Directors Report of NOCIL Ltd.
Mar 31, 2022
Your Board of Directors are pleased to present their Board Report together with the Audited Financial Statements of the Company for the year ended March 31,2022.
FINANCIAL SUMMARY
|
(? In Crores) |
||
|
Particulars |
Year ended |
Year ended |
|
March 31, |
March 31, |
|
|
2022 |
2021 |
|
|
Operative Revenue |
1,571.31 |
924.66 |
|
Other Income |
4.84 |
14.28 |
|
Total Income |
1,576.15 |
938.94 |
|
Profit before Interest, Depreciation & Tax |
287.74 |
141.21 |
|
Less: Interest |
1.07 |
0.96 |
|
Less: Depreciation |
47.08 |
36.07 |
|
Profit before tax |
239.59 |
104.18 |
|
Less: Tax Expenses |
63.64 |
17.69 |
|
Net Profit after tax |
175.95 |
86.49 |
|
Earnings per share of face value of ? 10 each -Basic |
10.57 |
5.21 |
|
Earnings per share of face value of ? 10 each - Diluted |
10.54 |
5.20 |
PERFORMANCE OF THE COMPANY The year started with the 2nd COVID-19 wave resulting in a dip in sales volumes during the first quarter due to lockdown at some of the customers ends. Thereafter, your Company could register healthy sales volume for the remaining part of the year on a consistent basis. Overall, the annual sales volume recorded an increase of 16%. It is worthwhile to note, that your Company for the second year in succession, could achieve double digit growth as against the industry long term trend of 3% - 4% over the last 10 years.
The Board of Directors are pleased to inform you that, your Company has recorded its highest ever revenue of ? 1,571 Crores for the year as against ? 925 Crores during the financial year 2020-21. This was on the back of growth in sales volume by 16% for the year under review and price corrections carried out on account of significant cost increases on inputs consumed towards the manufacture of rubber chemicals.
It is further reassuring to see that considering the challenges experienced, your Company could achieve this volume growth as against the growth in the global rubber
consumption by 9.60% for the Calendar Year 2021. The performance during the last quarter of the year has further demonstrated that your Company can touch many more heights in the coming years.
Your Company continues to practice its ethical business strategy and all regular customers were served in a timely manner with the best quality and services at affordable prices.
Your Company recorded a Net Domestic revenue of ? 1,004 Crores for the year under review. The domestic business registered a growth of over 15% in volume parameters. To maintain and garner additional market share, the Company consciously undertook an aggressive pricing approach.
The continuing restrictions on import of tires into India, enabled the domestic customers to maintain their utilisation rate thus resulting in an improved demand for rubber chemicals. De-risking of supply chain strategy initiated by some of our customers created additional requirements from their end. In view of the substantial expansion of capacities in place, your Company could cater to the additional volumes sought by its major customers.
The surge in the major input prices from the second half of 2021 continues to be volatile with different challenges emerging from time to time. This even led to disruptions in availability of inputs despite firm orders placed on the vendors by the Company leave alone the substantial price increases of over 100% in some of the key products. Fortunately, price corrections initiated by our competitors on some of the key products with some growth in specialised application products (largely meant for exports), ensured that our profit margins in absolute terms for the year showed significant improvement.
It may be worthwhile to mention that these abnormal price increases in inputs are not sustainable in the long term given that the building blocks of these inputs did not experience such massive increases and we as a Company do not believe in taking substantial price corrections other than the cost increases in absolute terms passed on to us or required to be borne by us. This led to some dips in gross margin percentage as in a high-cost regime, the important point is to maintain the absolute margins adjusted for volumes.
Though China accounts for 80% of the World''s rubber chemical production, it only consumes about 35% of the same, resulting in an exportable surplus, which makes it possible to dump it into nearby markets, including India given that the exports of Chinese rubber chemicals into USA attracts trade sanctions.
To counter the same, your Company made necessary applications before the Director General of Trade Remedies (DGTR) for levy of anti-dumping duty in respect of four of the main products.
We are happy to inform that in all the 4 products, the DGTR recommended positive final findings. In one of our main products, the Central Government did not accept the recommendation in view of the public interest.
In respect of the other 3 products, the Central Government will notify through appropriate customs notification, if they accept the recommendations of the DGTR.
For the year under review, Exports showed a volume growth of 17%. In view of our strategy of expanded presence in the international market, your Company got additional orders in certain key accounts. The exports business activity ended with a record revenue of ? 567 Crores. In view of the additional capacities set-up, we will continue to pursue further growth from the current level of volumes.
Your Company strategically continues to promote some high quality and high value speciality products in the export market which contribute significantly to the export turnover and margins. With additional volumes available from our newly expanded Plants, focus will be on long term business developments with our customers.
As stated above, the production of all products was aligned with the marketing needs as per the customer enquiries. During the year, after ensuring proper COVID protocols, vaccination of employees across the Company, all the manufacturing sites could operate in a smooth manner with no major hurdles. In this process, all operating guidelines issued by the various regulatory bodies of the respective States have been complied with.
In line with the approvals from the customers for the new products along with increased offtakes from customers,
yourCompanys'' operational parameters registered a higher utilisation of the production capacities marking a growth of over 30% for the year under review.
On the input front, Crude Oil price which started around USD 65 per Barrel at the beginning of the year experienced high volatility during the second half of the year. With the recent Russia-Ukraine war, the crude oil prices touched a high of USD 125 per Barrel in March 22. This led to increased prices of all crude oil derivatives. Since our major inputs are benzene derivatives, your Company too had to expend high input costs as compared to the previous year.
The said factors led to skewed supply demand pattern in several of our inputs, some cases of force majeure, logistic bottlenecks, and scramble for securing supply resulted in raw material prices skyrocketing with availability constraints. This resulted in significant cost increases in raw materials for your Company. Fortunately, due to the corrections undertaken by our competitors from Dec 20 onwards at regular intervals by way of appropriate increase in the selling price of rubber chemicals, your Company could withstand this increase in input costs with no loss of margins.
It may be recalled that the Board of Directors of your Company had approved a capital expenditure of ? 470 Crores in financial year 2017-18. In terms of the said plan, besides the capex towards finished goods & intermediates that got commissioned in the previous years, the residual part of utilities, effluent treatment etc. got completed during the year. Given that the finished products manufactured out of the Dahej expansion projects have started receiving customer approvals, capacity utilisation will be scaled up in line with the commercial orders.
As stated in our earlier reports, in view of the Company''s comfortable liquidity position the entire capex was financed through internal accruals.
During the year the company judiciously utilised its resources and generated cash profits and thus were not required to utilise any fund based working capital faciltiies for most part of the year. The Company continues to enjoy the ''debt free'' status.
The Credit Ratings Agencies CARE and CRISIL Limited have reaffirmed ratings as CARE AA (Double A) (Stable) and CRISIL AA for long term Bank Facilities (Term loan as well as Fund Based facilities) and CARE AH (A One plus) and CRISIL AH (stable) rating for short term Non-Fund Bank facilities, respectively.
The Company forms part of the List of top 500 listed entities and top 1000 listed entities based on Market Capitalisation as on March 31, 2020. In view thereof, pursuant to the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 as amended, at its meeting held on May 04, 2018, the Board of Directors have approved the Dividend Distribution Policy effective from the Financial Year 2018-19. The said Policy is attached as Annexure "G" and is also available on the Company''s website, the weblink of which is
https://www.nocil.com/images/fckeditor/file/Dividend-Distribution-Policy-2018.pdf.
The Board of Directors at its meeting held on May 17, 2022 recommended a dividend of ? 3 per Equity share of the face value of ? 10/- each to be paid to those shareholders whose names appeared in the Register of Members of the Company or in the records of Depositories as beneficial owners of Equity Shares, as on July 21, 2022.
This is subject to the approval of the shareholders at the forthcoming 50th Annual General Meeting convened on July 28, 2022. The cash outflow on account of dividend (if approved) will involve a sum of ? 50 Crores (Previous year ? 33 Crores) which will be utilised from the Free Reserves prevailing as on the date of 60th Annual General Meeting.
Transfer of Unpaid Dividend and corresponding Equity Shares to the Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"), all unpaid or unclaimed dividends are required to transferred by the Company to the IEPF; established by the Government of India, after completion of seven years. Further, according to the IEPF Rules, the shares on which dividend has
not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority.
The total amount lying in the Unclaimed Dividend Account of the Company as on March 31, 2022 in respect of the last seven years from 2014-15 to 2020-21 is ? 3.82 Crores.
During the year, all unclaimed / unpaid dividend up to 2013-14 amounting to ? 0.23 Crores have been transferred to the Investor Education and Protection Fund and unclaimed / un-encashed dividend for 2014-15 paid on July 23, 2015 is due for transfer to IEPF on August 29, 2022. As per the IEPF Rules, as amended, the due date for transfer of Equity Shares in respect of Dividend pertaining to the Financial Year 2013-14 was August 06, 2021. The Company had intimated individually to concerned shareholders and published necessary notice in the newspapers intimating the shareholders about the impending transfer and the modus operandi for claiming the same.
In compliance with the Amended Rules, during the year, the Company has transferred 1,04,627 Equity shares to the designated demat account opened by IEPF Authority with NSDL through Punjab National Bank, belonging to those shareholders holding shares both in dematerialised form as well as physical form, who had not encashed their Dividend for a period of 7 years or more beginning from the Financial Year 2013-14. The shares held in demat / physical mode were transferred in September 2021.
The Company has also uploaded the details of the shareholders whose shares were liable to be transferred to IEPF on its website viz., www.nocil.com.
The nodal officer for the purpose of IEPF is Mr. Amit K. Vyas, Assistant Vice-President (Legal) & Company Secretary of the Company. The details of the same are mentioned on the website of the Company. The web link is:
http://www.nocil.com/detail/investors/transfer-of-
unclaimed-shares-to-iepf/75
The Company does not any accepts deposits from public, and hence there are no outstanding/unclaimed deposits as of March 31, 2022.
The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and as required under the various legislative enactments. There were no major incidents or accidents to warrant Insurance claims during the year under review. In terms of the applicable COVID-19 regulations, the Company undertook the insurance cover to address the potential hospitalisation issues in respect of its employees as well as regular contract work force.
Health, Safety and Environment (HSE)
Health, Safety and Environment continue to be at the core of NOCIL''s long term sustainable growth strategy. Our commitment to the HSE issues ensures clean environment and safety of all the employees, community around all the manufacturing locations and all the stakeholders. We care for nature and operate in an environment friendly manner, complying with all safety and environmental standards and employing best-in-class practices.
Your Company is a âResponsible Care" logo holder, which ensures continuous improvements in the areas of environmental protection, health, safety and secured transportation of raw materials and finished products. Implementation of Responsible Care guiding principles systematically ensures the highest standards of HSE in the Company and the periodic audits assess continuous improvement.
Though the effects of the COVID pandemic were largely overcome during the year, we continue to follow certain essential protocols to ensure no further impact. All the employees including their family members and all the contractor employees were provided with free vaccination by the Company. During the last âOmicronâ wave there were few cases of infection, which were very mild in nature and there was no impact on the continuity of the operations and the business. The Occupational Health Centre of your Company continues to provide all the necessary awareness inputs and medical help to the employees.
We have very well laid down policies, procedures, practices, and systems in place for Health, Safety and Environment related issues. Necessary training inputs are provided to all the employees, including contract employees and strict adherence to the protocols are monitored through regular
auditing, reporting of incidences and timely preventive and corrective measures leading to continuous improvements. Safe practices are encouraged by conducting various annual competitions and rewarding the employees.
Regular workplace monitoring is carried out for Volatile Organic Compounds (VOC), Noise and Illumination levels, Ambient air quality etc. to ensure safe and healthy work environment. Weekly firefighting drills and half yearly Disaster Management Plan drills are conducted to prepare the internal firefighting teams to be in readiness at all the time.
Process Safety Measures are given highest priority and laid down Pre-Start Up Safety Review (PSSR) procedures are followed before starting up of any Plant operations. Similar procedures are followed for Plant shutdowns and stoppages. Process Safety issues are thoroughly analysed using HAZOP/HAZAN / LOPA techniques and findings are implemented.
Your Company endeavors to not only meet the prescribed environmental standards but also strives to implement innovative technologies which encompass green chemistry. Research Centre has an exclusive team focusing on environmental research and green chemistry. Your Company focuses on strategies to reduce consumption of natural resources including electricity and water.
Your Company will continue to assume the role of a responsible citizen and adopt and implement strategies to meet the climate change challenges.
Total Quality Management (TQM)
The primary focus of TQM in your Company is to improve customer satisfaction by having a high customer focus and consistently meeting customer expectations across the organisation. TQM is an integral part of the business from sourcing of inputs to meeting the customer''s needs.
Your Company over the years has established systems and processes to adhere to international business process standards at each step and build on continual improvement recommendations emanating from various audits by suppliers, customers and certifying agencies.
TQM initiatives by your Company, which ensure right quality of product and services, have enhanced the competitiveness of the business and are one of the prime enablers for growth.
Your Company is certified for ISO 14001: 2015 (Environment Management System), ISO 45001: 2018 (Occupational Health & Safety Management System), ISO 50001: 2018 (Energy Management System).
Your Company is amongst the select 75 companies in the country which is certified for âResponsible Care". "Responsible Care" is a Chemical Industry initiative, which calls on Companies to demonstrate their commitment to improve all aspects of performance which relate to protection of health, safety, and environment. Your Company enjoys the privilege of using Responsible Care logo.
Your Company has adopted "5 S - Workplace organisation
method" to improve productivity, safety and to reduce wastage as a part of normal work practices.
Quality Assurance and Marketing Technical Service laboratories at Navi Mumbai location are accredited as per ISO 17025:2017.
Your Company has all the basic elements and practices in place for the ESG (Environment, Social & Governance) guiding principles and all initiatives in this regard together with the associated risks are periodically reviewed by the Risk Management Committee of the Board as a part of Enterprise Risk. As per SEBI directions the Company is gearing upfor preparation of the Business Responsibility and Sustainability Report (BRSR) covering ESG (Environment, Social and Governance) parameters.
Research & Development (R&D)
The Research & Development Centre of your Company, endeavours to develop products and processes for a sustainable future & benefit the customers. The R&D Centre of the Company has been recognized by the Department of Scientific and Industrial Research, Ministry of Science & Technology. The R&D Centre is also involved in collaborative research with Education Institutions and CSIR for exploring newer domains.
The R&D Centre has the following main objectives and each group has specialised knowledge in their respective areas.
Continuous improvement in the existing process to (a) achieve higher volumes in the same hardware by process changes; (b) continuous improvement in product quality; (c) support Technology for debottlenecking of the Plants; (d) to be better in environment standard than stipulated norms.
To scan the perceived needs of the customer and develop products which are future ready and meet the green chemistry norms. To develop environmental strategies and processes in line with the current and future sustainability needs.
Continuous assessment of new technologies being developed in the World and evaluate the adoptability for product and process improvements. Development of niche products and intermediates by novel processes & technologies.
Implementation of 3R (Reduce, Recycle and Reuse)
strategies for reducing carbon and water footprint in our manufacturing processes.
R&D efforts in the above areas resulted in increasing production volumes, reduced raw material & energy consumption and reduced environmental emission. The top management is regularly supporting to strengthen the R&D Infrastructure and resources and encouraging R&D team in exploring various Research activities in line with Company''s objectives.
Risk Assessment and Management
Your Company has a well-defined Risk Management System in place, as a part of its good Corporate Governance practices. Your Company has assigned the ownership of key risks to various Risk Owners and has made the concerned department(s) and official(s) responsible for mitigation plans and review of these risks from time to time. The risks are identified at various departmental levels and suitable mitigation measures are thereafter adopted. These are further subjected to a quarterly review by the Risk Management Committee as well as the Board. The Business plans are devised and approved by the Board keeping in mind risk factors which can significantly impact the performance of the business. All major capital expenditure commitments are subjected to thorough scrutiny by the Board and investments are permitted only on being satisfied about their return or utility to the Company. Expansion projects are subject to detailed risk assessment and sensitivity tests and approved only after found to pass eligibility criteria.
In terms of the applicable regulations, the Board has constituted the Risk Management Committee (RMC) w.e.f. April 2019, as required under Regulation 21(4) of SEBI
(Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018. The RMC specifically covers inter alia the risk factors related to Cyber Security. The composition of the RMC its terms of reference and number of committee meetings held during the year are given in the Corporate Governance Report. The Company has also approved a Risk Management Policy to address any risk factors that may arise on account of the regulatory changes/ amendments as applicable to the Company are being followed and monitored closely. SEBI amended Regulation 21 of the SEBI (LODR) Regulations, 2015 w.e.f May 06, 2021 relating to the role and functioning of the Risk Management Committee. The Company''s Risk Management Committee is in compliance with the amended Regulation 21.
