Your Directors are pleased to present the twenty ninth Annual Report and the Company'saudited financial statements for the year ended on March 31 2018.
1. FINANCIAL RESULTS
| || ||(Rs. in lakhs) |
| ||2017-2018 ||2016-2017 |
|Revenue (net of excise duty and GST) ||303462.52 ||292610.93 |
|Profit before tax ||17893.64 ||27784.84 |
|Tax expenses ||6281.58 ||9843.61 |
|Profit after tax ||11612.06 ||17941.23 |
|Interim/Final Dividend on equity shares (including corporate dividend tax) paid during the year ||5226.67 ||1161.52 |
|Transfer to general reserve ||7000.00 ||10000.00 |
|Balance carried forward ||9231.10 ||9845.71 |
During the year under review your Directors declared an interim dividend of Rs.1.00 perequity share. Your Directors now recommend a final dividend of Rs.3.50 per equity shareentailing an out go of Rs.4072 lakhs including corporate dividend tax. The total dividendfor the year would thus be Rs.5233.47 lakhs including corporate dividend tax. The payoutof dividend is in line with your Company's policy to pay dividend linked to longtermgrowth objectives of the Company to be met from internal cash accruals.
3. REVIEW OF OPERATIONS
Your Company's revenue increased to Rs.303462.52 lakhs (net of excise duty and GST) forthe year under review as compared to Rs.292610.93 lakhs (net of excise duty) in theprevious year. This increase is mainly on account of increased cost during the year ofStyrene Monomer the main raw material for your Company's products.
Net Profit after tax for the year under review is Rs.11612.06 lakhs as againstRs.17941.23 lakhs in the previous year.
Your Company's performance is discussed in detail in the 'Management Discussion andAnalysis Report'.
Status of Insurance Claim-Chennai Plant
The settlement of the loss/damage to the assets at the EPS plant in Tamil Nadu due tofloods in December 2015 is in progress. Your Company had filed preliminary claim ofRs.1092 lakhs. Final claim bill lodged is for Rs.977 lakhs. Your Company has till datereceived interim claim of V718 lakhs.
4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT & CORPORATE GOVERNANCE
Management Discussion and Analysis for the year under review is presented separately inthe Annual Report. The Report on Corporate Governance forms an integral part of thisReport. The compliance of 'Corporate Governance' conditions has also been certified by theAuditors and the same is annexed to the report on Corporate Governance.
5. BUSINESS RESPONSIBILITY REPORT
The requirement relating to Business Responsibility Report became applicable to yourCompany for the year under review. Business Responsibility Report for the year 201718 isincluded as part of the Annual Report.
6. HEALTH SAFETY & ENVIRONMENT
Both the Environmental Management System and Occupational Health and Safety ManagementSystem continued to be maintained by your Company as per the ISO 14001:2015 Standard andOHSAS 18001:2007 Standard respectively.
Your Company has continued implementation of HSE management Systems under the GuidingPrinciples of declared Integrated Management System policy. (Occupational Health andSafety Policy' and 'Environmental Policy') HSE Performance Index for the period underreview stood to be in "Excellent" Range.
Your Company has completed 6375 accident free days as on March 31 2018 which amountsto 16.48 million manhours of accident free operations.
7. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri M P Taparia (DIN 00112161) and Shri S J Taparia (DIN 00112513) Directors of theCompany retire by rotation and being eligible offer themselves for re-appointment.
A brief resume of the Directors eligible for re-appointment is given in the report onCorporate Governance.
During the year under review the members re-appointed Shri Rajan B Raheja (DIN00037480) and Shri B L Taparia (DIN 00112438) as Non-Executive Non-Independent Directorsliable to retire by rotation.
Your Company has received declarations from all the Independent Directors of theCompany confirming that they meet the criteria of independence as prescribed both underthe Companies Act 2013 and the Listing Agreement with the Stock Exchanges.
Your Company has in place criteria for evaluation of performance of the BoardIndependent Directors and Non-Independent Directors approved by the Nomination andRemuneration Committee.
