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Directors Report of Dhabriya Polywood Ltd.

Mar 31, 2015

To the Members of

DHABRIYA POLYWOOD LIMITED

The Directors have pleasure to present their 23rd Annual Report together with the Audited Financial Statements for the year ended 31st March 2015. The Management Discussion and Analysis is also included in this Report.

CORPORATE OVERVIEW

Late Prof S.S. Dhabriya who was an environmentalist and a remote sensing expert had contributed a lot towards saving nature. His motto of life was to save trees. He has been the inspiration for all of us to work towards the betterment of the human race by saving natural resources. His values have been the motto of our lives and we have reached so far following his foot prints. Dhabriya Polywood Limited (formerly known as Dhabriya Agglomerates Limited) was incorporated under the erstwhile Companies Act, 1956 in the year 1992.

The Company started commercial production of polymer based wood substitute products i.e. Rigid PVC Profiles, with the brand name "Polywood" which are used for fabrication of Doors, Windows, Partitions, False Ceiling, Wall Paneling and many more furnishing & interior applications. In the last 22 years, "Polywood" has been an undeniable part of the "Save Trees" campaign by bringing in the minds of people the use of PVC Profiles which, was only confined to European Countries earlier. The Company has also taken the credit of launching for the first time in India some exquisite products like PVC Folding Doors, PVC Designer Doors, PVC Fencing, Wood Plastic Composite Panels.

1. FINANCIAL PERFORMANCE (In Lakhs)

Consolidated Particulars 2014-15 2013-14

Gross Income 7756.16 7316.55

EBIDTA 1048.69 800.50

Finance Cost 296.69 250.48

Depreciation 232.51 117.77

Net Profit Before Tax 519.49 432.25

Provision for Tax 179.14 147.13

Net Profit After Tax 339.7 284.74

Paticular Standalone 2014-15 2013-14

Gross Income 7264.83 7012.51

EBIDTA 953.17 737.10

Finance Cost 293.14 243.35

Depreciation 229.84 116.97

Net Profit Before Tax 430.19 376.78

Provision for Tax 151.69 129.92

Net Profit After Tax 278.50 246.86

2. DIVIDEND AND RESERVES

During the Year Company has earned profit and your directors have decided to plough back the profit into the business therefore no dividend is recommend for the financial year ended 31st March, 2015. During the year under review balance of profits after tax was transferred to General Reserve.

3. SHARE CAPITAL

The authorize and paid up Equity Share Capital as on March 31, 2015 stood at Rs. 1000.00 Lakhs and 820.00 Lakhs. During the year Company increased its authorize Share Capital from 300.00 Lakhs to 1000.00 Lakhs.

Your Company increased its paid up Share Capital from Rs. 300.00 Lakhs to Rs. 820.00Lakhsby way of 30 Lakh Bonus Share amounting of Rs. 300.00 Lakhs and 22 Lakh Equity Shares through Initial Public Offer (IPO) amounting of Rs. 330.00Lakhs at a face value of Rs. 10/- each and a premium of Rs. 5/- each. The aforesaid Equity Shares is listed on BSE-SME Platform.

During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2015, none of the directors of the Company hold instruments convertible into Equity Shares of the Company.

11. FINANCE & ACCOUNTS

Your Company prepares its Financial Statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The Financial Statements have been prepared on historical cost basis. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner. The form and substance of transactions and reasonably present the Company's state of affairs, profits and cash flows for the year ended March 31, 2015.

There is the no audit qualification in the standalone or in the consolidated financial statements by the statutory auditors for the year under review.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loan, Guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are given in the notes to Financial Statements.

13. ACCEPTENCE OF DEPOSIT

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

14. PERFORMANCE OF SUBSIDIARY COMPANIES

Company is having only one Subsidiary Company namely Polywood Green Building Systems Private Limited. The Gross Revenue of the Subsidiary Company stood at Rs.1926.05 Lakhs compared with Rs. 971.27 Lakhs in the Previous Year. The Net Profit after tax for the Year stood at Rs. 61.84 Lakhs against Rs. 38.26 Lakhs reported in the Previous Year.

