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Directors Report of Fineotex Chemical Ltd.

Mar 31, 2014

Dear members,

The Directors hereby present their Eleventh Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS (Rs. in Lakhs)

Standalone

Year ended Year ended

31-3-2014 31-3-2013

Total Income (net of Excise duty) 5,719.01 4,318.23

Less: Expenditure 4,861.16 3,524.08

Less: Depreciation 20.69 20.26

Less: Finance Costs 34.27 40.01

Net Profit before Tax 802.88 733.75

Provision for Tax (including short 222.02 190.78 provision for Previous Year)

Profit after tax 580.86 542.96

Appropriations

Dividend on Equity Shares 56.15 56.15

Tax on Dividend (8.88) 9.11

Balance Brought forward

from previous Year 2,075.14 1,597.44

Profit carried to Reserves 2,608.72 2,075.14

FINANCIAL RESULTS (Rs. in Lakhs)

Consolidated

Year ended Year ended

31-3-2014 31-3-2013

Total Income (net of Excise duty) 8,926.70 9,836.80

Less: Expenditure 7,743.89 8,641.37

Less: Depreciation 26.20 29.82

Less: Finance Costs 40.21 52.23

Net Profit before Tax 1,116.40 1,113.37

Provision for Tax (including short 334.81 302.20 provision for Previous Year)

Profit after tax 781.59 811.17

Appropriations

Dividend on Equity Shares

Tax on Dividend

Balance Brought forward

from previous Year

Profit carried to Reserves

DIVIDEND

Your Directors have recommended a dividend of Re 0.50 per equity share ( Last year Re. 0.50 per share) for the year ended 31st March, 2014. The dividend will be paid to the members whose names appear in the register of members as on 19th September, 2014.. In case of shares held in dematerialised form the same will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date. The dividend is free from Income Tax in the hands of the shareholders.

OPERATIONS

The economic conditions during the year under review were worse than those compared to the earlier year. The Company could achieve a turnover of Rs. 5,719 lakhs as against Rs. 4,319 lakhs last year, on Stand alone basis, an increase of 32.41 % inspite of the depressed economic conditions. There was a record fall in the Rupee value vis-a-vis the US dollar during the year resulting overall rise in input costs which could not be fully passed on to the customers. The Company was able to meet the challenge, maintain its position by adapting to the changing environment, ensuring timely delivery and new product development. The Company continues to develop new products and modify the products as per the requirements of its customers. Company has its own testing and development facilities by qualified staff.

This ensured higher sales which helped it to maintain its absolute profits. Your directors are hopeful that, subject to unforeseen circumstances, the Company would be in a position to maintain robust growth rate in the current year.

One big hindrance in the smooth performance during the year was the levy of Local Bodies Tax by the Government of Maharashtra last year. It is heard in the market that the Government is considering the review of the same. It is facing widespread resentment and would have very negative impact on the performance of the businesses as well as margins. Your Company is therefore reviewing the entire plan it had. It has already sought the shareholders permission to go in for diversification. A wholly owned subsidiary has been formed to pursue the company''s foray into reality business.

SUBSIDIARIES

Fineotex Malaysia Limited (FML), a Limited Company, was incorporated in Labaun Malaysia in 2011. FML in turn had controlling interest in 3 other companies in Malaysia that have established manufacturing and trading activities. Their turnover is higher than the parent company. The synergy of the businesses has helped all the companies.

FCL Landmarc Private Limited was incorporated in March 2013 as a wholly owned subsidiary to pursue Company''s activities in the reality sector. In October 2013, it took over Manya Steels Private Limited (Manya) as a wholly owned subsidiary. It owns land in Wada Taluka in Thane District of Maharashtra which the Company proposes to use for further expansion. In March 2014, Manya was made the direct subsidiary of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company along with its subsidiaries for the year ended 31st March, 2014 form part of this Annual Report

PUBLIC DEPOSITS AND LOANS AND ADVANCES.

The Company has neither accepted any deposits from the public or the shareholders during the year nor are there any outstandings as at year end. Loans & Advances given to Subsidiaries are disclosed in the financial statements as required under Clause 32 of the Listing Agreement with the Bombay Stock Exchange Limited.

RELATED PARTY CONTARCTS.

The Company had entered into contracts with related parties which were either covered under Section 297 of the Companies Act,1956 or were exempt there under. These were properly approved by the Board, shareholders and disclosed in the Prospectus issued by the Company in February 2011 at the time of Initial Public Offer, Subsequently in 2012, the Company had received the approval of the Regional Director, Ministry of Corporate Affairs, Government of India which are valid till 31st March, 2015. There are also other contracts regarding taking of premises on rent. These had been fully disclosed in the Prospectus but did not require any further approval under the erstwhile Act. As disclosed and explained in the Prospectus these contracts are comparable with the market prices. As per the Companies Act, 2013, you consent is required as per the provisions of Section 188 of the said Act. These are as per the normal business terms and, in the opinion of the Board, not prejudicial to the Company''s interest. The Board seeks your approval.