The Independent Directors in their meeting evaluated the performance of the Board theChairperson and the Non-Independent Directors while the Nomination and RemunerationCommittee evaluated the performance of all the Directors. The Board evaluated theperformance of the Independent Directors.
The criteria/policies of the Company for selection of Directors and Remuneration Policyfor Directors Key Managerial Personnel and other Employees are attached herewith markedas Annexure-1.
The details of the Familiarisation Programme for Independent Directors are placed onthe website of the Company and can be accessed at http://supremepetrochem.com/pdf/Familiarisation-Programme- For-Independent-Directors.pdf
B. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 your Directors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
(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 at the end of the financial year and ofthe profit and loss of the Company for that period;
(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this 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 operatingeffectively;
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
9. TRANSFERS TO INVESTOR EDUCATION AND PROTECTION FUND
Your Company transferred an aggregate amount of Rs.38.41 lakhs during the year underreview to the Investor Education and Protection Fund. The aggregate amount transferred tothe fund since January 2002 is Rs.335.69 lakhs.
As per Section 124(5) of the Companies Act 2013 all unpaid or unclaimed dividends fora period of seven years are required to be transferred by the Company to the InvestorEducation and Protection Fund (IEPF) established by the Central Government.
Further Section 124(6) of the Companies Act 2013 requires that all shares in respectof which unpaid or unclaimed dividend has been transferred to IEPF shall also betransferred to IEPF. The Rules notified by Ministry of Corporate Affairs amongst othermatters contain provisions for transfer of all shares in respect of which dividend hasnot been paid or claimed for seven consecutive years or more in the name of IEPF SuspenseAccount.
Your Company transferred 1287209 equity shares of 7605 shareholders between fourth toeighth December 2017 to the Investor Education and Protection Fund including 72780 equityshares from the unclaimed Suspense Account.
The unclaimed dividends on equity shares paid in October 2011 will be due for transferto the Fund in November 2018. Investors who have not yet claimed these dividends arerequested to contact either the Company's Secretarial Department or the R & T Agents.
The Company will upload full details of such shareholders and shares due for transferto IEPF Suspense Account on its website atwww.supremepetrochem.com/investorrelations.Members are requested to complete formalities for claiming unpaid dividend if any to avoidtransfer of the shares to IEPF. Please refer to the section Shareholders' Assistance inthe Corporate Governance Report for further details.
10. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO
Information as per Section 134(3)(m) read with COMPANIES DISCLOSURE OF PARTICULARS INTHE REPORT OF THE (BOARD OF DIRECTORS) RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014forms part of the DIRECTORS' REPORT for the year under review.
A. CONSERVATION OF ENERGY
Energy conservation programmes at both plant locations resulted in savings of energy tothe extent of 355926 KWH (273304 KWH in the Amdoshi Plant and 82622 KWH in the plant inManali Chennai).
The energy conservation progammes consisted mainly of the following :
At the plant in Amdoshi Maharashtra
1) Installation of energy efficient devices like motors air conditioners in place ofold low efficiency devices.
2) Replacement of florescent lamps tube lights mercury and sodium vapour lightfittings with LED fittings.
3) Replacement of conventional Drives with Variable Frequency Drives (VFDs) whereverpossible.
At the plant in Manali Chennai
1) Improvement in process operations resulted in reduction in specific energy consumedfor production of EPS.
2) High energy consuming devices like reciprocating compressor for air applicationchiller for chilled water application were replaced by energy efficient screw compressors.
3) Replacing conventional drives with variable frequency drives was carried outwherever specific energy consumption was high.
4) Existing high energy consuming conventional lights were replaced with energyefficient LED lights in a phased manner.