15. AWARDS AND RECOGNITIONS

During the year your Company has received Udyamita Gaurav Samman for Extra Ordinary Contribution for Productivity and Employment Generation by Laghu Udyog Bharti in September 2014 and Order of Merit Award 2015 for Saving of Trees by the Skoch Achievers Award Committee in March, 2015

16. CONSOLIDATED ACCOUNTS

The consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standards viz. AS-21 and AS-23 issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements together with Auditors' Report thereon forms part of the Annual Report.

17. CORPORATE GOVERNANCE

As required by Clause 52 of the SME Listing Agreement with the Stock Exchanges a separate section on Corporate Governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report.

18. EXTRACTS OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT 9 as a part of this Annual Report as ANNEXURE 'C'.

19. DIRECTORS

The Board of Directors had on the recommendation of Remuneration & Nomination Committee Appointed Mr. Digvijay Dhabriya as Chairman and Managing Director of the Company for a period of five years effective from 01.09.2014 to 31.08.2019.

The Board of Directors had on the recommendation of Remuneration & Nomination Committee Appointed Mr. Mahendra Karnawat, Mr. Shreyansh Dhabriya and Mrs. Anita Dhabriya as whole time Director of the Company for a period of five years effective from 01.09.2014 to 31.08.2019.Mrs. Ratan Devi Dhabriya has resigned from the directorship of the Company w.e.f July 12, 2014.

Also Mr. Hitesh Agrawal and Mr. Sparsh Jain have been appointed as Chief Financial Officer and Company Secretary with effect from 21.08.2014 and 01.09.2014 respectively.

In accordance with the Companies Act, 2013, Mr. Mahendra Karnawat and Mr. Shreyansh Dhabriya retire by rotation and being eligible offers himself for reappointment. During the year under review Mr. Sharad Kankaria, Mr. Padam Kumar Jain, Mr. Anil Upadhyay and Mr. Shiv Shanker were appointed as Independent Directors of the Company with effect from01.09.2014 for a period of five consecutive years. All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of Companies Act, 2013 and Clause 52 of the SME Listing Agreement.

20. DECLARATION ON INDEPENDENT DIRECTORS

The Board of Directors declares that the Independent Directors Mr. Sharad Kankaria,

Mr. Padam Kumar Jain, Mr. Anil Upadhyay and Mr. Shiv Shanker are:

(a) in the opinion of the Board, are persons of integrity and possesses relevant expertise and experience;

(b) (i) who were or were not a promoter of the Company or its holding, subsidiary or associate Company

(ii) who are not related to promoters or directors in the Company, its holding, subsidiary or associate Company;

(c) Who have or had no pecuniary relationship with the Company, its holding, subsidiary or associate Company or their promoters or directors, during the two immediately preceding financial years or during the current financial year;

(d) None of whose relatives has or had pecuniary relationship or transaction with the Company, its holding, subsidiary or associate Company or their promoters, or directors, amounting to two percent or more of its gross turnover of total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

(e) Who, either himself nor any of his relatives -

i) holds or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial year immediately preceding the financial year in which he is proposed to be appointed;

ii) is or has been an employee or propriety or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of- - a firm of auditors or Company secretaries in practice or cost auditors or the Company or its holding, subsidiary or associate Company; or - any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten percent or more of the gross turnover of such firm;

iii) holds together with his relative two per cent, or more of the total voting power of the Company; or

iv) is a Chief Executive or director, by whatever name called, of any nonprofit organization that receives twenty-five percent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per cent or more of the total voting power of the Company; or

v) Who possesses such other qualification as may be prescribed.

