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Transpek Industry Ltd.

BSE: 506687 Sector: Industrials
NSE: TRANSPEK ISIN Code: INE687A01016
BSE 00:00 | 19 Mar 1515.30 0.25
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NSE 05:30 | 01 Jan Transpek Industry Ltd
OPEN 1519.00
PREVIOUS CLOSE 1515.05
VOLUME 2916
52-Week high 1730.00
52-Week low 1170.00
P/E 18.57
Mkt Cap.(Rs cr) 847
Buy Price 1500.00
Buy Qty 14.00
Sell Price 1534.00
Sell Qty 10.00
OPEN 1519.00
CLOSE 1515.05
VOLUME 2916
52-Week high 1730.00
52-Week low 1170.00
P/E 18.57
Mkt Cap.(Rs cr) 847
Buy Price 1500.00
Buy Qty 14.00
Sell Price 1534.00
Sell Qty 10.00

Transpek Industry Ltd. (TRANSPEK) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the Fifty Second Annual Reporttogether with the Standalone and Consolidated

Audited Financial Statements of the Company for the financial year ended 31st March2018.

1. FINANCIAL RESULTS (STANDALONE):

2017 - 2018 2016 2017
Rs. in Lakhs Rs. in Lakhs
Net Sales including Trading and Operating Income 36899.79 32770.14
Other Income 433.06 742.99
Cash Profit/(Loss) before Extraordinary Items and Taxes 4494.73 5103.37
Profit/(Loss) before Tax 3502.25 4240.47
Provision for Taxation
Current:
(i) Current Tax 680.49 1087.66
(ii) Deferred Tax (Asset) / Liability 209.10 164.67
(iii) Tax adjustment for earlier years (27.68) (0.98)
Profit/(Loss) after Tax 2640.27 2940.76
Balance brought forward from Previous Year 6470.99 3497.82
Amount available for appropriation 9493.92 6438.58

Note : Previous year figures have been regrouped / rearranged wherever necessary.

2. DIVIDEND:

Your Directors have recommended a dividend of Rs.9/- (i.e. 90%) per equity share of Rs.10/- each on the Equity Share

Capital of Rs. 558.56 Lakhs for the year ended 31st March 2018 (previous year: 90%i.e. Rs. 9.00/- per share).

The dividend will be paid to members whose names appear in the Register of Members ason 31st July 2018 in case of physical shareholding and in respect of shares indematerialised form it will be paid to members whose names are furnished by the NationalSecurities Depository Limited and Central Depository Services (India) Limited asbeneficial owners as on that date.

3. RESULTS OF OPERATIONS AND THE STATE OF THE COMPANY'S AFFAIRS:

The Directors are happy to report that the net sale (excluding Excise Duty) of theCompany for the year under review is Rs.359.09 crores as compared to Rs. 306.66 crores inthe previous year an increase of 17.10% and exports have increased to Rs.252.50 croresfrom Rs. 204.49 crores in the previous year i.e. an increase of 23.48% and the domesticsale has gone up to Rs.106.59 crores from Rs. 102.03 crores in the previous year showingan increase of 4.47%. The Company has achieved a net profit of Rs.26.40 crores for theyear 2017-18 as against Rs. 29.97 crores in the previous year i.e. a decrease of 13.51%.

During the year sales increased due to increase in exports. However the net profithas decreased due to significant increase in cost of some of the raw materials which couldnot be passed on in the customer pricing due to competitive pressures and reduction inother income.

Your Company has been continually taking several initiatives aimed at improvingefficiencies and EHS practices and standards.

4. OUTLOOK:

Due to steady global demand and significant reduction in production of Chemicals inChina the overall outlook for Indian

Chemical Industry is looking very positive. In addition the “Make in India”initiative of the Indian Government should provide further impetus for fast growth. Thereis a visible shift in sourcing location henceforth considered by global chemicalcompanies. It is noted that such global giants are now increasing their reliance on Indiafor the Raw Materials and Intermediates.

The Company has been constantly strengthening its operations and systems including EHSand Safety Practices to take

advantage of the opportunity that may arise considering the current outlook and strongcustomer relationships.

5. QUALITY ENVIRONMENT HEALTH AND SAFETY MANAGEMENT SYSTEMS:

The Company's existing Integrated Management System is accredited with QMS ISO 9001:2015 EMS ISO 14001:2015 and BS OHSAS 18001: 2007. The Company is also now accredited forEnergy Management System ISO 50001: 2011 certification with TUV NORD a certificationagency. The Company is committed to ensure protection of the environment and maintenanceof biodiversity. The Company continues taking several initiatives to achieve this goal.