The Risk Management Policy has been modified and uploaded on the Company''s website. The link for accessing the said Policy is given here below:
https://www.nocil.com/images/fckeditor/file/NOCIL%20
RISK%20MANAGEMENT%20POLICY.pdf
Internal Control Systems and their Adequacy
Adequate internal controls, systems, and checks are in place, commensurate with the size of the Company and the nature of its business. The Management exercises financial control on the Company''s operations through a well-defined budget monitoring process and specifying standard operating procedures. Your Company has appointed an external professional agency M/s. Aneja Associates, Chartered Accountants, to conduct the internal audit, and the findings and recommendations of the Internal Auditors are placed before the Audit Committee of your Board regularly.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internal controls in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditors, the Management undertakes corrective action in the respective areas and thereby further strengthens the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Audit committee of the Board ensures that necessary corrective actions suggested are put in place. In addition, during the year under report, the Audit Committee and the Board have specifically
reviewed the Internal Financial Controls with reference to the Financial Statements and process prevalent in the Company. On a case-to-case basis, the Board also engages the services of professional experts in the said field, to ensure that adequate financial controls and systems are in place. At the end of a period, the Managing Director and the Chief Financial Officer (CFO) give a declaration in the prescribed format to certify that the financial statements prepared are accurate and complete in all aspects and that there are no significant issues that can impair the financial performance of the Company. Overall, the Internal as well Statutory Auditors were satisfied with the Internal Control Systems including Compliances and SAP - IT related security.
Vigil Mechanism / Whistle Blower Policy
The Company has a Vigil Mechanism Policy to deal with an instances of fraud or mismanagement, if any. It is heartening to note that no untoward or fraud case was reported.
There has been change in the said Policy during the financial year. Necessary amendments to the Policy have been carried out in line with the regulatory requirements.
The link of the Policy is mentioned as below:
https://www.nocil.com/images/fckeditor/file/NOCIL_Vigil_
Mechanism.pdf
Policy on Prevention of Sexual Harassment of Women at Workplace
As per the requirements of section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, an appropriate Committee has been formed to attend to the complaints of the sexual harassment at workplace, if any, made by female employees. The committee of 4 members comprises of two women employees, Vice President-Human Resources, and a practicing Advocate in the field of Labour Laws and Regulations. The Company has in place a Policy on the Prevention of Sexual Harassment. During the year under review, no complaints were received.
The Board regrets to report the sad demise of Mr N. Sankar, Independent Director who expired on April 17, 2022, after a brief illness. Late Mr. N. Sankar who had been on the Board of the Company since July 29, 2005 was a man of great
intellect, vision and courage who contributed immensely to the development of Indian industry on the global stage. Late Mr. N. Sankar has left behind a powerful legacy of humility, simplicity and dedication that will stay with us. Your Directors would like to place on record their highest gratitude and appreciation for the guidance given by Late Mr. N. Sankar to the Board during his tenure as a Director
The Board of Directors met seven (7) times during the financial year under review as per details stated in the Corporate Governance Report.
Details of Committee Meetings Audit Committee Meeting
The members of Audit Committee met six (6) times during the financial year under review, as per the details stated in the Corporate Governance report.
Nomination & Remuneration Committee Meeting
The members of Nomination & Remuneration Committee met once during the financial year under review, as per the details stated in the Corporate Governance report.
Stakeholders'' Relationship and Investors'' Grievance Committee
The members of Stakeholders'' Relationship and Investors'' Grievance Committee met once during the financial year under review, as per the details stated in the Corporate Governance report.
The members of Risk Management Committee met three (3) times during the financial year under review, as per the details stated in the Corporate Governance report.
Corporate Social Responsibility Committee
The members of Corporate Social Responsibility Committee met three (3) times during the financial year under review, as per the details stated in the Corporate Governance report.
Composition of Audit Committee:
The total strength of the Audit Committee is 5 Directors all of whom are Independent. The norms require atleast 2/3rd of the members to be Independent Directors.
|
The composition of the Audit Committee is given below: |
|
|
Name of Members |
Category |
|
Mr. D.N. Mungale - Chairman |
Independent Director |
|
Mr. Rohit Arora |
Independent Director |
|
Mr. Vilas R. Gupte |
Independent Director |
|
Mr. P. V. Bhide |
Independent Director |
|
Mr. Debnarayan Bhattacharya |
Independent Director |
During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.
Pursuant to the applicable provisions of the Companies Act, 2013, as amended from time to time and Regulations 17 and 25 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, of individual Directors as well as the evaluation of the working of its Audit, Nomination & Remuneration, and other Committees. The various criteria considered for evaluation of Whole Time / Executive Directors included qualification, experience, knowledge, commitment, integrity, leadership, engagement, transparency, analysis, decision making, governance etc. The Board commended the valuable contributions and the guidance provided by each Director in achieving the desired levels of growth. This is in addition to evaluation of Non-Independent Directors and the Board as a whole by the Independent Directors at their separate meeting being held every year.
Declaration by the Independent Directors
As required under Section 149(7) of the Companies Act, 2013, read with SEBI (Listing Obligations and Disclosure Requirements), (Amendment) Regulations, 2018, the Independent Directors have placed the necessary declarations of their independence in terms of the conditions laid down under Section 149(5) of the Companies Act, 2013, as amended, at the Board Meeting held on Thursday, April 14, 2022. Further, pursuant to the Companies (Appointment and Qualification of Directors), Rules, 2014 as amended, the said declarations also include a confirmation to the effect that the Independent Directors have included their names in the Database maintained by the Indian Institute of Corporate Affairs, and have paid the necessary fees for the said registration.
Familiarisation Programme for the Independent Directors
The Company provides suitable familiarisation programmes to Independent Directors to help them familiarise with the nature of the Industry in which the Company operates and the business model of the Company in addition to regular presentation on expansion plans and their updates, technical operations, marketing and exports and financial statements. In addition to the above, the Directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations, about their roles, rights, and responsibilities as Directors of the Company. There is a regular interaction of Directors with the Key Management Personnel of the Company. The details of the familiarisation programme have been disclosed and updated from time to time on the Company''s website and its web link is:
https://www.nocil.com/images/fckeditor/file/
Familiarization-Programme-for-IDS.pdf.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3)(c) of the Companies Act, 2013:
(a) That in the preparation of the Annual Financial Statements for the Year ended March 31, 2022, the Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI) have been followed along with proper explanations relating to material departures, if any;
(b) That such accounting policies as mentioned in Note 1 forming part of the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent to give a true and fair view of state of affairs of the Company as of March 31, 2022;
(c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) That the annual financial statements have been prepared on a going concern basis;
(e) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
(f) That proper systems are devised to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;
(g) That all the applicable Secretarial Standards have been complied with by the Company during the year under review.
The above assessment of the Board was further strengthened by periodic review of internal controls by both Internal as well as the Statutory Auditors.
During the Financial Year 2014-15, based on the recommendations of the Nomination & Remuneration committee, the Board of Directors approved a Policy for selection and appointment of Directors, Senior Management, and their remuneration.
There has been a change in the said Policy during the financial year. Necessary amendments to the Policy have been carried out in line with the regulatory requirement.
The weblink of the Policy is:
http://www.nocil.com/images/fckeditor/file/
Remuneration-Policy.pdf.
All related party transactions that were entered into during the financial year were at an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, and Key Managerial Personnel, wholly owned subsidiary Company or other designated persons which may have a potential conflict with the interest of the Company at large, except as stated in the Financial Statements / Directors'' Report.
As per the Related Party Transactions Policy, approved by the Board of Directors of the Company, during the year under review, the Company has entered into related party
transactions based upon the omnibus approval granted by the Audit Committee. The Audit Committee reviewed such transactions on quarterly basis for which omnibus approval was given.
Particulars of contracts or arrangements with Related Parties as referred to in Section 188(1) of the Companies Act, 2013 along with the disclosures as mentioned in Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the prescribed form AOC-2 for 2021 -22 are given in Annexure "F".
SEBI has vide notification Nos SEBI /LADNRO/GN/2021/55 dated November 09, 2021 and SEBI/HO/CFD/CMD1 / CIR/P/2021/662 dated November 22, 2021 made
amendments to the SEBI (LODR) Regulations 2015, with regard to Related Party Transactions (RPTs). Most of the amendments are effective from April 01, 2022 whereas some are effective from April 01, 2023. The Company is in compliance with the said amended Regulations. However, the current Related Party transactions (RPT) policy was amended/modified suitably to reflect the amended Regulations and uploaded on the Company''s website.
The weblink of the Policy is as under:
http://www.nocil.com/images/fckeditor/file/Policy-on-
Related-Party-Transaction.pdf
Loans, Guarantees or Investments
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013, are given in the Notes forming part of Financial Statements for the year ended March 31, 2022.
Extract of Annual Return for the Financial Year ended March 31, 2022 as required by Section 92 (3) of the Companies Act 2013. The weblink of the same is https://www.noci!. com/images/fckeditor/file/Draft%20Annual%20Return%20 2021 -22.pdf
Subsidiary Company, Associates and Joint Ventures
PIL Chemicals Limited, (PIL), a Wholly Owned Subsidiary (WOS) has recorded a Total Income of ? 18.95 Crores and Profit before Tax of ? 2.84 Crores, for the year under review. The Board of Directors of PIL declared a total Dividend of ? 1.20/-per share. (Previous year Dividend was ? 1.20/- per share).
The Company does not have any material subsidiary, however, the Company has formulated a policy for determining material subsidiary(ies) and such policy has been disclosed on the Company''s website and its weblink
is http://www.nocil.com/images/fckeditor/file/Policy-on-Material-Subsidiaries.pdf.
Pursuant to the requirements of Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the details of Loans / Advances made to, and investments made in the subsidiary Company have been furnished in the Notes forming part of the Accounts.
A statement containing the salient features of the financial statement of the Company''s Wholly Owned Subsidiary (WOS) under the provisions of section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 has been annexed in prescribed Form AOC -1.
The audited accounts of the WOS Company are placed on the Company''s website and the members interested in obtaining copy of Annual Report of the WOS Company are requested to get in touch with the Office of the Company Secretary.
Further, the Company does not have any joint venture or associate companies during the year or at any time after the closure of the year and till the date of the report.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by the Company in accordance with the applicable Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs and the same together with Auditors'' Report thereon form part of the Annual Report. The financial statements have been prepared as per Division II of Schedule III issued by the Ministry of Corporate Affairs vide its Notification dated 6th April 2016 as amended from time to time.
The relations, during the year, between the Employees and the Management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued support and co-operation during the year under review.
lntermsofyourapproval,readwiththeSEBI(EmployeesStock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended, the details required to be provided under the said Guidelines set out in Annexure "C" to this Report.
The information required under section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 in respect of employees of the Company is provided in Annexure "E".
Appointment/Reappointment of Directors and Key Managerial PersonnelDirectors
Pursuant to Section 152(6) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Priyavrata H Mafatlal Non -Executive Director retires by rotation at the forthcoming 60th Annual General Meeting. Being eligible, he offers himself for re-appointment.
Appointment of Mr. Anand V.S. as the Deputy Managing Director
Mr. Anand V.S. has been appointed as the Deputy Managing Director of the Company for a period of 5 years with effect from March 02, 2022 to March 01, 2027.The Company has secured the approval of the Shareholders for his appointment by way of passing an Ordinary Resolution through the mechanism of the Postal Ballot. The details of the Postal Ballot are given under the Corporate Governance section of the Annual Report.
Re-appointment of Mr. S.R. Deo as the Managing Director for a period of One (1) Year
Mr. S.R. Deo was appointed as the Managing Director of the Company for a period of 5 years w. e. f. August 01, 2017 to July 31, 2022 by a Special Resolution passed by the Shareholders at the Annual General Meeting held on July 27, 2017. The tenure of Mr. S.R. Deo as the Managing Director thus expires on July 31, 2022.
Having regard to his critical role in Management of the operations and given his vast experience with the Mafatlal Group, it is proposed to extend his tenure/re-appoint him as
the Managing Director of the Company for a period of 1 year w.e.f August 01, 2022 to July 31,2023.
There has been no change in Key Managerial Personnel of the Company during the year.
M/s. Kalyaniwalla & Mistry, LLP Chartered Accountants, Mumbai (Registration No. 104607W/W100166) were appointed as Statutory Auditors of the Company at the 55th Annual General Meeting (AGM) held on July 27, 2017 for a period of five (5) years and hence their first term comes to an end on the conclusion of the 60th Annual General Meeting convened on July 28, 2022. In terms of section 139 (2) (b) of the Companies Act, 2013, an Audit firm is entitled to be appointed or re-appointed as the Statutory Auditor of the Company for a maximum of two terms of five consecutive years. Thus M/s Kalyaniwalla & Mistry, LLP are entitled to be re-appointed for a second term of five years up to the conclusion of the 65th Annual General Meeting of the Company to be held in the year 2027. M/s. Kalyaniwalla & Mistry, LLP have given their consent for their re-appointment as Statutory Auditors of the Company and have certified that their re-appointment, if made, will be within the limits prescribed under the provisions of Section 139 of the Companies Act, 2013 (''the Act'') and the Rules made thereunder. M/s. Kalyaniwalla & Mistry, LLP have confirmed that they are eligible for the proposed appointment under the Companies Act, 2013, the Chartered Accountants Act, 1949 and the Rules or Regulations made thereunder. The said firm has reported their independence from the Company and its subsidiary according to the Code of Ethics issued by the Institute of Chartered Accountants of India (''ICAI'') and the ethical requirements relevant to audit. The Board of Directors at their meeting held on February 04, 2022 (based on the recommendations of the Audit Committee meeting held on the same date) and subject to approval of Members /Shareholders at the 60th Annual General Meeting convened on July 28, 2022, re-appointed M/s. Kalyaniwalla & Mistry, LLP as Statutory Auditors of the Company to hold the office as Statutory Auditors for the second and final term from the conclusion of this 60th Annual General Meeting till the conclusion of its 65th Annual General Meeting i.e., till conclusion of Annual General Meeting to be held during the year 2027 for conducting Statutory Audit for the Financial Years 2022-23 to 2026-27.
Explanations or comments on the qualification, reservation, adverse remark, or disclaimer made by the Statutory Auditors or by the Company Secretary in practice in their report
During the year under review, there is no qualification, reservation or adverse remark or disclaimer made by the Statutory Auditors appointed under section 139 of the Companies Act, 2013. Hence, the need for explanation or comments by the Board does not arise. The report of the Statutory Auditors forms a part of the financial statements.
During the year under review, there were no material or serious instances of fraud falling within the purview of Section 143 (12) of the Companies Act, 2013 and Rules made there under, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit conducted and therefore no details are required to be disclosed under Section 134 (3) (ca) of the Act.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company are required to be audited.
M/s. Kishore Bhatia & Associates, the Cost Auditors have given a Certificate to the effect that the appointment, if made, will be within the prescribed limits specified under section 141 of the Companies Act, 2013.
The Audit Committee has obtained the requisite certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company. The Cost Audit Report in respect of 2020-21 was filed on October 19, 2021 and the Report for the Financial Year 2021-22 will be filed within the time limit as prescribed under the Companies (Cost Records and Audit), Rules, 2014.
Your Directors, on the recommendation of the Audit Committee, appointed M/s Kishore Bhatia & Associates to audit the cost accounts of the Company for the financial year 2022-23 on a remuneration of ? 8.00 lakhs.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is placed before the Members for their approval and ratification.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. Makarand M. Joshi & Co., Company Secretaries, a firm of Company Secretaries in Practice to carry out the Secretarial Audit of the Company for 2021 -22. The Report of the Secretarial Audit is annexed herewith as Annexure "B".
The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks or disclaimer.
Further, PIL Chemicals Limited, is the only Wholly Owned Subsidiary (WOS) of the Company and is not a material unlisted subsidiary. Therefore, the provisions regarding the Secretarial Audit as mentioned in Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements), 2015 as amended, do not apply to PIL Chemicals Limited.
Report on Corporate Governance
As per Regulation 34 read with Schedule V (C) of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, a separate section on Report on Corporate Governance practices followed by the Company, together with a certificate received from the Company''s Secretarial Auditor confirming compliance is attached.
Report on Management Discussion and Analysis
As required under Regulation 34 read with Schedule V (B) of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, report on "Management Discussion and Analysis" is attached and forms a part of this Report.
Business Responsibility Report
The Company forms part of top 1000 listed entities based on market capitalisation calculated as on March 31, 2021. In view of this, as required under Regulation 34(2)(f) SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, a report on Business Responsibility is attached and forms a part of this report.
Corporate Social Responsibility
In line with the provisions of the Companies Act, 2013 as amended from time to time and the Rules framed there under with respect to the Corporate Social Responsibility (CSR), the Company has formulated a Policy on CSR and has also constituted a CSR Committee to recommend and monitor expenditure on CSR. In terms of the requisite requirements, due processes and controls have been set up by the Company to ensure that all CSR contributions sanctioned by the CSR committee are expended by the relevant organisations for the purpose for which they were sanctioned.
