Your Directors present their 57th Annual Report and the AuditedFinancial Accounts for the Financial Year ended March 31 2016.
1. Financial Performance
The Company's Financial Performance for the Year ended March 312016 is summarizedbelow;-
(Rs. in Crore)
|Particulars ||2015-16 ||2014-15 |
|Gross Income from Operations ||289.85 ||240.82 |
|Gross Profit ||224.39 ||185.40 |
|Interest Paid ||72.25 ||75.55 |
|Cash Profit ||152.14 ||109.85 |
|Depreciation ||80.48 ||68.65 |
|Net Profit / (Loss) Before Exceptional item / s ||71.66 ||41.20 |
|Add; Exceptional item / s ||(2.58) ||6.66 |
|Net Profit / Loss for the Year after Exceptional item / s ||69.08 ||47.86 |
|Provision for Taxation; || || |
|Current tax ||(0.01) ||0.05 |
|Deferred tax ||25.52 ||15.23 |
|Profit / (Loss) for the || || |
|Year after tax ||43.57 ||32.58 |
|Add ; Carried forward surplus ||29.43 ||6.33 |
|Amount available for Appropriation ||73.00 ||38.91 |
|Proposed dividend on Equity shares ||6.76 ||7.91 |
|Tax on Dividend ||1.38 ||1.57 |
|Balance carried to Balance Sheet ||64.86 ||29.43 |
2. Financial Operations (Summary)
i. Gross Income from Operations for the Financial Year 2015-16 was ' 289.85crore as against ' 240.82 crore for 2014-15 an increase of approx. 20%.
ii. Gross Profit for the Financial Year 2015-16 was ' 224.39 crore asagainst ' 185.40 crore for 2014-15 an improvement of approx. 21%.
iii. Cash Profit for the Financial Year 2015-16 was ' 152.14 crore asagainst ' 109.85 crore for 2014- 15 an improvement of approx. 38%.
iv. The Exceptional Items for the Financial Year 2015-16 are the write back ofthe Property Tax liability of the earlier years on account of assessment as per theCapital Value System payment of Excise Duty and interest thereon based on the Hon'bleSupreme Court order in relation to manufacture of Nylon Tyrecord Yarn and Fabrics duringthe period April 1999 to June 2000 and payment of Liquidated damages and interest thereonon delayed payment of Provident Fund dues during the period January 2000 to February 2007.
v. Net Profit for the Financial Year 2015-16 (after taxes and exceptional items)was ' 43.57 crore as against a profit of ' 32.58 crore for 2014-15 an improvementof approx. 33%.
The Company is in the business of development and managing an Industrial Park andduring the year under review there is no change in the business activity of the Company.
The Board does not propose to transfer any amount to the General Reserve account in theBalance Sheet for the Financial Year 2015-16.
For the year under review your Directors recommended a dividend of ' 0.75 paise perequity share of ' 10.00 each (7.5%) amounting to ' 8.14 crore (inclusive of tax of ' 1.38crore) subject to the approval of Members of the Company at their 57th AnnualGeneral Meeting.
Dividend will be paid to Members whose names appear in the Register of Members as onThursday September 8 2016. In respect of shares held in Dematerialized Form dividendwill be paid to Members whose names are furnished by the National Securities DepositoryLimited and the Central Depository Services (India) Limited as Beneficial Owners as onthat date.
5. Industrial Park Operations at Goregaon (East). Mumbai & Future Outlook
Development and management of the Industrial Park / Information Technology (IT) Parki.e. Nirlon Knowledge Park (NKP) - Goregaon (East) Mumbai.
Nirlon is the owner of NKP an approx. 23 acre campus in Goregaon (East) Mumbai. NKPis an Industrial Park as per the Consolidated Foreign Direct Investment (FDI) Policyof the Government of India (goi) and is an IT Park under the Government ofMaharashtra's (GOM) Policy. The current FDI Policy of the GOI permits 100% FDI inIndustrial Parks.
i. Construction. Delivery of Licensed Premises. and License Fee Commencement
The planning for the development of NKP in four phases began in 2006 and constructionin April / May 2007. Currently all four phases are completed.
The Company is planning further development / re-development of its existing oldbuildings in NKP (Phase 5).
Phases 12 3 and 4 :
A total of approx. 29.46 lakh sq. ft. area has been constructed in Phases 1 2 3 and 4corresponding to approx. 18.78 lakh sq. ft. of licensable area. Licence fees for Phases 12 3 and 4 continue to be received by the Company as on March 312016.
License fees for Phase 4 began to accrue to the Company in stages during March Juneand July 2015.
Please Note: The total constructed area of approx. 29.46 lakh sq.ft. for Phases 12 3 and 4 includes two levels of basements in phases 12 and 3 and one level of basementthe ground floor (part) mezzanine and four upper levels of parking in Phase 4
as well as a ten floor multi level car parking (MLCP) (which also has twobasements) housing the utilities i.e generator chillers water tanks electricalinfrastructure etc. for Phases 1 and 2 in addition to visitor and occupant parking.