The Company places a strong emphasis on ensuring safety of the employees andsurrounding population and has very effective safety management systems in place. TheCompany is a member of the Indian Chemical Council and has taken steps to become asignatory to ‘Responsible Care' a globally recognised Chemical Industry initiative.The Company has also achieved Silver grade for its CSR initiatives from Ecovadis Germany.

6. SUBSIDIARY COMPANY:

Transpek Industry (Europe) Limited (‘TIEL') is a wholly owned subsidiary ofthe Company and during the year under review it has continued to provide services tosome of the Indian companies under REACH regulations. The expenses incurred during theyear are apportioned to and recovered by TIEL from Transpek Industry Limited the holdingcompany and other participating companies resulting in there being no profit and no loss.

7. DISCLOSURE UNDER THE COMPANIES ACT 2013:

Information given below is pursuant to various disclosure requirements prescribed underthe Companies Act 2013 (hereinafter ‘the Act') and the rules thereunder to theextent applicable to the Company. Some of the disclosures have been included inappropriate places in the Corporate Governance Report as prescribed under the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 [hereinafter 'SEBI(LODR) Regulations'] which is a part of the Annual Report. a) CONSERVATION OF ENERGYTECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed to this report as ‘Annexure I'.

b) EXTRACTS OF ANNUAL RETURN & OTHER DISCLOSURES:

The extract of the Annual Return in form no. MGT 9 as per Section 134 (3) (a) of theAct read with Rule 8 of Companies (Accounts) Rules 2014 and Rule 12 of Companies(Management and Administration) Rules 2014 is annexed to this report as ‘AnnexureII'.

c) REMUNERATION POLICY AND INFORMATION REGARDING REMUNERATION:

Particulars of the Company's Remuneration Policy and information pursuant to Rule 5 (1)of the Companies

(Appointment & Remuneration of Managerial Personnel) Rules 2014 are annexed tothis report as ‘Annexure III'.

d) PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:

During the year under review your Company has not directly or indirectly

a) given any loan to any person or other body corporate other than usual advancesenvisaged in a contract for supply of

materials or equipment or job work if any;

b) given any guarantee or provided security in connection with a loan to any other bodycorporate or person; and

c) acquired by way of subscription purchase or otherwise the securities of any otherbody corporate.

e) RELATED PARTY TRANSACTIONS:

During the year under review all the Related Party Transactions were in the ordinarycourse of business and on an arm's length basis. Those transactions were placed before theAudit Committee of Directors for prior approval in the form of omnibus approval asprovided in SEBI (LODR) Regulations.

The estimated transactions with M/s. Anshul Life Sciences a related party werematerial related party transactions as per Regulation 23 of the SEBI (LODR) Regulationsbut in the ordinary course of business and on an arm's length basis as per Section 188 (1)of the Act. Requisite approval of the shareholders was obtained at the 49th Annual GeneralMeeting of the Company held on 21st September 2015 for a period of three years from 01stOctober 2015 to 30th September 2018. Details relating to these transactions have beengiven in 'Annexure IV' to this report in the prescribed form AOC 2 pursuant toclause (h) of sub-section (3) of Section 134 of the Act read with Rule 8 (2) of theCompanies (Accounts) Rules 2014. However considering the turnover of the Company and asper the criteria laid down under Regulation 23 of the SEBI (LODR) Regulations thetransactions during the period were not material.

During the year the Company had entered into transactions with TML Industries Limited(TML) a related party. The said transactions were not material and the amount did notexceed the sums prescribed under the applicable rules and the same were approved by theAudit Committee as well as the Board of Directors of the Company as required underSection 188 (1) of the Act and the Companies (Meetings of the Board and its Powers) Rules2014 and SEBI (LODR) Regulations.

The policy on materiality of related party transactions etc. as approved by the Boardis placed on the Company's website

on the link: http://www.transpek.com/pdf/policy-on-materiality-of-events.pdf.

Your Directors draw attention of the members to Note no.42 to the financial statementwhich sets out related party disclosures.

f) RISK MANAGEMENT:

The Company has formulated a policy to identify and evaluate business risks andopportunities in compliance with the provisions of Section 134 (3) (n) of the Act. Thispolicy framework ensures transparency minimizes adverse impact on the business objectivesand enhances the Company's competitive advantage.

On the basis of ISO: 31000 standard the Company has adopted the Risk ManagementProcedures and has also put a

mechanism in place for managing risk factors in technical and commercial areas.