B. TECHNOLOGY ABSORPTION
There are no existing technology supply agreements. All previously suppliedtechnologies have been successfully absorbed.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
| ||(Rs. in lakhs) |
|Foreign exchange earnings and outgo ||2017-2018 |
|a. Foreign exchange inflow ||48096.61 |
|b. CIF value of imports including capital goods ||243968.34 |
|c. Expenditure in foreign currency ||713.45 |
11. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules are provided in the Annual Report. Disclosures pertaining to remuneration andother details as required under Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in the Annual Report. Having regard to the provisions of the first proviso toSection 136(1) of the Companies Act 2013 and as advised the Annual Report excluding theaforesaid information is being sent to the members of the Company.
The said information is available for inspection at the registered office of theCompany during working hours and any member interested in obtaining such information maywrite to the Company Secretary and the same will be furnished on request. The full AnnualReport including the aforesaid information is being sent electronically to all thosemembers who have registered their email addresses and is available on the Company'swebsite.
The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
b. The percentage increase in remuneration of Manager CFO and Company Secretary
|Designation ||% increase in remuneration in the financial year |
|Manager ||8.0 |
|Chief Financial Officer ||8.0 |
|Company Secretary ||8.5 |
c. The percentage increase in the median remuneration of employees in the financialyear: 10%
d. The number of permanent employees on the rolls of Company : 376
e. The average percentage increase in the salaries of employees other than the Managerwas 11% as compared to an increase of 8% in the Manager's remuneration.
f. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of theCompany.
12. AUDITORS AND AUDITORS' REPORT
The term of the Statutory Auditors M/s. G. M. Kapadia & Co. Chartered Accountantsends at the conclusion of the ensuing Annual General Meeting and are eligible to beappointed as Statutory Auditors for a period of five years from the conclusion of theensuing Annual General Meeting until the conclusion of the Annual General Meeting to beheld in the calendar year 2023.
G. M. Kapadia & Co. is a reputed firm of Chartered Accountants established in theyear 1938 and possesses a strong team of professionals with indepth knowledge in thedesired fields particularly the regulatory requirements.
The Firm's domestic and international clients range from privately owned entities topublic listed Companies including large reputed Companies banks insurance companiesinvestment banks venture capital funds mutual funds private equity funds brokers andhigh net- worth individuals.
The Firm was rated amongst the leading tax firms in India by the International TaxReview for the tenth consecutive year in its publication World Tax 2018.
The Firm was also rated amongst the leading transfer pricing firms in India by theInternational Tax Review for the fifth consecutive year in its publication of WorldTransfer Pricing 2018.
Considering the standing of the firm and domain knowledge Directors commend theappointment of M/s. G M Kapadia & Co as Statutory Auditors of the Company
The Auditors have confirmed their eligibility to the effect that their appointment ifmade would be within the prescribed limits of the Companies Act 2013 and that they arenot disqualified for such appointment.
There are no qualifications or adverse remarks in the auditors' report. No frauds werereported by the Auditors under sub Section (12) of the Section 143 of the Companies Act2013.
Cost Auditors' report for the year 2016-2017 was filed with the authorities on August09 2017 well within the due date. M/s. Kishore Bhatia & Associates Cost Accountantshave been appointed as Cost Auditors to audit the cost accounts of the Company for thefinancial year April 01 2017 to March 31 2018.
Your Company had appointed M/s. Parikh & Associates Company Secretaries to conductsecretarial audit for the year under review. The secretarial audit report for thefinancial year ended March 31 2018 is annexed hereto marked as Annexure-2. TheSecretarial Auditors' Report does not contain any qualifications or adverse remark.
13. RELATED PARTY TRANSACTIONS
Transactions with related parties during the year under review were in the ordinarycourse of business and on an arm's length basis. During the year your Company had notentered into any contract or arrangement with a related party which would be considered asmaterial in accordance with the policy of the Company on materiality of related partytransactions.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://supremepetrochem.com/pdf/Policy-On-Dealing-With-Related-Partv-Transactions.pdf. Information on related party transactions aregiven in Annexure-5 in Form AOC-2 forming part of this report.
14. CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility Committee has formulated and recommended to the Boarda Corporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company. This Policy has been approved by the Board. The CSR Policy isavailable on the Company's website at the link: http://supremepetrochem.com/pdf/Corporate-Social-Responsibility.pdf.
