Vikas EcoTech Limited
Your Directors have pleasure in presenting the 33rd Annual Report on thebusiness and operations of the Company and
Audited Statement of Accounts for the year ended 31st March 2018.
1. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) of the Companies Act 2013 the Directors to the best oftheir knowledge hereby state and confirm that:
a) The Financial Statements of the Company - comprising of the Balance Sheet as at 31stMarch 2018 and the Statement of Profit & Loss for the year ended on that date havebeen prepared on a going concern basis;
b) i n the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
c) t he directors had 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 of the company for that period;
d) the directors had 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;
e) the internal financial controls to be followed by the company were laid down andsuch internal financial controls were 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.
2. FINANCIAL PERFORMANCE
The standalone financial statements for the financial year ended 31st March2018 forming part of this Annual Report have been prepared in accordance with the IndianAccounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs. On aconsolidated basis our sales declined to ' 367.33 Crores for the current year as against' 387.64 crores in the previous year.
Our net profits increased to ' 28.60 Crores for the current year as against ' 23.19Crores in the previous year.
Key highlights of financial performance of your Company for the financial year 2017-18are provided below:
( ' in Lac)
|Particulars ||2017-2018 ||2016-2017 |
|Net Sales /Income from Business Operations ||36733.59 ||38764.57 |
|Other Income ||496.13 ||166.93 |
|Total Income ||37229.72 ||38931.50 |
|Gross Expenditure ||31041.13 ||31999.99 |
|Less Interest ||1443.04 ||1300.17 |
|Profit before Depreciation ||4745.55 ||5631.34 |
|Less Depreciation ||383.91 ||426.67 |
|Profit after depreciation and Interest/Net Profit Before Tax ||4361.64 ||5204.67 |
|Less: Extra-ordinary Item ||--- ||163.11 |
|Less Current Tax ||1453.03 ||1450.00 |
|Less Previous year adjustment of Income Tax ||13.29 ||0.00 |
|Less Deferred Tax ||34.72 ||(196.32) |
|Mat Credit Availed ||0.00 ||0.00 |
|Net Profit after Tax ||2860.60 ||2319.90 |
|Profit for the Period ||2860.60 ||2319.90 |
|Less Proposed Dividend ||139.95 ||139.95 |
|Less Provision for Dividend Distribution Tax ||29.28 ||29.28 |
|Net Profit after dividend and Tax ||2691.37 ||2147.80 |
|Earnings per Share (Basic) ||1.02 ||0.91 |
|Earnings per Share (Diluted) ||1.02 ||0.91 |
There have been no material changes and commitments that have occurred after close ofthe financial year till the date of this report which affect the financial position ofthe Company. Based on the internal financial control framework and compliance systemsestablished in the Company the work performed by Statutory Internal SecretarialAuditors and reviews performed by the management and/or the Audit Committee of the Boardyour Board is of the opinion that the Company's internal financial controls were adequateand working effectively during financial year 2017-18.
Your Directors recommend payment of Equity Dividend of ' 0.05 per equity share of ' 1/-each and such Equity Dividend upon approval by the Members of the Company at the ensuingAnnual General Meeting shall be payable on the outstanding equity capital as at theRecord Date i.e. 21st September 2018. The outflow on account of equitydividend and the tax on such dividend distribution based on current paid-up capital ofthe Company would aggregate to ' 16923411/-.
Transfer to Investor Education and Protection Fund Authority
During the period under review the company has not required to transfer any amount orshares in IEPF authority.
3. STATE OF AFFAIRS OF THE COMPANY
During fiscal 2018 your Company witnessed yet another strong year of performancedespite the uncertain macro environment reflecting the inherent strength of our businessportfolio and continued to perform well in domestic markets while expanding ourinternational reach.
During the year under review:
The company got Food grade approval for its product TINMATE (OrganotinStabiliser) from FICCI Research and Analysis Centre.
The company bagged a prestigious order from Petrochemical Giant"MEXICHEM and tries to expand itself to the Latin American Countries.
The company commenced trial runs for added capacity of 10000 MT of specialitychemicals in plant at Rajasthan.
The Company introduced new range of Eco-friendly Calcium Zinc heat stabilizerfor PVC Compounds.
