Your Directors are pleased to present their Board Report together withthe Audited financial statements for the year ended March 312020.
| || || |
(Rs. In Crores)
|Particulars ||Financial year ended March 31 2020 ||Financial year ended March 31 2019 |
|Total Revenue ||855.99 ||1052.91 |
|Profit before Interest Depreciation and Tax ||186.15 ||300.29 |
|Less: Interest ||1.32 ||0.63 |
|Less: Depreciation ||32.42 ||22.97 |
|Profit before tax ||152.41 ||276.69 |
|Less: Tax Expenses ||21.43 ||92.60 |
|Net Profit after tax ||130.98 ||184.09 |
|Earning per share of face value of Rs. 10 each - Basic ||7.91 ||11.14 |
|Earning per share of face value of Rs. 10 each - Diluted ||7.91 ||11.08 |
Performance of the Company
Your Directors wish to inform you that the Company recorded a turnoverof Rs. 846 Crores for the year as against Rs. 1043 Crores a de-growth of 19%. This wason the back of de-growth in sales volume by 4% as against the domestic automobile sectorde-growth of 15%.
Auto sector experienced a recessionary situation from October 2018 andthe trend continued throughout the financial year under review. The US China tradetensions compounded the problem for your company as the Chinese competitors starteddumping rubber chemicals into India (Rs.hird largest market) on account of their exportsbecoming difficult in US markets. Further the cessation of anti- dumping duty post endJuly 2019 added pressure on margins of six (6) of our products.
Your Company continues to practice its ethical business strategy andall regular customers were served in a timely manner with the best quality and services atcompetetive prices.
Your Company has recorded a Net Domestic turnover of Rs. 560 Crores forthe year under review. In view of the reasons mentioned in the previous para the domesticsales volume reported a de-growth of 9% as compared to the previous Financial Year2018-19.
As stated in the previous annual report the Domestic tire industry gotimpacted by the slowdown in the OEM industry which started from August 2018 onwards andthe trend continued throughout the year. The slowdown led to a drop in capacityutilisation at the major tire companies. In view of the BS VI auto emission introductionauto sales were expected to witness a growth due to pre-buying which did not materialiseon account of COVID-19.
On the other hand rubber chemicals prices which started softening fromOctober 2018 in view of the slow down better availability and drop in corresponding CIFlevels marked a drop of 15% for the year under review.
Reductions were also witnessed in the input prices thoughdisproportionate to the finished goods price reductions.
Though China accounts for about 75% of world's rubber chemicalproduction it only consumes about 35% of the rubber chemicals resulting in exportablesurplus which makes it possible to dump it into neighboring markets including India. TheCompany made necessary applications before the Director General of Trade Remedies (DGTR)for anti-dumping duty in respect of its main product.The matter has been initiated by DGTRin May 2020. Any positive findings will benefit the company in the form of additionalprotection which will enable to get a level playing field.
Despite the above challenges for the year under review Exports showeda volume growth of 6%. In view of our expanded presence in the international market yourCompany is hopeful to participate more fruitfully in certain key accounts and the exportsbusiness activity is not likely to experience any major setbacks from the current level ofRs. 286 Crores.
Your Company strategically continues to promote some high quality andhigh value speciality products in the export market which contribute significantly to ourexport turnover and margins. In case of other products where competition is acute fromChina/Korea/EU/USA and pricing unattractive your Company continues to maintain only astrategic presence in certain select key accounts focusing on long term business strategyas well as to ensure better capacity utilisation.
The production of all products was aligned in line with the marketconditions in view of the auto industry slowdown. As a result some production cuts had tobe undertaken to manage the inventories.
On the input front the reduction in Benzene prices have resulted insome favorable downward movements in prices of all major inputs. Crude Oil witnessed astable price range in most part of the year in the range of USD 55 - 60 per barrel.Increased availability of Aniline due to slow down in Methylene Diphenyl Di-isocyante(MDI) demand resulted in the spreads dropping significantly lower over Benzene spot price.As a result your company managed a long-term contractual arrangements with its vendors inrespect of Aniline at an attractive fixed spread over spot Benzene price.
It may be recalled that the Board of Directors of your company hadapproved a capital expenditure of Rs. 450 Crore in financial year 2017-18. In terms of thesaid plan the second leg capex towards finished goods was completed by October 2019.There is some capex on intermediates and infrastructure which is likely to be commissionedby October 2020. Currently the finished products manufactured out of the Dahej expansionprojects have started receiving customer approvals and capacity utilisation will be scaledup in line with the commercial orders.
In view of the company's comfortable liquidity position the entirecapex got financed through internal accruals.
During the year under review the Company has utilised its resourcesjudicially and consequently the Company generated cash profits and did not utilise anyworking capital facilities for the whole year. The Company has remained debt free.
The Credit ratings Agencies CARE and CRISIL Limited have reaffirmedratings as CARE AA (Double A) (Stable) and CRISIL AA for long term Bank Facilities (Rs.ermloans as well as Fund Based facilities) and CARE A1+ (A One plus) and CRISIL A1+ (stable)rating for short term Non-Fund Bank facilities respectively.