The Board of Directors of the Company at their meeting held on January 29 2016 interalia have considered and approved in principle the development of Phase 5 of NKP
ii. License Fees
During the Financial year under review gross license fees from Phases 1 2 3and 4 aggregated approx. ' 211.36 crore and approx. ' 39.71 crore by way of additionallicense fees from the existing old buildings. The licensee occupying one of the existingold buildings in NKP has vacated the licensed premises from February 2016 on the expiryof the license agreement. Presently license fees of ' 42.27 lakh per month are stillaccruing to the Company from licensees occupying the other existing old buildings. Theselicensees will also be vacating the premises currently occupied by them from January12017 on the expiry / mutualy agreed termination of the license agreements. This vacatingof the existing old buildings by not renewing the licenses for these premises is requiredso that these buildings can be demolished for the proposed construction of Phase 5.
Phases 1 2 3 and 4 of NKP continue to be approx. 98% licensed (as on August 10 2016)to reputed international and Indian corporates.
The Company has made a specific effort to license its development to well-regardedCorporates and the campus is fully operational and functional in this regard.
The Company's debt funding to date continues to be provided by HDFC Limited and can bebroadly broken down in two categories:
a. Securitized Loans - ' 543.10 crore (as on August 10 2016) being repaid in equalmonthly installments of principal and interest from the existing license fees for Phases1 2 3 and 4.
b. Proposed construction loan - Additional finance from HDFC Limited / any otherLending Agencies to meet with the capital expenditure requirement for the proposed Phase 5development.
The Company expects the rate of interest for the proposed Phase 5 construction loan tobe similar to the already competitive rate it is paying for its securitized loans.
The Company's business plan will continue to retain ownership of the NKP developmentand offer office space on a leave and license basis only.
In this connection the Company has issued a Postal Ballot Notice dated July 9 2016 interalia seeking approvals by way of Special Resolutions for the following items:-
1. To authorize the Board of Directors of the Company to borrow up to ' 1500.00 Crorefrom Lending Agency / ies; and
2. To authorize the Board of Directors of the Company to create
charges / mortgages / hypothecations on the Company's movable and / or immovableproperties situate at Village Pahadi and Goregaon Goregaon (East) Mumbai both presentand future in order to create security in favor of Lending Agency / ies.
6. Nirlon House
The Company continues to co-own 75% undivided interest in approx. 45475 sq.ft. of areain the Nirlon House building in a prime location on Dr. A. B. Road Worli in CentralMumbai.
7. Status on Open Offer by Reco Berry Pvt. Ltd.
a. Acquisition of Equity Shares
Members may be aware that Reco Berry Private Limited (Reco) of Singapore anaffiliate of GIC the Sovereign Wealth Fund of Singapore has successfully:
i. acquired 25600000 equity shares of the Company comprising of approx. 28.41% ofits share capital pursuant to an Open Offer made in accordance with the provisions of theSecurities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations 2011 for which a Public Announcement was made on December 23 2014;
ii. also acquired 30159872 equity shares of the Company comprising approx. 33.46% ofits share capital by April 30 2015 pursuant to certain Share Purchase Agreements datedDecember 23 2014 and December 30 2014; and
iii. On October 9 2015 further acquired 1846402 equity shares from the Promotergroup comprising approx. 2.04% of its share capital.
iv. Presently Reco holds an aggregate of 57606274 equity shares of the Companycomprising of approx. 63.92% of its share capital and has been classified as a Promoterof the Company along with the existing Promoters with effect from April 28 2015.
b. Property Management Functions
i. It may be recalled that as disclosed in the Open Offer documents Reco and Mr. KunalV. Sagar Mr. Rahul V. Sagar Alfano Pte. Ltd. and Deltron Pte. Ltd. (Promoters)had entered into share purchase and shareholders agreements dated December 23 2014 whichprovide inter alia that the property management functions of the Company will beoutsourced to a new management services company (MSC') to be incorporated byMr. Kunal V. Sagar and Mr. Rahul V. Sagar.
ii. The agrement further provides that subject to receipt of all necessary corporateauthorizations and regulatory approvals (if required) the MSC shall service and providethe Company with property / project and other management services and it was intendedthat the MSC shall make offers of employment to the employees of the Company engaged inthe provision of such services on terms that are no less favorable than those beingoffered by the Company to each of its employees.
iii. Accordingly Nirlon Management Services Company Pvt Ltd. (NMSCPL')was incorporated on October 7 2015 by Mr Kunal V. Sagar and Mr Rahul V. SagarPromoters of the Company who presently own 100% (one hundred per cent) of the votingrights and share capital of NMSCPL.
iv. The Company now proposes to appoint NMSCPL as a provider of project / property andother management services in respect of the properties of the Company on the terms set outin a management services agreement proposed to be executed between the Company and NMSCPL.In addition and simultaneously with the above the Company proposes to enter into anasset sale agreement with NMSCPL to record :
a. the transfer of identified movable assets relating to the services from the Companyto NMSCPL; and
b. the resignation of employees from the Company and their employment with NMSCPL asdescribed above. The Company has also agreed to grant its no-objection and consent toNMSCPL's use on a royalty free basis of the name and mark "Nirlon" under aname user agreement proposed to be executed between the Company NMSCPL Mr. Kunal V.Sagar and Mr. Rahul V. Sagar.