The details of CSR Expenditure are given in the prescribed format and forms part of this Report.
The same is annexed as Annexure "A".
The Company continues to actively support deserving social causes for improvement and upliftment of various sections of the society as has been its practice for past several years.
Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of section 134(3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules 2014 is set out in Annexure "D" and forms a part of this Report.
Your Directors would like to draw your attention to Section 20 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, as may be amended from time, which permits paperless compliances and service of notice/documents (including annual report) through electronic mode to its members. To support this green initiative of the Central Government in full measure, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holdings with their concerned depository participants and / or with the Company.
Further, the Company shall also sent the Annual Report for F.Y. 2021-22 to all the shareholders through electronic
means as per the relaxations provided by MCA Circular dated May 05, 2020, Janaury 13, 2021 and December 14, 2021 and SEBI Circular dated May 12, 2020, January 15, 2021 and May 13, 2022 due to COVID-19 pandemic which shall also enhance the Green Initiative measures taken by the Company.
Your Directors state that no disclosures or reporting is required in respect of the following items as there were no transactions on these items during the year under the review:
a) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.
b) Issue of Equity Shares with differential voting rights, dividend or otherwise as per Section 43(a)(ii) of the Companies Act, 2013.
c) Issue of Shares including Sweat Equity Shares to the employees of the Company under any scheme as per provisions of Section 54(1 )(d) of the Companies Act, 2013.
d) No instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Companies Act, 2013
e) There was no revision to the financial statements for the year under review.
Your Directors would like to acknowledge the continued support and co-operation from its Bankers, Government Bodies, and Business Associates which has helped the Company to sustain its growth during the year.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : May 17, 2022 Chairman
Mar 31, 2018
DIRECTORSâ REPORT
Dear Members,
The Directors are pleased to present their Report together with the Audited Accounts of the Company for the year ended 31 March 2018.
|
FINANCIAL RESULTS |
(Rs, In Crores) |
|
|
Particulars |
For the year |
For the year |
|
31 March 2018 |
31 March 2017 |
|
|
Gross Revenues |
989.27 |
818.28 |
|
Profit before Tax |
253.07 |
146.18 |
|
Profit after Tax |
168.61 |
96.83 |
|
Earnings per share of Face Value of Rs, 10/- each - Basic |
10.27 |
5.98 |
|
- Diluted |
10.15 |
5.89 |
Performance of the Company
Your Directors are pleased to inform you that the performance of your Company showed a substantial improvement for the year under review as compared to the previous year 2016-17. The performance is significant considering relatively low growth in global rubber consumption for most part of the year. Demand for rubber chemicals is a derived demand and is directly a function of Rubber consumption which saw a growth of about 3%. Against this backdrop, your company has posted Gross Revenues of Rs, 989 Crore as compared to Rs, 818 Crore for the previous year. It may be noted that for the second consecutive year, we achieved growth in sales volume of 12.5%.
Compliance audits and strict implementation of Pollution Control norms by China, resulted into closure of defaulting industries there and created a serious disruption in supply chain. Since over 70% of world''s rubber chemical requirement is met by China, this disturbance resulted into temporary shortage and price escalation. However, your company continued its ethical business strategy and all regular customers were served in a timely manner without abnormal price escalations. Chinese manufacturers have started corrective actions and market is expected to stabilize in near future. However, price bands of rubber chemicals could shift upward due to enhanced compliance costs.
Domestic Market
Your company has recorded a Net Domestic turnover of Rs,700 Crore as against Rs, 513 Crore for the previous year. The Company''s domestic sales volumes grew by 14% as compared to the previous Financial Year 2016-17 despite rubber consumption increasing by 3.5%. During the year, to meet sudden surge in requirement of rubber chemicals, the Company had to raise the production levels of all the products.
The Domestic tyre industry recorded a healthy growth occasioned by the growth in automobile sector and imposition of anti-dumping duty on radial Tyres. Higher capacity utilization by tyre industry resulted into higher demand of rubber chemicals for domestic sector. Some of the domestic non- tyre companies faced subdued industrial activity due to paucity of some article inputs. As a result, in certain segments of non-tyre industries, we could not achieve double digit growth.
Though China accounts for 70% of world''s rubber chemical production, it only consumes about 33-35% of the rubber consumption, resulting in its exports surplus, thereby occasioning the likelihood of dumping into the neighbourhood markets including India.
Exports
For the year under review, Export showed a growth of 8% in volume and 17% in revenue. Your company on the back of positive indicators in global rubber consumption coupled with the Company''s strength in specific application areas, recorded one of its best export performances over the years. The issues faced by the Chinese competitors because of the stricter Government measures, have created tightness in supply aspects at the market place. Owing to this, your Company could participate more aggressively in certain key customers accounts on a relatively level playing field. As a result, we have recorded an Export Turnover of Rs, 255 Crore as compared to Rs, 218 Crore in the previous year.
Your company strategically continues to promote some high quality and high value speciality products in the export market which contribute significantly to our export turnover. In case of other products, where competition is acute from China/Korea/EU and pricing unattractive, your company continues to maintain a limited presence in certain select key accounts, focusing on long term business strategy as well as to ensure better capacity utilisation.
Operations
The production of all products was undertaken with higher operating rate keeping in mind the market needs. On the input price front, crude Oil witnessed a volatile range of US $ 55 per barrel - US $ 70 per barrel for most part of the year. Benzene prices too witnessed sharp movement between US $ 750- US $ 1050 per M.T. This coupled with supply issues from China, resulted in increased prices of all inputs. Most critical input costs increased by 20% to 50% as compared to the prevailing levels at the beginning of the year. We have been procuring raw materials in a judicious manner and maintaining the inventories at appropriate levels. In few items, we have maintained adequate levels of inventory so as to mitigate the rising cost of production. This fortunately benefitted the Company in terms of higher EBIDTA margins for the 2nd half of the year.
Project
It may be recalled that the Board of Directors of your company had approved a capital expenditure (capex) of Rs, 170 Crore in March 2017. In terms of the said plan, capex which was to be incurred at Navi Mumbai, shall be commissioned by the end of June 2018. Dahej expansion plans are progressing as scheduled and expected to commission during the 3rd quarter of the Financial Year 2018-19.
In view of the overall market conditions, significant expansion plans of the tyre customers and the environmental measures affecting the production capabilities of Chinese competitors, the Board of Directors, after careful evaluation in December 2017/ January
2018, has approved further expansion of '' 255 Crore at the Company''s plants at Navi Mumbai & Dahej. The said expansion is expected to be commissioned during the first half of FY 2019-20. This will enhance the capacities of accelerators and anti-oxidants. In view of the company''s current liquidity position and the likely business scenario in the upcoming financial year, the board is confident that the said Capital Expenditure can be largely financed through internal accruals.
Finance and Rating
During the year under review, in view of optimum utilization of resources, the company generated cash profits and did not utilize any working capital facilities for the whole year. The Company as a result, incurred lower Finance cost for the year under review.
The Credit Ratings Agency CARE has reaffirmed ratings as CARE AA (Double A) (Stable) for long term Bank Facilities (Terms loan as well as Fund Based facilities) and CARE A1 (A One plus) rating for short term Non-Fund Bank facilities. Further, CARE has also reaffirmed CARE A1 rating for issue of Commercial Paper which has been carved out of the working capital facilities.
In addition to the above, the Company had also approached CRISIL Limited for credit ratings for the banking facilities. The said Agency has also assigned CRISIL AA for its Fund-based Bank Facilities and CRISIL A1 (stable) for its Non - Fund-based Bank Facilities
Dividend
Your Directors are pleased to recommend payment of dividend of Rs, 2.50 per share of Rs,10/- each (25%), on the equity share capital of the Company [previous year Rs,1.80/- per share of Rs,10/- (18%)]. The dividend, together with the tax on Dividend, will absorb a sum of Rs, 49.15 crore (previous year Rs, 35.16 crore).
Transfer of Unpaid Dividend and corresponding Equity Shares to the Investor Education and Protection Fund (IEPF)
In terms of the provisions of Section 125 of the Companies Act, 2013 read with the Companies (Declaration and Payment of Dividend) Rules, 2014, all unclaimed / unpaid dividend up to FY 2009-10 has been transferred to the Investor Education and Protection Fund and unclaimed / un-encashed dividend for the FY 2010-11 paid on 27 July 2011 is due for transfer to IEPF on 2 September 2018.
The Ministry of Corporate Affairs (MCA) had vide its Notification dated 5th September 2016 notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules). In terms of the Rules, the Equity Shares in respect of which the Dividend has not been claimed for seven consecutive years or more, are also required to be transferred to the IEPF in the prescribed manner.
The said Rules were amended from time to time. As per the latest Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017, notified by MCA vide its Notification dated 13th October 2017, the due date for transfer of Equity Shares in respect of Dividend pertaining to the Financial Year 2009-10 was 31st October
2017. The Company had intimated individually to concerned shareholders and published necessary notice in the newspapers intimating the shareholders about the impending transfer and the modus operandi for the same.
In compliance with the Amended Rules, the Company has transferred 12,02,824 Equity shares to the designated demat account opened by IEPF Authority with NSDL through Punjab National Bank i.e. account no. IN300708 10656671, belonging to those shareholders holding shares both in dematerialized form as well as physical form, who had not encashed their Dividend for a period of 7 years or more beginning from the Financial Year 2009-10. The shares held in demat mode were transferred in November 2017 and those held in physical mode were transferred in December 2017.
The Company has also uploaded the details of the shareholders whose shares were liable to be transferred to IEPF on its website viz., www.nocil.com.
Fixed Deposits
All the unclaimed fixed deposits/ unclaimed fixed deposit warrants have been transferred to Investor Education & Protection Fund, as required under Section 125 of the Companies Act, 2013. Since, the Company no longer accepts deposits from public, there are no outstanding/unclaimed deposits as at 31 March 2018.
Insurance
The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and as required under the various legislative enactments.
Health, Safety and Environment
Highest HSE standard is a competency parameter for your company and all policies and activities are directed towards setting up benchmarks in safety and environment standards. Safety standards of the company at all locations ensures safety of the employees, visitors, contractors and community around the locations. A dedicated cell in our research Centre directs its efforts to develop new environmental strategies to achieve highest sustainability in the business.
Your Company operates its facilities in a manner consistent with all the applicable HSE laws and regulations, adheres to well laid down policies, systems and procedures, safety awareness and training to maintain the workplace free of any significant incidents and risk to safety and health of all stakeholders.
The Company has in place a very effective Emergency Handling Procedure to provide very prompt and effective response to any emergency situations arising within its premises as well as in the neighborhood.
The Company is very pleased to inform you that we are now certified for âRESPONSIBLE CAREâ with effect from 1st December 2017. Responsible Care evaluates safety and environmental impact of products from inception, through manufacture and distribution, to ultimate reuse, recycle and disposal, and involves all the stakeholders in the decision-making process. Various programs and studies have been undertaken related to Safety, Health and Environment and are being implemented as a part of this journey.
Your Company actively participates in the Mutual Aid Group, CETP and solid waste disposal management in the Thane Belapur Industrial Area and has earned the reputation amongst the industry members and statutory authorities for prompt technical support and help during any emergency situations.
Health of employees is of utmost importance. Regular check-up of all employees is done to monitor their health. Work area monitoring to check concentration of chemicals, noise level, Illumination levels and quality of ambient air is regularly done to ensure safe and healthy work environment.
HSE performance of the Company is reviewed by your Board every quarter and guidance and valuable suggestions made by the Board are incorporated to further strengthen HSE practice of the Company.
Total Quality Management
Total quality management in your company is an integrated effort by all functions, from supply chain to application support at customer end, to improve quality performance at each level with a focus on continuous improvement. TQM is a focused objective for your company and management commitment is demonstrated through continuous participation in TQM initiatives.
TQM implementation has strengthened your company''s competitive position. It has improved your company''s adaptability to emerging market conditions particularly in the areas of environmental impact and national and international regulations.
Your company is certified for ISO 9001:2015, IS0 14001:2015, OHSAS 18001:2007 and IATF 16949: 2016 which has a positive impact in terms of customer satisfaction and long-term customer retention. Quality Assurance laboratory of your company is accredited in accordance with ISO 17025:2005 standard.
Dahej location has adopted 5S culture to create an international operating standard.
TQM will continue to contribute in organizational development resulting into enhanced shareholder and stakeholder value.
Research & Development
The research team of your company continues to focus innovative initiatives which will yield long term benefits to the Rubber Chemical business and society at large.
Research & Development is at the core of our continuous improvement Strategy. It is the major enabling factor to fulfil our vision to be a World Class, Customer focused, Innovative organization in the field of rubber chemicals. In view of strengthening R&D, your Board has regularly encouraged investments in R&D and substantial efforts are consistently on to increase talented Manpower pool & to provide necessary Resources & infrastructure for modernization.
The Company''s R & D team have made significant contribution in development of several indigenous Process technologies and new products & one of the major being successful commercialization of novel & greener intermediate technology & further improvement at Dahej. These efforts culminated in growth of the company and improving the bottom line.
The Company''s Research center focuses on the following key areas:
> Enhancement of plant capacities by employing different strategies and continuous improvement in process efficiency and Product quality to satisfy the needs of the National & International customers.
> Development of Niche products using innovative technologies & Green chemistry concepts.
- Adopting various innovative environmental technologies for sustainability.
- Development of new generation environmentally sustainable processes for growth.
These initiatives resulted in de-bottlenecking of plant capacities to cater to the growing market requirements and environmental needs. Research initiatives of your company are recognised by national and international customers and the company enjoys a privileged status as a technology-oriented organization. Novel green initiatives of the company in the field of environmental strategies are appreciated by authorities, setting a benchmark as an environmentally friendly chemical business.
Your board is pleased to inform that your company has also received approval of extension of the Company''s in -house R & D facility from the Ministry of Science and Technology, New Delhi.
Risk Assessment and Management
Your Company has a well-defined Risk Management System in place, as a part of its good Corporate Governance practices. Your Company has assigned the ownership of key risks to various Risk Owners and has made the concerned departments and officials responsible for mitigation plans and review of these risks from time to time. The risks are identified at various departmental levels and suitable mitigation measures are thereafter adopted. These are further subjected to a quarterly review by the Risk Co-ordination Committee as well as the Board. The Business plans are devised and approved by the Board keeping in mind risk factors which can significantly impact the performance of the business. All major capital expenditure commitments are subjected to thorough scrutiny by the Board and investments are permitted only on being satisfied about their return or utility to the Company. Expansion projects are subject to detailed risk assessment and sensitivity tests and approved only after found to pass eligibility criteria.
Internal Control Systems and their Adequacy
Adequate internal controls, systems, and checks are in place, commensurate with the size of the company and the nature of its business. The management exercises financial control on the company''s operations through a well-defined budget monitoring process and specifying standard operating procedures. Your Company has appointed an external professional agency M/s. Aneja Associates, Chartered Accountants, to conduct the internal audit, and the findings and recommendations of the Internal Auditors are placed before the Audit Committee of your Board regularly.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internal controls in the company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditors, the management undertakes corrective action in the respective areas and thereby further strengthens the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Audit committee of the Board ensures that necessary corrective actions suggested are put in place. In addition, during the year under report, the Audit Committee and the Board have specifically reviewed the Internal Control and Financial Reporting process prevalent in the Company. On a periodical basis, the Board also engages the services of professional experts in the said field to ensure that adequate financial controls and systems are in place. At the end of a period, the CEO/CFO gives a declaration in the prescribed format to certify that the financial statements prepared are accurate and complete in all aspects and that there are no significant issues that can impair the financial performance of the Company.
Vigil Mechanism / Whistle Blower Policy
The company has a Vigil Mechanism Policy to deal with an instance of fraud or mismanagement, if any. The details of the Policy are explained in the Corporate Governance Report and are also posted on the website of the Company.
Policy on Sexual Harassment of Women at Workplace
As per the requirement under the provisions made under section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal), Act, 2013, an appropriate Committee has been formed to attend to the complaints of the sexual harassment at workplace, if any, made by female employees. The committee of 4 members consists of two female employees, Vice President-Human Resource and a practicing Advocate in the field of labour laws and regulations. During the year under review, no complaints were received. Wide publicity continues to be given with respect to the policy to all employees and the policy is also displayed on the company''s website.
DIRECTORS
- Number of Board Meetings
During the year the Board of Directors met eight times as per details stated in the report on Corporate Governance.
- Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulations 17 and 25 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, of individual Directors as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The various criteria considered for evaluation of Whole Time / Executive Directors included qualification, experience, knowledge, commitment, integrity, leadership, engagement, transparency, analysis, decision making, governance etc. The Board commended the valuable contributions and the guidance provided by each Director in achieving the desired levels of growth.
