To the Members
Your Directors have pleasure in presenting Thirty Seventh Annual Report of the Companytogether with the Audited Financial Statements for the year ended 31st March2020.
A brief on the financial performance during the year under review as compared to theprevious year is given below:-
| || ||(Rs./ Crore) |
| ||2019-20 ||2018-19 |
|Revenue from Operations ||663.64 ||825.31 |
|Other Income ||6.44 ||9.35 |
|Profit before Interest & Depreciation ||32.04 ||57.05 |
|Finance Cost ||4.99 ||8.17 |
|Depreciation ||6.66 ||5.76 |
|Profit before Taxes ||20.39 ||43.12 |
|Tax Expenses for the year : || || |
|Current Tax ||6.00 ||10.44 |
|Deferred Tax Liability /(Assets) ||1.34 ||5.30 |
|Less: Exceptional Items || || |
|Profit after Taxes ||13.05 ||27.38 |
Pursuant to outbreak of coronavirus disease (COVID-19) worldwide and its declaration asglobal pandemic the Government of India declared lockdown on March 24 2020 which led thetemporary suspension of operations of the Company and has impacted the overall businessactivities of the Company.
COVID-19 has impacted the normal business operations of the Company by way ofinterruption in production supply chain disruption unavailability of personnelclosure/lock down of production facilities etc. during the lock-down period.
There remain uncertainties on how this pandemic situation will evolve and that remainsa risk for the Company. These include risks related to employee safety supply chaincustomers business development efforts and cash flows of the Company.
After resumption of operations the management has made detailed assessment of itsliquidity position and has prepared future cash flow projections and also assessed therecoverability of its assets and factored assumptions used in the annual impairmentassessment of its cash generating units using various internal and external information.The situation is changing rapidly giving rise to inherent uncertainty around the extentand timing of the potential future impact of the COVID-19 which may be different from thatestimated as at the date of approval of these financial statements. The Company willcontinue to closely monitor any material changes arising of future economic conditions andimpact on its business.
RESULTS OF OPERATIONS AND STATE OF COMPANY'S AFFAIRS
The Company has recorded production of 41250 MT and Sale of 38771 MT during the yearunder review as against 43462 MT and Sale of 44505 MT respectively during the previousyear. During the year under review sales volume came down because of negative sentimentsof COVID-19 and further lockdown announced during the last week of March 2020.
The Company posted EBIDTA for the year of Rs. 32.04 Crore as compared to Rs. 57.05Crore in the previous year and Net Profit of Rs. 13.05 as compared to Rs. 27.38 Crore inthe previous year.
Despite of various challenges such as volatility in raw material prices dumping ofacrylic fibre by China Peru and Belarus foreign exchange fluctuations the Company'sperformance has been satisfactory.
In accordance with the provisions of Section 136 of the Companies Act 2013 theaudited financial statements of the Company are available on website of the Company www.pasupatiacrylon.com.
INTEGRATED CPP FILM PROJECT
The production capacity to produce CPP film is 10000 MT PA and during the year companyproduced 4531 MT and sold 4420 MT. The Company expects that this segment shall do wellduring the FY 2020-21 as the demand of CPP Films is on the rise and product of the companyis well accepted in market now.
MANAGEMENT DISCUSSION & ANALYSIS REPORT ACRYLIC FIBRE
a) Industry Structure and Development
The Demand of Acrylic Fibre during the year was subdued consequently company'sproduction fallen to 41250 MT from 43462 MT and sales were down to 38771 MT from 44505 MT.During the year exports were almost same company exports 12062 MT as compared to lastyear 12379 MT.
b) Opportunities and Threat
The raw material to produce Acrylic Fibre is crude derived. The movement in crudeaffects the raw material prices to some extent during the year the crude prices remainedvolatile it moved in a band of 72-32 USD a barrel so as the A C N prices. Since Companyis dependent upon imports the fluctuation in foreign exchange i.e. USD vs. INR has abearing on the margin of the Company.
c) Segment-wise / Product-wise performance
Segment wise/product wise performance is given.
d) Risk and Concern
Since Company is dependent upon imported raw materials as such sudden movement in USDand volatility in crude oil affects the margin. The Company is giving thrust on increasingthe exports so that effect can be mitigated. During the year company's export was 31%. CPPFILM
a) Industry Structure and Development
There is intense competition among CPP Film manufacturers in the country. The Companyhas installed European machinery which shall ensure quality product giving edge over otherproducers.
The Industry is growing at 7- 8% Per Annum.
b) Opportunities and Threat
The major raw material to produce CPP film is available locally. Since the raw materialis crude derived as such fluctuation in crude may affect the raw material price.
c) Segment-wise / Product-wise performance
Segment wise/product wise performance is given.
d) Risk and Concern
Since raw material is crude derived as such movement either side shall affect the rawmaterial price. To mitigate the effect the Company has entered into long term contractswith suppliers.