v. The Audit Committee of the Board in their meeting on August 10 2016 approved theproposed related party transactions as detailed in paragraph 7 (b) (iv) above andrecommended the same to the Board of Directors of the Company which in turn on the sameday approved subject to receipt of Members' approval at the 57th AnnualGeneral Meeting to be held on Tuesday September 20 2016 and subject to such otherapprovals as may be required under the Articles of Association of the Company theproposal to: -
1. enter into an asset sale agreement to be executed between NMSCPL and the Companyunder which (i) certain movable assets of the Company will be transferred to NMSCPL and(ii) certain employees of the Company will resign as employees of the Company and take upemployment with NMSCPL on terms not less favourable than those given to them by theCompany on the terms and conditions as more particularly set out in the draft Asset SaleAgreement;
2. enter into a management services agreement to be executed between NMSCPL and theCompany under which the Company will appoint NMSCPL as a provider of lease managementproperty management marketing related project management and general management servicesin respect of the properties of the Company in accordance with the terms and on theconditions set out in the draft management services agreement proposed to be executedbetween the Company and NMSCPL; and
3. enter into a name user agreement to be executed amongst NMSCPL Mr. Kunal V. SagarMr. Rahul V. Sagar and the Company under which the Company will approve the use of thename and mark Nirlon' in the corporate name of NMSCPL on a royalty free basis inaccordance with the terms and conditions set out in the draft name user agreement.
Further details of the arrangements proposed to be entered into with NMSCPL are set outin item no. 7 of the Notice and Explanatory Statement calling for the 57thAnnual General Meeting of the Company to be held on September 20 2016.
8. The Board & its Committees
a. Board of Directors :
The total strength of the Board of Directors of the Company consists of 8 (eight)Directors including 2 (two) women Directors. Of this number 4 (four) IndependentNon-Executive Directors including 1 (one) woman director constitute 50% of the totalstrength of the Board of Directors of the Company.
For more detail please refer to the link:- http: / / www.nirlonltd.com /board-committees.html The Board of Directors at their meeting held on January 29 2016considered and approved the recommendation of the Nomination and Remuneration Committeerecommending re-appointment of Mr. Rahul V. Sagar w.e.f. February 1 2016 for a term of 5(Five) years as Executive Director and the payment of his proposed ManagerialRemuneration.
In this connection the Company has issued a Postal Ballot Notice Dated July 9 2016 interalia seeking approvals by way of special resolution for the above.
Re-appointment and Appointment of Directors at the 57th
i. Mr. Kunal V. Sagar Director retires by rotation and being eligible offers himselffor re-appointment.
ii. Reco Berry Pvt. Ltd. a Promoter of the Company nominated Mr. KunnasagaranChinniah on the Board w.e.f. April 28 2016. Mr. Chinniah shall hold office as a directorup to the date of the 57th AGM and the Company has received a valid noticewith deposit amount as required under section 160 of the Act for his appointment.
The Board recommends the re-appointment of Mr. Sagar as a director and the appointmentof Mr. Chinniah as a director to retire by rotation.
A brief resume of the Directors including Mr. Sagar and Mr. Chinniah nature of theirexpertise and the name of company / ies where they hold Chairmanships Directorships andMemberships of Board / Committees and Shareholdings if any as stipulated under therequired Regulation of the Listing Obligations & Disclosure Requirements Regulations2015 (LODR) is provided in this Report and also forms part of the Notice callingthe 57th AGM.
b. Various Committees of the Board of Directors and their Role and Responsibilities
i. Audit Committee (AC)
The AC of the Board played an important role during the year under review includingcoordinating with the Statutory Auditors Internal Auditors Cost Auditors and other KeyManagerial Personnel of the Company. The AC has also rendered guidance inter aliain the areas of corporate governance internal audit finance taxation accounts etc.
ii. Stakeholders Relationship Committee (SRC)
The SRC met regularly over the course of the year. With the compulsorydematerlallzatlon of the Company's shares and electronic mode of transfers postaldispatches / email correspondence which led to frequent complaints have been minimized.
As on March 31 2016 approx. 92.25% of the Company's total paid up equity sharecapital was held Dematerialized Form and there were no investor grievances / complaintspending.
iii. Corporate Social Responsibility Committee (CSRC)
The Board formed a Corporate Social Responsibility Committee on September 23 2014.
iv. Nomination & Remuneration Committee (NRC)
The NRC recommends to the Board the remuneration / compensation packages of ExecutiveDirectors Key Managerial Personnel and other employees.
v. Risk Management Committee (RMC)
The Board formed a Risk Management Committee on September 23 2014.
For more detail please refer to the link:-
http: / / www.nidonltd.com / pdf / various_committees.pdf
vi. Anti Sexual Harassment Committee (SHC) - Prevention of Sexual Harassment at theWorkplace
As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 read with rules made thereunder your Company hasconstituted a committee which is responsible for redressal of complaints related to sexualharassment.
During the year under review there were no complaints pertaining to sexual harassment.
