To The Members of
SADHANA NITRO CHEM LIMITED
Your Directors take pleasure in presenting the 45th Annual Report togetherwith Audited Financial Statements for the Financial Year ended 31st March2018.
1. FINANCIAL RESULTS (?InLakhs)
|PARTICULARS || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Revenue from operations (Net) & Other Income ||11115 ||5949 ||11464 ||5737 |
|Profit before Finance Cost Depreciation Exceptional item and Tax (EBIDTA) ||3500 ||912 ||3513 ||875 |
|Finance Cost ||(484) ||(626) ||(521) ||(632) |
|Depreciation ||(188) ||(192) ||(192) ||(192) |
|Profit/(Loss) before exceptional item and taxation ||2828 ||94 ||2800 ||51 |
|Exceptional Items ||- ||- || ||- |
|Tax Expense ||309 ||- ||309 ||- |
|Profit/(Loss) after tax ||3137 ||94 ||3109 ||51 |
|Other Comprehensive Income ||(42) ||(12) ||(42) ||(12) |
|Total Comprehensive Income ||3095 ||82 ||3067 ||39 |
Yours Directors are pleased to recommend dividend of ? 1.00 per equity share of ? 10.00each for financial year 2017-18.
Your Board of Directors have approved and shall pay preference dividend of ? 0.10/- Per1% NonCumulative Non Convertible Preference shares of? 10/ each to the PreferenceShareholders.
This will entail an out go of? 103 Lakhs.
There is no unclaimed dividend which remains to be transferred to Investor Education& Protection Fund (IEPF).
3. TRANSFER TO RESERVES:
The Board of Directors has not appropriated and transferred any amount to any Reserveand have decided to retain the entire amount in Profit and Loss account. .
4. REVIEW OF OPERATIONS:
The total revenue of your company for the financial year ending 31st March2018 has been? 11115 Lakhs as compared to? 5949/- lakhs in the previous yearsregistering a significant growth of 87 %.
Focus efforts have been placed on expanding the end applications of company's productline over the last several years which has helped in yield strong results this yearoffering healthy sustainability for the years to come.
This diversification in end application has also simultaneously diversified clientsand end destinations for company's products globally de-risking our portfolio from anysingle customer application or market.
The level of operations has been steadily increased over the last several year and hasreached satisfactory level. This has helped in economies of scale and made companycompetitive on the global front.
Because of your company's product quality standards we have been able to maintainsteady relationships with our long standing customers along with building relationshipswith several new customers.
The result of all the above factors has led to company's best year to date registeringcompany's highest ever turnover and the highest ever Profit After Tax (PAT) of ? 3137lakhs. (P.Y. ? 94 Lakhs) from normal operation registered in 3237 % growth.
Pursuant to the notification dated February 16 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from April 12017. As such the financial statements for the year ended as at March312017 have been restated to conform to Ind AS.
The company has a very strong order book position and expect to maintain the same orhigher growth trend. The cost control at every stage of operations with the increase levelof operations resulted in product cost improvement.
This resulted in outstanding performance and best ever year the EBIDTA from normaloperation for 2017-18 was ? 3500 lakhs (PY EBIDTA of ?. 913 lakhs) which represents agrowth of 283 %. Moreover the profit for the last quarter of 2017-18 from normaloperation was of ?2186 lakhs (Last quarter of PY profit of ? 125 lakhs).
With the increase in competitiveness of your company on a global front it has stableexports to across Europe Japan Korea North and South America and with a significantquantity being sold to China.
While our local market is growing steadily company's turnover is still focused on theexport market with this year's exports being a total of? 8163 lakhs compared to lastyear's ? 4152 lakhs registering a growth of 96 %
Exports constituted about 76 % of the overall revenue from operation including otherincome. Company's Exports are well diversified in terms of product range as well as theCountries of Export.
The company has resumed manufacture of Colour formers a performance chemical it usedto manufacture in the past. It is the key raw material for the coating of thermal paper apresently growing industry. Due to global demand and growth of thermal paper your companyis expanding its production lines of colour former to capture the current globalrequirements
There is increased demand of Meta Amino Phenol and Aniline 25 Disulphonic acidglobally two of your company's key products due to which your company is in the processof increasing it's capacity by 50% in both products.