Your company forms part of the List of top 500 listed entities based onMarket Capitalisation as on March 31 2018 and top 1000 listed entities as on March 312019. In view thereof pursuant to the provisions of Regulation 43A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended at its meetingheld on May 04 2018 the Board of Directors have approved the Dividend DistributionPolicy effective from the Financial Year 201819. The said Policy is attached as Annexure"H" and is also available on the Company's website the weblink of which ishttp://www.nocil.com/images/fckeditor/file/Dividend-Distribution-Policv-2018.pdf.
During the year under review the company discharged dividendobligations to the tune of Rs. 99.56 crores (inclusive of dividend distribution tax)consisting of the final dividend approved by the members in July 2019 and the interimdividend approved by the Board of Directors at its meeting held on March 06 2020. On boththe occasions Dividend of Rs. 2.50/- (25%) per Equity share of the face value of Rs. 10/-each was paid to those shareholders whose names appeared in the Register of Members of theCompany or in the records of Depositories as beneficial owners of Equity Shares as on therecord date.
Your Directors recommend that the Interim Dividend of Rs. 2.50/- perEquity Share declared on March 06 2020 and already paid to the shareholders beconsidered as final dividend for the Financial Year ended March 31 2020 subject to theapproval of the shareholders at the forthcoming Annual General Meeting.
Transfer of Unpaid Dividend and corresponding Equity Shares to theInvestor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 readwith the IEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 ("theIEPF Rules") all unpaid or unclaimed dividends are required to be transferred bythe Company to the IEPF; established by the Government of India after completion of sevenyears. Further according to the IEPF Rules the shares on which dividend has not beenpaid or claimed by the shareholders for seven consecutive years or more shall also betransferred to the demat account of the IEPF Authority.
The total amount lying in the Unclaimed Dividend Account of the companyas on March 31 2020 in respect of the last seven years from FY 2012-13 to FY 2018-19 isRs. 3.22 Crores.
During the year all unclaimed / unpaid dividend up to FY 201112amounting to Rs. 0.21 Crores has been transferred to the Investor Education and ProtectionFund and unclaimed / unencashed dividend for the FY 2012-13 paid on July 29 2013 is duefor transfer to IEPF on September 04 2020. As per the IEPF Rules as amended the duedate for transfer of Equity Shares in respect of Dividend pertaining to the Financial Year2011-12 was September 06 2019. The Company had intimated individually to concernedshareholders and published necessary notice in the newspapers intimating the shareholdersabout the impending transfer and the modus operandi for the same.
In compliance with the Amended Rules during the year the Company hastransferred 196711 Equity shares to the designated demat account opened by IEPFAuthority with NSDL through Punjab National Bank belonging to those shareholders holdingshares both in dematerialised form as well as physical form who had not encashed theirDividend for a period of 7 years or more beginning from the Financial Year 2011-12. Theshares held in demat / physical mode were transferred in October 2019.
The Company has also uploaded the details of the shareholders whoseshares were liable to be transferred to IEPF on its website viz. www.nocil.com.
The nodal officer for the purpose of IEPF is Mr. Amit K. VyasAssistant Vice-President (Legal) & Company Secretary of the Company. The details ofthe same are mentioned on the website of the Company. The web link is:http://www.nocil.com/detail/investors/transfer-of-unclaimed-shares-to-iepf/75
Since the Company no longer accepts deposits from public there are nooutstanding/unclaimed deposits as at March 31 2020.
The Company has taken all the necessary steps to insure its propertiesand insurable interests as deemed appropriate and as required under the variouslegislative enactments. There were no major incidents or accidents to warrant Insuranceclaims during the year under review.
Health Safety and Environment (HSE)
Health Safety and Environment forms a core theme for long termsustainability of your company. HSE is an essential feature of your company's businessmodule which ensures clean environment and safety of all employees community around allmanufacturing locations and all the stakeholders.
High emphasis is placed on laid down policiessystems and procedurescollective learning and continuous improvement by encouraging all employees includingcontract employees to report no "near miss accidents"."Safe AttitudeEncouragement" is a humane interactive approach which is initiated by the SeniorManagement on weekly basis to strengthen the safety culture of your organisation.
Management of process safety is an essential part of risk assessmentand even the smallest change incorporated in the Plant undergoes risk assessment studybefore implementation. Extensive process safety is incorporated through automatic controlsystem and training is imparted to all the concerned employees.
Work areas are regularly monitored to check the concentration ofchemicals noise level illumination and quality of ambient air to ensure safe and healthywork environment. Safe practices in the Company are encouraged by conducting variousannual competitions and rewarding the employees for proposing novel safety messages.
Mitigation Actions are undertaken through weekly planned emergencydrills to train the employees for systematic communication and planned actions. Yourcompany is also a member of "mutual aid group" in which all the neighbouringindustries participate in the mock drills to ensure all time preparedness for emergencies.