For more detail please refer to the link-
http: / / nirlonltd.com / pdf / policy_on_sexual_ harassment.pdf
9. Policies & Codes
SEBI introduced the LODR effective from December 1 2015. The LODR provides interalia various regulations annexures and schedules and all prescribed companies wererequired to comply with the LODR latest by March 31 2016.
In view of the above and in order to meet with the requirements the Company madesuitable modifications to its existing polices and also adopted new policies on March 292016. Your Company is compliant with the LODR.
i. Determination of Materiality of Events / Information (DMEI) Policy
The DMEI Policy for determination of materiality of events / information aims to:
a. ensure that all investors have equal access to important information that may affecttheir investment decisions;
b. ensure that adequate and timely information is provided to investors;
c. avoid establishment of a false market in the securities of the Company; and
d. Communicate the principles of materiality based on which the Company shall makedisclosures of events or information.
For more detail kindly refer to the link-
http: //www.nirlonltd.com /pdf / dmei_poiicy_mar_16.pdf
ii. Related Party Transaction (RPT) Policy
The RPT Policy is in accordance with the requirement of Regulation 23 of the LODR 2015and Section 188 of the Companies Act 2013 and is intended to ensure the proper approvaland reporting of transaction / s between the Company and its Related Parties.
Aims of the RPT Policy
Inter alia to disclose in the Financial Statements of the Company applicabletransaction / s between the Company and Related Parties as well as policies concerningtransaction / s with Related Parties. Such transactions are appropriate only if they arein the best interest of the Company and its shareholders.
For more detail kindly refer to the link-
http: / / www.nirlonltd.com / pdf / related_party_transaction_ policy_mar_16.pdf
iii Whistle Blower (WB) Policy
The Company has a vigil mechanism system called the Whistle Blower Policy (WBP) todeal with instances of fraud and mismanagement if any.
The WBP meets with the requirement of Regulation 22 of the LODR 2015 and Section 177of the Act and is intended to ensure that the Directors and Employees or any other personreport their genuine concerns. During the year under review there was no case of whistleblowing reported.
For more detail kindly refer to the link-
http: / / www.nirlonltd.com / pdf / whistle_blower_policy_ mar_16.pdf
iv. Corporate Social Responsibility (CSR) Policy
CSRC and CSR Policy are in compliance and in agreement with Section 135 of the Act.
Objectives of the Policy:
a. To formulate and recommend to the Board a Corporate Social Responsibility Policywhich shall indicate the activities to be undertaken by the Company as specified inSchedule VII to the Act.
b. To recommend the amount of expenditure to be incurred on CSR activities.
c. To monitor the CSR Policy.
d. To ensure that the Company spends in every financial year at least 2 (two)% of theaverage net profits of the Company made during the 3 (three) preceding financial years onCSR activities.
The Company has not spent any amount on CSR activities during the Financial Year2015-16 under Section 135 (5) of the Companies Act 2013 as the average net profits of theCompany made during the three (3) immediately preceding financial years were not positiveas calculated under Section 135(5) of the Companies Act 2013.
For more detail kindly refer to the link:-
http: / / www.nirlonltd.com / pdf / csr_policy_mar_16.pdf
v. Nomination & Remuneration (NR) Policy
NRC and NR Policy are in compliance with Section 178(1) of the Companies Act 2013 andRegulation 19 read with Part D of Schedule II of the LODR.
Objectives of the NR Policy:
a. To guide the Board in relation to appointment and removal of Directors KeyManagerial Personnel and Senior Management;
b. To evaluate the performance of the members of the Board and to provide necessaryreports to the Board for further evaluation of the Board;
c. To recommend to the Board levels of remuneration / compensation payable toDirectors Key Managerial Personnel and other Senior Management;
d. ESOP and other related matters.
For more detail kindly refer to the link:-
http: / / www.nirlonltd.com / pdf / nomination_and_ remuneration_poiicy_mar_16.pdf
vi. Risk Management (RM) Policy
The Regulation 21 of the LODR provides applicability for the Risk Management Committeeand Risk Management Plan for the top 100 listed companies based on market capitalizationas at the end of the immediate previous financial year.
Although the Company is not required to have a RMC / RM Policy the Company hasinstituted the RMC / RM Policy for better safeguarding of business continuity operationsand timely assessment of potential risk as well as mitigation and minimization proceduresfor the same.
For more detail kindly refer to the link-
http: / / www.nirionitd.com /pdf/risk_mgmt_policy_mar_16. pdf
vii. Preservation of Documents (POD) Policy
Under Regulation 9 of the LODR the Company is required to adopt the POD Policy.
Aims of the POD Policy
a. The POD Policy contains guidelines for identifying Documents that need to bemaintained the period of preservation of such Documents and the procedure for theirdestruction / disposal.
b. This Policy aims to provide an efficient and systematic control on the periodicityand destruction of business related Documents.
For more detail kindly refer to the link-
http: / / www.nirionitd.com / pdf / pod_policy_mar_16. pdf
viii. Anti Sexual Harassment Policy
The Company provides an equal employment opportunity and is committed to creating ahealthy working environment that enables employees to work without fear of prejudicegender bias and sexual harassment. The Company also believes that all employees of theCompany have the right to be treated with dignity. Sexual harassment at the workplace orother than workplace if involving employees is a grave offence and is thereforepunishable.