- Declaration of Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the Independent Directors have placed the necessary declaration in terms of the conditions laid down under Section 149(6) of the Companies Act, 2013 in the Board Meeting held on 4th May 2018.
- Familiarization Programme to Independent Directors
The company provides suitable familiarization programme to Independent Directors to familiarize themselves with the nature of the industry in which the company operates and business model of the company in addition to regular presentation on Expansion plans and their updates, technical operations, marketing and exports and financial statements. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, Listing Regulations about their roles, rights and responsibilities as Directors of the company. The details of the familiarization programme have been disclosed and updated from time to time on the company''s website and its web link is: http://www. nocil.com/images/fckeditor/file/Familiarization-Programme-for-IDS.pdf.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3)(c) of the Companies Act, 2013:
(a) That in the preparation of the annual financial statements for the year ended 31st March 2018, the Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI) have been followed along with proper explanations relating to material departures, if any;
(b) That such accounting policies as mentioned in Note 1 forming part of the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent to give a true and fair view of the of the Company as at 31 March 2018.
(c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) That the annual financial statements have been prepared on a going concern basis;
(e) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
(f) That system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
The above assessment of the Board was further strengthened by periodic review of internal controls by both internal as well as external auditors.
Remuneration policy
During the Financial Year 2014-15, based on the recommendations of the Nomination & Remuneration committee, the Board of Directors approved a Policy for selection and appointment of Directors, Senior Management and their remuneration. There has been no change in the said Policy for the year under review. The Salient features of Remuneration Policy are given in the Corporate Governance Report and criteria for remuneration to independent directors / non-executive directors is also available on the Company''s website.
Investments in Navin Fluorine International Limited and Mafatlal Industries Limited
Your Company in terms of the Board approval, undertook sale and purchase transactions of Equity Shares in Navin Fluorine International Limited (NFIL) and Mafatlal Industries Limited (MIL) respectively in the previous year. These transactions were from time to time disclosed to the Stock Exchanges as per the SEBI Regulations.
The Company has disposed of its entire balance shareholding in NFIL. The cash surplus generated by the Company on sale of shares of NFIL (net of acquisition costs of MIL''s shares) aggregating Rs, 115 Crore has been re-invested by the Company in suitable short-term investments. This income has been routed through the Other Comprehensive Income (OCI), as per the Indian Accounting Standards (Ind AS).
Related Party Transactions
All related party transactions that were entered into during the financial year were at an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, and Key Managerial Personnel, subsidiary company or other designated persons which may have a potential conflict with the interest of the company at large except as stated in the Financial Statements / Directors'' Report.
As per the Related Party Transactions Policy, approved by the Board of Directors of the Company, during the year under review, the Company has entered into related party transactions based upon the omnibus approval granted by the Audit Committee. On quarterly basis, the Audit Committee reviewed such transactions for which omnibus approval was given.
Particulars of contracts or arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed form for FY 2017-18 are given in Annexure âGâ.
The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website and its weblink is http://www.nocil.com/images/fckeditor/file/Policy-on-Related-Party-Transaction.pdf
Loans, Guarantees or Investments
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013, are given in the Notes forming part of Financial Statements for the year ended 31st March 2018.
Extract of Annual Return
Extract of Annual Return for the Financial Year ended on 31 March 2018 as required by Section 92 (3) of the Companies Act 2013, is annexed as Annexure âEâ.
Subsidiary Company
PIL Chemicals Limited, (PIL) has recorded a Turnover of Rs, 14.63 Crores and Profit before Tax of Rs, 1.96 Crores, for the year under review. The Board of Directors of PIL recommended a Dividend of Re.0.60/-per share.
The Company does not have any material subsidiary, however, the company has formulated a policy for determining material subsidiary(ies) and such policy has been disclosed on the company''s website and its weblink is http://www.nocil.com/images/ fckeditor/file/Policy-on-Material-Subsidiaries.pdf
Pursuant to the requirements of Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the details of Loans /Advances made to and investments made in the subsidiary have been furnished in Notes forming part of the Accounts.
A statement containing the salient features of the financial statement of the Company''s subsidiary under the provisions of section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 has been annexed in prescribed form AOC -1.
The audited accounts of the subsidiary company are placed on the Company''s website and the members interested in obtaining copy of annual report of the subsidiary company are requested to get in touch with the Office of the Company Secretary.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by your Company in accordance with the applicable Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs and the same together with Auditors'' Report thereon form part of the Annual Report. The financial statements have been prepared as per Division II of Schedule III issued by the Ministry of Corporate Affairs vide its Notification dated 6th April 2016.
Personnel
The relations, during the year, between the employees and the management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued support and co-operation during the year under review.
Stock Options
In terms of your approval, read with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended, the details required to be provided under the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in Annexure âCâ to this Report.
Particulars of Employees
The information required under section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 in respect of employees of the Company is provided in Annexure âFâ.
Appointment/Reappointment of Directors and Key Managerial Personnel
During the year under review, Mr. C. R. Gupte superannuated as Managing Director w.e.f. 31st July 2017. He was associated with the Company for 41 years and has been instrumental in achieving substantial growth for the company both domestic as well overseas. The Board takes the opportunity to sincerely thank Mr. C. R. Gupte for the excellent contribution made as Managing Director and wish him very healthy and peaceful retired life.
Mr. S.R. Deo, who was Deputy Managing Director took over as Managing Director of the Company effective from 1st August 2017. Mr. Deo earlier served as the Deputy Managing Director and Executive Director & President (Operations). Mr. Deo is M. Tech in Chemical Engineering from the Indian Institute of Technology,
Kanpur. He has contributed significantly to improve the plant efficiencies, product quality, Health, Safety and Environment (HSE) standards in the company, Human Resources strategy to meet the future business challenges, creating strong technical team of Research and Technology for indigenous development of technologies and its implementation. The Board takes the opportunity to wish him success in all his future endeavors.
Pursuant to Section 152(6) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Priyavrata H. Mafatlal, Director retires by rotation at the forthcoming Annual General Meeting. Being eligible, he offers himself for re-appointment.
Auditors
Pursuant to the requirement of Section 139(1) of the Companies Act, 2013, at the Annual General Meeting held on 27th July 2017, the Members had accorded their approval for the appointment of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, Mumbai as the Statutory Auditors of the Company to examine and audit the accounts of the Company for the Financial Years 2017-18 to 2021-22. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for re-appointment as Auditors of the Company. As required under Regulation 33(1) (d) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. As required by Section 139(1) of the Companies Act, 2013, the appointment of Statutory Auditors is placed before the Members for ratification.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company are required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s Kishore Bhatia & Associates to audit the cost accounts of the Company for the financial year 2018-19 on a remuneration of '' 6.50 lakhs.
The Cost Auditors have given a Certificate to the effect that the appointment, if made, will be within the prescribed limits specified under section 141 of the Companies Act, 2013.
The Audit Committee has obtained a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company. The Cost Audit Report in respect of F.Y. 2016-17 was filed on 17th August 2017 and the Report for the Financial Year 2017-18 will be filed on or before the due date i.e. 27th September 2018.
As required under the Companies Act, 2013, the remuneration payable to the cost auditor is placed before the Members for their ratification.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. Makarand M. Joshi & Co., Company Secretaries, a firm of Company Secretaries in Practice to carry out the Secretarial Audit of the Company for FY 2017-18. The Report of the Secretarial Audit is annexed herewith as Annexure âBâ.
Report on Corporate Governance
As per Regulation 34 read with Schedule V (C) of SEBI (Listing Obligation and Disclosure Requirements), Regulations, 2015, a separate section on Report on Corporate Governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance is attached.
Report on Management Discussion and Analysis
As required under Regulation 34 read with Schedule V (B) of SEBI (Listing Obligation and Disclosure Requirements), Regulations,2015, report on âManagement Discussion and Analysisâ is attached and forms a part of this Report.
Corporate Social Responsibility
In line with the provisions of the Companies Act, 2013 and the rules framed there under with respect to the Corporate Social Responsibility (CSR), your company has formulated a Policy on CSR and has also constituted a CSR Committee to recommend and monitor expenditure on CSR. The details of CSR Expenditure are given in the prescribed format and forms part of this Report. The same is annexed as Annexure âAâ.
The company continues to actively support deserving social causes for improvement and upliftment of various sections of the society as has been its practice for past several years.
Other Particulars
Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules 2014 is set out in Annexure âDâ and forms a part of this Report.
Green Initiative
Your Directors would like to draw your attention to Section 20 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, as may be amended from time, which permits paperless compliances and also service of notice/ documents (including annual report) through electronic mode to its members. To support this green initiative of the Central Government in full measure, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holdings with their concerned depositary participants and / or with the Company.
Acknowledgements
Your Directors would like to acknowledge the continued support and co-operation from its Bankers, Government Bodies, and Business Associates which has helped the company to sustain its growth during the year.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : 4 May 2018 Chairman
Mar 31, 2017
The Directors are pleased to present their Report together with the Audited Accounts of the Company for the year ended 31 March 2017.
|
FINANCIAL RESULTS |
|
(Rs. In Crores) |
|
Particulars |
For the year |
For the year |
|
|
31 March 2017 |
31 March 2016 |
|
Gross Revenue |
818.28 |
788.61 |
|
Less : Excise Duty |
76.06 |
73.40 |
|
Net Revenue |
742.22 |
715.21 |
|
Profit before Tax |
170.47 |
118.13 |
|
Profit after Tax |
120.09 |
77.74 |
|
Earnings per share of Face Value of Rs. 10/- each - Basic. |
7.42 |
4.83 |
|
- Diluted |
7.31 |
4.78 |
Performance of the Company
A significant improvement in the operating performance of your company was witnessed during the financial year 2016-17 inspite of the challenges of low growth in global rubber consumption and a sudden increase in input costs during the last quarter of the financial year. Demand for rubber chemicals is a derived demand and is directly a function of global rubber consumption which for the year saw a modest growth of 1.60%. Against this backdrop, your company has posted a gross revenue of Rs.818 crores as compared to Rs.789 crores for the previous year. The growth in sales volume for the year also was very good at 12.5%. The performance also reflects relatively stable input prices (for the first half of the year) and commensurate lower selling prices. The lower selling prices also reflect the stiff competitive pressures in the market.
Domestic Market
Your company achieved domestic sales of Rs.589 crores against the previous year''s figures of Rs.580 crores. The value increase appears to be modest due to lower prices for major part of the year. However, growth in volumes has been creditable and we have outperformed the market growth significantly. To put this in the right perspective, domestic rubber consumption recorded an estimated growth of 5.8% whereas our local sales volumes grew by 10%.
During the year we had to trim production levels of some products in order to manage inventories in a situation of weak demand. Our major customers too had to operate at lower than optimum levels due to large imports of low-price tyres, mainly from China. With our customers improving capacity utilization towards the last quarter of the year, we are confident of improving volumes going forward.
For most of the year, our competitors from China, Korea and EU posted low C.I.F prices to India to counter anti-dumping duties and in an attempt to place larger volumes, as they were faced with weak demand in their domestic markets. Also some of our local competitors also adopted a low price approach to gain volumes. This continued even in the second half of the year, although raw material prices by then had started climbing towards end 2016.
It was only towards the end of the financial year 2016-17 that we saw some efforts by the international rubber chemical manufacturers to improve pricing in response to the sharply increased raw materials and pollution abatement costs.
On our part, the attempt was to try and strike a balance between volumes and realizations in a prudent fashion by making small price corrections as and when possible without much sacrifice in volumes.
As mentioned, the sharp increases in raw material prices (particularly in second half of the Financial Year 2016-17) had already resulted in higher rubber chemicals prices. These increases will largely be effective for the first quarter of 2017-18. Your company will judiciously adapt to this change in the market place keeping in mind our objective of long term sustainable growth. Some corrections were effected in January-March 2017 and some more could be made effective from April 2017.
The domestic sales volumes have to be seen from the perspective of total rubber consumption in the Indian market along with the automobile production. The automobile production for the year under review too recorded a growth of 5.44%.
Exports
On the back of small but positive indicators in the global rubber consumption and our strength in some specific markets/ application areas, your company managed to record one of its best export performances in volume terms in recent years.
The recent problems faced by some of our Chinese competitors whose operations were severely constrained by stricter environmental and pollution control enforcement by the authorities there, have created a certain tightness in the supply of products in the market place. Owing to this, your Company could participate more aggressively in certain international key accounts on a relatively better level playing field. We have recorded an Export Turnover of Rs.218 Crores as compared to Rs.200 Crores in the previous Year.
Your company strategically continues to promote some high quality and high value specialty products in the export market which contribute significantly to our export turnover. In case of other products, where competition is acute from China/Korea/EU and pricing unattractive, your company continues to maintain a limited presence in certain select key accounts, keeping long term goals and strategy in mind, as well as to ensure better utilization of our own capacity.
Operations
The production of all products was as planned, with a higher level of activity in certain key products to align with the market trends.
On the Input prices front, Crude oil prices witnessed a sudden surge during the second half of the year. With Benzene price going up sharply from US$ 600 to about US$ 1,000, most of our critical inputs also increased in tandem in the range of 30% to 80% compared to the price levels at the beginning of the year.
We have been procuring our raw materials in a judicious manner and also maintaining working inventories of both raw materials as well as finished products at appropriate levels. This has helped us to maintain our margins without getting adversely impacted by these sudden increases in input costs.
Most other costs did not show any significant increase.
Project
After a careful evaluation of the overall market conditions, and factoring the expansion plans of various major rubber industry players, the management of the company felt the need to expand our existing production capacities to fulfill the increasing demand for our productions. The Board of Directors has approved the same at the Company''s plants situated at Navi Mumbai and Dahej. The total Capital Expenditure envisaged is approx. Rs.170 Crore. The expansion project is expected to be commissioned by the end of second Quarter of the Financial Year 2018-19. In view of the company''s current liquidity position and the likely business scenario in the upcoming financial year, the board is confident that the said Capital Expenditure can be largely financed through internal accruals.
Finance & Rating
During the year under review, your Company generated cash profits at adequate levels which did not necessitate additional / fresh working capital borrowings from Banks/ Financial Institutions. Hence, the Company has incurred finance costs only towards the Term Loan.
The Credit Rating Agency CARE, in their recent evaluation, have enhanced your company''s Long Term Credit Rating from AA- to AA and reaffirmed the Short term borrowings rating at the highest grade of A1 .
During the year your Company, repaid the term loan of Rs.10 crore to its lender as per the terms of the agreement.
Dividend
Your Directors are pleased to recommend payment of dividend of Rs.1.80 per share of Rs.10/- each ( 18 %), on the equity share capital of the Company [previous year Rs.1.20/- per share of Rs.10/- (12%)]. The dividend, together with the tax on Dividend, will absorb a sum of Rs.35.16 crore (previous year Rs.23.22 crore).
Transfer of Unpaid Dividend and corresponding Equity Shares to the Investor Education and Protection Fund (IEPF)
In terms of the provisions of Section 125 of the Companies Act, 2013 read with the Companies (Declaration and Payment of Dividend) Rules, 2014, all unclaimed / unpaid dividend up to FY 2008-09 has been transferred to the Investor Education and Protection Fund and unclaimed / un-encashed dividend for the FY 2009-10 paid on 30 July 2010 is due for transfer to IEPF on 5 September 2017.
The Ministry of Corporate Affairs (MCA) vide its Notification dated 5th September 2016 notified the Investor Education and Protection Fund Authority ( Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules) followed by an amendment notified on 28th February 2017 . In terms of the said Rules, the Equity Shares in respect of which the Dividend has not been claimed for seven consecutive years or more, are also required to be transferred to the IEPF in the prescribed manner.
Necessary communication to shareholders and newspaper notices have been issued in terms of the rules. The members are requested to claim / encash the unpaid / unclaimed Dividend for FY 2009-10 onwards so that the shares are not transferred to the IEPF. Further, notification from MCA regarding the modus operandi / procedure for such transfer of equity shares to IEPF is awaited, subsequent to which appropriate actions will be taken by the Company.
The list of shareholders who have not claimed / encashed Dividend Warrants for previous seven years is available on the website of the Company.
Registrar and Share Transfer Agents (RTA)
As you are aware Securities & Exchange Board of India (SEBI) had vide its order dated 22 March 2016 banned Sharepro Services (India) Pvt Ltd (âSharepro''), the Company''s erstwhile Registrar and Transfer Agent (RTA) from performing the responsibilities as RTA with immediate effect.
In compliance with the SEBI''s Order, with effect from 23 May 2016, the Company has appointed Karvy Computershare Private Limited (âKarvy'') as the Company''s RTA.