Research Centre of your company has a core team which focuses ondeveloping and implementing the technologies which ensures continuous improvement in theenvironment standards of all manufacturing locations. Highest emphasis is placed on theenvironment standards by your company management and substantial capital expenditure isallocated to implement new technologies developed by the Research Centre.
Conservation of natural resources is a major initiative as a part ofHSE. Capital expenditure is encouraged and reviewed periodically by the board of yourcompany to ensure continuous reduction in consumption of natural resources.
Your company has occupational health centers at all locations which notonly undertake the mandatory periodical health check ups of employees but also counsel theemployees on the life style health hazards. Based on the health statistics of thecommunity collective counselling by experts is organised to increase the health awarenessof employees.
HSE performance of your company is reviewed by your board every quarterand valuable suggestions by the board members are incorporated in policies/ work practicesto further strengthen the HSE standards of the Company.
In view of the recent pandemic COVID-19 the company has issued strictwork instructions to all its employees contractors business associates etc. on theprecautions to be followed and the safety protocols including banners hoardings at itslocations. Further adequate health screenings are conducted at regular intervals andcompulsory social distancing norms are followed.
All manufacturing activities came to halt during last week of March2020 as per the Government directive of nationwide lockdown. Closing a chemical plant at ashort notice and lack of supervision post stoppage due to restriction on employee movementposed a safety challenge. This was an unprecedented event for which there was no standardoperating procedure. Your company quickly sought permission for supervision of the plantby senior technical team and ensured the safety of the site through continuous supervisionby senior management team.
Total Quality Management (Rs.QM)
Total Quality Management in your company has ensured harmonisation ofbusiness processes and systems across all the locations in the organisation. Total Qualitymanagement has increased the customer satisfaction by boosting quality. It does this bymotivating the work force and improving the way the company operates. In an increasinglycompetitive market your company with a continuous improvement culture and external focusis always on the growth path.
The Company's Plants situated at Navi Mumbai and Dahej and also PILChemicals Limited a wholly owned subsidiary of the Company continue to be certified forISO 9001:2015 IS0 14001:2015 ISO45001:2018. Navi Mumbai Plant and PIL chemicalscontinues to be certified for prestigious IATF 16949:2016. Your company is also certifiedas a member of Responsible Care and enjoys the privilege of using Responsible Care Logo.Quality Assurance laboratory of your company Navi Mumbai location is accredited inaccordance with ISO 17025:2017 standard. A well-equipped ISO 17025:2017 accredited inhouselaboratory of your company reduces external dependency and plays a vital role in achievingquality improvement goals.
TQM has given your company a competitive edge over other manufacturers.
Research and Development
The vision of Research and Development team of your company is to focustowards long-term supplier of Rubber Chemicals in the global arena and maintainsustainable business advantage R&D team's effort is continued towards manufacturingprocess optimisation & development of greener manufacturing processes in order to makethem cost-effective and environment friendly. In this endeavor R&D team is regularlystrengthened with adequate resources and adding talented manpower to ensure focus indevelopment of innovative process technologies and to meet business challenges in linewith company's goal to be world class innovative organisation in the field of RubberChemicals. Your Company's R&D's laudable effort towards development of Greener Processtechnologies and adoption of innovative effluent treatment strategies viz. 3Rs (ReduceReuse & Recycle) approaches and new generation treatment methods was recognised byIndian Chemical Council (ICC) by conferring ICC Award for Excellence in Management ofEnvironment for the year 2018 for newly expanding Dahej site.
Company's R & D focus is on the following key areas:
Continuous improvement in current manufacturing processes andmeeting Customer's quality needs;
Development of Greener Processes and adoption of 3R strategiesfor environmental sustainability;
Pursuing differentiation through development of niche Productsand Processes;
Continued focus on increase in plant capacities by process/plant debottlenecking through process optimisation;
Conservation of natural resources with focus on reduction ofWater and carbon footprint.
Research and Development efforts in the above areas resulted inincrease in Plant capacities cost reduction through lower raw material usage and energyconsumption recovery of value-added products from process streams significant reductionin environmental load and in the development of speciality products. Your Company'sR&D center at Navi Mumbai is approved by DSIR (Department of Scientific and IndustrialResearch) Government of India and some of its outcome is acknowledged by national andinternational customers. Successful implementation of inhouse technologies and continuedencouragement from top management provided enhanced motivation in the research team toperform better in development of innovative technologies and ensure long term businesssustainability in rubber chemicals and also explore new business segment.
Risk Assessment and Management
Your Company has a well-defined Risk Management System in place as apart of its good Corporate Governance practices. Your Company has assigned the ownershipof key risks to various Risk Owners and has made the concerned departments and officialsresponsible for mitigation plans and review of these risks from time to time. The risksare identified at various departmental levels and suitable mitigation measures arethereafter adopted. These are further subjected to a quarterly review by the RiskCoordination Committee as well as the Board. The Business plans are devised and approvedby the Board keeping in mind risk factors which can significantly impact the performanceof the business. All major capital expenditure commitments are subjected to thoroughscrutiny by the Board and investments are permitted only on being satisfied about theirreturn or utility to the Company. Expansion projects are subject to detailed riskassessment and sensitivity tests and approved only after found to pass eligibilitycriteria.