During the year under review there were no sexual harassment complaints reported.
For more detail kindly refer to the link-
http: / / www.nirlonltd.com / pdf / policy_on_sexual_ harassment.pdf
i. Internal Code of Conduct for Regulating Monitoring and Reporting of Trades underthe SEBI (Prohibition of Insider Trading) Regulations 2015 (ICCPIT)
The Board earlier adopted the internal Code of Conduct (ICCPIT') forRegulating Monitoring and Reporting of Trades under the SEBI (Prohibition of InsiderTrading) Regulations 2015 and the same was effective from June 20 2015.
Thereafter the LODR came to force and the existing ICCPIT was amended suitably. It isalso mandatory under the LODR that every listed entity should have a framework to avoidinsider trading and abusive selfdealing.
Further Regulation 8(1) of the PIT Regulations 2015 mandates that listed companiesformulate and display on their website a code of practices and procedures for fairdisclosure of unpublished price sensitive information by adhering to the principles as setout in the Regulations. The principles of fair disclosure are also a part of ICCPIT andthe Company is compliant in this regard.
For more detail kindly refer to the link-
http: / / www.nirionitd.com / pdf / iccpit_mar_16.pdf
ii Code of Conduct for Board Members and Designated Employees (CCBE)
The LODR 2015 provides specific regulation with respect to the CCBE and hence theCCBE originally adopted by the Board on July 26 2014 was amended suitably on March 292016.
Objectives of CCBE
a. The CCBE envisages that the Board and Designated Employees must act within theboundaries of the authority conferred upon them and with a duty to comply with therequirements of applicable laws while discharging their duties and responsibilities.
b. The principles prescribed in CCBE are general in nature and lay down broadstandards of compliance and ethics as required by Regulation 17 (5) (a) and 26 of theLODR 2015. The Board and Designated Employees shall also refer to other applicablepolicies and procedures of the Company for specific instructions and guidelines which areto be read in conjunction with the CCBE.
For more detail kindly refer to the link:-
http: / / www.nirlonltd.com / pdf / ccbe_mar_16.pdf
iii Code of Conduct for Independent Directors (CCID)
The Board adopted the Code of Conduct for Independent Directors (CCID) and the same waseffective from November 13 2014. As the LODR provide specific regulation with respect tothe CCID the CCID originally adopted by the Board was amended suitably.
Objectives of the CCID
To provide guidance for the professional conduct of Independent Directors (IDs)of the Company in order to adhere to desired standards by the IDs and for fulfillment oftheir responsibilities in a professional and faithful manner so as to promote confidencein the investment community particularly stakeholders regulators etc.
For more detail kindly refer to the link- http: / / www.nirlonltd.com / pdf /ccid_mar_16.pdf
10. a. Formal Annual Evaluation by the Directors
Pursuant to the provisions of the Act and the relevant provisions of LODR the Boardhas carried out an annual performance evaluation of its own performance the Directorsindividually as well as an evaluation of the working of its Audit Nomination &Remuneration and other Compliance Committees.
b. Familiarization Programme for Independent Directors
The Company's Board is diversified with Independent Directors (IDs) who arehighly qualified with rich experience. The IDs have been associated with variousGovernment agencies and departments and have been associated with various corporate andbusiness organizations including the
Company. They are familiar with the Company's business activities. Moreover theCompany provides them updates by providing a regular brief on operations as well asmaking suitable arrangements for visits by the independent Directors to the NKP site.
For more detail kindly refer to the link-
http: / / www.nirlonltd.com / pdf / famiiiarization_%20 programme_ids.pdf
c. Declaration by and Tenure of the Independent Directors
All IDs have given declarations that they meet the criteria of independence and are notdisqualified to act as IDs as laid down under Section 149(6) of the Act and the relevantRegulation of LODR.
The IDs were appointed by the Members of the Company at their meeting held on September23 2014 to hold the office of Independent Director for a period of five consecutiveyears. Accordingly the IDs shall hold office up to March 31 2019. Letters of appointmentwere issued to IDs and the same were uploaded on the Company's website.
For more detail kindly refer to the links:
1. http: / / www.nirlonltd.com / pdf / mr_moosa_%20raza. pdf
2. http: / / www.nirlonltd.com / pdf / mr_rama_varma.pdf
3. http: / / www.nirlonltd.com / pdf / mr_arjan_gurbuxani. pdf
4. http: // www.nirlonltd.com /pdf / mrs_aruna_makhan. pdf
d. Directors' Responsibility Statement
To the best of your Directors 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 Act:
a. that in the preparation of the Annual Financial Statements for the year ended March31 2016 the applicable accounting standards have been followed along with properexplanations relating to material departures if any;
b. that such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgments and estimates have been made thatare reasonable and prudent so as to give a true and fair view of the State of Affairs ofthe Company as at March 31 2016 and of the Profit of the Company for the year ended onthat date;
c. 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;
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 these financialcontrols were adequate and were operating effectively; and
f that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively
e. Number of Board & Audit Committee Meetings
A calendar of Meetings is prepared and circulated in advance to the Directors Duringthe year 6 (six) Board Meetings and 5 (five) Audit Committee Meetings were convened andheld.