Fixed Deposits
All the unclaimed fixed deposits/ unclaimed fixed deposit warrants have been transferred to Investor Education & Protection Fund, as required under Section 125 of the Companies Act, 2013. Since, the Company no longer accepts deposits from public, there are no outstanding/unclaimed deposits as at 31 March 2017.
Insurance
The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.
Health, Safety and Environment
Your company is committed to highest level of HSE standards and integrating the same into business objectives to protect the environment and ensure the safety of employees, contractors, visitors and the communities around including suppliers and customers.
Your Company operates its facilities in a manner consistent with all the applicable HSE laws and regulations, adheres to well laid down policies, systems and procedures and has in place emergency handling procedures to provide very prompt and effective response to any emergency situation in the neighbourhood or society around the premises.
Company has Occupational Health Centres (OHC) at all its locations manned by a team of experienced doctors and male nurses. Regular health checks of all employees including contract employees is carried out every year which also meets statutory compliance requirement. Individual need based counselling of employees is done and health awareness programmes are held regularly.
A dedicated cell of Research & Technology is relentlessly working towards improvements in Environmental standards. Key objectives of the cell are:
- Source reduction by recovery and reuse of useful and valuable molecules from individual plant discharge streams.
- Natural resource and energy conservation measures by employing new and novel technologies.
Dahej plant has successfully implemented this environment strategy and delivers continuous compliance through real time on line data transmission.
HSE performance of the Company is reviewed by your Board every quarter and guidance and valuable suggestions made by the Board are incorporated to further strengthen HSE practice of the Company.
Total Quality Management
Total quality management of your company focuses on improvement in quality and performance in all business processes and functions. TQM facilitates a disciplined approach and provides quality services internally and to all customers to achieve sustainable growth and healthy relationship with all employees, customers & suppliers.
Continuous improvement continues to be a key feature of your company''s TQM initiative. Audits by external agencies and customers and their valuable inputs results into strengthening of TQM culture across the organization. Planned annual targets for improvement and its review by the top management team demonstrates commitment of the management to enhance business value through TQM.
Your company has also ensured that its subsidiary and ancillary units are also certified for ISO 9001: 2008.
Dahej location is adopting 5S culture to create an international operating standard.
TQM will continue to be a focused objective for value enhancement of the rubber chemicals business.
Research & Development
In pursuit of your company''s vision to become a World class, customer focused, Innovative organization in the field of Rubber Chemicals, Research & Development function has been playing a pivotal role by developing novel and innovative process technologies in the following areas to accelerate growth strategies:
- Continuous improvement in process efficiency & Product quality to satisfy customer needs by employing advanced technologies & Process Intensification approaches;
- Sustainable environmental measures and Greening of existing processes through adoption of Green chemistry principles;
- Development of Niche Products & exploring innovative and novel technologies;
Strong R&D initiatives have led to de-bottlenecking of plant capacities, cost reduction through lower raw material consumption and increased participation in niche products market, resulting in better realization.
Research initiatives of your company are recognized by national and international customers and the company enjoys a privileged status as a technology oriented organization. Novel green initiatives of the company in the field of environmental strategies are appreciated by authorities, setting a benchmark as environmental friendly chemical business.
The research team of your company will continue the innovative initiatives which will yield long term benefits to the business and society.
Risk Assessment and Management
Your Company has a well-defined Risk Management System in place, as a part of its good Corporate Governance practices. Your Company has assigned the ownership of key risks to various Risk Owners and has made the concerned departments and officials responsible for mitigation plans and review of these risks from time to time. The risks are identified at various departmental levels and suitable mitigation measures are thereafter adopted. These are further subjected to a quarterly review by the Risk Co-ordination Committee as well as the Board. The Business plans for the future are devised and approved by the Board keeping in mind risk factors which can significantly impact the performance of the particular business. All major capital expenditure commitments are subjected to thorough scrutiny by the Board and investments are permitted only on being satisfied about their return or utility to the Company. Expansion projects are subject to detailed risk assessment and sensitivity tests and approved only after found to pass eligibility criteria.
Internal Control Systems and their Adequacy
Adequate internal controls, systems, and checks are in place, commensurate with the size of the company and the nature of its business. The management exercises financial control on the company''s operations through a well-defined budget monitoring process and specifying standard operating procedures. Your Company has appointed an external professional agency M/s. Aneja Associates, Chartered Accountants, to conduct the internal audit, and the findings and recommendations of the Internal Auditors are placed before the Audit Committee of your Board regularly.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internal controls in the company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditors, the management undertakes corrective action in the respective areas and thereby further strengthens the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Audit committee of the Board ensures that necessary corrective actions suggested are put in place. In addition during the year under report, the Audit Committee and the Board have specifically reviewed the Internal Control and Financial Reporting process prevalent in the Company. On a periodical basis, the Board also engages the services of professional experts in the said field in order to ensure that adequate financial controls and systems are in place. At the end of a period, the CEO/CFO gives a declaration in the appropriate format to certify that the financial statements prepared are accurate and complete in all aspects and that there are no significant issues that can impair the financial performance of the Company.
Vigil Mechanism / Whistle Blower Policy
The company has a Vigil Mechanism Policy to deal with an instance of fraud or mismanagement, if any. The details of the Policy are explained in the Corporate Governance Report and are also posted on the website of the Company.
Policy on Sexual Harassment of Women at Workplace
As per the requirement under the provisions made under section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, an appropriate Committee has been formed to attend to the complaints of the sexual harassment at workplace, if any, made by female employees. The committee of 4 members consists of two female employees, Vice President-Human Resource and a practicing Advocate in the field of labour laws and regulations. During the year under review, no complaints were received. Wide publicity continues to be given with respect to the policy to all employees and the policy is also displayed on the company''s website.
DIRECTORS
- Number of Board Meetings
During the year the Board of Directors met seven times as per details stated in the report on Corporate Governance.
- Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulations 17 and 25 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, of individual Directors as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The various criteria considered for the purpose of evaluation of Whole Time / Executive Directors included qualification, experience, knowledge, commitment, integrity, leadership, engagement, transparency, analysis, decision making, governance etc. The Board commended the valuable contributions and the guidance provided by each Director in achieving the desired levels of growth.
- Declaration of Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the Independent Directors have placed the necessary declaration in terms of the conditions laid down under Section 149(6) of the Companies Act, 2013 in the Board Meeting held on 8 May 2017.
- Familiarization Programme to Independent Directors
The company provides suitable familiarization programme to Independent Directors so as to familiarize themselves with the nature of the industry in which the company operates and business model of the company in addition to regular presentation on technical operations, marketing and exports and financial statements. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, Listing Regulations with regard to their roles, rights and responsibilities as Directors of the company. The details of the familiarization programme have been disclosed and updated from time to time on the company''s website and its web link is: http://www.nocil.com/images/fckeditor/file/ Familiarization-Programme-for-IDS.pdf.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3)(c) of the Companies Act, 2013:
(a) That in the preparation of the annual financial statements for the year ended 31 March, 2017, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;
(b) That such accounting policies as mentioned in Note 1 forming part of the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2017.
(c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) That the annual financial statements have been prepared on a going concern basis;
(e) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;
(f) That system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
The above assessment of the Board was further strengthened by periodic review of internal controls by both internal as well as external auditors.
Remuneration policy
During the Financial Year 2014-15, based on the recommendations of the Nomination & Remuneration Committee, the Board of Directors approved a Policy for selection and appointment of Directors, Senior Management and their remuneration. There has been no change in the said Policy for the year under review. The Salient features of Remuneration Policy are given in the Corporate Governance Report.
Restructuring of Promotersâ shareholding
During the year under review, an Agreement was executed between the promoters and the listed companies of the Arvind Mafatlal Group. The details of this arrangement are uploaded on the company''s website.
Pursuant to the Agreement, Mafatlal Industries Limited (MIL), the Company and Navin Fluorine International Limited (NFIL) realigned their inter-se shareholding and consequently the Company undertook purchase and sale transactions of Equity Shares which it held in MIL and NFIL respectively with a cash neutral position.
All the transactions were conducted as per the prevalent rules of SEBI and the gain on sale of shares of NFIL is shown as an exceptional item in the statement of profit and loss.
Related Party Transactions
With the requisite approval of Audit Committee and Board of Directors and as a part of the Family settlement and Succession Planning amongst Mr. H.A. Mafatlal, Mr. V.P. Mafatlal, their family members and family companies, your Company purchased 7,03,375 equity shares of MIL from NFIL and sold 95,325 equity shares held by the Company in NFIL to group companies owned by Mr. V. P. Mafatlal. The transaction was completed as block deal at market price on National Stock Exchange.
All other related party transactions that were entered into during the financial year were at an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel, subsidiary company or other designated persons which may have a potential conflict with the interest of the company at large except as stated above.
As per the Related Party Transactions Policy, approved by the Board of Directors of the Company, during the year under review, the Company has entered into related party transactions based upon the omnibus approval granted by the Audit Committee. On quarterly basis, the Audit Committee reviewed such transactions for which omnibus approval was given.
Particulars of contracts or arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed form for FY 2016-17 are given in Annexure âGâ.
The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website and its weblink is http://www.nocil.com/images/fckeditor/file/Policy-on-Related-Party-Transaction.pdf
Loans, Guarantees or Investments
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013, are given in the Notes forming part of Financial Statements for the year ended 31 March, 2017.
Extract of Annual Return
Extract of Annual Return for the Financial Year ended on 31 March 2017 as required by Section 92 (3) of the Companies Act, 2013, is annexed as Annexure âEâ.
Subsidiary Company
PIL Chemicals Limited, (PIL) has recorded a Turnover of Rs.12.56 Crores and Profit before Tax of Rs.1.04 Crores, for the year under review. The Board of Directors of PIL recommended a Dividend of Re.0.40 per share.
The Company does not have any material subsidiary, however, the company has formulated a policy for determining material subsidiary(ies) and such policy has been disclosed on the company''s website and its weblink is http://www.nocil.com/images/ fckeditor/file/Policy-on-Material-Subsidiaries.pdf
Pursuant to the requirements of Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the details of Loans /Advances made to and investments made in the subsidiary have been furnished in Notes forming part of the Accounts.
A statement containing the salient features of the financial statement of the Company''s subsidiary under the provisions of section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 has been annexed in prescribed form AOC -1
The audited accounts of the subsidiary company are placed on the Company''s website and the members interested in obtaining copy of annual report of the subsidiary company are requested to get in touch with the Office of the Company Secretary.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by your Company in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the same together with Auditors'' Report thereon form part of the Annual Report. The financial statements have been prepared as per Schedule III issued by the Ministry of Corporate Affairs.
Personnel
The relations, during the year, between the employees and the management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued support and co-operation during the year under review.
Stock Options
In terms of your approval, read with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, the details required to be provided under the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in AnnexureâCâ to this Report.
Particulars of Employees
The information required under section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 in respect of employees of the Company, are provided in Annexure âFâ.
Appointment/Reappointment of Directors and Key Managerial Personnel
Considering current business needs and future business expansion plans of the Company, the Board of Directors thought appropriate in the interest of the Company to appoint Mr. Hrishikesh A. Mafatlal as Executive Chairman effective 19 August 2016 for a period of 5 (five) years. Prior to that, Mr. Mafatlal was Non-Executive Chairman of the company representing the Promoter Group. The Company has secured the approval of the shareholders for his appointment by way of passing a special Resolution through the mechanism of the Postal Ballot. The details of the Postal Ballot are given under the Corporate Governance Section of the Annual Report.
In view of amicable restructuring and family settlement and succession between Mr. Hrishikesh A. Mafatlal and Mr. Vishad P. Mafatlal, the Board of Directors at its meeting held on 8 May, 2017, had appointed Mr. Priyavrata H. Mafatlal as an Additional Director (Promoter Group) pursuant to Section 161 of the Companies Act, 2013. As per the provisions of said section Mr. Mafatlal holds office as an Additional Director up to the date of the forthcoming Annual General Meeting and is eligible to be appointed as a Director liable to retire by rotation.
Mr. Vishad P. Mafatlal stepped down as Non-Executive Director-Promoter Group of the Company from 19 August 2016. The Board wishes to place on record the valuable contributions made by him during his tenure as a director of the company.
Pursuant to Section 152(6) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Vilas R. Gupte, Director retires by rotation at the forthcoming Annual General Meeting. Being eligible, he offers himself for re-appointment.
During the Financial Year under review, there has been no change in office of Key Managerial Personnel of the Company.
Auditors
Pursuant to the requirement of Section 139(1) of the Companies Act, 2013, M/s Deloitte Haskins and Sells LLP, Chartered Accountants, Mumbai were appointed as Statutory Auditors, for financial years 2014-15, 2015-16 and 2016-17 and will hold the office up to ensuing Annual General Meeting (AGM) of the Company.
In line with the applicable provisions of the Companies Act, 2013, M/s Deloitte Haskins and Sells LLP, are required to demit from the office of the Statutory Auditors at the conclusion of ensuing AGM on 27 July, 2017.
Based on the recommendations of the Audit Committee, the Board of Directors has, at its meeting held on 8 May 2017 recommended the appointment of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, Mumbai to be the Statutory Auditors of the Company to hold the office from conclusion of ensuing AGM until the conclusion of AGM to be held in the year 2022.
M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for appointment as Auditors of the Company. As required under Regulation 33 (1)(d) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. As required by Section 139(1) of the Companies Act, 2013, the appointment of Statutory Auditors is placed before the Members for approval. The appointment of the said firm shall be subject to ratification at every subsequent Annual General Meeting until the conclusion of AGM to be held in the year 2022.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s Kishore Bhatia & Associates to audit the cost accounts of the Company for the financial year 2017-18 on a remuneration of ''5 lakhs.
The Cost Auditors have given a Certificate to the effect that the appointment, if made, will be within the prescribed limits specified under section 141 of the Companies Act, 2013.
The Audit Committee has obtained a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company. The Cost Audit Report in respect of F.Y. 2015-16 was filed on 4 August 2016 and the Report for the Financial Year 2016-17 will be filed on or before the due date i.e. 30 September 2017.
As required under the Companies Act, 2013, the remuneration payable to the cost auditor is placed before the Members for their ratification.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. Makarand M. Joshi & Co., Company Secretaries, a firm of Company Secretaries in Practice to carry out the Secretarial Audit of the Company for FY 2016-17. The Report of the Secretarial Audit is annexed herewith as Annexure âBâ.
Report on Corporate Governance
As per Regulation 34 read with Schedule V (C) of SEBI (Listing Obligation and Disclosure Requirements), Regulations, 2015, a separate section on Report on Corporate Governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance is attached.
Report on Management Discussion and Analysis
As required under Regulation 34 read with Schedule V (B) of SEBI (Listing Obligation and Disclosure Requirements), Regulations, 2015, report on âManagement Discussion and Analysisâ is attached and forms a part of this Report.
Corporate Social Responsibility
In line with the provisions of the Companies Act, 2013 and the rules framed there under with respect to the Corporate Social Responsibility (CSR), your company has formulated a Policy on CSR and has also constituted a CSR Committee to recommend and monitor expenditure on CSR. The details of CSR Expenditure are given in the prescribed format and forms part of this Report. The same is annexed as Annexure âAâ.
The company continues to actively support deserving social causes for improvement and upliftment of various sections of the society as has been its practice for past several years.
Other Particulars
Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules 2014 is set out in Annexure âDâ and forms a part of this Report.
Green Initiative
Your Directors would like to draw your attention to Section 20 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, as may be amended from time, which permits paperless compliances and also service of notice/ documents (including annual report) through electronic mode to its members. To support this green initiative of the Central Government in full measure, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holdings with their concerned depositary participants and / or with the Company.
Acknowledgements
Your Directors would like to acknowledge the continued support and co-operation from its Bankers, Government Bodies, and Business Associates which has helped the company to sustain its growth even during these challenging times.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : 8 May 2017 Chairman
Mar 31, 2016
The Directors are pleased to present their Report together with the
Audited Accounts of the Company for the year ended 31 March 2016.
FINANCIAL RESULTS (Rs. in Crore)
Particulars For the year For the year
31 March 2016 31 March 2015
Gross Revenue 788.61 785.33
Less : Excise Duty 73.40 66.33
Net Revenue 715.21 719.00
Proft before Tax 118.13 85.65
Proft after Tax 77.74 56.75
Earnings per share
of Face Value
of Rs.10/- each - Basic 4.83 3.53
- Diluted 4.78 3.50
Proposed Dividend 19.29 16.08
Tax on Dividend 3.93 3.27
Performance of the Company
I am happy to inform you that the fnancial year 2015-16 saw a notable
improvement in the operating performance of your Company, even on the
back-drop of weak global demand, falling prices and over-capacities
etc. Demand for Rubber Chemicals is a derived demand and is directly a
function of Global Rubber Consumption, which for the year remained
relatively fat. Despite this, your Company has posted a growth of 4% in
its sales volume. It is pertinent to note that this growth was
achieved, in spite of a conscious decision to stay away from certain
traditional but non- strategic export markets,in the face of
unrealistically low pricing from Chinese and Korean suppliers.