In the fourth quarter of FY18 the Directorate of Revenue Intelligence conducted adetailed survey of the company's international trade operations including import andexport consignments. These surveys were carried out at the ports as well as office andfactory premises. Almost 70-80 per cent of the company's raw materials are imported whileexports constitute nearly 50 per cent of the total revenue. As a result the companyexperienced a significant disruption of its day-to-day operations.
The Manufacturing plants of the Company are located in the state of J&K Rajasthanand Noida SEZ. This has been done keeping in mind the strategic and locational advantageswith regard to availability of raw material and potential for finished goods.
As a move forward and with the help of information technology your Company is planningto introduce new products in market. The Company is scheduling manufacturing unit for itskey raw material 2-EHTG at Gujarat Industrial Development Corporation (A Government ofGujarat undertaking) at Dehej Gujarat to cater the market of Western and Southern Indiaand also for exports its products like Methyle Tin Mercaptile and Epoxidised Soya BeanOil.
During the period under review:-
To unlock the true value of the business and to achieve prosperity in each segment ofthe business the company had decided to demerge its business into 2 separate entities:High Value Groups and High Volume Groups. Consequently Vikas Ecotech would house the HighValue Group i.e. the specialty chemicals and compounds business while the resultantcompany Vikas Multicorp Ltd. would contain the recycled compounds and trading businesseswhich traditionally have lower margins but higher revenues.
The final hearing for the above scheme of arrangement at the NCLT is scheduled for 6thSeptember 2018. Once the NCLT approval is granted shareholders of Vikas Ecotech shallreceive additional shares of Vikas Multicorp in the ratio of 1:1 at no extra cost andVikas Multicorp would be listed as an independent entity.
Management Discussion and Analysis Report
In terms of regulation 34 of the Listing Regulations Management Discussion and Analysisreport ("MD&A Report"). The MD&A Report capturing your Company'sperformance industry trends and other material changes with respect to your Companies andits subsidiaries wherever applicable are presented in this Annual Report. The MD&AReport provides a consolidated perspective of economic social and environmental aspectsmaterial to your Company's strategy and its ability to create and sustain value to yourCompany's key stakeholders and includes aspects of reporting as required.
SUBSIDIARY COMPANIES JOINT VENTURE AND CONSOLIDATED FINANCIAL STATEMENTS
During the period under review the Company does not have any Subsidiary.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has duly constituted a Committee under the nomenclature of Corporate SocialResponsibility Committee consisting of majority of non-executive independent Directors.The Committee has developed Corporate Social Responsibility Policy of the Company and ismonitoring implementation of the same. The CSR Committee reports to the Board. The saidCSR policy of the Company is also posted on the Website of the Company atwww.vikasecotech.com
During the year under review the Company undertook CSR initiative for cause ofEducation through the "Maharaja Agrasen Technical Education Society (Regd.)amounting to ' 2100000 & St. Kabir Educational society ' 3500000/- were allocatedand spent for the said cause of promoting education being one of the areas Company ispresently focusing.
The Annual Report on Company's CSR activities is attached to this report.
4. GOVERNANCE AND ETHICS
Your Company believes in adopting best practices of corporate governance. Corporategovernance principles are enshrined in the Spirit of VEL which form the core values ofVEL. These guiding principles are also articulated through the Company's code of conductCorporate Governance guidelines charter of various sub-committees and disclosure policy.
Your Company has been constantly reassessing and benchmarking itself withwell-established Corporate Governance practices besides strictly complying with therequirements of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ('Listing Regulations') applicable provisions ofCompanies Act 2013 and applicable Secretarial Standards issued by the Institute ofCompany Secretaries of India.
As per regulation 34 of the Listing Regulations a separate section on corporategovernance practices followed by your Company together with a certificate from Shri. AnilKumar Popli Practising Company Secretaries on compliance with corporate governance normsunder the Listing Regulations is provided in this Annual Report.
BOARD OF DIRECTORS
Board's Composition and Independence
Your Company's Board consists of leaders and visionaries who provide strategicdirection and guidance to the organization. As on 31st March 2018 the Boardcomprised Four Executive Directors and Three Non-Executive Independent Directors.
Definition of 'Independence' of Directors is derived from regulation 16 of the ListingRegulations and Section 149(6) of the Companies Act 2013. The Company has receivednecessary declarations from the Independent Directors stating that they meet theprescribed criteria for independence.