21. KEY MANAGERIAL PERSONNEL

During the year under review, the Company has appointed following persons as Key Managerial Personnel:

Name of the Person Designation

1. Mr. Digvijay Chairman & Dhabriya Managing Director

2. Mr. Mahendra Whole Time Karnawat Director

3. Mrs. Anita Whole Time Dhabriya Director

4. Mr. Shreyansh Whole Time Dhabriya Director

5. Mr. Hitesh Chief Financial Agrawal Officer

6. Mr. Sparsh Jain Company Secretary

22. BOARD EVALUATION

Pursuant to the provisions of Companies Act, 2013 and Clause 52 of the SME Listing Agreement, a structured questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The Performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and the Non- Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

23. NUMBER OF MEETINGS OF THE BOARD

The details of the number of meetings of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance Report.

24. LISTING ON STOCK EXCHANGES

Your Company's shares got listed on the Bombay Stock Exchange-SME Platform on 17th October 2014. During the year under review, your Company's share price had touched Rs. 42.90 per equity share which clearly show that the markets have recognized its performance. The Share price quoted at BSE-SME at the closing on 31.03.2015 which was Rs. 29. The strength of shareholders has also considerably increased. The Share price quoted at BSE-SME at its listing on 17.10.2014was Rs.16.75 which clearly shows that the investors have built a greater confidence in the Company and its performance.

25. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has put in place a mechanism of reporting illegal or unethical behavior. Employees are free to report violations of laws, rules, regulations or unethical conduct to their immediate supervisor/notified persons. The reports received from any employee will be reviewed by the audit committee. It is affirmed that no person has been denied access to the audit committee in this respect. The Directors and senior management are to maintain confidentiality of such reporting and ensure that the whistle blowers are not subjected to any discriminatory practice. The Vigil Mechanism/Whistle blower policy has been posted on the website of the Company (www.polywood.org).

26. RELATED PARTY TRANSACTIONS

All transactions entered with the Related Parties as defined under the Companies Act, 2013 and clause 52 of the SME listing agreement during the financial year were in the ordinary course of business and on arm's length basis and do not attract the provisions of section 188 of the Companies Act, 2013. Thus disclosure in form AOC- 2 is not required.

Related party transactions have been disclosed under the Note 35 of significant accounting policies and notes forming part of the financial statements in accordance with "Accounting Standard 18". A statement in summary form of transactions with related parties in the ordinary course of business and arm's length basis is periodically placed before the Audit committee for review and recommendation to the Board for their approval.

None of the transactions with related parties were in conflict with the interest of the Company. All the transactions are in the normal course of business and have no potential conflict with the interest of the Company at large and are carried out on an arm's length basis or fair value.

27. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

Management does not perceive any material changes occurred subsequent to the close of the financial year as on 31.03.2015 before the date of report dated 01st September, 2015 affecting financial position of the Company in any substantial manner.

28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators/courts that would impact the going concern status of the Company and its future operations.

29. DIRECTORS' RESPONSIBILITY STATEMENT

The directors report that:-

i. That in the preparation of the Annual Accounts for the year ended March 31, 2015; the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. And applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

iii. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss account of the Company for that period;

iv. The annual accounts have been prepared on a going concern basis;

v. That the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi. That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30. AUDITORS

The Statutory Auditors of the Company M/s. Narendra Sharma & Co., Chartered Accountants, have audited the Financial Statements of the Company. The Statutory Auditors who were appointed by the members of the Company at the 22ndAnnual General Meeting of the Company held on August 14, 2014 needs ratification by the members of the Company for the financial year 2015-16.

The Company has received consent letter from M/s Narendra Sharma & Co., Chartered Accountants, to the effect that their ratification of appointment, if made, would be within the prescribed limits under Section 139 of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of Section 141 of the Companies Act 2013.

31. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of Companies Act, 2013 and rules made there under, the Company has appointed M/s M Sancheti & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit is enclosed as ANNEXURE 'D' to this report. No adverse comment have been made in the said report by the Practicing Company Secretary.