The continued weakness in the price of Crude Oil and certain
Petrochemical building blocks, during the year, did have a favourable
impact on the Company''s Raw Material costs. However, these reductions
in costs were accompanied by reductions in selling prices of fnished
goods. In line with our usual long-term approach to business, we have
adjusted our selling prices to our regular customers to refect these
reductions in costs as also to maintain our business share at these
accounts, in line with the prevailing stiff competition.
Domestic Market
Your Company achieved Domestic Sales of Rs. 580 Crores against the
previous year''s fgure of Rs. 560 Crores. Although the value increase
appears to be modest, thanks to the reduction in the selling prices of
our products, it does not adequately capture the growth in the domestic
sales volume and market share, in this challenging year. Higher
domestic volumes, better product-mix and continual improvements in
operational effciencies, particularly at the new plant in Dahej, have
been key factors in improving the operating margins.
It may also be noted that the overall situation with our consuming
industry during the year remained weak. As a result, most of your
Company''s major customers had curtailed their capacity utilization.
Consequently, your Company was also forced to align its production plan
with the overall demand- trend, and in the face of un-remunerative
pricing offered by our Chinese and Korean competitors, compelled us to
consciously stay out of some of the customer accounts. As a result, we
had to reduce the production of some of products and their
intermediates,during the year. This however had the positive impact of
the Company reducing its inventory levels by Rs. 55 Crores, leading to a
signifcant reduction in working capital borrowings and bringing down
fnancing costs.
The Indian economy exhibited signifcant resilience during the year in
contrast to most other countries, China in particular. According to
most forecasts, India''s GDP growth, is expected to be in the region of
7.5% for the year 2016-17. Your Company''s management expects to
capitalize on this growth by further strengthening its premier position
as the largest domestic player in the Rubber Chemicals business. Given
the acknowledged quality of its products and services, your Company
sees 2016-17, as a year of signifcant opportunities, to grow its
volumes and improve its capacity utilization.
We expect that the major threat to this objective, is likely to be from
the continued and aggressive dumping of Rubber Chemicals at
unrealistically low prices by producers, mainly from China, Korea and
the European Union. The poor domestic demand in China due to the
slow-down in that country and the absence of growth in the EU Region
may create a situation, where rubber chemicals pricing may witness
further reductions in the near term. But, at the same time, the Crude
Oil and its downâstream derivatives have shown a hardening trend
towards the end of the fnancial year and as a result, the ability of
these competitors to sustain such low pricing may also come under
considerable strain.
In this context, it is worthwhile to note that the Government of India
has created to some extent, a level playing feld for your Company, by
imposing Anti-Dumping duty on six products, out of about twenty
products which your Company produces and markets. Ironically, the level
playing feld so provided by the Government, to quite some extent, was
neutralized by the conscious erosion in the prices of these products,
by competitors from China, Korea and the EU. Your Company continues to
face these challenges and continues to counter these, by offering high
quality products and service, judicious business decisions and further
helped by its long reputation of a dependable supplier to the rubber
industry.
Exports
Due to the weak prevalent market conditions in the European Union and
Japan, your Company''s export volumes remained subdued and pricing too
was affected due to aggressive price undercutting resorted to, by our
global competitors from China/Korea and EU. The slow-down in the
domestic demand in China,was one of the most important factors behind
this price undercutting despite which your Company during the year
achieved an export turnover of nearly Rs. 200 Crore. Your Company adopted
a judicious approach of promoting exports of only high
value/specialized products, and staying away from high volume products
with poor margins. In fact, your Company, over the past few years has
focussed on improving its sales-mix, by promoting some speciality and
high-value products to specifc customers,thereby improving its margins.
I am happy to inform that, with this approach, your Company, managed to
achieve improved proftability in the export segment, despite forgoing
volume growth. In case of some of the products, where competition is
acute from China/Korea/EU and pricing unattractive, your Company has
chosen to export these products, only to a certain select key
accounts,keeping in mind the equally important need to maintain
continuity at these accounts, as well as to ensure,our own capacity
utilization remained at reasonable levels.
Finance & Rating
During the year, your Company renewed its working capital facilities
with its existing bankers and further inducted State Bank of India and
IDFC Bank, into its Multiple Banking Arrangement. The Credit Rating
Agency CARE, in their recent evaluation, have re-affrmed your Company''s
Long Term Credit Rating at AA â and Short term borrowings rating at
A1 .
Your Company, with its improved cash fow position, also managed to
prepay its term loan of Rs. 25 crores, to one of its term loan lenders.
The other term loan lender, agreed to bring down the interest rate,
instead of accepting prepayment.
Dividend
Your Directors are pleased to recommend payment of dividend of Rs. 1.20
per share of Rs. 10/- each (12%), on the equity share capital of the
Company [previous year Rs. 1/- per share of Rs. 10/- each (10%)]. The
dividend, together with the tax on Dividend, will absorb a sum of Rs.
23.22 crore (previous year Rs. 19.35 crore).
Transfer of Unpaid Dividend to the Investor Education and Protection
Fund (IEPF)
In terms of the provisions of Section 125 of the Companies Act, 2013
read with the Companies (Declaration and Payment of Dividend) Rules,
2014, all unclaimed / unpaid dividend up to FY 2007-08 has been
transferred to the Investor Education and Protection Fund and unclaimed
/ un-encashed dividend for the FY 2008-09 paid on 3 August 2009 is due
for transfer to IEPF on 4 September 2016. Those members who have not
yet claimed / encashed the same, are requested to claim the same at the
earliest before transfer to IEPF.
Registrar and Share Transfer Agents (RTA)
Your Company had appointed Sharepro Services (India) Pvt Ltd as its RTA
for the last 16 years. On a complaint received from one of the listed
companies, who were also the clients of Sharepro, SEBI vide its order
dated 22 March 2016 banned Sharepro from performing the
responsibilities as RTA with immediate effect. Your Company being one
of the clients of Sharepro has been asked by SEBI, to furnish a
detailed audit report on the working of the RTA and also appoint a new
RTA within 6 months of the SEBI order.
As per the interim order of SEBI, your Company''s shareholders are not
affected by such wrongdoings. Your Company''s management, in the interim
and as desired by SEBI, has appointed M/s Makarand Joshi & Co.,
Practicing Company Secretaries to conduct an audit of the Company''s
records, maintained by Sharepro.
Your Board of Directors, after careful evaluation, has decided to
appoint Karvy Computershare Private Limited (''Karvy'') as the Company''s
Registrar and Transfer Agent (RTA) effective 23 May 2016. Karvy, is one
of the largest and reputed RTA operating in the Country for the last
three decades with a wide network spanning across different states.
Karvy, with their very high technology driven process, has been
servicing a very large investor base and also have an extensive
internal / external audit oversight for their operations.
I wish to reassure each one of the members, that the Board and the
Management of your Company,will keep the interest of shareholders as
one of its topmost priorities and will also ensure that the transition
from the erstwhile RTA to the new one, under the watchful supervision
of its own offcials, happens smoothly and with least inconvenience to
the shareholders.
Fixed Deposits
All the unclaimed fxed deposits/unclaimed fxed deposit warrants have
been transferred to Investor Education & Protection Fund, as required
under Section 125 of the Companies Act, 2013.Since, the Company no
longer accepts deposits from public, there are no outstanding/unclaimed
deposits as at 31 March 2016.
Insurance
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
Health, Safety and Environment
The core theme of HSE standard is to ensure clean environment and
safety of employees, community around and all suppliers & customers.
HSE practices adopted by your Company ensure adherence to this core
theme for all the activities inside and outside the Company.
High emphasis is placed on adherence to the laid down policies,systems
and procedures, collective learning out of experience through meetings
and training programs,imparting training to all the employees including
contract employees and vendors and continual skill development to
ensure safe operations at all the times.
Management of process safety risk assessment is an essential part of
HSE management and the smallest of a change in the process is evaluated
for its risk before implementation. Employees are encouraged to report
"near miss incidents" and a core HSE team evaluates root cause for such
incidents. Mitigation action plan thereon, forms the theme for
subsequent training programs to ensure elimination of root cause
through collective learning.
Safe attitude encouragement is achieved by investing substantial man
hours to spread the message of safe working, across the organization on
continual basis.
A core team of research center focuses on continual improvement in
environment standard. New technologies are adopted for "recovery and
reuse" of valuable chemicals from effuent stream to ensure clean
environment and enhance the proftability of the Company. Substantial
capital expenditure is allocated every year by your management to
ensure continual improvement in the environment standards of the
Company at all locations.
Conservation of natural resources is a major initiative as a part of
HSE and projects are implemented to ensure continual reduction in
consumption of natural resources.
Your Company has occupational health centres at its all locations which
not only undertake the periodic heath checks of all employees but also
specifc counselling is undertaken to educate the employees on life
style health hazards.
Safe practices in the Company are encouraged by conducting various
annual competitions and rewarding the concerned employees.
Suggestion scheme is utilized by the employees to offer suggestions for
continuous improvement of safety practices.
HSE performance of the Company is reviewed by your Board every quarter
and guidance and valuable suggestions made by the Board are
incorporated to further strengthen HSE practices of the Company.
Total Quality Management
Adherence to quality standards is absolutely imperative for the
Company''s domestic and International businesses, since customers
evaluate the Company as per its prevailing TQM standard. The primary
objective of TQM is to ensure that the laid down quality standards are
followed at all levels and for all operations at all locations
including warehousing and delivery of the goods to customers.
Navi Mumbai plant continues to be certifed for ISO 9001:2008 (Quality
Management system), ISO 14001: 2004 (Environment Management System),
OHSAS 18001: 2007(Occupational Health & Safety Standards) as well as TS
16949: 2009 (Quality system for Automotive Sector). The Quality
Assurance Laboratory of the Company is certifed for ISO 17025.
New location at Dahej was also certifed for ISO 9001:2008 (Quality
Management system), ISO 14001: 2004 (Environment Management System),
OHSAS 18001: 2007(Occupational Health & Safety Standards) during the
fnancial year.
Your Company also has ensured that its subsidiary and ancillary units
are also certifed for ISO 9001: 2008. NOCIL TQM team conducts periodic
audits at these locations to ensure a continual implementation of TQM
culture.
Your Company continues to be a member of "Responsible Care". During
audits conducted by the international and reputed domestic tyre
customers, our quality system continues to get the highest rankings in
their vendor assessment.
TQM is always and will continue to be an important factor amongst the
various objectives set by the Company. In this modern day of
competitive scenario, TQM is one of the important pillar of your
Company''s successful business journey.
Research & Development
NOCIL Research and Development continues to be acknowledged as one of
the core strengths of NOCIL by all its domestic and international
customers. Your Board has consistently encouraged investment in
Research activities for sustainable growth in Rubber Chemicals
business. The Research Centre of your Company is recognized by Ministry
of Science and Technology, Government of India and it focuses on key
business areas including:
- Process development, scale up and commercial implementation.
- Environmental strategies for sustainable growth.
- Introduction of emerging technologies for process/ product
improvements.
- Research initiatives as per customers'' perceived needs.
The innovative environmental strategies implemented in the plant have
resulted among other things into improvements in conserving natural
resources and valuable chemicals.
In-house technology development is protected by obtaining National and
International Patents.
The Company''s Research and Development team consistently endeavors to
create innovative concepts which will yield signifcant benefts to the
Company in the short as well as long term.
Risk Assessment and Management
Your Company has a well-defned Risk Management System in place, as a
part of its good Corporate Governance practices. Your Company has
assigned the ownership of key risks to various Risk Owners and has made
the concerned departments and offcials responsible for mitigation plans
and review of these risks from time to time. The risks are identifed at
various departmental levels and suitable mitigation measures are
thereafter adopted. These are further subjected to a quarterly review
by the Risk Co-ordination Committee as well as the Board. The business
plans for the future are devised and approved by the Board keeping in
mind the risk factors which can signifcantly impact the performance of
the particular business. All major capital expenditure commitments are
subjected to thorough scrutiny by the Board and investments are
permitted only on being satisfed about its return or utility to the
Company. Expansion projects are subject to detailed risk assessment and
sensitivity tests and approved only after found to pass eligibility
criteria.
Internal Control Systems and their Adequacy
Adequate internal controls, systems, and checks are in place,
commensurate with the size of the Company and the nature of its
business. The management exercises fnancial control on the Company''s
operations through a well-defned budget monitoring process and
specifying standard operating procedures. Your Company has appointed an
external professional agency M/s. Aneja Associates, Chartered
Accountants, to conduct the internal audit, and the fndings and
recommendations of the Internal Auditors are placed before the Audit
Committee of your Board regularly.
The Internal Auditors monitor and evaluate the effcacy and adequacy of
internal controls in the Company, its compliance with operating
systems, accounting procedures and policies at all locations of the
Company. Based on the report of Internal Auditors, the management
undertakes corrective action in the respective areas and thereby
further strengthens the controls. Signifcant audit observations and
corrective actions thereon are presented to the Audit Committee of the
Board. The Audit committee of the Board ensures that necessary
corrective actions suggested are put in place. In addition during the
year, the Audit Committee and the Board have specifcally reviewed the
Internal Control and Financial Reporting process prevalent in the
Company. On a periodical basis, the Board also engages the services of
professional experts in the said feld in order to ensure that adequate
fnancial controls and systems are in place. At the end of a period, the
CEO & CFO gives a declaration in the appropriate format to certify that
the fnancial statements prepared are accurate and complete in all
aspects and that there are no signifcant issues that can impair the
fnancial performance of the Company.
Vigil Mechanism / Whistle Blower Policy
The Company has a Vigil Mechanism Policy to deal with an instance of
fraud or mismanagement, if any. The details of the Policy are explained
in the Corporate Governance Report and are also posted on the website
of the Company.
Policy on Sexual Harassment of Women at Workplace
As per the requirement under the provisions made under Section 4 of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal), Act, 2012, an appropriate Committee has been formed to
attend to the complaints of the sexual harassment at workplace, if any,
made by female employees. The committee of 4 members consists of two
female employees, Vice President-Human Resource and a practicing
Advocate in the feld of labour laws and regulations. During the year
under review, no complaints were received. Wide publicity continues to
be ensured with respect to the policy to all employees and the policy
is also displayed on the Company''s website.
DIRECTORS
- Number of Board Meetings During the year the Board of Directors met
fve times as per details stated in the report on Corporate Governance.
- Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulations
17 and 25 of the SEBI (Listing Obligations and Disclosure
Requirements), Regulations, 2015, the Board has carried out an annual
performance evaluation of its own performance, of individual Directors
as well as the evaluation of the working of its Audit, Nomination &
Remuneration and Compliance Committees. The various criteria considered
for the purpose of evaluation of Whole Time / Executive Directors
included leadership, engagement, transparency, analysis, decision
making, functional knowledge, governance etc. The Board was of the
unanimous view that all the Whole Time / Executive Directors were
providing good business and people leadership.
- Declaration of Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the
Independent Directors have placed the necessary declaration in terms of
the conditions laid down under Section 149(6) of the Companies Act,
2013 in the Board Meeting held on 5May 2016.
- Familiarization Programme to Independent Directors
The Company provides suitable familiarization programme to Independent
Directors so as to associate themselves with the nature of the industry
in which the Company operates and business model of the Company in
addition to regular presentation on technical operations, marketing,
exports and fnancial statements. In addition to the above, Directors
are periodically advised about the changes effected in the Corporate
Law, Listing Regulations with regard to their roles, rights and
responsibilities as Directors of the Company. The details of the
familiarization programme have been disclosed and updated from time to
time on the Company''s website and its weblink is
http://www.nocil.com/images/fckeditor/fle/
Familiarization-Programme-for-IDS.pdf.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134 (3)(c) of the Companies
Act, 2013:
(a) That in the preparation of the annual fnancial statements for the
year ended 31 March 2016, the applicable accounting standards have been
followed along with proper explanations relating to material
departures, if any;
(b) That such accounting policies as mentioned in Note 1 forming part
of the Financial Statements have been selected and applied consistently
and judgment and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31 March 2016;
(c) That proper and suffcient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) That the annual fnancial statements have been prepared on a going
concern basis;
(e) That proper internal fnancial controls were in place and that the
fnancial controls were adequate and were operating effectively;
(f) That system to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
The above assessment of the Board was further strengthened by periodic
review of internal controls by both internal as well as external
auditors.
Remuneration policy
During the Financial Year 2014-15, based on the recommendations of the
Nomination & Remuneration Committee, the Board of Directors approved a
Policy for selection and appointment of Directors, Senior Management
and their remuneration. There has been no change in the said Policy in
the Financial Year 2015-16. The Salient features of Remuneration Policy
are given in the Corporate Governance Report.