Based on the confirmations/disclosures received from the Directors under Section 149(7)of the Companies Act 2013 and on evaluation of the relationships disclosed.
The Independent Directors of your Company in a separate meeting held without presenceof other Directors and management evaluated performance of the Chairman Managing Directorand other Non-Independent Directors along with performance of the Board / Board Committeesbased on various criteria recommended by Nomination & Remuneration Committee. A reporton such evaluation done by Independent Directors was taken on record by the Board andfurther your Board in compliance with requirements of Companies Act 2013 evaluatedperformance of all Independent Directors based on various parameters including attendancecontribution etc.
In compliance with the requirements of Companies Act 2013 and Listing Regulations yourBoard had constituted various Board Committees including Audit Committee Nomination &Remuneration Committee Stakeholders Relationship Committee and Corporate SocialResponsibility Committee. Details of the constitution of these Committees which are inaccordance with regulatory requirements have been uploaded on the website of the Companyviz. www.vikasecotech.com. Details of scope constitution terms of reference number ofmeetings held during the year under review along with attendance of Committee Memberstherein form part of the Corporate Governance Report annexed to this report.
Your Company has adopted an process as a channel for receiving and redressingcomplaints from employees and Directors as per the provisions of Section 177(9) and (10)of the Companies Act 2013 and regulation 22 of the Listing Regulations. Under thispolicy your Company encourages its employees to report any reporting of fraudulentfinancial or other information to the stakeholders and any conduct that results inviolation of the Company's code of business conduct to the management. Further yourCompany has prohibited discrimination retaliation or harassment of any kind against anyemployees who based on the employee's reasonable belief that such conduct or practicehave occurred or are occurring reports that information or participates in theinvestigation. Mechanism followed is appropriately communicated within the Company acrossall levels and has been displayed on the Company's website athttps://www.vikasecotech.com.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTIONPROHIBITION & REDRESSAL) ACT 2013
Your Company has a policy and framework for employees to report sexual harassment casesat workplace and its process ensures complete anonymity and confidentiality ofinformation.
RELATED PARTY TRANSACTIONS
Your Company has historically adopted the practice of undertaking related partytransactions only in the ordinary and normal course of business and at arm's length aspart of its philosophy of adhering to highest ethical standards transparency andaccountability. In line with the provisions of the Companies Act 2013 and the ListingRegulations the Board has approved a policy on related party transactions. An abridgedpolicy on related party transactions has been placed on the Company's websitehttps://www.vikasecotech.com.
All Related Party Transactions are placed on a quarterly basis before the AuditCommittee and before the Board for approval. Prior omnibus approval of the Audit Committeeand the Board is obtained for the transactions which are of a foreseeable and repetitivenature.
The particulars of contracts or arrangements with related parties referred to inSection 188(1) and applicable rules of the Companies Act 2013 in Form AOC-2 is providedas Annexure I to this Report.
5. INTERNAL FINANCIAL CONTROLS AND AUDIT
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Board of your Company has laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and operatingeffectively. Your Company has adopted policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
As per Section 139 of the Companies Act 2013 and based on the recommendations of theAudit Committee and upon review of confirmations of satisfaction of criteria as specifiedin Section 141 of the Companies Act 2013 read with Rule 4 of Companies (Audit &Auditors) Rules 2014 and in accordance with the approval accorded by the Members at the31st Annual General Meeting held on September 30 2016 M/s KSMC &Associates Chartered Accountants New Delhi having Firm Registration No. 003565Nappointed as Statutory auditor for a period of five years.
There are no qualifications reservations or adverse remarks made by KSMC &ASSOCIATES Statutory Auditors in their report for the financial year ended March 312018. Pursuant to provisions of Section 143(12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the Audit Committee during the yearunder review.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Anil Kumar Popli AAA & Associates a firm of Company Secretaries inPractice to conduct Secretarial Audit of the Company. The Report of the Secretarial Auditin Form MR-3 for the financial year ended March 31 2018 is enclosed as Annexure III tothis Report. There are no qualifications reservations or adverse remarks made by theSecretarial Auditor in his report.