32. RISK MANAGEMENT

In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Company's risk management is embedded in the business processes. Your Company has identified the following risks:

Key Risk Impact to Dhabriya Polywood Limited (formerly known as Dhabriya Agglomerates Limited)

Commodity Price Risk of price fluctuation on basic Risk raw materials like PVC & uPVC as well as finished goods used in the process of manufacturing.

Interest Rate Any increase in interest rate can Risk affect the finance cost.

Human Resources Your Company's ability to deliver Risk value is dependent on its ability to attract, retain and nurture talent. Attrition and non-availability of the required talent resource can affect the overall performance of the Company.

Competition Your Company is always exposed Risk to competition Risk from Asian Countries like China and other African Countries. The increase in competition can create pressure on margins, market share etc.

Compliance Any default can attract penal Risk - provisions Increasing regulatory requirements

Industrial Safety, The Plastic industry is labor Employee Health and intensive and are exposed to Safety Risk accidents, health and injury risk due to machinery breakdown, etc.

Mitigation Plans

The Company commands excellent business relationship with the buyers. In case of major fluctuation either upwards or downwards, the matter will be mutually discussed and compensated both ways. Also by focusing on new value added products helps in lowering the impact of price fluctuation in finished goods.

Dependence on debt is very minimum and we have surplus funds with Banks to settle the entire debt in case the need arises.

By continuously benchmarking of the best HR practices across the industry and carrying out necessary improvements to attract and retain the best talent.

By putting in place production incentives on time bound basis and evaluating the performance at each stage of work. Also recruitment is across almost all states of India which helps to mitigate this risk and we do not anticipate any major issue for the coming years.

By continuous efforts to enhance the brand image of the Company by focusing on R&D, quality, Cost, timely delivery and customer service. By introducing new product range commensurate with demands your Company plans to mitigate the risks so involved.

By regularly monitoring and review of changes in regulatory framework. By monitoring of compliance through legal compliance Management tools.

By development and implementation of critical safety standards across the various departments of the factory, establishing training need identification at each level of employee.

33. ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company Policy requires conduct of operations in such a manner, so as to ensure of all concerned, compliances, environmental regulations and preservation of natural resources. In the last 22 years, "Polywood" has been an undeniable part of the "Save Trees" campaign by bringing in the minds of people the use of PVC Profiles which, was only confined to European Countries earlier.

As required by the Sexual Harassment of women at workplace (Prevention, Prohibition & Redressal) Act, 2013 The Company has formulated and implemented an Anti-harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has been employing about ten women employees in various cadres within the factory premises. Internal Complaint Committee are set up at shop floor level to redress complaints received regularly and are monitored by women line supervisors who directly report to the Chairman & Managing Director. All employees (permanent, contractual, temporary, trainees) are covered under the policy. There was no compliant received from any employee during the financial year 2014-15 and hence no complaint is outstanding as on 31.03.2015 for redressel.

34. CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company hereby confirms that the provisions of Section 135(1) of the Companies Act, 2013 and Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is not applicable to our Company for the financial year 2014-15.

35. STATUTORY INFORMATION

Information as per Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in ANNEXURE 'A' forming part of this report.

In Terms of provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company is not having any employee drawing remuneration in excess of the limits set out in the said rules. Disclosure pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013 read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided ANNEXURE 'B'.

36. CAUTIONARY STATEMENT

Statements made herein describing the Company's expectations or predictions are "forward-looking statements". The actual results may differ from those expected or predicted. Prime factors that may make a difference to the Company's performance include market conditions, input costs, govt. regulations, economic development within/outside country etc.

37. APPRECIATION

Your Directors wish to place on record their appreciation for the whole hearted and sincere co- operation the Company has received from its Bankers and various Government agencies. Your Directors also wish to thank all the employees, customers, dealers, agents, suppliers, investors for their continued support and faith reposed in the Company.

For and on behalf of the Board Sd/-

DIGVIJAY DHABRIYA Chairman & Managing Director Date: 01st September, 2015 DIN: 00519946 Place: Jaipur

 
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