Related Party Transactions
All related party transactions that were entered into during the
fnancial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially signifcant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel, subsidiary Company or other designated persons
which may have a potential confict with the interest of the Company at
large.
As per the Related Party Transactions Policy, approved by the Board of
Directors of the Company, during the year under review, the Company has
entered into related party transactions based upon the omnibus approval
granted by the Audit Committee. On quarterly basis, the Audit Committee
reviewed such transactions for which omnibus approval was given.
Particulars of contracts or arrangements with related parties as
referred to in Section 188(1) of the Companies Act, 2013 in the
prescribed form for FY 2015-16 are given in Annexure G.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company''s website and its weblink is
http://www.nocil.com/images/fckeditor/file/Policy-on-Related-
Party-Transaction.pdf
Loans, Guarantees or Investments
Particulars of loans, guarantees or investments under Section 186 of
the Companies Act, 2013 are given in the Notes forming part of
Financial Statements for the year ended 31 March 2016.
Extract of Annual Return
Extract of Annual Return for the Financial Year ended on 31 March 2016
as required by Section 92 (3) of the Companies Act, 2013, is annexed as
Annexure "E".
Subsidiary Company
PIL Chemicals Limited, (PIL) has recorded a Proft before Tax of Rs. 80.86
lakhs, for the year under review.
The Company does not have any material subsidiary, however, the Company
has formulated a policy for determining material subsidiary(ies) and
such policy has been disclosed on the Company''s website and its weblink
is http://www.nocil.com/images/
fckeditor/fle/Policy-on-Material-Subsidiaries.pdf
Pursuant to the requirements of Regulation 34 (3) read with Schedule V
of the SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2015, the details of Loans/Advances made to and
investments made in the subsidiary have been furnished in Notes forming
part of the Accounts.
A statement containing the salient features of the fnancial statement
of the Company''s subsidiary under the provisions of Section 129(3) of
the Companies Act, 2013 read with Rule 5 of the Companies (Accounts)
Rules, 2014 has been annexed in prescribed form AOC -1.
The audited accounts of the subsidiary Company are placed on the
Company''s website and the members interested in obtaining copy of
annual report of the subsidiary Company are requested to get in touch
with the Offce of the Company Secretary.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors'' Report thereon forms part of the Annual Report. The fnancial
statements have been prepared as per Schedule III issued by the
Ministry of Corporate Affairs.
Personnel
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
Stock Options
In terms of your approval, read with the SEBI (Employees Stock Option
Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, the
details required to be provided under the SEBI (Employees Stock Option
Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, are set
out in Annexure"C" to this Report.
Particulars of Employees
The information required under Section 197 of the Companies Act, 2013
read with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 in respect of employees of the
Company, are provided in Annexure "F" Appointment/Reappointment of
Directors and Key Managerial Personnel Pursuant to Section 152(6) of
the Companies Act, 2013 and the Articles of Association of the Company,
Mr. Vilas R. Gupte, Director retires by rotation at the forthcoming
Annual General Meeting. Being eligible, he offers himself for
re-appointment.
During the Financial Year under review, there has been no change in the
Board of Directors and Key Managerial Personnel of the Company.
Auditors
Pursuant to the requirement of Section 139(1) of the Companies Act,
2013, M/s Deloitte Haskins and Sells LLP, Chartered Accountants, Mumbai
were appointed as Statutory Auditors, for fnancial years 2014-15,
2015-16 and 2016-17. They have confrmed their eligibility under Section
141 of the Companies Act, 2013 and the Rules framed there under for
re-appointment as Auditors of the Company. As required under Regulation
33(1) (d) of the SEBI (Listing Obligations and Disclosure
Requirements), Regulations, 2015, the Auditors have also confrmed that
they hold a valid certifcate issued by the Peer Review Board of the
Institute of Chartered Accountants of India. As required by Section
139(1) of the Companies Act, 2013, the appointment of Statutory
Auditors is placed before the Members for ratifcation.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with the
Companies (Cost Records and Audit) Amendment Rules, 2014, the cost
audit records maintained by the Company are required to be audited.
Your Directors had, on the recommendation of the Audit Committee,
appointed M/s Kishore Bhatia & Associates to audit the cost accounts of
the Company for the fnancial year 2016-17 on a remuneration of Rs. 5
lakhs.
The Cost Auditors have given a Certifcate to the effect that the
appointment, if made, will be within the prescribed limits specifed
under Section 141 of the Companies Act, 2013.
The Audit Committee has obtained a certifcate from the Cost Auditor
certifying their independence and arm''s length relationship with the
Company. The Cost Audit Report in respect of F.Y. 2015-16 will be fled
on or before the due date i.e. 27 September 2016.
As required under the Companies Act, 2013, the remuneration payable to
the cost auditor is placed before the Members for their ratifcation.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Board of Directors has appointed M/s
Hemanshu Kapadia & Associates, a frm of Company Secretaries in Practice
to carry out the Secretarial Audit of the Company. The Report of the
Secretarial Audit is annexed herewith as Annexure "B".
Report on Corporate Governance
As per Regulation 34 read with Schedule V(C) of SEBI (Listing
Obligation and Disclosure Requirements), Regulations, 2015, a separate
Section on Report on Corporate Governance practices followed by the
Company, together with a certifcate from the Company''s Auditors
confrming compliance is attached.
Report on Management Discussion and Analysis
As required under Regulation 34 read with Schedule V (B) of SEBI
(Listing Obligation and Disclosure Requirements), Regulations, 2015,
report on "Management Discussion and Analysis" is attached and forms a
part of this Report.
Corporate Social Responsibility
Your Company has always been in the forefront in discharging its social
responsibilities. Accordingly, at the recommendation of the CSR
Committee, your Board sanctioned a sum of Rs. 41.50 Lakhs and Rs. 38.85
lakhs by way of a donation to Shri Sadguru Seva Sangh Trust, and Sri
Chaitanya Seva Trust respectively. Shri Sadguru Seva Sangh Trust has
been conducting over 140,000 eye operations annually in the rural areas
and also provides quality and affordable education to the children of
the economically weaker sections of the society, support in the feld of
women empowerment, dairy farming and has also provided relief to those
affected by natural calamities and disasters. Sri Chaitanya Seva Trust
is running Bhakti Vedanta Hospital equipped with all sophisticated
medical facilities and provides affordable medical aid to the poor and
needy patients in the tribal areas in the vicinity.
Your Company, in addition to its continued endeavours in greening it''s
surrounding areas, also participates directly / indirectly in "Swachha
Bharat Abhiyan". It also provides assistance to local schools, Medical
Aid to the nearby villages on various occasions. It also organises
Disaster Management / Safety Training Programmes for its neighbouring
industries.
In line with the provisions of the Companies Act, 2013 and the rules
framed there under with respect to the Corporate Social Responsibility
(CSR), your Company has formulated a Policy on CSR and has also
constituted a CSR Committee to recommend and monitor expenditure on
CSR. The details of CSR Expenditure are given in the prescribed format
and forms part of this Report. The same is annexed as Annexure "A".
Other Particulars
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of Section 134(3)(m) of the Companies Act, 2013,
read with Rule 8 of the Companies (Accounts) Rules 2014 is set out in
Annexure "D" and forms a part of this Report.
Green Initiative
Your Directors would like to draw your attention to Section 20 of the
Companies Act, 2013 read with the Companies (Management and
Administration) Rules, 2014, as may be amended from time to time, which
permits paperless compliances and also service of notice/documents
(including annual report) through electronic mode to its members. To
support this green initiative of the Central Government in full
measure, we hereby once again appeal to all those members who have not
registered their e-mail addresses so far are requested to register
their e-mail address in respect of electronic holdings with their
concerned Depository Participants and / or with the Company.
Acknowledgements
Your Directors would like to acknowledge the continued support and
co-operation from its Bankers, Government Bodies, and Business
Associates which has helped the Company to sustain its growth even
during these challenging times.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : 5 May 2016 Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present their Report together with the
Audited Accounts of the Company for the year ended 31 March 2015.
FINANCIAL RESULTS (Rs. in crore)
Particulars For the year ended For the year ended
31 March 2015 31 March 2014
Gross Revenue 785.33 645.79
Less : Excise Duty 66.33 49.65
Net Revenue 719.00 596.14
Profit before Tax 85.65 34.70
Profit after Tax 56.75 23.62
Earnings per share of Face Value
of Rs. 10/- each
- Basic. Rs. 3.53 1.47
Earnings per share
- Diluted. Rs. 3.50 Rs. 1.47
Proposed Dividend 16.08 9.65
Tax on Dividend 3.27 1.64
Performance of the Company
The year under review saw a significant improvement in the performance
of your company with our Revenue touching Rs.785 crores as compared to
Rs.646 crores in the previous year - an increase of 22%. The operating
performance also showed similar improvement.This improvement was a
result of improved volumes combined with better realizations and the
continual streamlining of Dahej operations leading to better capacity
utilization.
Supply-side tightness in case of various Rubber Chemicals was witnessed
for some part of the year, mainly due to the long- overdue clamping
down on polluting capacities in China, resulting in constrained
supplies for a period, in certain product groups. As a result of this,
there was some check on the extent of dumping being resorted to by the
foreign producers. This enabled the company to implement some
corrections in the selling prices in the early part of the financial
year.
Raw material price levels ruled high in the first half of the year, but
with crude oil prices easing subsequently, input prices started
softening, albeit with the customary lag. The situation however
continues to be volatile and some hardening trends in the input prices
were visible in the last quarter of the year.
The overall situation in the consuming industry (mainly automotive
industry related) however remained depressed during the year under
review. Most major customers had to curtail capacity utilization due to
the weak demand from original equipment and replacement segments. There
were some signs of the automotive industry coming out of the last few
years of slump, towards the end of the year.
Expectation for a better GDP growth in 2015-16 and ICRA''s forecast for
a healthy demand for automobiles should give us an opportunity to
improve business further in the domestic market. The major threat
remains that of the continued dumping at unrealistic prices by
producers mainly from China, Korea and the European Union. The
continued slowdown in the Rubber Industry in China has further worsened
the scenario of Rubber Chemical pricing with supply outstripping the
demand by a big margin. Continued depressed market situation in the
automobile industry has been increasing unfair competition in the
market from a number of foreign suppliers, particularly from China,
Korea and Europe. As a result, we are recently seeing considerable
softening of prices in the domestic as well as international markets.
The production of rubber chemicals and their intermediates for 2014-15
was 46266 MT as against 37333 MT in the previous year. Antidumping
Duties
In recognition of the company''s appeal for addressing the injury
suffered due to continued dumping (from China & Korea in particular),
the Government of India announced revised anti- dumping duties on some
of the rubber chemicals towards the end of July 2014 which further
supported our efforts at achieving reasonable realization for our
products. On levying of this duty some of the affected parties have
filed appeals against this order in the Delhi High Court as well as the
Supreme Court. The Apex Court has given us / domestic industry an
interim relief in the matter, we are hopeful that the final decision of
the court will be in favour of the industry/company. However, in the
meantime to negate the effect of the enhanced duties some of the
Chinese/Korean competitors have started reducing their prices further,
which has made it difficult for the company to realise the full benefit
of this well deserved protection. The company is constantly monitoring
the unfair and irrational pricing by the global competitors in order to
safeguard its interests.
Exports
On account of the tough competition in the rubber chemicals business
and the weak demand globally and more particularly in China, Export
volumes remained subdued and the pricing too remained soft for most
part of the year.Fortunately, with a significant proportion of
specialty products in our export basket, your company managed to
achieve a higher export turnover of Rs.234 crores as compared to Rs.225
crores in the previous year. It would be worthwhile mentioning that
your company has over a period, successfully developed and markets a
few specialty products, specifically tailored for some of its major
international customers, which enable it to enjoy a niche position in
these products. As far as the other generic products are concerned, as
reported earlier, the company continues to participate in the export
segment, only out of a compulsion to optimally utilise its own
capacities in the absence of sufficient orders from the domestic
customers and not out of choice, since the pricing in the exports
markets is also vitiated by the aggressive dumping resorted to by the
Chinese, Korean and other competitors
Dividend
Your Directors are pleased to recommend payment of dividend of Re.1 per
share of Rs.10/- each (10%), on the equity share capital of the Company
[previous year Re.0.60 per share of Rs. 10/- (6%)]. The dividend,
together with the tax on Dividend, will absorb a sum of Rs. 19.35 crore
(previous year Rs. 11.29 crore).
Transfer of Unpaid Dividend to the Investor Education and Protection
Fund
In terms of the provisions of section 205C of the Companies Act, 1956,
all unclaimed / unpaid dividend up to FY 2006-07 has been transferred
to the Investor Education and Protection Fund and unclaimed /
unencashed dividend for the FY 2007-08 paid on 28.07.2008 is due for
transfer to IEPF on 28 August 2015. Those members who have not yet
claimed / encashed the same, are requested to claim the same at the
earliest before transfer to IEPF.
Fixed Deposits
All the unclaimed fixed deposits/ unclaimed fixed deposit warrants have
been transferred to Investor Education & Protection Fund, as required
under Section 125 of the Companies Act, 2013.Since, the Company no
longer accepts deposits from public, there are no outstanding/unclaimed
deposits as at 31 March 2015.
Insurance
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments
Health, Safety and Environment
The company policy on health, safety and environment aims at healthy,
safe and productive work environment, by providing continuous training
and adopting the best of safety practices and monitoring the stated
practices. All employees direct or indirect are trained in technical
skills like, handling of chemicals, first aid, firefighting etc. Mock
drills with an envisaged scenario are conducted every week at all sites
to keep the work force alert, ready and trained to handle all
emergencies.
The company''s occupational health centres carry out periodic medical
check-ups for all employees at all locations. Proactive measures are
taken to reduce the seasonal cases of malaria and water borne diseases.
The occupational health centre also focuses on "life style
diseases" and conducts training programmes and counselling sessions
to minimise aliments like hypertension, diabetes and coronary diseases.
NOCIL R&D centre continues to focus on cleaner environment strategies
and their implementation, to create a long term, sustainable
manufacturing facility with a focus on green chemistry. Recycle, reuse
and reduction at source through process improvement, is the theme which
forms basis for environmental strategies of your company. Continued
improvement in the effluent load, both solid and liquid, demonstrated
the commitment of your company towards the environment.
Management is pleased to inform you that your company is now a member
signatory of "Responsible Care" Initiative.
Total Quality Management
Total Quality Management is given utmost importance amongst the various
targets set by the management from time to time. It continues to be an
important pillar of your company''s successful business journey, in the
highly competitive field of rubber chemicals and will always remain an
important activity in the future scheme of things. All activities in
the company are conducted as per the business processes stipulated by
the Total Quality Management system.
The company continues to be certified for ISO 9001:2008 (Quality
Management system), ISO 14001: 2004 (Environment Management System),
OHSAS 18001: 2007(Occupational Health & Safety Standards) as well as TS
16949: 2009 (Quality system for Automotive Sector). The Quality
Assurance Laboratory of the company is certified for ISO 17025.
As mentioned earlier, your company is also a Member signatory of
"Responsible Care" Initiative.
Research & Development
Research & Technology continues to be a strong backbone for the
continuous innovation and business growth of your company. It focuses
on the key areas of a) new process development
b) continuous improvement in the existing processes for value creation
c) environmental strategies to move towards "green chemistry" for
sustainable growth d) continuous improvement in the product quality as
perceived by the customer e) new field of technologies. .
Dahej Project was based on in-house technology, in-house engineering
and was implemented by the NOCIL research and technology team. Your
company''s Research and technology team has also implemented innovative
concepts in effluent treatment at Dahej which are unique.
Technology development is protected by creating National and
International Patents.
Your Board would like to make a special mention about the excellent
work that has been done by the Research and the Technology group of the
company over the last decade in the field of rubber chemicals.
Risk Assessment and Management
Your Company has a well defined Risk Management System in place, as a
part of its good Corporate Governance practices. Your Company has
assigned the ownership of key risks to various Risk Owners and has made
the concerned departments and officials responsible for mitigation
plans and review of these risks from time to time. All the risks are
identified at various departmental levels and suitable mitigation
measures are thereafter adopted. These are subjected to a quarterly
review by the Risk Co-ordination Committee as well as the Board.
Internal Control System and their Adequacy Adequate internal controls,
systems, and checks are in place, commensurate with the size of the
Company and the nature of its business. The management exercises
financial control on the operations through a well defined budget
monitoring process and other standard operating procedures. Your
Company has appointed an external professional agency M/s. Aneja
Associates, Chartered Accountants, to conduct the internal audit, and
the findings and recommendations of the Internal Auditors are placed
before the Audit Committee of your Board regularly.
The Internal Auditors monitor and evaluate the efficacy and adequacy of
internal control in the company, its compliance with operating systems,
accounting procedures and policies at all locations of the Company.