As on 31st March 2020 the Company does not have any subsidiary associateor joint venture company.
TRANSFER OF RESERVES
The Board of Directors of your company has decided not to transfer any amount to theReserves for the year under review.
The Board of Directors decided to plough back the earnings to strengthen the financialsof the Company and not to recommend dividend for the year under review.
CHANGE IN THE NATURE OF BUSINESS
During the year under review there is no change in the nature of the business of thecompany.
As on 31st March 2020 the Company's issued and paid up capital stands Rs.891331210/- divided into 89113121 fully paid up equity shares of Rs. 10/- each.During the year under review the Company has not issued any share' Further the Companyhas also not issued any share with differential Voting Rights/Sweat Equity shares/underStock Option Scheme (ESOS) earlier and during the year. The Company has no scheme orprovision of money for purchase of its own shares by employees or by trustees for thebenefit of its employees. Hence the details under rule 16 (4) of Companies (Share Capitaland Debentures) Rules 2014 are not required to be disclosed. DIRECTORS
In accordance with the provisions of section 152(6) of the Act and the Articles ofAssociation of the Company Mr. Vineet Jain Managing Director will retire by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.
Mr. Deveshwer Kumar Kapila Mr. Subhash Chandra Malik and Mr. S. Sathyamoorthy areIndependent Directors of the Company.
The present term of Mr. Deveshwer Kumar Kapila and Mr. Subhash Chandra Malik asIndependent Directors would be expiring at the ensuing Annual General Meeting and theyhave submitted their consent for re-appointment as Independent Directors of the Company.
The Board recommends the re-appointment of Mr. Vineet Jain Mr. Deveshwer Kumar Kapilaand Mr. Subhash Chandra Malik and resolutions seeking shareholders' approval for theirre-appointment form part of the AGM Notice.
During the year under review Mrs. Remmy Jain ceased to be director w.e.f February 292020 due to her sad demise. The Board of Directors on the recommendation of Nomination& Remuneration Committee has appointed Mrs. Kamlesh Gupta as Independent WomanDirector w.e.f. 27th July 2020 to fill the casual vacancy caused due to deathof Smt. Remmy Jain. Mrs. Gupta's appointment needs to be confirmed at the forthcomingAnnual General Meeting. In the opinion of the Board Mrs. Kamlesh Gupta has the requisiteintegrity expertise and experience (including proficiency). Board recommends herappointment for shareholders' approval at the ensuing Annual General Meeting.
KEY MANAGERIAL PERSONNEL
As on 31st March 2020 the Company had the following Whole-time KeyManagerial Personnel (KMPs) in accordance with the provisions of Section 203 of theCompanies Act 2013:
1. Mr. Vineet Jain- Managing Director
2. Mr. Satya Prakash Gupta-Director (Operations)
3. Mr. Satish Kumar Bansal- Chief Financial Officer
4. *Mr. Bharat Kapoor - Company Secretary
*During the year under review Mr. Ankush Kumar Chokhani resigned from the position ofCompany Secretary on 10 th December 2019 and Mr. Bharat Kapoor has beenappointed as Company Secretary of the Company w.e.f 12th February 2020.However the Board of Directors has by way of circular resolution dated 15thJanuary 2020 appointed Mr. Bharat Kapoor as Compliance Officer of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 and Regulation 25(8) of SEBI Listing Regulationsstating that they meet the criteria of independence as laid down under Section 149(6) ofthe Companies Act 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. All the independent directors of the Companyhave been registered and are members of Independent Directors Databank maintained byIndian Institute of Corporate Affairs. Further the Board after taking thesedeclaration/disclosures on record and acknowledging the veracity of the same concludedthat the Independent Directors are persons of integrity and possess the relevant expertiseand experience to qualify as Independent Directors of the Company and are Independent ofthe Management.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than the sitting fees andreimbursement of expenses incurred by them for the purpose of attending meetings of theBoard/Committees of the Company.
MEETINGS OF THE BOARD
During the year under review four meetings of the Board of Directors were held. Thedetails of Board Meetings are set out in Corporate Governance Report which forms part ofthis Annual Report.
NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Nomination and Remuneration Policy is available on the website of theCompany www.pasupatiacrylon.com.
In terms of the applicable provisions of the Companies Act 2013 and SEBI ListingRegulations 2015 the Board of Directors has carried out an annual evaluation of its ownperformance of its committees and of each Board Member individually.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc.
The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual directors on the basis of laid down criteria.
Independent Directors of the Company had in their separate meeting held on November12 2019 reviewed the performance of nonindependent directors the Board as a whole andChairman of the Company taking into account the views of Executive and Non-ExecutiveDirectors.