The details of these meetings are given in the Corporate Governance Report Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.
11. Promoters & Key Managerial Personnel
1 Mr Kunal V Sagar
2 Mr Rahul V. Sagar
3 Mrs Rajani M Bhagat
4 Reco Berry Private Limited (w.e.f. April 28 2015)
b. Key Managerial Personnel
1 Mr Kunal V. Sagar Executive Vice Chairman (up to September 25 2015)
2 Mr Rahul V. Sagar Executive Director
3 Mr Jasmin K Bhavsar Company Secretary & Vice President (Legal) &Compliance Officer
4 Mr. Manish B. Parikh Chief Financial Officer
The change in the Directors and Key Managerial Personnel during the financial year isas follows : -
Mr Kunal V. Sagar resigned as Execuive Vice Chairman of the Company w.e.f September25 2015 However he continues to be a Promoter and Non Executive Director of the Companythereafter
Please note that Mr Kunnasagaran Chinniah was appointed as a Nominee Director of RecoBerry Pvt. Ltd. w.e.f. April 28 2016.
12. Loan. Guarantees. Security & Investment
The Company has not made any loan or given any guarantee or provided security to anyperson and has not made any investment that attracts the provisions of Section 186 of theCompanies Act 2013 during the Financial Year
13. Holding. Subsidiary & Associate Company
The Company is not a holding a subsidiary or an associate company of any company andvice versa and hence Form AOC-1 is not applicable to the Company.
14. Fixed Deposits & Debentures
The Company has neither accepted nor invited any fixed deposits during the FinancialYear under review
The Company has also not issued any debentures during the Financial Year under review
15. Transfer of any amount to the Investor Education and Protection Fund (IEPF)
There is no amount lying with the Company as unpaid / unclaimed with respect to anydebenture redemption amount and / or fixed deposit and / or any outstanding interestthereon.
However as on August 10 2016 there is an amount of ' 1753 lakh and ' 15.10 lakhlying with HDFC Bank Limited in a special account named the Nirlon Limited- Dividendunpaid / unclaimed Dividend Account - 2013-14' and 2014-15' respectively whichpertains only to Shareholders who hold their shares in Physical Form
16. Authorized Share Capital. Paid up Capital and Listed Capital of the Company
The Authorized Share Capital of the Company is ' 1500000000 divided into150000000 equity shares of ' 10 each and the paid up capital is ' 901180400 dividedinto 90118040 equity shares of ' 10 each
The Company's paid up share capital is listed on the BSE Limited with the security code500307 with ISIN INE910A01012.
17. Fraud Reporting
During the year under review there was no fraud reported
18. Related Party Transactions
a There were no related party transactions during the Financial Year except:-
i the appointment of and remuneration being paid to the Executive Vice Chairman andthe Executive Director of the Company pursuant to the special Resolutions passed by theMembers / to be passed by the Members;
ii Payment of dividend as declared by the Members of the Company
None of the Directors of the Company has received any commission from the Company
None of the Directors and Key Managerial Personnel save and except as stated abovehave any pecuniary relationships or transactions vis-a-vis the Company.
b. The Company has proposed to enter in to a transaction / arrangement with NMSCPLdetails of which are given in item no. 7 of the Notice and Explanatory Statementdated August 10 2016 calling the 57th AGM under which the Members' consent isbeing sought for such transactions / arrangements at this 57th AGM
The Company has not entered in to any contracts or arrangements with related parties asdefined under Section 188 of the Act as on date and hence reporting in the Form AOC-2 orunder the LODR is not applicable.
The Company shall make the reqisite disclosures and reporting in Form AOC-2 as well asunder the LODR in the Directors' Report for the year ending on March 31 2017 in relationto the arrangements proposed with NMSCPL subject to receipt of approval from the Membersat the 57th AGM for such arrangements
19. Details of Significant & Material Orders Passed by the Regulators or Courts orTribunals impacting the Going Concern Status & the Company's Operations in Future
There are no material orders passed by the Regulators / Courts which would impact thegoing concern status of the Company and its future operations.
20. Spending on the Corporate Social Responsibility Programme
The Company was not required to spend any amount during the Financial Year 2015-16 asthe average net profits of the Company made during the three (3) immediately precedingfinancial years were negative as per Section 135 (5) of the Companies Act 2013.
21. Intellectual Property Rights
The Company's trade mark / service mark logo / s and copyrights are registered andprotected under the respective statutes.
a. Statutory Auditors & their Report
i. The Company's Statutory Auditors M / s. N. M. Raiji & Co. (Firm Registrationno.108296W) Chartered Accountants retire as auditors of the Company at the conclusion of57th Annual General Meeting and are eligible for re-appointment. They haveindicated their willingness to accept re-appointment and have furnished the necessarycertificate in terms of Section 139 of the Companies Act 2013.
ii. The Audit Committee has considered and recommended the re-appointment of M / s. N.M. Raiji & Co. Chartered Accountants as Statutory Auditors of the Company to theBoard of Directors.
iii. As required under Act the Auditors have also confirmed that they hold a validcertificate issued by the Peer Review Board of the Institute of Chartered Accountants ofIndia.
iv. The Board of Directors have accepted the Audit Committee's recommendation andrecommended the re-appointment of M / s. N. M. Raiji & Co. Chartered Accountants toMembers as the Statutory Auditors of the Company.
v. Accordingly the consent of Members is sought for passing an Ordinary Resolution asset out at Item no. 4 of the Notice.
