The Board of Directors is pleased to present the Company's 55th annual report and theCompany's Audited Financial Statements for the financial year ended March 312020.
1. Financial results
The Company's financial performance for the year ended March 312020 is summarizedbelow:
| ||2019-20 ||2018-19 |
| ||(Rs. in Lacs) ||(Rs. in Lacs) |
|Revenue from operations ||2793.21 ||3582.41 |
|Operating expenditure ||2598.29 ||3439.18 |
|Profit before Interest Depreciation Tax ||194.92 ||143.23 |
|Less: Finance Cost ||117.54 ||112.41 |
|Profit after Finance Cost ||77.38 ||30.82 |
|Less: Depreciation ||128.68 ||133.53 |
|(Loss)/Profit for the year before tax ||(51.30) ||(102.71) |
|Add: Exceptional Items ||NIL ||NIL |
|Profit for the year after exceptional items and before tax ||(51.30) ||(102.71) |
|Less: Income Tax ||- ||- |
|Profit after tax ||(51.30) ||(102.71) |
|Add/(Less): Other Comprehensive Income ||(0.14) ||(0.13) |
|Total Comprehensive Income for the year ||(51.37) ||(102.84) |
2. Company's performance and state of affairs of the company
* Revenue from operations (net) decreased by 22.03% to Rs. 2793.21 Lacs from Rs.3582.41 Lacs in the previous year.
* PBDIT increased by 36.09% to Rs. 194.92 Lacs for the year ended 31st March 2020compared to previous year Rs. 143.23 Lacs.
* Total comprehensive (loss) decreased by 50.05% to Rs (51.37 Lacs) for the year ended31st March 2020 compared to previous year Rs. (102.84 Lacs.)
3. Dividend and transfer to reserves
In view of the loss for the year under report the Board of Directors is unable torecommend any dividend for the financial year 2019-20 and no amount is transferred toReserves for the financial year 2019-20.
4. Material changes affecting the company
There have been no material changes and commitments affecting the financial position ofthe company between end of the financial year and date of this report. There has been nochange in the nature of business of the company.
5. Management Discussion and Analysis Statement and Corporate Governance Report
The statement on management discussion and analysis forms part of the annual report isprovided in Annexure I.
Regulation 15(2) of Securities & Exchange Board of India (Listing Obligations &Disclosure Requirements) Regulations 2015 is not applicable to the Company since theCompany's paid-up capital is less than Rupees Ten Crores and net worth is less than RupeesTwenty Give Crores as prescribed under the said regulation and hence the provisionsrelating to the Corporate Governance is not applicable to the Company hence no CorporateGovernance Report is given by the Company as a part of the Director's Report.
6. Secretarial Standards
The Directors state that the applicable Secretarial Standards i.e. SS-1 and SS-2relating to the Meetings of the Board of Directors' and General Meetings'respectively have been duly followed by the Company.
7. Director's Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312020 and of the profit andloss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operating; and
f) the Directors have revised proper systems to ensure compliance with the provisionsof all applicable laws were in place and that such systems are adequate and operatingeffectively.
8. Contracts and arrangements with related parties
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in ordinary course of business and on arms length basis andthat the provisions of Section 188 of the Companies Act 2013 are not attracted. Thusdisclosure in Form AOC-2 is not required.
The Policy on materiality of Related Party Transactions and on dealing with RelatedParty Transactions as approved by the Board may be access on the Company's website at:www.organiccoatingsltd.com
Meebers may refer to Note No. 32 to the financial statement which sets out relatedparty disclosures pursuant to Ind AS.
9. Corporate Social Responsibility (CSR)
The provisions relating to Corporate Social Responsibility (CSR) under section 135 ofthe Companies Act 2013 are not applicable to the Company.
10. Risk Management
The Risk Management Policy has been framed implemented and monitored. Major riskidentified by the businesses and functions are systematically monitored through mitigatingactions on continuing basis.
The development and implementation of Risk Management Policy has been covered inManagement Discussion & Analysis which forms part of this report.
11. Internal Financial Controls
The Company has in place adequate internal financial controls with reference to thefinancial statements. During the year such controls were tested and no reportable materialweakness in the design or operation was observed.
12. Directors and Key Managerial Personnel
Mr. R. K. Shah Vice Chairman & Managing Director resigned w.e.f. 30th November2019 after a meritorious association with the company as a promoter for over 50 years.The directors have placed on record appreciation of the services rendered by him duringhis association with the company. Mr. Abhay R. Shah has been elevated to the position ofManaging Director w.e.f. 1st March 2020 from the position of Joint Managing Director onthe same terms and conditions as approved by the shareholders at the Annual GeneralMeeting 27th September 2019.