As mentioned in the Annual Report of the previous Financial Year2018-19 your company formed part of top 500 listed entities based on marketcapitalisation calculated as on March 31 2018. In view of this in addition to the abovethe Board
has constituted the Risk Management Committee (RMC) w.e.f. April 012019 as required under Regulation 21(4) of SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018. RMC will specifically cover inter alia therisk factors related to Cyber Security. The composition of the Risk Management Committeeterms of reference and number of committee meetings held during the year are given in theCorporate Governance Report. The Company has also approved a Risk Management Policy inorder to mitigate such risk factors.
Internal Control Systems and their Adequacy
Adequate internal controls systems and checks are in placecommensurate with the size of the Company and the nature of its business. The managementexercises financial control on the Company's operations through a well-defined budgetmonitoring process and specifying standard operating procedures. Your Company hasappointed an external professional agency M/s. Aneja Associates Chartered Accountants toconduct the internal audit and the findings and recommendations of the Internal Auditorsare placed before the Audit Committee of your Board regularly.
The Internal Auditors monitor and evaluate the efficacy and adequacy ofinternal controls in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalauditors the management undertakes corrective action in the respective areas and therebyfurther strengthens the controls. Significant audit observations and corrective actionsthereon are presented to the Audit Committee of the Board. The Audit committee of theBoard ensures that necessary corrective actions suggested are put in place. Inadditionduring the year under report the Audit Committee and the Board have specificallyreviewed the Internal Financial Controls with reference to the Financial Statements andprocess prevalent in the Company. On a case to case basis the Board also engages theservices of professional experts in the said field to ensure that adequate financialcontrols and systems are in place. At the end of a period the CEO/CFO gives a declarationin the prescribed format to certify that the financial statements prepared are accurateand complete in all aspects and that there are no significant issues that can impair thefinancial performance of the Company. Over all the Internal as well Statutory Auditorswere satisfied with the Internal Control Systems including Compliances and SAP - ITrelated security.
Vigil Mechanism / Whistle Blower Policy
The Company has a Vigil Mechanism Policy to deal with an instance offraud or mismanagement if any. It is heartening to note that no untoward or fraud casewas reported.The details of the Policy are explained in the Corporate Governance Reportand are also posted on the website of the Company. The link of the same is mentioned asbelow: http://www.nocil.com/images/fckeditor/file/NOCIL Vigil Mechanism.pdf
Policy on Prevention of Sexual Harassment of Women at Workplace
As per the requirement under the provisions made under section 4 of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013an appropriate Committee has been formed to attend to the complaints of the sexualharassment at workplace if any made by female employees.The Committee of 4 membersconsists of two women employees Vice President-Human Resource and a practicing Advocatein the field of labour laws and regulations. The Company has in place a Policy on thePrevention of Sexual Harassment. During the year under review no complaints werereceived.
- Number of Board Meetings
The Board of Directors met six times during the financial year underreview as per details stated in the report on Corporate Governance.
- Number of Committee Meetings
- Audit Committee Meeting
The members of Audit Committee met five times during the financial yearunder review as per the details stated in the Corporate Governance report.
- Nomination and Remuneration Committee Meeting
The members of Nomination and Remuneration Committee met twice duringthe financial year under review as per the details stated in the Corporate Governancereport.
- Stakeholders Relationship and Investors' Grievance Committee
The members of Stakeholders Relationship and Investors' GrievanceCommittee met once during the financial year under review as per the details stated in theCorporate Governance report.
- Risk Management Committee
The members of Risk Management Committee met three times during thefinancial year under review as per the details stated in the Corporate Governance report.
- Corporate Social Responsibility Committee
The members of Corporate Social Responsibility Committee met four timesduring the financial year under review as per the details stated in the CorporateGovernance report.
- Composition of Audit Committee:
The total strength of the Audit Committee is 5 out of which 4 membersfall under the Independent Category. The norms require 2/3rd of the members to beIndependent Directors.
During the year under review the following changes took place in thecomposition of the Audit Committee upon approval of the Board:
a. Mr. D. N. Mungale has been appointed as the Chairman of the AuditCommittee effective from May 10 2019 in place of Mr. C. L. Jain who continued to be aMember of the Audit Committee up to June 29 2019.
b. Mr. N. Sankar ceased to be a Member of the Committee effective May10 2019.
c. Mr. P V. Bhide and Mr. Debnarayan Bhattacharya have been appointedas Members of the Committee effective May 10 2019
The composition of the re-constituted Audit Committee is given below:
|Name of Members ||Category |
|Mr. D.N. Mungale - Chairman ||Independent Director |
|Mr. Rohit Arora ||Independent Director |
|Mr. Vilas R. Gupte ||Non-Executive Director |
|Mr. P V. Bhide ||Independent Director |
|Mr. Debnarayan Bhattacharya ||Independent Director |
During the year under review all the recommendations made by the AuditCommittee were accepted by the Board.