Further the Independent Directors hold unanimous opinion that the Non-IndependentDirectors as well as the Chairman bring to the Board abundant knowledge in theirrespective field and are experts in their areas. Besides they are insightful convincingastute with a keen sense of observation and have a deep knowledge of industry. They havebeen performing reasonably well under the prevailing circumstances.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(3) (c) of the Companies Act 2013 yourDirectors to the best of their knowledge and belief and according to the information andexplanations obtained by them hereby confirm:
a. That in the preparation of the annual accounts for the financial year ended 31stMarch 2020; the applicable accounting standards had been followed along with properexplanation relating to material departures;
b. That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year ended 31st March 2020 and of the profit of the company for theyear ended on that date;
c. That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
d. That the directors had prepared the annual accounts on a going concern basis;
e. That the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
f. That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The company has complied with the Corporate Governance code as stipulated under SEBI(Listing Obligation and Disclosure Requirement) Regulation 2015. A separate report onCorporate Governance forming part of the Annual Report of the Company is annexed hereto.
The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
In compliance with the provisions of the Act and SEBI Listing Regulations 2015 allrelated party transactions are placed before the Audit Committee for prior approval andalso before the Board wherever necessary. During the year under review allContracts/arrangements/ transactions entered into by the Company with related parties wereon an arm's length basis. None of the transactions with any of the related parties were inconflict with your company's interest. All related parties transactions are disclosed inNote No.36 of the Financial Statements forming part of this Annual Report.
Pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 particulars of contracts or arrangements with relatedparties referred to Section 188(1) of the Companies Act 2013 in the prescribed form AOC-2is appended as Annexure - I to the Board's Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE DATE OF BOARD'S REPORT AND END OF FINANCIAL YEAR
There is no such material change and commitment affecting the financial position of theCompany which have occurred between the end of financial year of the Company to which thefinancial statements relate and the date of the report. The outbreat of COVID-19 pandemicposed unprecedented challanges to the business.
DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORK PLACE
The Company has in place a Policy for prevention of sexual harassment at the workplacein line with the requirements of Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013. Internal Complaint Committee has been set up toredress complaints regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. No complaints on issues covered by theabove act were received during the year.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS/TRIBUNALS
During the year under review there are no significant or material orders passed by theRegulators / Courts/Tribunals which would impact the going concern status of the Companyand its future operations.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the provisions of Section 135 of the Companies Act 2013 the Boardof Directors has constituted the Corporate Social Responsibility Committee (CSRCommittee).The said Committee has been entrusted with the responsibility of recommendingto the Board about the activities to be undertaken by the Company for CSR purposemonitoring the implementation of the frame work of the CSR Policy and recommending theamount to be spent on CSR Activities. The CSR policy is available on the Company's websitewww.p asup atiacrylon.com.
During the year under review the Company has spent Rs. 51 Lakh on CSR activitiesagainst its obligation of Rs. 93.24 Lakh. The amount remained unspent due to the fact thatthe Company could not find suitable project during the year. The short fall of Rs. 42.24Lakh shall be made good in the financial year 2020-21.
The disclosures related to CSR activities pursuant to section 134(3) of the CompaniesAct 2013 read with Rule 9 of Companies (Accounts) Rules 2014 and Rule 8 of Companies(Corporate Social Responsibility) Rules 2014 are annexed hereto and form part of thisreport as Annexure- II.
The Board of Directors has constituted a Risk Management Committee which has beenentrusted with the responsibility to assist the Board to oversee and approve the CompaniesRisk Management framework and all the risks that the company faces such as strategicfinancial credit market liquidity security property IT legal regulatoryreputational and other risks have been identified and assessed and there is an adequaterisk management. The Risk Management Policy has also been hosted on the website of theCompany www.pasupatiacrylon.com .
AUDITORS AND AUDITOR'S REPORT
M/s Suresh Kumar Mittal & Co. Chartered Accountants (Firm Registration No.500063N)were appointed as Statutory Auditors of the Company at the AGM held on September 272017for a period of 5 years till the conclusion of the 39th AGM subject to theratification of their appointment by the members at every AGM. In terms of Section 139 ofthe Act as amended by the Companies (Amendment) Act 2017 appointment of Auditors is notrequired to be ratified at every AGM w.e.f May 7 2018. Hence the resolution seekingratification of the Members for continuance of their appointment at this AGM is not beingsought. The Auditors have confirmed that they continue to fulfil the criteria forappointment as Auditor of the Company as prescribed under the Act and the Rules framedthere under.
The notes on financial statement referred to in the Auditors Report areself-explanatory and do not call for any further comments. During the year under reviewthe Statutory Auditors has not found any instance of fraud committed against the Companyby its officers or employees and accordingly reporting to the audit committee or CentralGovernment under Section 143 (12) of the Companies Act 2013 is not required. TheAuditors report does not contain any qualification reservation or adverse remark.