Statutory Auditors Report
i. The observations made by the Auditors in the Report referring to the Notes formingpart of the Accounts are self-explanatory and therefore do not require any furthercomments under Section 134 (3) (f) of the Companies Act 2013.
ii. There is no qualification in the Audit Report and a certificate to that effect in FormA' is attached to this Report as Annexure 1.
b. Internal Auditors
i. DH Consultants Private Limited (earlier known as M / s. BDO Consulting PrivateLimited) were the Internal Auditors of the Company for the year under review and theirreports were reviewed by the Audit Committee appointed by the Board.
ii. KPMG India has been appointed as Internal Auditors of the Company by the Boardbased on the recommendation of the Audit Committee for the Financial Year 2016-17.
c. Secretarial Auditors & Secretarial Audit Report
i. Pursuant to the provisions of Section 204 of the Companies Act 2013 and TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyappointed M / s. Alwyn Jay & Co. a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the financial year 2016-17. TheSecretarial Audit Report is attached as Annexure 2.
ii. There is no qualification in the Secretarial Audit Report.
d. Cost Auditors & Cost Audit Records
i. The Companies (Cost Records and Audit) Rules 2014 read along with Companies (CostRecords and Audit) Amendment Rules 2014 specifies criteria for specified industries whichare required to maintain cost records and get them audited. The Company's business as anIndustrial Park is covered under Clause 5(a) of Schedule VI of the Companies Act 2013 andits turnover is in excess of ' 100 crore. It is therefore required to maintain costrecords which should be audited by a practicing Cost Auditor.
ii. In view of the above provisions of the Act the Board based on the recommendationof the Audit Committee has approved the appointment and remuneration of Mr. Vinay B.Mulay the Practicing Cost Auditor (ICAI- CMA No. 8791 CP No. 101159) of M / s. VinayMulay & Co. Mumbai to conduct the audit of the cost records of the Company for thefinancial year ending March 312016.
iii. In accordance with the provisions of Section 148 of the Act read with theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditoras recommended by the Audit Committee and approved by the Board of Directors has to beratified by Members of the Company.
iv. Accordingly the consent of Members is sought for passing an Ordinary Resolution asset out at Item no. 5 of the Notice for ratification of the remuneration payable tothe Cost Auditor for the financial year ending March 312016.
v. The Board appointed Mr. Vinay B. Mulay the Practicing Cost Auditor (ICAI-CMA No.8791 CP No. 101159) of M / s. Vinay Mulay & Co. Mumbai to conduct the audit of thecost records of the Company for the financial year ending March 312017.
23. Conservation of Energy. Technology Absorption & Foreign Exchange Earning &Outgo
As required under Section 134 (3) (m) of the Companies Act 2013 read with read withRule 8 of The Companies (Accounts) Rules 2014 the particulars relating to theconservation of energy technology absorption and foreign exchange earnings and outgo wereas under:
A. The Company has no manufacturing activities relating to conservation of energy.
B. 1. The Company has not made any provision for research and development expenditureas the same is not applicable.
2. The Company has no activity relating to technology absorption and innovation.
C. The Company has incurred travel expenses in foreign currencies aggregating to ' Nilcrore and the Company has no foreign earnings.
The Company has incurred professional fee expenses in foreign currency aggregating to '0.37 crore.
24. Managerial Remuneration
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(as amended) in respect of employees of the Company forms a part of this Report as Annexure3.
25. Remuneration ratio of the Directors / Key Managerial Personnel / Employees
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (as amended) inrespect of employees of the Company and Directors is furnished in Annexure 4.
26. Employees Stock Option Scheme (Nirlon ESOP 2012)
Applicable disclosures as on March 31 2016 are attached as Annexure 5 and forma part of this Report. The relevant details of the schemes have also been disclosed on thewebsite of the Company.
Under the Nirlon ESOP 2012. the Board approved the 717656 options out of which715000 options were granted to eligible employees and vesting period were accelerated(options corresponding to 2656 equity shares of the Company have not been granted tilldate). Furthermore eligible employees have exercised their rights for 680000 optionssave and except for one employee to whom 35000 options have vested but have not beenexercised. All other eligible employees have fully exercised their rights arising out ofthe Nirlon ESOP 2012. There have been no material changes to the Nirlon ESOP 2012. TheNirlon ESOP complies in all respects with applicable rules and regulations.
The Company has received a certificate from its Statutory Auditors that the Scheme hasbeen implemented in accordance with SEBI Guidelines and the required resolution has beenpassed by Members. This Certificate will be available at the Company's 57thAnnual General Meeting for inspection by Members.