- Board Evaluation
Pursuant to the provisions of the Companies Act 2013 as amended fromtime to time and Regulations 17 and 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance of individual Directors as well as the evaluation ofthe working of its Audit Nomination and Remuneration and other Committees.The variouscriteria considered for evaluation of Whole Time / Executive Directors includedqualification experience knowledge commitment integrity leadership engagementtransparency analysis decision making governance etc. The Board commended the valuablecontributions and the guidance provided by each Director in achieving the desired levelsof growth. This is in addition to evaluation of Non-Independent Directors and the Board asa whole by the Independent Directors in their separate meeting being held every year.
- Declaration by Independent Directors
As required under Section 149(7) of the Companies Act 2013 read withSEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018 theIndependent Directors have placed the necessary declaration of their independence in termsof the conditions laid down under Section 149(6) of the Companies Act 2013 as amended inthe Board Meeting held on Monday June 29 2020. Further pursuant to the Companies(Appointment and Qualification of Directors) Rules 2014 as amended the said declarationalso includes a confirmation to the effect that the Independent Directors have includedtheir names in the Database maintained by the Indian Institute of Corporate Affairs andthey have paid the necessary fees for the said registration and will pay the fees for therenewal.
- Familiarisation Programme to Independent
The Company provides suitable familiarisation programme to IndependentDirectors to help them familiarise themselves with the nature of the industry in which thecompany operates and the business model of the Company in addition to regular presentationon expansion plans and their updates technical operations marketing and exports andfinancial statements. In addition to the above Directors are periodically advised aboutthe changes effected in the Corporate Law Listing Regulations about their roles rightsand responsibilities as Directors of the company. There is a regular interaction ofDirectors with the Key Management Personnel of the Company.The details of thefamiliarisation programme have been disclosed and updated from time to time on thecompany's website and its web link is:http://www.nocil.com/images/fckeditor/file/Familiarization-Programme-for-IDS.pdf
Directors' Responsibility Statement
To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134 (3)(c) of the Companies Act 2013:
(a) That in the preparation of the annual financial statements for theyear ended March 31 2020 the Indian Accounting Standards (Ind AS) the provisions of theCompanies Act 2013 as applicable and guidelines issued by the Securities and ExchangeBoard of India (SEBI) have been followed along with proper explanations relating tomaterial departures if any;
(b) That such accounting policies as mentioned in Note 2 forming partof the Financial Statements have been selected and applied consistently and judgment andestimates have been made that are reasonable and prudent to give a true and fair view ofstate of affairs of the Company as at March 31 2020;
(c) That proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) That the annual financial statements have been prepared on a goingconcern basis;
(e) That proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively;
(f) That proper systems are devised to ensure compliance with theprovisions of all applicable laws were in place and were adequate and operatingeffectively.
(g) That all the applicable Secretarial Standards have been compliedwith by the Company during the year under review.
The above assessment of the Board was further strengthened by periodicreview of internal controls by both internal as well as external auditors.
During the Financial Year 2014-15 based on the recommendations of theNomination and Remuneration committee the Board of Directors approved a Policy forselection and appointment of Directors Senior Management and their remuneration.
There has been no change in the said Policy for the financial yearunder review. However the revised remuneration policy has been recommended by theNomination and Remuneration Committee in their meeting held on June 18 2020 to the Boardof Directors to bring it in line with the amendments in SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The Salient features of Remuneration Policyare given in the Corporate Governance Report and criteria for remuneration to independentdirectors / non-executive directors is also available on the Company's website. Necessaryamendments to the policy have been carried out in line with the regulatory requirements.
The weblink of the Policy is:http://www.nocil.com/images/fckeditor/file/Remuneration-Policv.pdf.
Scheme of Amalgamation
During the year under review at its meeting held on January 30 2020your Directors based on the recommendations of the Audit Committee approved the draftScheme of Amalgamation of Suremi Trading Private Limited ('Suremi') and SushripadaInvestments Private Limited ('Sushripada') being promoter group companies with theCompany under Sections 230 to 232 of the Companies Act 2013 and other applicableprovisions if any of the Companies Act 2013. Upon this Scheme becoming effectiveexisting equity shares held by Suremi and Sushripada in the paid-up share capital of theCompany shall stand cancelled. Pursuant to the Scheme there will no change in theshareholding of Promoter Group and Public Shareholders of NOCIL. The Scheme would besubject to approval of the National Company Law Tribunal (Mumbai Bench) ['NCLT'] and suchother competent authority and various statutory approvals shareholders andlenders/creditors of each of the companies as may be directed by the NCLT.
The amalgamation will ensure a streamlined group structure by reducingthe number of legal entities in the group structure. There will be no adverse effect ofthe said Scheme on the equity shareholders (Rs.he only class of shareholders) keymanagerial personnel promoter and non-promoter shareholders of the Company.