The proposed expansion will be put to use and operationalise its entire capital work-inprogress during the year 2018-19. In addition to this the estimated project cost will bearound ? 50 Crores. The above expansions are being funded through internal accruals andare likely to be completed by the end of this financial year. The additional positiveeffect on your company's results due to these expansions will take effect in the financialyear ending March 2020
Your company has strong long term fundamentals. The company has practically reduced allit's borrowing and has started the year debt free. It is looking towards leveraging it'sunique product offering along with it's competitive strengths towards a long term diversesales pipeline with sustainable cash flows for the foreseeable future. Your company islooking to utilise it's cash flow towards expanding product lines as well as diversifyinginto downward derivatives of it's existing products to create a maintainable long termrevenue pipeline.
8. REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES:
The performance and financial position/ salient features of the financial statement ofeach of the subsidiaries associates and j oint venture companies for the year ended 31 stMarch 2018 is given in Form AOC-1 and is attached and marked asAnnexurel'andformspartof this Report.
The Company has two wholly owned subsidiaries viz. Anuchem B.V.B.A. Belgium - a ForeignSubsidiary and during the year your company acquired Strix Wireless Systems Pvt. Ltd anIndian Subsidiary. The Audited Financial Statement of the said subsidiaries is consideredfor the purpose of preparing Consolidated Financial statements.
9. RELATED PARTY TRANSACTIONS
The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Act the Rules thereunder andthe Listing Regulations. The Policy on Related Party transactions has been hosted onwebsite of the Company.
The particulars of contracts or arrangements with related parties referred to insubsection (1) of section 188 of the Companies Act 2013 in the prescribed Form AOC-2 isattached as Annexure-II' to the Boards Report.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014 during the year under review. Hence therequirement for furnishing of details relating to deposits covered under Chapter V of theAct or the details of deposits which are not in compliance with the Chapter V of the Actis not applicable.
11. Particulars of Loans Guarantees or Investments
Pursuant to the provisions of Section 186 of the Companies Act 2013 read with TheCompanies (Meetings of Board and its Powers) Rules 2014 as amended from time to time(including any amendment thereto or reenactment thereof for the time being in force)Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Note No.5 & 8 to the financial statements provided in this AnnualReport.
III. Issue of Sweat Equity Shares
As per provisions of Section 54(l)(d) of the Act read with Rule 8(13) of the Companies(Share Capital and Debenture) Rules 2014 details of sweat equity shares issued by theCompany during the financial year under review is furnished in Annexure HI' attachedherewith which forms part of this Report.
IV. Employees Stock Option Plan
The Company has received in principle approval for issued of ESOP pursuant to schemeapprove by members. However the same has not been granted till date.
11. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OFTHE FINANCIAL YEAR AND DATE OF THE REPORT:
Aquisition/Takeover: The Board at its meeting held on January 192018 recommended andwhich is duly approved by shareholder Aquisition of Spidigo Net Pvt. Ltd. Indian Company
12. RELEASE OF ENCUMBRANCE OF SHAREHOLDING OF HOLDING COMPANY
On the clearance of the dues corresponding to pledge the encumbrance on the part of theshareholding held by the holding company were released on April 242018.
13. ISO CERTIFICATION
Your Company has certification as per ISO 9001-2008 ISO 14001:2004 and OHSAS B.S.18001:2007 granted by the certifying body RINA for development and manufacture of ChemicalIntermediates.
The assets of your Company are adequately insured. Your Company has also taken outsuitable cover for Public Liability.
15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate Internal Control System commensurate with the size andnature of its business. The preparation designing and documentation of Policy on InternalFinancial Control are in place and implemented which is reviewed periodically and modifiedsuitably to ensure controls.
The internal audit are carried out by a separate firm of Chartered Accountants. Theperiodical audit reports including significant audit observations and corrective actionsthereon are presented to the Chairman of the Audit Committee.