Additionally in compliance with the requirements of Section 148 of the Companies Act2013 read with Companies (Cost Records and Audit) Rules 2014 as amended M/s JSN &Co. Cost Accountants was engaged to carry out Audit of Cost Records of the Company duringFinancial Year 2017-18. Requisite proposal seeking ratification of remuneration payable tothe Cost Auditor for FY 2017-18 by the Members as per Rule 14 of Companies (Audit andAuditors) Rules 2014 forms part of the Notice of ensuing Annual General Meeting.
6. SOCIAL RESPONSIBILITY AND SUSTAINABILITY
Corporate Social Responsibility
Your Company is at the forefront of Corporate Social Responsibility (CSR) andsustainability initiatives and practices. Your Company believes in making lasting impacttowards creating a just equitable humane and sustainable society.
As per the provisions of the Companies Act 2013 companies having net worth of ' 500crore or more or turnover of ' 1000 crore or more or net profit of ' 5 Crores or moreduring the immediately preceding financial year are required to constitute a CorporateSocial Responsibility (CSR) committee of the Board comprising three or more directors atleast one of whom should be an independent director and such company shall spend at least2% of the average net profits of the company's three immediately preceding financial yearstowards CSR activities. Accordingly your Company has spent ' 5600000 towards CSRactivities during the financial year 2017-18. The contents of the CSR policy and CSRReport for the year 2017-18 is attached as Annexure IV to this Report. Contents of the CSRpolicy is also available on the Company's website at https://www.vikasecotech.com. Theterms of reference of CSR committee framed in accordance with Section 135 of theCompanies Act 2013.
Particulars Regarding Conservation of Energy and Research and Development andTechnology Absorption
Details of steps taken by your Company to conserve energy through its"Sustainability initiatives Research and Development and Technology Absorptionhave been disclosed as part of the MD&A Report.
7. OTHER DISCLOSURES
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the financial year to which the financialstatements relate and the date of this report.
Details of Significant and Material Orders Passed by the regulators/Courts/TribunalsImpacting the Going Concern Status and the Company's Operations in Future
There are no significant and material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and its future operations.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL INCLUDING THOSE WHO WERE APPOINTED ORHAVE RESIGNED DURING THE YEAR
Your Board currently comprises of 8 Directors including 4 Independent Directors 4Executive Director. Independent Directors provide their declarations both at the time ofappointment and annually confirming that they meet the criteria of independence asprescribed under Companies Act 2013 and Listing Regulations. During FY 2017-18 your Boardmet 5 (Five) times details of which are available in Corporate Governance Report annexedto this report.
Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri. Vikas GargManaging Director is due to retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment. Your Board recommends hisre-appointment.
The details of Director being recommended for re-appointment as required under the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are contained in theaccompanying Notice convening the ensuing Annual General Meeting of the Company.
During the period under review Mrs. Anjavi pandya has resigned as CFO and Mr. SumitGarg was appointed as Chief Finance Officer of the Company w.e.f. 11th August2017.
During the period under review Mr. Purushottam Dass Bhoot Mr. Jagdish Capoor Mr.Pradip Kumar Banerji has resigned from Board and Mr. Kapil Gupta and Mr. Devender KumarGarg was appointed on Board. Further on 14.02.2018 Mr. Kapil Gupta has resigned asIndependent Director of the Company
After close of the financial year Mr. Madan Mohan Mandal was appointed as IndependentDirector w.e.f 14.05.2018 and Mr. Amit Dhuria as CFO w.e.f. 30.05.2018.
In compliance with the requirements of Section 203 of the Companies Act 2013 Mr.Vikas Garg Managing Director Mr. Vivek Garg Whole-time Director Mr. Ashutosh KumarVerma Whole-time Director & CEO Mr. Amit Dhuria Chief Finance Officer and MrSiddharth Agrawal Compliance Officer & Company Secretary of the Company continue asKey Managerial Personnel of the Company.
During the year under review Brickwork Ratings India Private Limited A SEBI RBI &NSIC registered credit rating agency in India has upgraded the company's rating to BBB+from BBB- for Long-term bank facilities The upgraded ratings showcase the company'simproved and strong fundamentals across finance operations and governance parameters. Thecompany has been continuously working to ensure better performance in terms of financialparameters as also garnering higher market share.
Dun & Bradstreet a US based information and business rating MNC has upgraded thecompany's rating to 5A2 from the previous 4A3 due to improved performance and businessmetrics.