DIRECTORS

There were no changes to the Board during the year. Mr. Manmohan Mehta, Mr. Navin Mittal and Mr Alok Dhanuka are the three Independent Directors on the Board of the Company as per the Listing Agrement with the Bombay Stock Exchange Limited. As per the provisions of Section 149 of the Companies Act, 2013, at least one third of the Board should have independent Directors. They have given declarations stating that they meet with the criteria of Independence as prescribed under Section 149(6) of the Companies Act 2013.

Mr. Manmohan Mehta is due to retire by rotation at the ensuing Annual General Meeting as per the provisions of the erstwhile Companies Act, 1956 and is eligible for re-appointment. The Board of the Company seeks the reappointment of Mr. Manmohan Mehta and Mr Alok Dhanuka as Independent Director for a term of five years till the Annual General Meeting to be held in 2019. The Company has received separate notices under Section 160 of the Companies Act 2013 from members signifying their intention to propose them as candidates for the office of an Independent Directors at the ensuing Annual General Meeting. Profiles of Mr. Manmohan Mehta and Mr Alok Dhanuka are given in Corporate Governance Report and Explanatory Statement to the notice of the Eleventh Annual General meeting.

Ms Ritu Gupta was appointed as Additional Director by the Board on 13 th August, 2014. She is a MBA Finance from S P Jain, Centre of Management. She was also associated with the Company as General Manager initially at the time of Initial Public offer. She is related to the Chairman and Managing Director and to the Executive Director. Her details are given in the annexure to the notice. She is therefore a Non- Independent Director liable to retire by rotation.

AUDITORS AND AUDIT REPORT

Messrs UKG & Associates, the auditors of the Company, bearing ICAI Registration No Firm Registration No. 123393W, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. They have given their declaration, in writing, that they are eligible and willing for re-appointment as Auditors. As per the provisions of Section 139 of the Companies Act, 2013 and Rules made there under, they are eligible for reappointment to hold office till the conclusion of 5th Annual General Meeting held thereafter. The Audit Committee has recommended their reappointment which the Board has accepted. Board recommends their appointment.

COST ACCOUNTING RECORDS AND COST AUDIT

The Cost Audit Branch (CAB) of the Ministry of Corporate Affairs have issued CAB Order dated 24th January, 2012 making the products of the Company liable to Cost Audit under Section 233B of the Companies Act, 1956. This Order would apply to accounting periods commencing on or after 1st April, 2012. The Board has therefore recommended the name of M/s V J Talati & Co. as Cost Auditors of the Company. The approval of the government is received and M/s VJ Talati & Co. would do the audit for 2013-14. The Board also proposes to appoint them for 2014-15. The Audit Committee recommended their appointment.

SECRETARIAL AUDIT

The Companies Act, 2013 has made it mandatory for the Listed Company, like yours, to have the secretarial records audited. The Board of Directors have appointed HS Associates, Company Secretaries as Secretarial Auditors for 2014-15.

PARTICULARS OF EMPLOYEES

None of the employees of the Company drew a remuneration of Rs. 5 lakhs per month or Rs 60 lakhs per annum during the year under review. Hence there is no disclosure required as per provisions of Section 217(2A) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO

Information as required by the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed and forms part of this report. Refer Annexure A DIRECTORS'' RESPONSIBILITY STATEMENT As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure;

(ii) they have selected such accounting policies and applied them consistently and made judgements 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 of the Company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) they have prepared the Accounts on a going concern basis

MANAGEMENT DISCUSSION AND ANALYSIS

In accordance with the requirements of the clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd. a report on Management Discussion and Analysis is attached hereto (Annexure ''B'') and form part of this Report.

CORPORATE GOVERNANCE

Your Company would strive to set and achieve appropriate Corporate Governance practices. In accordance with the requirements of clause 49 of the Listing Agreement with the Stock Exchange, a report on the status of compliance of corporate governance norms is also attached. (Annexure ''C''). The Auditors certificate on the same is also attached.

ACKNOWLEDGEMENT

Your Directors wish to thank the Company''s stakeholders, Bankers and employees for their support extended to it throughout the year.

For and on behalf of the Board Place : Mumbai (Surendrakumar Tibrewala) Dated: 13-Aug-2014 Chairman


Mar 31, 2013

The Directors hereby present their Tenth Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March 2013.