Pursuant to Section 148(1) and other applicable provisions of the Companies Act 2013and the Companies (Cost Records and Audit) Rules 2014 maintenance of cost records isrequired by the Company and accordingly such accounts and records are made andmaintained.
Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit)Rules 2014 your Directors on the recommendation of the Audit committee appointed Mr.Satnam Singh Saggu Cost Accountants as Cost Auditors of your company for the FinancialYear 2020-21 to carry out the cost audit for the applicable business on a remuneration ofRs.45000/- (Rupees forty five thousand only) plus applicable taxes and reimbursement ofout of pocket expenses. A certificate from Mr. Satnam Sigh Saggu Cost Accountants hasbeen received to the effect that their appointment as Cost Auditors of the Company ifmade would be in accordance with the limits specified under Section 141 of the Act andRules made thereunder.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyappointed M/s. V.K. Sharma & Co Practicing Company Secretaries (FCS No. 3440) toundertake Secretarial Audit for the financial year 2019-20. The Secretarial Audit Reportfor the Financial Year ended 31st March 2020 is annexed herewith to this Reportas Annexure - III. The Auditors report does not contain any qualification reservation oradverse remark.
Pursuant to provisions of Section 138 of the Companies Act 2013 M/s. Jinender Jain& Company Internal Auditors have conducted internal audit of the functions andactivities of the Company and maintained Internal Control Systems of the Company duringFinancial Year 2019-20.
INTERNAL FINANCIAL CONTROL SYSTEM AND ITS ADEQUACY
Your Company remains committed to improve the effectiveness of internal financialcontrols and processes which would help in efficient conduct of its business operationsensure security to its assets and timely preparation of reliable financial information.
The internal financial controls with reference to the Financial Statements are adequatein the opinion of the Board of Directors.
The Company has a proper system of internal controls to ensure that all assets aresafeguarded and protected against loss from unauthorized use or disposition and thattransactions are authorized recorded and reported correctly. The internal control issupplemented by an extensive programe of internal external audits and periodic review bythe Management. This system is designed to adequately ensure that financial and otherrecords are reliable for preparing financial information and other data and formaintaining accountability of assets.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Statutory Auditors and the Internal Auditors are inter alia invited to attendthe Audit Committee Meetings and present their observations on adequacy of internalfinancial controls and the steps required to bridge gaps if any.
Audit Committee of the Board has been constituted as per the SEBI Listing Regulationsand section 177 of the Companies Act 2013. The composition and other details of the AuditCommittee are provided in Corporate Governance Report which is part of this Report. Allrecommendations made by the Audit Committee were accepted by the Board.
The Company has framed and implemented a vigil mechanism named as Whistle Blower Policyto deal with instances of fraud and mismanagement if any in terms of Section 177(9) ofthe Companies Act 2013 and Regulation 22 of SEBI Listing Regulations 2015. The detailsof the Whistle Blower Policy are provided in the Corporate Governance Report and alsoposted on the website of the Company www.pasupatiacrylon.com.
Particulars of Loans Investments Guarantees.
Particulars of Loans given Investments made Guarantees given and Securities providedas per Section 186 of the Companies Act 2013 along with the purpose for which the Loan orguarantee or security is proposed to be utilized by the Company is provided in financialstatement.
Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo .
The information as required to be disclosed under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 is set out in theAnnexure - IV to this Report.
Extract of Annual Return
As per the requirements of Section 92(3) of the Companies Act 2013 read with rulesframed thereunder the extract of Annual Return as on 31st March 2020 is givenin prescribed form MGT9 in Annexure - V which form part of the Board's Report.
Pursuant to the provisions of section 134 (3) (a) of Companies Act 2013 the extract ofannual return is placed on www.pasupatiacrylon.com Particulars of Employees
The statement containing particulars of employees as required under section 197(12) ofthe Act read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended is attached as Annexure - VI.
The statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required under Section 197(12) of the Act read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in a separate annexure forming part of this report. Further interms of first proviso to Section 136(1) of the Act the Annual Report excluding theaforesaid information is being sent to the Members of the Company. The said annexure isopen for inspection at the Registered Office of the Company during business hours on allworking days 21 days before the Annual General Meeting and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished on request.
Your Company is an ISO 9001:2000 accredited by Bureau of Indian Standard Rooid VoorAccreditatie and Netherland. This certification indicates our commitments in meetingglobal quality and standards.
The Company has not accepted or renewed any deposit during the year and there are nooutstanding and/or overdue deposits as at 31st March 2020.
Your Directors wish to place on record their deep appreciation of the continued supportand co-operation received from Financial Institutions Banks and Shareholders the Stateand Central Government.
Your Directors also wish to place on record their appreciation of the devoted servicesof the Company's employees who have diligently contributed to the Company's progress.