The Company has voluntarily constituted a Risk Management Committee comprising thefollowing Directors and a

Senior Executive to monitor and review the Risk Management Plan of the Company thoughRegulation 21 of the SEBI

(LODR) Regulations is not applicable:

1. Shri Bimal V. Mehta : Managing Director & Chairman of the Committee

2. Shri Ravi A. Shroff : Promoter Director & Member of the Committee

3. Shri R. B. Shetty : Sr. Vice President Technical & Member of the Committee

g) EVALUATION OF THE PERFORMANCE OF THE BOARD COMMITTEES OF DIRECTORS AND INDIVIDUAL

DIRECTORS:

Pursuant to the provisions of Sections 134 and 178 of the Act and Regulation 17 of SEBI(LODR) Regulations the Board has carried out an annual performance evaluation of its ownperformance the directors individually evaluation of the Chairman of the Board as wellas of the working of its Audit Nomination & Remuneration and other Committees of theBoard. The manner in which the evaluation has been carried out has been explained in the‘Corporate Governance Report' which forms a part of this Annual Report.

h) MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

WHICH HAVE OCCURRED BETWEEN THE END OF FINANCIAL YEAR OF THE COMPANY TO WHICH THE

FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

There were no material changes and commitments that have affected the financialposition of the Company which have

occurred between the financial year ended on 31st March 2018 and the report dated 23rdMay 2018.

i) ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

The Company has laid down adequate and effective Internal Financial Controls withreference to financial statements commensurate with its size and nature of businessoperations. During the year such controls were tested and upgraded and no reportablematerial weaknesses in the design or operation were observed. j) LEGAL COMPLIANCE:

The Board has devised proper systems commensurate with the size and operations of theCompany to monitor and ensure compliance of all the applicable laws and the said system isfound adequate and operating effectively. The Company Secretary and the Managing Directorprovide compliance certificate to the Board on a quarterly basis.

k) CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company has been contributing in the development of the surrounding areas sinceits inception. The Company supports and contributes to activities relating to promotion ofeducation sports medical and health care vocational skill development and livelihoodenhancement and programmes and activities relating to environment sustainability etc.During the year 2017-2018 your Company has enhanced its CSR activities to a largercommunity in order to provide maximum benefit to the surrounding villages.

These CSR projects and activities are in compliance with Schedule VII of the Act.

In the field of education your Company continued to impart basic computer literacy tostudents of several primary schools situated in the vicinity of the Company's factorypremises. Your Company has initiated a Special Teaching Programme for students studying in4th 8th Standards on the basis of their level assessment covering 140 students. ThisSpecial Teaching Programme is also extended to include students studying in 9th and 10thstandard covering additional 39 students.

Your Company has continued to provide support to Shroffs Foundation Trust (SFT) inrunning a fully equipped Mobile Medical Unit for providing door step medical services inthe tribal area of Chhotaudepur district. With this initiative the tribal residents ofChhotaudepur have benefited and their several health issues could be attended to andresolved. During the year 8 villages were covered and 1120 patients were examined in amega medical camp.

The Company has been substantially contributing in the upgradation of trainingfacilities at the Industrial Training Institute (ITI) at Padra and also conducted shortterm courses on plumbing masonry and wiring for the inmates of the Vadodara Central Jailand equipped them to earn their livelihoods in a dignified manner after their release fromjail. Vadodara Central Jail association introduced Beauty Parlour Course for femaleinmates to equip them also to earn livelihood in a dignified manner after their releasefrom jail.

Females in nearby villages were given training and skill development for selfemployment such as running Beauty Parlour making home products gift articles etc. Manyfemale members and their families have benefited with improved earning capabilities.

Your Company has continued to spend on rural sanitation and cleanliness. 89 nos. oftoilets were built in the villages and schools in the vicinity of the Company's factorypremises which is supportive of the Government of India's ‘Swachh Bharat Mission'.

During the year under review a new initiative under Swachh Village was undertaken atVillage Khanderaopura of Dabhasa Panchayat having 185 houses. Domestic grey water wastreated through Eco-friendly biofilter method for use in farms vermi-wash vermi-compostand conversion of solid waste into fertilizer. The process was shown to the VillageCommittee which will now continue with guidance and support from the Company's CSR team.

The Company has also achieved silver grade for its CSR initiatives from EcovadisGermany.

