual Return as per Section 92(3) of the Companies Act 2013 is given inAnnexure- III which is attached here to and forms a part of the Directors' Report.
PARTICULARS OF EMPLOYEES
The particulars required pursuant to Section 197 of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are not applicable to the Company as there was no employee drawing remuneration tothe extent mentioned therein.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the information on Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo are given in Annexure-IV which isattached hereto and forms a part of the Directors' Report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
a. Issue of equity shares with differential rights as to dividend voting or otherwise.b. Issue of shares (including sweat equity shares) to employees of the Company under anyscheme. c. The Company has no Subsidiary/JV/Associate Companies during the year. d.Neither the Managing Director nor the Whole-time Directors of the Company receive anyremuneration or commission from any of its subsidiaries. e. As per the requirement of theSexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013 ("POSH Act") and Rules made thereunder the Company has formed InternalComplaints Committee for various work places to address complaints pertaining to sexualharassment in accordance with the POSH Act.
Your Directors believe that the key to success of any Company are its employees. YourCompany has a team of able and experienced professionals whose dedicated efforts andenthusiasm has been an integral part of your Company's growth. Your Directors would liketo place on record their deep appreciation of their continuous effort and contribution tothe Company.
The Board desires to place on record its grateful appreciation for the excellentassistance and cooperation received from the Government Authorities and continued supportextended to the Company by the bankers investors suppliers and esteemed customers andother business associates. Your Directors also wish to place on record their deep sense ofappreciation to all the employees of the Company for their unstinted commitment andcontinued contribution in the performance of the Company.
For and On behalf of Board of Directors
Rajendra J. Sanghavi Chairman DIN: 00245637
Date: 13th November 2020