Pursuant to the provisions of Regulation 37 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended your company hasobtained 'No Objection' on the draft Scheme of Amalgamation from BSE Limited and NationalStock Exchange of India Limited respectively. The Company is in the process of filing therequisite application for approval from NCLT Mumbai.
Related Party Transactions
All related party transactions that were entered into during thefinancial year were at an arm's length basis and were in the ordinary course of business.There are no materially significant related party transactions made by the Company withPromoters Directors and Key Managerial Personnel wholly owned subsidiary company orother designated persons which may have a potential conflict with the interest of theCompany at large except as stated in the Financial Statements / Directors' Report.
As per the Related Party Transactions Policy approved by the Board ofDirectors of the Company during the year under review the Company has entered intorelated party transactions based upon the omnibus approval granted by the Audit Committee.On quarterly basis the Audit Committee reviewed such transactions for which omnibusapproval was given. The Related Party Transactions Policy was revised during the year inview of amendments in Rules.
Particulars of contracts or arrangements with related parties asreferred to in Section 188(1) of the Companies Act 2013 along with the disclosures asmentioned in Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 in the prescribed Form AOC-2 for FY 2019-20 are given in Annexure"G".
The policy on Related Party Transactions as amended and approved by theBoard is uploaded on the Company's website and its weblink is:http://www.nocil.com/images/fckeditor/file/Policy-on-Related-Party-Transaction.pdf
Loans Guarantees or Investments
Particulars of loans guarantees or investments under Section 186 ofthe Companies Act 2013 are given in the Notes forming part of Financial Statements forthe year ended March 312020.
Extract of Annual Return
Extract of Annual Return for the Financial Year ended on March 31 2020as required by Section 92 (3) of the Companies Act 2013 is annexed as Annexure"E". The weblink of the same is http://www.nocil.com/images/fckeditor/file/Extract-of-Annual-Return-2019-20.pdf
Subsidiary Company Associates and Joint Ventures
PIL Chemicals Limited (PIL) Wholly Owned Subsidiary (WOS) hasrecorded a Turnover of Rs. 13.43 Crores and Profit before Tax of Rs. 0.92 Crores for theyear under review. The Board of Directors of PIL declared an Interim Dividend of Rs.0.60/-per share. (Previous year Final Dividend was Rs. 0.60/- per share).
The Company does not have any material subsidiary however the Companyhas formulated a policy for determining material subsidiary(ies) and such policy has beendisclosed on the Company's website and its weblink ishttp://www.nocil.com/imaaes/fckeditor/file/Policv- on-Material-Subsidiaries.pdf
Pursuant to the requirements of Regulation 34 (3) read with Schedule Vof the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 thedetails of Loans/ Advances made to and investments made in the subsidiary have beenfurnished in Notes forming part of the Accounts.
A statement containing the salient features of the financial statementof the Company's wholly owned subsidiary under the provisions of section 129(3) of theCompanies Act 2013 read with Rule 5 of the Companies (Accounts) Rules 2014 has beenannexed in prescribed Form AOC - 1.
The audited accounts of the WOS company are placed on the Company'swebsite and the members interested in obtaining copy of annual report of the WOS companyare requested to get in touch with the Office of the Company Secretary.
Further the Company does not have any joint venture or associatecompanies during the year or at any time after the closure of the year and till the dateof the report.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by your Company inaccordance with the applicable Indian Accounting Standards (Ind AS) issued by the Ministryof Corporate Affairs and the same together with Auditors' Report thereon form part of theAnnual Report. The financial statements have been prepared as per Division II of ScheduleIII issued by the Ministry of Corporate Affairs vide its Notification dated April 062016.
The relations during the year between the employees and themanagement of your Company continued to be cordial. After successful negotiations yourcompany has renewed the Agreement with the Workers' Union during the year under review.
Your Directors wish to thank all the employees for their continuedsupport and co-operation during the year under review.
In terms of your approval read with the SEBI (Employees Stock OptionScheme and Employees Stock Purchase Scheme) Guidelines 1999 as amended the detailsrequired to be provided under the SEBI(Employees Stock Option Scheme and Employees StockPurchase Scheme) Guidelines 1999 are set out in Annexure"C" to thisReport.
Particulars of Employees
The information required under section 197 of the Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Amendment Rules 2016 in respect of employees of the Company is provided in Annexure"F".
Appointment/Reappointment of Directors and Key Managerial PersonnelDirectors
At the previous Annual General Meeting held on July 30 2019 theMembers accorded their approval by passing Special Resolution for appointment of Mr.Debnarayan Bhattacharya as an Independent Director for a period of 5 years.Further inview of Regulation17(1A) of the SEBI (Listing Obligations and Disclosure Requirements)(Amendment) Regulations 2018 approval was also obtained to continue the appointment ofMr. Bhattacharya as an Independent Director for five consecutive years not withstandingthat on September 13 2023 he would attain the age of 75 years during the said term of 5years.