A brief outline of the policy and the Annual Report on CSR Activities is annexed tothis report as ‘Annexure V'.

l) PARTICULARS OF EMPLOYEES:

The information required under Section 197 of the Act read with Rule 5 (2) of theCompanies (Appointment and

Remuneration of Managerial Personnel) Rules 2014 is annexed as ‘Annexure VI' andforms part of this report.

m) SECRETARIAL AUDITOR AND SECRETARIAL AUDITOR'S REPORT:

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder theBoard of Directors has appointed Shri Vijay L. Vyas Practising Company Secretary (FCS:1602; CP No. 13175) Vadodara as the Secretarial Auditor of the Company to conductSecretarial Audit for the year ended 31st March 2018. The Secretarial Auditor hassubmitted his Report on Secretarial Audit conducted by him which is annexed to this reportas ‘Annexure VII'. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Shri Dipesh K. Shroff Director of the Company will retire by rotation at the ensuingAnnual General Meeting and being

eligible offers himself for re-appointment. The Directors recommend hisre-appointment.

During the year under review Shri Atul G. Shroff Director of the Company retiredfrom services as Managing Director of the Company at the close of office hours on 30thNovember 2017 on completion of his tenure. The Board of Directors places on record itsdeep sense of appreciation of the yeoman services rendered by him during his associationwith the Company since 1965 and as Managing Director since 1st December 1981. Havingregard to his deep knowledge of the industry and experience in the field the Board ofDirectors had appointed him as an additional Non-Executive Director w.e.f. 1st December2017. The said appointment was approved by the Shareholders on 11th January 2018 bymeans of an Ordinary Resolution passed through Postal Ballot.

Also the Board of Directors has on the recommendations of the Nomination andRemuneration Committee appointed Shri Bimal V. Mehta as the Managing Director of theCompany w.e.f. 1st December 2017. Before his appointment as the Managing Director he wasthe whole-time Director designated as the Executive Director of the Company from 9thApril 2010. His appointment as Managing Director of the Company was also approved by theShareholders on 11th January 2018 by means of a Special Resolution passed through PostalBallot.

Further pursuant to the provisions of Section 203 of the Companies Act 2013 ShriPratik P. Shah was appointed as the Vice

President (Finance) designated as Chief Financial Officer (CFO) of the Company w.e.f.1st June 2017.

9. TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT SET UPBY GOVERNMENT OF INDIA:

During the year under review your Company has transferred equity shares of theshareholders of the Company whose dividend had been lying unclaimed with the Company for aperiod of seven consecutive years pursuant to the introduction of Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 and itssubsequent amendments by the Ministry of Corporate Affairs Government of India.

The list of these shareholders has been uploaded on the Company's websitehttp://www.transpek.com/unpaid_data.htm

10. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements under Section 134 (3) (c) of the Act with respect toDirectors' Responsibility Statement the

Directors state that:

a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) The Directors had selected such accounting policies and applied them consistentlyand made judgements 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 had 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 had prepared the annual accounts on a going concern basis; e) TheDirectors had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and

f) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

11. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under sub-section (6)of Section 149 the Act as well as under Regulation 25 of SEBI

(LODR) Regulations.

12. CORPORATE GOVERNANCE:

A separate report on Corporate Governance as required under Regulation 34 of the SEBI(LODR) Regulations 2015 is included in this Report along with a certificate of theAuditor confirming its compliance with the conditions of Corporate Governance stipulatedunder the said Regulation.

13. AUDITORS AND AUDITORS' REPORT:

a) STATUTORY AUDITORS:

The members of the Company had at their 49th Annual General Meeting held on 21stSeptember 2015 appointed M/s. CNK & Associates LLP Chartered AccountantsVadodara as Statutory Auditors of the Company for a period of five years i.e. from theconclusion of the 49th Annual General Meeting upto the conclusion of the 54th AnnualGeneral Meeting as prescribed under Section 139 (2) of the Act and relevant rules framedthereunder subject to their appointment being ratified every year by the members of theCompany.

Accordingly M/s. CNK & Associates LLP Chartered Accountants Vadodara have givena letter to the Company certifying that their appointment as Auditors would be inconformity with the limits specified in Section 139 (2) of the Act for ratifying theirappointment as Statutory Auditors for the financial year 2018-2019.

Further as per the amendment to section 139 of the Companies Act 2013 by theCompanies (Amendment) Act 2017 effective from 07th May 2018 as notified by MCAnotification of the said date the requirement of ratification of the appointment ofauditors by the shareholders has been dispensed with and therefore the Company is notrequired to seek ratification by the members and accordingly a resolution is beingproposed at the ensuing Annual General Meeting for the purpose.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.

b) COST AUDIT COMPLIANCE:

The Board has re-appointed M/s. Y.S. Thakar & Co. Cost Accountants as the CostAuditors for conducting cost audit of

cost records of the Company for the Financial Year 2018-2019.