1. FINANCIAL RESULTS

The Highilights of the performance of the Company during the Financial Year ended 31st march 2013 are appended below:-

(Rs. in Lakhs)

Year ended Year ended

2012-2013 2011-2012

Total Income (net of Excise duty) 4318.50 3,553.52

Less: Expenditure 3,524.48 2,760.87

Less: Depreciation 20.26 17.05

Less: Finance Costs 40.01 29.10

Net Profit before Tax 733.75 746.50

Provision for Tax (including short provision for Previous Year) 190.79 232.90

Profit after tax 542.96 513.60

Appropriations

Dividend on Equity Shares 56.15 56.15

Tax on Dividend 9.11 9.11

Balance Brought forward from previous Year 1,597.44 1,149.10

Surplus carried to Reserves 2075.14 1,597.44



2. DIVIDEND

Your Directors have recommended a dividend of 5% i.e Re 0.50 per equity share ( Last year Re. 0.50 per share) for the year ended 31st March, 2013. The dividend will be paid to the members whose names appear in the register of members as on 26-September-2013. In case of shares held in dematerialised form the same will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services Limited as beneficial owners as on that date. The dividend is free from Income Tax in the hands of the shareholders.

3. OPERATIONS

The Company could achieve a turnover of Rs. 4,068.64 lakhs as against Rs. 3,332.19 lakhs in last year, an increase of 22.10 % inspite of the depressed economic conditions. The Company was able to meet the challenge, maintain its position by adapting to the changing environment, ensuring timely delivery and new product development. The Company continues to develop new products and modify the products as per the requirements of its customers. It has its own testing and development facilities backed by qualified staff. This ensured higher sales which helped it to maintain its absolute profits. Your directors are hopeful that, subject to unforeseen circumstances, the Company would be in a position to maintain robust growth rate in the current year.

4. SUBSIDIARIES

Fineotex Malaysia Limited (FML), a Limited Company, was incorporated in Labaun Malaysia in 2011. FML in turn has controlling interest in 3 other companies in Malaysia that have established manufacturing and trading activities. The synergy of the businesses has helped all the companies.

During the year, FCL Landmarc Private Limited was incorporated as a wholly owned subsidiary to pursue Company''s activities in the realty sector as approved by the shareholders at the Ninth Annual General Meeting without affecting the activities of the chemical business. It will carry on the realty business as joint ventures in the initial stages. Realty business has better potential & profitability.

5. DIRECTORS

During the year Mr. Alok Dhanuka was appointed as Additional Director. Notices have been received from the shareholders proposing his name as Director of the Company. Mr. Sanjay Mittal resigned from the Board of the Company with effect from 11th February, 2013 due to his preoccupation. The Board notes with appreciation the services and advices rendered by him.

Mr. Navin Mittal retires by rotation and, being eligible, offers himself for reappointment.

6. PARTICULARS OF EMPLOYEES

None of the employees of the Company drew a remuneration of Rs. 5 lakhs per month or Rs 60 lakhs per annum during the year under review. Hence there is no disclosure required as per provisions of Section 217(2A) of the Companies Act, 1956.

7. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information as required by the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed and forms part of this report. Refer Annexure A.

8. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure;

(ii) they have selected such accounting policies and applied them consistently and made judgements 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 of the Company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) they have prepared the Accounts on a going concern basis

9. MANAGEMENT DISCUSSION AND ANALYSIS

In accordance with the requirements of the clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd. a report on Management Discussion and Analysis is attached hereto (Annexure ''B'') and form part of this Report.

10. CORPORATE GOVERNANCE

Your Company would strive to set and achieve appropriate Corporate Governance practices. In accordance with the requirements of clause 49 of the Listing Agreement with the Stock Exchange, a report on the status of compliance of corporate governance norms is also attached (Annexure ''C''). The Auditors certificate on the same is also attached.

11. AUDITORS AND AUDIT REPORT

Messrs UKG & Associates, the auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. They have given their declaration that they are eligible and willing for re-appointment as Auditors for the ensuing year. The Board recommends their appointment.

12. COST ACCOUNTING RECORDS AND COST AUDIT

The Ministry of Corporate Affairs has issued a notification dated 3rd June, 2011 titled The Companies (Cost Accounting Records) Rules, 2011 making it mandatory for your Company to maintain Cost Accounting Records as prescribed therein. The Cost Audit Branch (CAB) of the Ministry of Corporate Affairs have issued CAB Order dated 24th January, 2012 making the products of the Company liable to Cost Audit under Section 233B of the Companies Act, 1956. This Order would apply to accounting periods commencing on or after 1st April, 2012. The company has appointed M/s V. J. Talati & Co., Cost Auditor, Mumbai to audit the cost accounts for the year 2012-13 from 1 April, 2012 to 31 March, 2013 for which necessary approval from the Central Government has been received.

The Company has obtained the Cost Compliance Certificate for the year 2011-12 from M/s V J Talati & Co the Practising Cost and Management Accountant and filed with the Ministry of Corporate Affairs within the stipulated period.

The Board proposes to re-appoint M/s V. J. Talati & Co., as cost auditor of the company for year 2013-14.

13. ACKNOWLEDGEMENT

Your Directors wish to thank the Company''s stakeholders, Bankers and employees for their support extended to it throughout the year.



For and on behalf of the Board

(Surendrakumar Tibrewala)

Chairman

Date : 15-May-2013

Place : Mumbai

 
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