Pursuant to Rule 8 of the Companies (Accounts) Rules 2014 asamended in the opinion of the Board Mr. Debnarayan Bhattacharya who was appointed as anIndependent Director during the year has integrity expertise and experience (includingthe proficiency).
Pursuant to Section 152(6) of the Companies Act 2013 and the Articlesof Association of the Company Mr. Priyavrata H. Mafatlal Non - Executive Directorretires by rotation at the forthcoming Annual General Meeting. Being eligible he offershimself for re-appointment.
Mr. C. L. Jain did not seek re-appointment as an Independent Directorfor the second term. Accordingly in the month of March 2019 the Company had alsoobtained Member's approval by passing Special Resolution through conduct of Postal Ballotfor continuation of Mr. C. L. Jain as an Independent Director who was above 75 years forhis residual term up to June 29 2019. Therefore the existing term of Mr. C. L. Jain asan Independent Director ended on June 29 2019 and consequently he has ceased to be aDirector of the Company and Chairman of the Audit Committee and Member of the CorporateSocial Responsibility Committee of the Company.
The Board takes the opportunity to sincerely thank Mr. C. L. Jain forthe excellent contribution made as an Independent Director and Chairman of the AuditCommittee and Member of the Corporate Social Responsibility and wish him very healthy andpeaceful retired life.
The tenure of Ms. Dharmishta Raval as an independent director of theCompany shall expire on July 23 2020. She is aged 64 years and has given her consent forreappointment for the second term beginning from July 23 2020 to July 22 2024. She isenrolled as an Advocate of the Gujarat Bar Association in 1980 and is a Partner of Ravaland Raval Advocates Ahmedabad and also is in practice as an Advocate at Gujarat HighCourt since May 2003. Ms. Raval does not hold any shares in the Company and is notrelated to any Director or Key Managerial Personnel of the Company. Pursuant to theCompanies (Appointment and Qualification of Directors) Rules 2014 and the amendmentsmade thereto from time to time Ms. Raval has also registered herself in the Data Bankmaintained by the Indian Institute of Corporate Affairs for a period of five years. In theopinion of the Board of Directors of the Company Ms. Raval continues to fulfill theconditions of independence as specified in the Companies Act 2013 and Rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and the amendments made thereto for re-appointment as an Independent Director.
Having regard to her qualifications knowledge and vast experience herre-appointment on the Board of the Company as an Independent Director will be in theinterest of the Company and hence the Company had proposed her reappointment for secondterm of 4 years from July 23 2020 to July 22 2024 as an independent director. In thisregard the Company has proposed to pass a special resolution through postal ballot thenotice of which is circulated as on June 08 2020 with all the shareholders of the Companyas on cut-off date i.e. May 29 2020. E-voting facility for the same shall be open tillJuly 08 2020 post which the special resolution shall be deemed to be passed on the basisof results declared by the scrutinisers.
Key Managerial Personnel
During the year under review Mr. V. K. Gupte superannuated as CompanySecretary effective from the close of business hours of December 31 2019. In view of Mr.Gupte's superannuation Mr. Amit K. Vyas (holding Membership No. FCS 3766) has beenappointed as Assistant Vice President (Legal) and Company Secretary and Compliance Officerof the Company effective from January 01 2020.
Further Mr. R. M. Gadgil has superannuated as President Marketingeffective from May 15 2020.
The Board also extends its wishes to Mr. R.M. Gadgil and Mr. V. K.Gupte for their valuable contributions rendered to the Company in their capacity as theKey Managerial Personnel and wishes them very healthy and peaceful retired life.
Other than as stated above there has not been any change in theDirectors and Key Managerial Personnel of the Company.
Pursuant to the requirement of Section 139(1) of the Companies Act2013 at the Annual General Meeting held on July 27 2017 the Members had accorded theirapproval for the appointment of M/s. Kalyaniwalla & Mistry LLP Chartered AccountantsMumbai as the Statutory Auditors of the Company to examine and audit the accounts of theCompany for the Financial Years 2017-18 to 202122. They have confirmed their eligibilityunder Section 141 of the Companies Act 2013 and the Rules framed there under forre-appointment as Auditors of the Company. As required under Regulation 33(1) (d) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Auditorshave also confirmed that they hold a valid certificate issued by the Peer Review Board ofthe Institute of Chartered Accountants of India. The amended provision of Section 139(1)of the Companies Act 2013 has dispensed with the ratification of appointment ofStatutory Auditors each year by the Members.
Explanations or comments on the qualification reservation adverseremark or disclaimer made by the statutory auditors or by Company Secretary in practice intheir report
During the year under review there is no qualification reservation oradverse remark or disclaimer made by the Statutory Auditor appointed under section 139 ofthe Companies Act 2013. Hence the need for explanation or comments by the Board does notarise. The report of the Statutory Auditor forms part of the financial statements.
