To The Members of Nikhil Adhesives Limited
The Board of Directors are pleased to present the thirty third Annual Report togetherwith the audited Accounts for the financial year ended 31st March 2019.
In Financial Year 2018-19 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 2019 ||31st March 2018 |
|Profit Before Depreciation and Tax ||950.41 ||609.36 |
|Less: Depreciation ||207.22 ||176.04 |
|Profit Before Tax ||743.19 ||433.32 |
|Less: Provision for Tax || || |
|Current Tax ||166.98 ||130.00 |
|Deferred Tax ||54.74 ||17.68 |
|Profit After Tax ||521.47 ||285.64 |
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 2019subject to the approval of share holders.
RESULT OF OPERATIONS
| ||( in Crores) |
|Particulars ||2018-19 ||2017-18 ||% |
|Gross Sales Turnover ||451.68 ||345.08 ||30.89 |
|Net Sales Turnover ||451.68 ||335.61 ||34.58 |
|Other Income ||0.86 ||0.69 ||24.64 |
|Operating Profit ||9.50 ||6.10 ||55.74 |
|Net Profit ||5.21 ||2.86 ||82.17 |
Detailed analysis of the performance of your Company is presented in the ManagementDiscussion and Analysis Report forming part of this Annual Report.
The deposits at the beginning of the financial year were 438.35 Lakhs.
During the year your Company accepted deposits amounting to 120.04 Lakhs from itsmembers. As at 31 March 2019 the amount of deposits stood at 517.79 Lakhs. There hasbeen no default in repayment of deposits or payment of interest during the year. All thedeposits accepted by the Company are in compliance with the requirements of Chapter V ofthe Companies Act 2013.
TRANSFER TO RESERVES
In the financial year 2018-19 reserve maintained with the Company is 3498.25 Lakhswhile in year 2017-18 reserve was 3042.78 Lakhs.
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 and21320 forfeited shares amounting of 106603/- (One Lakh Six Thousand Six Hundred andThree Only).
The Management Discussion and Analysis Report on Corporate Governance and aCertificate by the Managing Director conforming compliance by all the Board Members andSenior Management Personnel with Company's Code of Conduct Joint Certification by theManaging Director and CFO to the Board and Auditors' Certificate regarding compliance ofconditions of Corporate Governance are made a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board at meeting held on 07th February 2019 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 not required to contributeany amount towards CSR for the financial year 2018-19. Accordingly the company has notundertaken any CSR activities during the year under review.
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 31stMarch 2019 the applicable accounting standards read with requirements set out underSchedule III to the Companies Act 2013 have been followed and there are no materialdepartures from the same;
b. That such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2019 and the profit of the Company for the year ended on thatdate;
c. That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. That the annual Financial statements have been prepared on a going concern basis;
e. That proper internal Financial controls were in place and that the Financialcontrols were adequate and were operating effectively;
f. That the systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
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) 149 152 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) Director shall retire by rotation atthe ensuring Annual General Meeting and being eligible has offered himself forre-appointment as a Director of the Company.
The details of Directors seeking re-appointment Mr. Tarak. J. Sanghavi as requiredunder Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 are given in the notice of the ensuring Annual General Meeting which isbeing sent to the shareholders along with Annual Report.
During the year Mr. Nirmal Tiwari resigned from the post of Company Secretary andCompliance of the Company on 28th March 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. Stakeholders Relationship 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 six Board Meetings were convened and held. The details ofwhich 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 /appointment to re-appointment of Managing Directorbased on their qualifications expertise positive attributes and independence inaccordance with prescribed provisions of the Companies Act 2013 and rules framed thereunder. The NRC in addition to ensuring diversity of race and gender also considers theimpact the appointee would have on Board's balance of professional experience backgroundviewpoints 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.
M/s.PHD & Associates Chartered Accountants (Firm Registration-No.111236W) wereappointed as Statutory Auditors to hold office until the conclusion of the ensuing AnnualGeneral Meeting of the Company. In the 30th AGM Messrs PHD & Associates who werefunctioning as Auditors of the Company for five consecutive years the Board of Directorsunanimously had agreed to the recommendation of the Audit Committee and had appointedMessrs PHD & Associates as Statutory Auditors of the Company for another term of 5(five) years from the conclusion of that Annual General Meeting (30th AGM) till theconclusion of fifth consecutive Annual General Meeting. The Auditors have confirmed theireligibility to the effect that their appointment if made would be within the prescribedlimits of the Companies Act 2013 and that they are not disqualified for such appointment.There are no qualifications or adverse remarks in the Auditors Report.
The Board of Directors has appointed Messrs B. F. Modi & Associates CostAccountants as Cost Auditors for conducting audit of the cost accounts maintained by theCompany in respect of the products of the Company covered under The Companies (CostRecords and Audit) Amendment Rules 2014 and fixed their remuneration based on therecommendation of the Audit Committee. The remuneration payable to the Cost Auditors issubject to ratification by the shareholders in the ensuing Annual General Meeting of theCompany.
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 31 March 2019. There are no adverse remarks or observationsmade by Messrs D. M. Zaveri & Co. in the Secretarial Audit Report.
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
The particulars of Loans Guarantees and Investment in pursuance to Section 186 of theCompanies Act 2013 are given in the Notes to the Financial Statements.
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 underany scheme.
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 receiveany remuneration or commission from any of its subsidiaries.
e. As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 ("POSH Act") and Rules made thereunderthe Company has formed Internal Complaints Committee for various work places to addresscomplaints pertaining to sexual harassment 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 co-operation 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 |
| ||Sd/- |
|Date: 14th August 2019 ||Rajendra. J. Sanghavi |
|Place: Mumbai ||Chairman |