In accordance with the provisions of the Act and Articles of Association of theCompany Mr. Ajay R. Shah retires by rotation and being eligible offers himself forre-appointment at the ensuing annual general meeting. The Board of Directors onrecommendation of Nomination & Remuneration Committee has recommended hisre-appointment.
Special resolution for the appointment of Mr. Sudhir A. Sathe as Non-ExecutiveIndependent Director not liable to retire by rotation for a term of 4 years is proposedfor the approval of the members since he has attained the age of over 75 years by SpecialResolution at the ensuing Annual General Meeting.
Special resolution for the continuation of Mr. Chandrakumar Z. Shah as Non-ExecutiveIndependent Director not liable to retire by rotation for the term of 5 years as alreadyapproved by the shareholders at the Annual General Meeting held on 27th September 2019 isproposed for the approval of the members since he has attained the age of over 75 years bySpecial Resolution at the ensuing Annual General Meeting for his continuation as NonExecutive Independent Director.
As per the provisions of the Companies Act 2013 Independent Directors have beenappointed for a period of 5 years and shall not be liable to retire by rotation. TheCompany has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence prescribed under the act and thelisting regulations.
The following are the remuneration policies for the Director's Key ManagerialPersonnel and other employees:
a. introduction - Organic Coatings Limited recognizes the importance of aligning thebusiness objectives with specific and measurable individual objectives and targets. Thecompany has therefore formulated the remuneration policy for its directors key personneland other employees keeping in view the following objectives.
i. ensuring that the level and compensation of remuneration is reasonable andsufficient to attract retain and motivate to run the company successfully.
ii. ensuring that relationship of remuneration to performance is clear and meets theperformance benchmarks.
b. Policy -
i. The Board on the recommendation of Nomination & Remuneration Committee (NRC)shall review and approve the remuneration payable to the Executive Directors of theCompany within the overall limits approved by the shareholders.
ii. The Board on the recommendation of NRC shall also review and approve theremuneration payable to the Key Managerial Personnel
iii. The remuneration structure to the Executive Directors and Key Managerial Personnelshall include the following:
a) Basic pay
b) Perquisites and allowance
c) Retiral benefits
iv. Remuneration to Non-Executive Directors
The Board on the recommendation of NRC shall review and approve the remunerationpayable to the Non-Executive Directors of the Company.
The Non-Executive Directors shall be entitled to sitting fees for attending themeetings of the Board and the Committees there of.
v. Remuneration to other employees
Employees are assigned grades according to their qualifications and work experiencecompetencies as well as their roles and responsibilities in the organization. Individualremuneration shall be determined within the appropriate grade and shall be based onvarious factors such as job profile skills sets seniority experience and prevailingremuneration levels for equivalent jobs.
13. Meetings of the Board
Four meetings of the Board of Directors were held during the year 2019-20 on28/05/2019 12/08/2019 13/11/2019 and 14/02/2020.
14. Performance Evaluation
The Company has devised a policy for performance evaluation of the Board Committeesand other individual directors (including Independent Directors) which include criteriafor performance evaluation of the Non-Executive and Executive Directors. The evaluationprocess inter-alia considers attendance of the Directors at Board and Committee Meetingsacquaintance with business communicating interse board members effective participationdomain knowledge compliance with code of conduct reason and strategy.
The detailed programs for familiarization of Independent Directors with the Companytheir roles rights and responsibilities in the Company nature of the industry in whichthe Company operates business model of the Company are being shared and discussed.
No separate meeting of Independent Directors' was held during the year 2019-20 asallowed as per General Circular No. 11/2020 bearing No. F.NO.2/1/2020-CLV issued by theMinistry of Corporate Affairs Government of India New Delhi dated 24th March 2020 inregard to the special measures under the Companies Act 2013 in view of COVID-19 breakoutproviding that if the Independent Directors of the company have not been able to hold suchmeeting for the F.Y. 2019-20 the same shall not be viewed as violation of the Act.
15. Policy on directors' appointment and remuneration and other details
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members keepingin mind the relevant provisions of the Companies Act 2013 read with specific rules.
16. Internal financial control systems and adequacy
The details in respect of internal financial control systems and their adequacy areincluded in the management discussion and analysis which forms part of this report.