During the year under review there were no material or seriousinstances of fraud falling within the purview of Section 143 (12) of the Companies Act2013 and rules made there under by officers or employees reported by the StatutoryAuditors of the Company during the course of the audit conducted and therefore no detailsare required to be disclosed under Section 134 (3)(ca) of the Act.
Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the cost audit recordsmaintained by the Company are required to be audited.
M/s. Kishore Bhatia & Associates the Cost Auditors have given aCertificate to the effect that the appointment if made will be within the prescribedlimits specified under section 141 of the Companies Act 2013.
The Audit Committee has obtained a certificate from the Cost Auditorcertifying their independence and arm's length relationship with the Company. The CostAudit Report in respect of F.Y 2018-19 was filed on August 19 2019 and the Report for theFinancial Year 2019-20 will be filed within the time limit as prescribed under theCompanies (Cost Records and Audit) Rules 2014.
Your Directors had on the recommendation of the Audit Committeeappointed M/s Kishore Bhatia & Associates to audit the cost accounts of the Companyfor the financial year 2020-21 on a remuneration of Rs. 6.50 Lakhs.
As required under the Companies Act 2013 the remuneration payable tothe cost auditor is placed before the Members for their ratification.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theBoard of Directors has appointed M/s. Makarand M. Joshi & Co. Company Secretaries afirm of Company Secretaries in Practice to carry out the Secretarial Audit of the Companyfor FY 2019-20. The Report of the Secretarial Audit is annexed herewith as Annexure"B".
The Secretarial Audit Report does not contain any qualificationsreservations or adverse remarks or disclaimer.
Further PIL Chemicals Limited is the only wholly owned subsidiary ofthe Company and is not a material unlisted subsidiary. Therefore the provisions regardingthe Secretarial Audit as mentioned in Regulation 24A of the SEBI (Listing Obligations andDisclosure Requirements) 2015 as amended do not apply to PIL Chemicals Limited.
Report on Corporate Governance
As per Regulation 34 read with Schedule V (C) of SEBI (ListingObligations and Disclosure Requirements) (Amendment) Regulations 2018 a separate sectionon Report on Corporate Governance practices followed by the Company together with acertificate received from the Company's Secretarial Auditor confirming compliance isattached.
Report on Management Discussion and Analysis
As required under Regulation 34 read with Schedule V(B) of SEBI(Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018 report on"Management Discussion and Analysis" is attached and forms a part of thisReport.
Business Responsibility Report
The Company forms part of top 1000 listed entities based on marketcapitalisation calculated as on March 312019. In view of this as required underRegulation 34(2)(f) SEBI (Listing Obligations and Disclosure Requirements)(Amendment)Regulations 2018 report on Business Responsibility is attached and forms a part of thisreport.
Corporate Social Responsibility
In line with the provisions of the Companies Act 2013 and the rulesframed thereunder with respect to the Corporate Social Responsibility (CSR) your companyhas formulated a Policy on CSR and has also constituted a CSR Committee to recommend andmonitor expenditure on CSR. The details of CSR Expenditure are given in the prescribedformat and forms part of this Report. The same is annexed as Annexure "A".
The company continues to actively support deserving social causes forimprovement and up-liftment of various sections of the society as has been its practicefor past several years.
Additional information on conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed in terms ofsection 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts)Rules 2014 is set out in Annexure "D" and forms a part of this Report.
Your Directors would like to draw your attention to Section 20 of theCompanies Act 2013 read with the Companies (Management and Administration) Rules 2014as may be amended from time which permits paperless compliances and also service ofnotice/documents (including annual report) through electronic mode to its members. Tosupport this green initiative of the Central Government in full measure we hereby onceagain appeal to all those members who have not registered their e-mail addresses so farare requested to register their e-mail address in respect of electronic holdings withtheir concerned depository participants and / or with the Company.
Further the Company shall also send the Annual Report for FY 2019-20to all the shareholders through electronic means as per the relaxations provided by MCACircular dated May 05 2020 and SEBI Circular dated May 12 2020 due to Covid-19 pandemicwhich shall also enhance the Green Initiative measures taken by the Company.
Your Directors state that no disclosures or reporting is required inrespect of the following items as there were no transactions on these items during theyear under the review:
a) No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and Company's operations infuture;
b) Issue of Equity Shares with differential voting rights dividend orotherwise as per Section 43(a)(ii) of the Companies Act 2013;
c) Issue of Shares including Sweat Equity Shares to the employees ofthe Company under any scheme as per provisions of Section 54(1)(d) of the Companies Act2013;
d) No instances of non-exercising of voting rights in respect of sharespurchased directly by employees under a scheme pursuant to Section 67(3) of the CompaniesAct 2013;
e) There was no revision to the financial statements for the year underreview.
Your Directors would like to acknowledge the continued support andco-operation from its Bankers Government Bodies and Business Associates which has helpedthe company to sustain its growth during the year.
|For and on behalf of the Board of Directors || |
|Place : Mumbai ||Hrishikesh A. Mafatlal |
|Date : June 29 2020 ||Chairman |