16. ESTABLISHMENT OF VIGIL MECHAMSM/WHISTLF. BLOWER AND RISK MANAGEMENT POLICY
The Board of Directors of the Company has pursuant to the provisions of Section 177(9)of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board and itsPowers) Rules 2014 and Regulation 22 of Listing Regulations the Company has established"Vigil Mechanism Policy" for Directors and employees of the Company to provide amechanism which ensures adequate safeguards to employees and Directors from anyvictimization on raising of concerns of any violations of legal or regulatoryrequirements incorrect or misrepresentation of any financial statements andreports etc.
The employees of the Company have the right/option to report their concem/grievance tothe Chairman of the Audit Committee. The Company is committed to adhere to the higheststandards of ethical moral and legal conduct of business operations. The Company alsoadopted Risk Assessment Procedure. The details of the same are mentioned in the CorporateGovernance Report.
17. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSOSNNEL I. Declarations byIndependent Directors:
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(l)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
n. Board Evaluation:
Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Audit Nomination & Remuneration andStakeholder relationship Committees. The manner in which the evaluation has been carriedout has been explained in the Corporate Governance Report.
In a separate meeting of Independent Directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of executive director. The same was discussed inthe Board meeting held subsequently to the meeting of the independent directors at whichthe performance of the Board its Committees and individual directors was also discussed.Performance evaluation of independent directors was done by the entire Board excludingthe independent director being evaluated.
EIL Remuneration Policy:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
IV. Number of Board Meetings:
The Board met Five times during the financial year ended 31 st March 2018 inaccordance with the provisions of the Companies Act 2013. The details of which are givenin the Corporate Governance Report. The intervening gap between any two Meetings waswithin the period prescribed by the Companies Act 2013 and the Listing Regulation.
V. Board of Directors and Key Managerial Persons:
Appointment of Directors and Key Managerial Personnel (KMP1
The existing agreement with Shri Asit D. Javeri Chairman & Managing Director Mrs.Seema A. Javeri Executive Director (Administration) and Shri. Ahhishek A. JaveriExecutive Director & CFO of the Company was terminated as on 30th April 2018 and theywere subject to the approval of the members in the General Meeting and subject to furtherapproval of central govt if required re-appointed on 1st May 2018 on the recommendationof the Nomination & Remuneration Committee.
Mr. Amit M. Mehta (DIN: 00073907) was appointed as an Additional Independent Directorof the Company with effect from 3 0th April 2018.
The terms of appointment of Shri Nitin R. Jani Company Secretary who retire on 13thNovember 2018 was extended further by 3 (Three) years upto 13thNovember2021.
Mr. D.M.Shah resigned as Director of the Company with effect from 19th January2018 dueto personal reasons. The hoard appreciates and takes on record his valuable advice andcontribution during his tenure.
I. Retirement By Rotation
In accordance with the provisions of the Act none of the Independent Directors isliable to retire by rotation.
As per the provisions of Section 152 of the Companies Act 2013 Mr. AbhishekA. Javeriretires by rotation at the ensuing Annual General Meeting and being eligible offerhimself for re-appointment.
18. AUDIT COMMITTEE:
The Audit Committee of Directors was constituted pursuant to the provisions of Section177 of the Companies Act 2013. The composition of the Audit Committee is in conformitywith the provisions of the said section. The details of Composition and meetings of theAudit Committee held has been mentioned in the Corporate Governance Report.
19. NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee of Directors as constituted by the Board ofDirectors of the Company in accordance with the requirements of Section 178 of the Act.
The details of composition of the Committee and the number of meetings held by thecommittee are mentioned in the Corporate Governance Report.
The Board has in accordance with the provisions of sub-section (3) of Section 178 ofthe Companies Act 2013. formulated the policy setting out the criteria for determiningqualifications positive attributes independence of a Director and policy relating toremuneration for Directors Key Managerial Personnel and other employees.
Major criteria / gist are defined in the Remuneration policy framed for appointment ofand payment of remuneration to the Directors of the Company. The remuneration policy isstated in the Corporate Governance Report.
20. STAKEHOLDERS RELATIONSHIP COMMITTEE
The Board of Directors of the company has constituted pursuant to Section 178 of theCompanies Act 2013; the Board of Directors of the Company has constituted theStakeholder's Relationship Committee.
The details of composition of the Committee and the number of meetings held by thecommittee are mentioned in the Corporate Governance Report.