17. Audit Committee
The audit committee consists of all the Independent Directors consisting of thefollowing members of the Board of Directors:
a) Ms. Ashwini Y Lad - Chairperson
b) Mr. Sudhir A. Sathe
c) Mr. Chandrakumar Z. Shah
During the financial year four audit committee meetings were held on 28/05/201912/08/2019 13/11/2019 and 14/02/2020
18. Nomination & Remuneration Committee
The Nomination & Remuneration Committee consists of all the Independent Directorsconsisting of the following members of the board of directors:
a) Mr. Chandrakumar Z. Shah Chairman
b) Mr. Sudhir A. Sathe
c) Ms. Ashwini Lad
During the financial year four Nomination & Remuneration Committee meetings wereheld on 28/05/2019 12/08/2019 13/11/2019 and 14/02/2020.
19. Stakeholders Relation Committee
The Stakeholders Relation Committee consists of the following Directors:
a) Mr. Sudhir A. Sathe Chairman
b) Ms. Ashwini Lad
c) Mr. Chandrakumar Z. Shah
d) Mr. Abhay R. Shah
During the financial year four Stakeholders Relationship Committee meetings were heldon 28/05/2019 12/08/2019 13/11/2019 and 14/02/2020.
20. Auditors and auditors' report Statutory Auditors
M/s. Praneti Yadav & Co Chartered Accountants were appointed as Statutory Auditorsof your Company at the Annual General Meeting held on 29th September 2017 for a term offive consecutive years. They have confirmed that they are not disqualified from continuingas Auditors of the Company. As per the provisions of Section 139 of the Companies Act2013 the appointment of Auditors is required to be ratified by the members at everyAnnual General Meeting.
In accordance with Companies Amendment Act 2017 enforced on 7th May 2018 by theMinistry of Corporate Affairs the appointment of Statutory Auditors is not required to beratified at every Annual General Meeting.
The Report given by the Auditors on the financial statement of the Company is part ofthis report. There has been no qualification reservation adverse remark or disclaimergiven by the Auditors in their Report.
The Board has appointed D.Kothari & Associates Practicing Company Secretaries toconduct the Secretarial Audit. The Secretarial Audit Report for the financial year endedMarch 312020 is annexed herewith and marked as
Annexure II to this report. The Secretarial Audit Report does not contain anyqualification reservation adverse remark or disclaimer.
21. Vigil mechanism
The Vigil Mechanism of the Company which also includes Whistle Blower Policy includesan ethics and compliance task force comprising senior executives of the Company. Protecteddisclosures can be made by Whistle Blower through an email or letter to the Chairman ofthe Audit Committee. No person has been denied access to the Audit Committee.
22. Particulars of loans given investments made Guarantees given and securitiesprovided
The Company has not given any loans or made any investments or provided guarantees u/s186 of the Companies Act 2013.
23. Conservation of energy technology absorption and foreign exchange earnings andoutgo.
The particulars related to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the act are provided inAnnexure III to this report.
24. Annual return
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 read withRule 12(1) of the Companies (Management & Administration) Rules 2014 an extract ofAnnual Return as on 31st March 2020 in Form MGT-9 is attached as Annexure IV and formspart of this report.
The annual return of the Company has been placed on the website of the Company and canbe accessed at www.organiccoatingsltd.com.
25. Particulars of employees and related disclosures
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under Section 197 of the Companies Act 2013 read with Rule 5(1) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure Vto this report.
The Company does not have any employee whose particulars are required to be disclosedin terms of the provisions of Section 197(12) of the act read with Rule 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 hencefurnishing of the same does not arise
Having regard to the provisions of the first proviso to Section 136(1) of the act theannual report excluding the information regarding the top ten employees is being sent tothe members of the Company. The said information is available for inspection on allworking days during the business hours at the registered office of the Company. Any memberinterested in obtaining such information may write to the Company Secretary and the sameshall be furnished on request.
Your Directors take that no disclosure or reporting required in respect of thefollowing items as there were no transactions on these items during the year under review.
1) Details relating to deposits covered under Chapter V of the act.
2) Issue of Equity Shares to differential rights as to dividend voting or otherwise.
3) Issue of shares (including sweat equity shares) to employees of the Company.
4) The Company does not have any subsidiaries hence the question of receivingremuneration or commission by the Managing Directors or Whole Time Directors of theCompany from the subsidiaries does not arise.
5) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operation in the future.
6) No fraud has been reported by the auditors to the Audit Committee or the Board.
Your Directors further state that during the year under review there were no cases fledpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors would like to express the sincere appreciation for the assistance andco-operation received from Shareholders Bank of Maharashtra Government Authorities andother Business constituents during the year under review.
Your Directors would also like to appreciate the commitment displayed by the humanresources of the Company.
| ||On behalf of the Board of Directors |
| ||Abhay R. Shah |
| ||Managing Director (DIN:0016497) |
| ||Ajay R. Shah |
| ||Director (DIN:0011763) |
|Place: Mumbai || |
|Date : 30th June 2020 || |