27. Corporate Governance Disclosure
a. The Company adheres to the principles of Corporate Governance mandated by SEBI underclause 49 of the Listing Agreement / LODR (as applicable) and has complied with allmandatory requirements. The nonmandatory requirements have been complied with to theextent practical and applicable.
A separate section on Corporate Governance Annexure 6 to this Report and acertificate from M / s. Alwyn Jay & Co. the practicing Company Secretaries confirmingcompliance with Corporate Governance requirements as applicable form part of this Report.
b. The Executive Director's declaration regarding compliance with the Code of BusinessConduct and Ethics forms part of the Corporate Governance Report.
c. The Executive Director's and Chief Financial Officer's certification underRegulation 17(8) of the LODR forms part of the Corporate Governance Report.
28. Management Discussion & Analysis
Details are provided in Annexure 7and form part of this Report.
29. Extract of Annual Return
The details forming part of the extract of the Company's Annual Return in form MGT 9are provided in Annexure 8.
30. Appointment of Share Transfer Agent (STA)
The Company appointed Link Intime India Pvt. Ltd. as its Share Transfer Agent (the STA').w.e.f. June 3 2016.
In view of the change in Share Transfer Agent the Registers of Members Annual Returnsetc. are maintained by Link Intime India Pvt. Ltd. at their registered office situate atC-13 Pannalal Silk Mills Compound L.B.S. Marg Bhandup (West) Mumbai 400 078 and / orat such other place(s) within the city of Mumbai where the STA may have their office fromtime to time.
In this connection the Company has issued the a Postal Ballot Notice Dated July 92016 inter alia seeking approvals by way of Special resolution for Ratificationof the appointment of Link Intime India Pvt. Ltd. to act as the Share Transfer Agent (STA)of the Company and to keep the Register of Members Index of Members Annual Returns etc.at the registered office of the STA and to allow inspection of the same as required underthe Act.
31. Postal Ballot
a. The Company has proposed the following Special Resolutions to be passed throughPostal Ballot for the special business as stated in the Notice dated July 9. 2016:1.To authorise the Board of Directors to borrow up to ' 1500.00 Crore from Lending Agency /ies;
2. To authorise the Board of Directors to create charge(s) / mortgage(s) /hypothecation(s) on the Company's movable and / or immovable properties situate atGoregaon (East) Mumbai both present and future in order to create security in favor ofLending Agency / ies;
3. Appointment of Mr. Rahul V. Sagar (DIN 00388980) as Executive Director of theCompany and the proposed payment of his Managerial Remuneration for a period of 5 (five)years w.e.f. February 1 2016 to January 31 2021;and
4. Ratification of the appointment of Link Intime India Pvt. Ltd. to act as the ShareTransfer Agent (STA) of the Company and to keep the Register of Members Index ofMembers Annual Returns etc. at the registered office of the STA and to allow inspectionof the same as required under the Act.
b. The Directors have appointed Mr. Alwyn D'souza Practising Company Secretary (FCSNo.5559 CP No.5137) of M / s. Alwyn Jay & Co. Company Secretaries Mumbai asScrutinizer (the Scrutinizer') for scrutinizing the voting through the PostalBallot including e-voting in a fair and transparent manner.
c. The Postal Ballot Form / s may also be deposited personally at the address giventhereon. The duly completed Postal Ballot Form / s are to reach the Scrutinizer not laterthan 5.00 p.m. (1ST) on Tuesday August 23 2016 to be eligible for being consideredfailing which it will be strictly treated as if no reply has been received from theMember.
d. The Scrutinizer will submit his report to the authorised Director after thecompletion of the scrutiny of the Postal Ballot including e-voting. The result of thePostal Ballot including e-voting shall be declared on Monday August 29 2016 and becommunicated to the BSE Limited and CDSL. The same would also be displayed on theCompany's website at www.nirlonltd.com'.
The following Link Is attached for the Postal Ballot:- 1. http: / / nirlonltd.com / pdf/ postal_ballot_notice_jul_16.pdf
2 http: //nirlonltd.com /pdf /postal_ballot_form_jul_16.pdf
32. Enhancing Shareholders / Members Value
Your Company believes that its Members are among its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the Company's productive asset and resource base and nurturing itsoverall corporate reputation. Your Company is also committed to creating value for itsother stakeholders by ensuring that its corporate actions positively impact socio-economicdimensions and contribute to sustainable growth and development.
33. Personnel Relations & Acknowledgements
Personnel relations with employees continue to remain cordial. Your Directors recordtheir appreciation for the services rendered by employees at all levels. They acknowledgeand record their appreciation for the co- operation and assistance rendered by HDFCLimited Banks and various Government authorities at State and Central levels. YourDirectors thank all stakeholders for their continued support.
We would also like to place on record our sincere appreciation for the co-operationreceived from the Reserve Bank of India SEBI the BSE Limited and all other statutory and/ or regulatory bodies.
|For and on behalf of the Board of Directors |
| ||Nirlon Limited |
| ||sd / - |
| ||Moosa Raza |
| ||Chairman |
|Mumbai August 10 2016 ||DIN 00145345 |