I. Statutory Auditors of the Company and their observations on accounts for the yearended 31st March 2018.
At the 44th Annual General Meeting held on August 2 2017 the Members approvedappointment of M/s. Chandrashekar Iyer & Co. Chartered Accountants (Firm registrationNo: 114260W) to hold office from the conclusion of the 44th Annual General Meeting untilthe conclusion of the 49th Annual General Meeting to he held for the financial year 2022subj ect to ratification of their appointment at every AGM on such remuneration as may befixed by the Board apart from reimbursement of out of pocket expenses as may be incurredby them for the purpose oi audit.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s. Makarand M. Joshi& Co. Company Secretaries in Practice Mumbai has been appointed to undertake theSecretarial Audit of the Company for the financial year 201819. The Secretarial AuditReport in form MR-3 for the financial year 2017-18 is annexed herewith as AnnexureIV'.
The replies to the comments of Secretarial Auditors in Auditors Report are as follows:-
1. The Company has not filed e-Form MGT - 14 as mandated under Section 179(3) read withSection 117 of the Companies Act 2013 for the following purposes:
a) Availment of loan from Hero Fincorp to the extent of Rs. 136 crores approved in theBoard Meeting held on 26ti
h) Delegation of authority to Mr. Asit Javeri and Abhishek Javeri to borrow fromBanks/NBFC/ICD to the extent of Rs 75 Crores approved in the Board Meeting held on 26thApril 2017.
The filing of the ahovementioned forms are inadvertently missed. However the company isin process of taking necessary corrective action.
2. The Outcome of Board Meetings held on 13th September 2017 04th December 2017 and19th January 20If pertaining to approval of Quarterly Financial results have beensubmitted to the Stock Exchange beyond the mandated time period of 30 minutes.
On account of technological constraint the said filing were made in delay.
3. ADesignated Employee of the Company has made contra trade which is a contraventionof the provisions of Insider Regulations.
The company is in process of taking necessary action against the designated Employee.
22. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT.
Pursuant to Regulations 17 to 27 clauses (b) to (i) of Regulation 46(2) and Para C Dand E of Schedule V ofSEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the corporate governance report together with Auditor report on the compliance on thesame is attached as Annexure-V' and the Management Discussion andAnalysis report isattached as Annexure VI'.
23. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS-23 and AS-27 issued by the Institute ofChartered Accountants of India form part of this Annual Report.
24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules2014 is annexed herewith as 'Annexure-VII'.
25. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2018 made under the provisionsof Section 92(3) of the Act is attached as 'Annexure-VIH' which forms part ofthis Report.
26. PARTICULARS OF EMPLOYEES
Employee drawing Remuneration in excess of the limits prescribed by the Companies Act2013. The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given inAnnexure IX'
27. HUMAN RESOURCE/INDUSTRIAL RELATIONS
Human Resource programs and initiatives are aligned to meet the business needs. Yourcompany believes in investing in people to develop and expand their capability. TheCompany has been able to create a favourable work environment that motivates performance;customer focus and innovation in your company's strategies are based inter alia onprocesses of continuous learning and improvement.
28. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURESAS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014
The disclosures as per Rule 5 of Companies (Appointment & Remuneration) Rules 2014have been marked as Annexure IX.
29. SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
30. DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act2013 in relation to the auditedfinancial statements of the company for the year ended 31 st March 2018 the Board ofDirectors hereby confirms that
(a) that in the preparation of the annual financial statements for the year ended 31stMarch2018the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and judgment and estimates have been made thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31 st March 2018 and of the profit of the Company for the year ended onthat date;
(c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
Your Directors would like to express their appreciation - for the assistance andcooperation received from the Bankers Central and State Government Departmentscustomers vendors and other business partners. The Directors also wish to place onrecord their appreciation to all the employees of the Company for their cooperation andcontinued contribution to the Company. Last but not least the Directors place on recordtheir gratitude to the Investors Clients and Shareholders of the Company for theirsupport and trust reposed.
| ||For and On Behalf of the Board of Directors |
|Place: Mumbai Date: 30th April 2018 ||ASIT D. JAVERI |
CHAIRMAN & MANAGING DIRECTOR DIN:00268114