Crisil a S& P Global Company has rated the bank facilities of Company has assignedCRISIL BBB for company's Long-Term Borrowings & CRISIL A3+ for the Short-TermBorrowings with stable outlook.
The ratings indicate company's comfortable financial risk profile and are in line withCompany's strategy of profitable growth and improvement in quality of its financialparameters through better operational performance. The rating reinforces the company'spractice for financial transparency and reporting.
The new ratings will help all stakeholders especially financial institutions appreciatethe bettered credit quality of the company. In turn the company going forward will beable to access debt and capital at more efficient terms for its various growthinitiatives.
LISTING OF SECURITIES
The shares of the Company are listed on the National Stock Exchange of India Limited(NSE) and BSE Limited (BSE). CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
Energy Conservation measures taken Steps taken for utilizing alternate source ofenergy Capital investment on energy conservation equipment:
The Company has commissioned 300 KW of solar panels at Rajasthan and also installed acentralized power house on a single High Tension line in place of separate connections forindividual unit at its manufacturing facility in Rajasthan . Both these measures willimprove efficiency and generate cost savings for the company.
The company has commissioned three dry cutting machines. This will help in generationof cost savings and water conservation for the company and the society.
These are specifically designed panels ensuring optimum use of the electricity beingconsumed at our factories.
The power factor calculations on our electricity consumption calculations show that VELis nearing perfect results in getting the best output from the electrical energy consumedin the plants.
VEL closely monitors the throughput of all the machines to ensure that every part ofthe electrical energy consumed is justified with nearly nil wastage of energy.
Proper production planning also contributes positively to avoid wastage of electricalenergy & optimum outputs.
Water conservation Water extraction storage desalinization (softening hard waterfiltration for further use in process) also involve a considerable consumptions ofelectrical energy.
VEL plants have the rainwater harvesting systems in place which not only help conservewater but also the electrical energy involved in extraction of the volume of water thuscollected.
The Company shall continue its endeavor to improve energy conservation and utilizationTECHNOLOGY ABSORPTION
1) Efforts made in technology absorption & Benefits derived:
Major initiatives are being taken to upgrade the various processes by making use oflatest and better techniques. Efforts are being made to make best use of availableinfrastructure and at the same time importing new technology to bring out efficiency andeconomy. As a step towards it the Company has procured highly sophisticated machinery forits newly set up plant at Shahjahanpur Rajasthan for commencing production of anadditional range of Polymer Additives.
Research & Development (R & D)
a) Specific Areas in which R & D carried out by the Company: During the year theCompany has inclined its efforts in the development of its production efficiency byimproving its methods and technology.
b) Benefits derived as a result of above R & D: Increased in market share.
c) Future Plan of Action/Expansions Plans: As the relevant industry is gearing up tocater to the growing demand Vikas EcoTech Limited is all set to expand their business ina big way in the coming years. The company is also progressive in installation ofadditional line to increase the production of Polymer and Polyester Compound at itsexisting plant located at Shahjahanpur Alwar Rajasthan.
With a host of expansion plans the Company is confident of achieving new heights inthe coming years.
2) Imported Technology (imported during last 3 years reckoned from beginning of thefinancial year)
3) Expenditure incurred on Research and Development (R&D)
The Company has incurred a total expenditure of ' 4.32 lacs (including capital andrevenue expenses) towards Research and Development.
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the Financial Year 2017-18 the Company had foreign exchange earnings of '1863076248 and outgo of ' 594971924.
Extract of Annual Return
Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act 2013 extract ofthe Annual Return as on March 31 2018 in form MGT-9 is enclosed as Annexure V to thisreport.
Acknowledgements and Appreciation
Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners/ associates financial institutions and Central and StateGovernments for their consistent support and encouragement to the Company. I am sure youwill join our Directors in conveying our sincere appreciation to all employees of theCompany and its subsidiaries and associates for their hard work and commitment. Theirdedication and competence has ensured that the Company continues to be a significant andleading player in the industry.
|For and on behalf of Board || |
|For Vikas EcoTech Limited || |
|Sumer Chand Tayal ||Vikas Garg |
|(Director) ||Managing Director |
|DIN: 00255661 ||DIN: 00255413 |
|Place: New Delhi || |
|Date: 19.07.2018 || |