Pursuant to Section 148 of the Companies Act 2013 and the Companies (Cost Records andAudit) Rules 2014 Cost Audit Report for the financial year ended 31st March 2017 wassubmitted to the Central Government on 4th September 2017. Necessary resolution forapproval of their remuneration is being proposed at the ensuing Annual General Meeting.

14. DISCLOSURES:

a) AUDIT COMMITTEE:

Details of the composition of the Audit Committee of Directors of the Company have beenmentioned in the Corporate

Governance Report.

During the year under review there were no such instances wherein the Board ofDirectors of the Company did not accept the recommendations of the Audit Committee.

More details about all the Committees of Directors are given in the CorporateGovernance Report.

b) MEETINGS OF THE BOARD:

During the year under review 5 (five) Board meetings were held. For further detailsplease refer to the Report on Corporate Governance. c) VIGIL MECHANISM:

The Company has a Whistle Blower Policy to report genuine concerns or grievance detailsof which have been given in the Corporate Governance Report. The Whistle Blower Policy hasbeen posted on the website of the Company and can be accessed at linkhttp://www.transpek.com/pdf/whistle-blower-policy.pdf.

15. CHANGE IN THE NATURE OF BUSINESS:

During the year under review there was no change in the nature of the business of theCompany.

16. FIXED DEPOSITS:

During the year under review your Company has accepted deposits amounting toRs.168978000/- (includes new Deposits and Renewals during the FY 2017-2018) only fromthe shareholders. The deposits that remained unpaid or unclaimed as at 31st March 2018amount to Rs.3712000/-. The Company has sent written reminders to the Depositors fortheir appropriate action in this regard.

The Deposits and Interest which remained unclaimed for last seven years have beentransferred to the Investor Education and Protection Fund as required under the Act.

During the year there has been no default in repayment of deposits or payment ofinterest thereon. Also during the year there were no deposits accepted by the Companywhich did not comply with the requirements of Chapter V of the Act.

17. STOCK EXCHANGE:

The Company's equity shares are listed on the BSE Limited and the Listing Fees of theCompany for the Financial Year 2017-

2018 have been paid. The address of the said Exchange is as under:

BSE Limited:

Phiroze Jeejeebhoy Towers

Dalal Street Fort Mumbai 400 001.

Scrip ID: ‘transpek'; Scrip Code: 506687; Group/Index: ‘XC'; ISIN:INE687A01016

18. HEALTH CARE AND WELFARE OF EMPLOYEES:

Employees' Welfare Schemes such as subsidized food in the Company's canteen at thefactory medical facilities Group Mediclaim Insurance and Group Accident Insurancecontinued to be maintained by the Company. Sports and Cultural activities were also givendue importance. The Company has also set up a place for doing Yoga playing Table Tennisand a Gym for the Employees. Employees are also given core long-term health offering whichincludes making available preventive medical examinations to cover fields of prevention ofmental health fitness and nutrition. Reports show that the examinations contribute toimprovement in fitness blood pressure nutrition habits and nicotine abstinence.Employees are also offered training programmes and workshops on health-orientedleadership. Monetary support is also given to employees who wish to acquire highereducational qualifications.

Merit awards are also given to employees' children. The Company promotes innovationrewards performance and provides opportunities for people to grow. In addition yourCompany has put in place a range of initiatives for attracting and retaining a highperformance work force. The Company also rewards exemplary performance of employees.

19. DISCLOSURE UNDER THE SEXUAL HARASSMENT AT WORK-PLACE (PREVENTION PROHIBITION ANDREDRESSAL)

ACT 2013:

The Company has employed a number of women in various cadres. It has put in place aSexual Harassment Policy in line with the requirements of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013. An internal committee ofwomen employees is also set up to redress complaints received which are monitored by womensupervisors who are fully aware of the Policy and redressal mechanism. All employees ofthe Company those of contractors as well as trainees are covered under this Policy. Nocomplaint was received from any employee during the financial year 2017-2018 and nocomplaint is outstanding as on 31st March 2018 for redressal.

20. MANAGEMENT DISCUSSION AND ANALYSIS:

The report on Management Discussion and Analysis dealing with the Operations BusinessPerformance etc. is given

separately and it forms part of this Annual Report.

ACKNOWLEDGEMENTS

Your Directors wish to acknowledge the co-operation and assistance extended to theCompany by the Company's Bankers and State Government agencies. Your Directors also wishto place on record their appreciation of the contribution made by employees at all levelstowards the growth of the Company. Your Directors also acknowledge with gratitude thesupport of the shareholders investors customers and suppliers for the faith reposed inthe Company and its management.

BY ORDER OF THE BOARD
PLACE: VADODARA A. C. SHROFF
DATED: 23rd May 2018 CHAIRMAN