Your Company has identified the following areas for its CSR activities:
(i) promoting preventive health care and sanitation and making available safe drinkingwater.
(ii) promoting education including special education and employment enhancing vocationskills livelihood enhancement projects granting of scholarships and building/improvinginfrastructure at educational institutions.
(iii) protection of national heritage art and culture including restoration ofbuildings and sites of historical importance and works of art setting up publiclibraries.
(iv) contribution to the Prime Minister's National Relief Fund or any other fund set upby the Central Government for socio-economic development and relief and welfare of theSchedule Caste the Scheduled Tribes other backward classes minorities and women.
(v) contributions or funds provided to technology incubators located within academicinstitutions which are approved by the Central Government.
(vi) ensuing environmental stability ecological balance conservation of naturalresources and maintaining quality of soil air and water.
(vii) rural development projects.
(viii) Slum rehabilitation.
(ix) Sports nationally recognised sports Paralympics Sports and Olympic Sports
These activities will be carried out in the villages in proximity to your Company'splants in Maharashtra and Tamil Nadu.
The report on CSR activities during the year under review is given in Annexure-4 tothis report.
15. RISK MANAGEMENT
Business Risk Evaluation and Management is an ongoing process within the Company. YourCompany has a robust risk management framework to identify monitor and minimise risk asalso identify business opportunities. As a process the risks associated with the businessare prioritised based on Severity Likelihood and Effectiveness of current detection.
Risk Management approach is composed of three components:
1) Risk Governance
2) Risk Identification
3) Risk Assessment and Control
Each risk factor is monitored periodically by the Management any event arising fromthese likely to impact operations are reported to the Board.
16. INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial controls commensurate with sizeand the nature of business which ensures that transactions are recorded authorised andreported correctly apart from safeguarding its assets against significant misuse or loss.Your Company also has adequate internal financial controls with reference to financialstatements. The Company's internal auditors carry out regular checks on the adequacy ofthe internal financial controls. Company has specific internal auditors for functions suchas GST financial controls and systems.
The internal audit reports are submitted periodically to the Audit Committee. The AuditCommittee reviews these reports with the executive management.
17. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has established a vigil / whistle blower mechanism which provides achannel to any employee / Director to report to the Management concerns about unethicalbehavior actual or suspected fraud or violation of code of conduct or policy. Themechanism provides for adequate safe guards against victimisation of the whistle blowerand also provides for direct access to the Chairperson/Manager/Chairperson of the AuditCommittee in exceptional cases.
18. POLICY FOR PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN ATTHE WORKPLACE
Your Company has a documented policy for prevention prohibition and redressal ofsexual harassment of women at workplace under the guiding principle that 'No woman shallbe subjected to sexual harassment in the Company's locations'.
Your Company has constituted an Internal Complaints' Committee (ICC) comprised ofinternal and external members to hear and inquire in complaints of sexual harassment andto recommend punitive/corrective action to the Management. Easy access has been providedto the ICC for women employees.
We are glad to report that there were no complaints/cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 duringthe year under review.
19. MEETINGS OF THE BOARD
Five meetings of the Board of Directors were held during the year under review. Forfurther details please refer to the report on Corporate Governance in this annual report.
20. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
There are no loans guarantees or investments under Section 186 of the Companies Act2013 as on March 31 2018.
21. EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-3 tothis annual report.
No disclosure or reporting is required ofthe following items as there were notransactions on these items during the year under review.
(i) Issue of equity shares with differential rights as to dividend voting orotherwise.
(ii) Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
(iii) Details relating to deposits covered under Chapter Rs.of the Companies Act 2013
(iv) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
Your Company does not have any Associate/ Joint Venture
The Directors are thankful to the Bankers Customers Suppliers and other BusinessAssociates/Stakeholders for their continued co-operation and support extended to yourCompany and to the employees for their dedicated and sincere services to the Company.
| ||For and on behalf of the Board |
| ||M. P. Taparia |
|Place: Mumbai ||Chairperson |
|Date: April 24 2018. || |