Based on the report of internal auditors, the managementundertakes
corrective action in their respective areas and thereby strengthens the
controls. Significant audit observations and corrective actions thereon
are presented to the Audit Committee of the Board.
In addition to the above, the Audit Committee and the Board
specifically review the Internal Control and Financial Reporting
process prevalent in the Company. On a periodical basis, the Board also
engages the services of professional experts in the said field in order
to ensure that the financial controls and systems are in place. At the
end of a period, the CEO/CFO gives a declaration in the appropriate
format to certify that the financial statements prepared are accurate
and complete in all aspects and that there are no significant issues
that can impair the financial performance of the Company.
Vigil Mechanism / Whistle Blower Policy
The company has a Vigil Mechanism Policy to deal with an instance of
fraud or mismanagement, if any. The details of the Policy are explained
in the Corporate Governance Report and are also postedon the website of
the Company.
Policy on Sexual Harassment of Women at Workplace
As per the requirement under the provisions made under section 4 of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal), 2012, an appropriate Committee has been formed to attend to
the complaints of the sexual harassment at workplace, if any, made by
female employees.The committee of 4 members consists of two female
employees, Vice President- Human Resource and a practising Advocate in
the field labour laws and regulations. During the year under review, no
complaints were received.
Number of Board Meetings
During the year the Board of Directors met six times as per details
stated in the report on Corporate Governance.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, of individual Directors as well as
the evaluation of the working of its Audit, Nomination & Remuneration
and Compliance Committees.
Directors:
(a) Independent Directors:
In accordance with the criteria suggested by the Nomination and
Remuneration Committee, the performance of each independent director
was evaluated by the entire Board of Directors (in the absence of the
director getting evaluated) on various parameters like engagement,
leadership, analysis, decision making, communication, governance,
interest of stakeholders etc. The Board was of the unanimous view that
every independent director was a reputed professional and brought
his/her rich experience to the deliberations of the Board. The Board
also appreciated the contribution made by all independent directors in
guiding the management to achieving higher growth and continuance of
each independent director on the Board will be in the interest of the
Company.
(b) Non-Independent Directors:
The performance of all the non-independent directors was evaluated by
the Independent Directors at their separate meeting. Further, their
performance was also evaluated by the Board of Directors. The various
criteria considered for the purpose of evaluation included leadership,
engagement, transparency, analysis, decision making, functional
knowledge, governance, stakeholders etc. The Board was of the unanimous
view that all the non-independent directors were providing good
business and people leadership
(c) Declaration of Independent Directors
As required under section 149(7) of the Companies act, 2013, the
Independent Directors have placed the necessary declaration in terms of
the conditions laid down under Section 149(6) of the Companies Act,
2013 in the Board Meeting held on 30 April 2015.
(d) Familiarization Programme to Independent Directors
The company provides suitable familiarization programme to Independent
Directors so as to associate themselves with the nature of the industry
in which the company operates and business model of the company in
addition to regular presentation on technical operations, marketing and
exports and financial statements. In addition to the above, Directors
are periodically advised about the changes effected in the Corporate
Law, Listing Agreement with regard to their roles, rights and
responsibilities as Directors of the company. The details of the
familiarization programme have been disclosed on the company''s website
and its weblink is http://www.nocil.com/images/fckeditor/file/Familia
rization-Programme-for-IDS.pdf Remuneration policy
The Board on the recommendation of the Nomination & Remuneration
committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The Salient features of
Remuneration Policy are given in the Corporate Governance Report.
Related Party Transactions
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially significant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the company at large.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval on quarterly basis. Particulars of
contracts or arrangements with related parties as referred to in
Section 188(1) of the Companies Act, 2013 in the prescribed form for FY
2015-16 are furnished below :-
Name of the Related Party Particulars Amount
(Rs. in lakhs)
Mafatlal Industries Ltd. Reimbursement of 16.38
Misc. Expenses
Navin Fluorine Purchase of material 2.34
International Ltd. Payment of rent 163.80
PIL Chemicals Ltd. Processing charges 1037.88
(Wholly owned subsidiary)
Shri Sadguru Seva Sangh Trust Donations under CSR 20.00
Chaitanya Seva Trust Donations under CSR 20.00
The policy on Related Party Transactions as recommended by Audit
Committee and as approved by the Board is uploaded on the Company''s
website and its weblink is http://www.nocil.com/images/fckeditor/
file/Policy-on-Related-Party-Transaction.pdf Loans, Guarantees or
Investments
Particulars of loans, guarantees or investments under section 186, are
given in the Notes forming part of Financial Statements for the year
ended 31st March, 2015.
Extract of Annual Return
Extract of Annual Return for the Financial Year ended on 31 March 2015
as required by Section 92 (3) of the Companies Act 2013, is annexed as
Annexure "E"
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statementsin terms of Section 134 (3) (c) of the Companies
Act, 2013:
(a) That in the preparation of the annual financial statements for the
year ended 31 March, 2015, the applicable accounting standards have
been followed along with proper explanations relating to material
departures, if any;
(b) That such accounting policies as mentioned in Note 1 forming part
of the Financial Statements have been selected and applied consistently
and judgment and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31 March 2015.
(c) That proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) That the annual financial statements have been prepared on a going
concern basis;
(e) That proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively;
(f) That system to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
The above assessment of the Board was further strengthened by periodic
review of internal controls by both internal as well as external
auditors.
Subsidiary Company
A wholly owned subsidiary viz. PIL Chemicals Pvt. Limited, (PIL) was
converted as Public Limited Company w. e. f. 30 June 2014 after
completing requisite legal formalities. PIL has recorded a Profit
before Tax of Rs.59 lakhs, for the year under review.
The Company does not have any material subsidiary, however, the company
has formulated a policy for determining material subsidiary(ies) and
such policy has been disclosed on the company''s website and its weblink
is http://www.nocil.com/images/fckeditor/file/Policy-on-Material-
Subsidiaries.pdf
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans/Advances made to and investments made in the
subsidiary have been furnished in Notes forming part of the Accounts.
A statement containing the salient features of the financial statement
of the Company''s subsidiary under the provisions of section 129(3) of
the Companies Act, 2013 read with Rule 5 of the Companies (Accounts)
Rules, 2014 has been annexed in prescribed form AOC -1
The audited accounts of the subsidairy company is placed on the
Company''s website and the members interested in obtaining copy of
annual report of the subsidiary company are requested to get in touch
with the Offi ce of the Company Secretary.
Consolidated Financial Statements
Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors'' Report thereon form part of the Annual Report. The financial
statements have been prepared as per Schedule III issued by the
Ministry of Corporate Affairs.
Personnel
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
Stock Options
In terms of your approval, read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in
Annexure"C" to this Report.
Particulars of Employees
The information required under section 197 of the Companies Act, 2013
read with Rule 5 of the Companies (Appointment and Remuneration of
managerial Personnel) Rules, 2014 in respect of employees of the
Company, are provided in Annexure "F" Appointment/Reappointment of
Directors The Board of Directors on recommendation of Nomination and
Remuneration Committee in their meeting held on 30 April 2015
re-appointed Mr. C.R. Gupte as Managing Director effective from 1
August 2015 for a period of two years and Mr. S.R. Deo as Deputy
Managing Director for four years effective from 1 April 2015 subject to
the approval of Members of the Company pursuant to the provisions of
the Companies Act, 2013.
Pursuant to Section 152(6) of the Companies Act, 2013, Mr. Vishad P.
Mafatlal retires by rotation at the forthcoming Annual General Meeting.
Being eligible, he offers himself for re-appointment. Pursuant to
Sections 149, 150 and 152 and any other applicable provisions of the
Companies Act, 2013, Ms. Dharmishta N. Raval who was appointed as
Additional Director by the Board of Directors in their meeting held on
31 July 2014,is being appointed as Director and is being appointed as
Independent Directors to hold office for five consecutive years.
Auditors
Pursuant to the new requirement of Section 139(1) of the Companies Act,
2013, M/s Deloitte Haskins and Sells LLP, Chartered Accountants, Mumbai
were appointed as Statutory Auditors, for financial years 2014-15,
2015-16 and 2016-17. They have confirmed their eligibility under
Section 141 of the Companies Act, 2013 and the Rules framed there under
for re-appointment as Auditors of the Company. As required under Clause
49 of the Listing Agreement, the auditors have also confirmed that they
hold a valid certificate issued by the Peer Review Board of the
Institute of Chartered Accountants of India. As required by Section
139(1) of the Companies Act, 2013, the appointment of Statutory
Auditors is placed before the Members for ratification.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The
Companies (Cost Records and Audit) Amendment Rules, 2014, the cost
audit records maintained by the Company is required to be audited. Your
Directors had, on the recommendation of the Audit Committee, appointed
Messrs Kishore Bhatia& Associates to audit the cost accounts of the
Company for the financial year 2015-16 on a remuneration of Rs.3.00
lakhs.
The Cost Auditors have given a Certificate to the effect that the
appointment, if made, will be within the prescribed limits specified
under section 141 of the Companies Act, 2013.
The Audit Committee has obtained a certificate from the Cost Auditor
certifying their independence and arm''s length relationship with the
Company. The Cost Audit Report in respect of F.Y. 2014- 15 will be
filed on or before the due date i.e. 27 September 2015. As required
under the Companies Act, 2013, the remuneration payable to the cost
auditor is placed before the Members for their ratification.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Board of Directors have appointed Messrs
Hemanshu Kapadia & Associates, a firm of Company Secretaries in
Practice to carry out the Secretarial Audit of the Company. The Report
of the Secretarial Audit Report is annexed herewith as Annexure "B"
Report on Corporate Governance
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Report on corporate governance practices followed
by the Company, together with a certificate from the Company''s Auditors
confirming compliance is attached.
Report on Management Discussion and Analysis
As required under the Listing Agreement, report on "Management
Discussion and Analysis" is attached and forms a part of this Report.
Corporate Social Responsibility In line with the new provisions of the
Companies Act, 2013 and the rules framed there under with respect to
the Corporate Social Responsibility (CSR), your company has formulated
a Policy on CSR and has also constituted a CSR Committee to recommend
and monitor expenditure on CSR. The details of CSR Expenditure are
given in the prescribed format and forms part of this Report. The same
is annexed as Annexure "A"
Other Particulars
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 134(3)(m) of the Companies Act, 2013,
read with Rule 8 of the Companies (Accounts) Rules 2014 is set out in
Annexure "D" and forms a part of this Report.
Green Initiative
Your Directors would like to draw your attention to the recent Circular
No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011
issued by the Ministry of Corporate Affairs allowing paperless
compliances and also service of notice/documents (including annual
report) through electronic mode to its members. To support this green
initiative of the Central Government in full measure, we hereby once
again appeal to all those members who have not registered their e-mail
addresses so far are requested to register their e-mail address in
respect of electronic holdings with their concerned depositary
participants and / or with the Company.
Acknowledgements
Your Directors would like to acknowledge the continued support and
co-operation from its Bankers, Government Bodies, and Business
Associates which has helped the company to sustain its growth even
during these challenging times.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : 30 April 2015 Chairman
Mar 31, 2014
Dear Members,
The Directors are pleased to present their Report together with the
Audited Accounts of the Company for the year ended 31 March 2014.
FINANCIAL RESULTS (RS in crore)
Particulars For the year ended For the year ended
31 March 2014 31 March 2013
Net Revenue 596.14 488.18
Other Income 10.76 13.87
Total Income 606.90 502.05
Profit before Tax 34.70 44.13
Profit after Tax 23.62 42.49
Earnings per share (of Rs 10/- each) Rs.1.47 Rs. 2.64
Proposed Dividend 9.65 9.65
Tax on Dividend 1.64 1.64
PERFORMANCE OF THE COMPANY
The year under review continued to experience challenging business
conditions with the slowing down of GDP growth in India and increased
competition from foreign suppliers. Our operating performance
consequently, got impacted particularly in the first half of financial
year 2013-14.
In line with the depressed automobile sector demand, majority of your
company''s customers both in the domestic as well as in the
international market, undertook production cuts at periodical intervals
to align their production with demand. As a result there was negligible
growth in demand for Rubber Chemicals in the country. The silver
lining is that, at least some of the large economies like the US in the
western world are now showing healthy trends. The Indian economy too is
expected to do better in the coming year in the hope of a stable
government at the centre, which should augur well for our business.
On the backdrop of these challenges, we are happy to inform you that
your company achieved a growth of 6.5% in its sales volumes as compared
to the previous year through sustained marketing efforts and also due
to some exits/closures of a few local and international Rubber Chemical
players.
The gross turnover of your Company, for the year under review, touched
Rs. 643 crores as compared to Rs. 527 crores in the previous year,
representing an increase of about 22%. This increase was possible due
to a combination of Rupee depreciation, a change in the product mix
along with some price corrections which were done to offset some rising
input costs. While our efforts to improve our realisations continue, we
are severely constrained in this regard on account of the aggressive
dumping resorted to by our competitors, especially from China and
Korea. This in turn has also forced the European competitors to offer
similar aggressive pricing.
The production of rubber chemicals and their intermediates, for the
year under review was 37,333 MT as against 33,341 MT, representing an
increase of about 12% as compared to the previous year. Unfortunately,
our main product (Px-13) continues to suffer due to the unrealistically
low prices offered by international competitors. On the whole, our
selling prices continue to be unfavorably influenced and impacted by
the artificially low pricing adopted by competitors.
Our Input costs, in sync with the high crude oil and benzene prices,
continued to show rising trend. While we did manage to pass on some of
these increases to our customers, they were not commensurate with the
increases we had to absorb.
ANTIDUMPING AND SAFEGUARD PETITION STATUS
As reported in the previous year, your company had filed the Sunset
Review petition before the Directorate of Anti Dumping, Ministry of
Commerce, Government of India, for reviewing the existing duties on six
of its major products. In view of the continued intensified dumping, we
had sought enhancement in the quantum of anti dumping duties. We are
pleased to inform you that the authorities have now concluded their
findings and have recommended enhancement of duties on all the products
under review. Your company had also approached the Safeguards
Directorate, Ministry of Finance, Government of India for the extension
of safeguard duty on one of its major products. We regret to inform you
that the Directorate of Safeguards have declined to extend the
safeguard duty on that product.
EXPORTS
With some of our important international markets showing some signs of
improvement in the second half of the current year, we registered a
marginal growth in export volumes by 3%. Due to a significant
proportion of high value/specialty products in our export basket as
well as due to the weaker Rupee, your company managed to achieve a
substantially higher export turnover of Rs. 225 crores as compared to Rs.
188 crores in the previous year. It would be worthwhile mentioning that
your company has over a period successfully developed and markets a few
specialty products, specifically tailored for its major international
customers, due to which it enjoys a niche position. As far as the other
generic products are concerned, the company enters the export segment,
only out of a compulsion to optimally utilise its own capacities in the
absence of sufficient orders from the domestic customers and not out of
choice, since pricing in the exports market is also vitiated by the
aggressive dumping resorted by the Chinese, Korean and other
competitors.
DAHEJ OPERATIONS
The new plant commissioned at Dahej in Gujarat, during the end of
previous year, initially witnessed certain teething problems as is
expected in any chemical plant of this nature. You are aware that this
plant has been built using solely in house technology and its
performance started improving from the second half of the year under
review. However the capacity utilisation of this plant was largely
impacted by the very high imports of this product into the country due
to the aggressive dumping resorted by the competitors. In the absence
of timely imposition of suitable anti-dumping and safeguard duties by
the authorities, these imports continued for the remaining part of the
year as well. We are hopeful that with the recent enhancement of duties
by both the above authorities, the capacity utilisation will improve
and will have a significant positive impact on the performance of your
company.
FINANCE & RATING
In view of high cost of inputs and the anticipated surge in its
operations, your Company has sought enhancement of its working capital
facilities. We are happy to inform you that all our bankers have agreed
to participate with additional share of lending.
Credit Rating Agency CARE, in their recent evaluation, have re-affirmed
our Long Term Credit Rating at AA- and short term borrowings rating at
A1 .
DIVIDEND
Your Directors are pleased to recommend payment of dividend of Re.0.60
per share of Rs. 10/- each (6%), on the equity share capital of the
Company (previous year Re.0.60 per share ofRs. 10/- (6%). The dividend,
together with the tax on Dividend, will absorb a sum of Rs. 11.29 crore
(previous year Rs. 11.29 crore).
TRANSFER OF UNPAID DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION
FUND
In terms of the provisions of section 205C of the Companies Act, 1956,
all unclaimed / unpaid dividend up to FY 2005-06 have been transferred
to Investor Education and Protection Fund and
unclaimed / unencashed dividend for the FY 2006-07 paid on 31 August
2007 is due for transfer to IEPF on 3 October 2014. Those members who
have not yet claimed / encased are requested to claim the same at the
earliest before transfer to IEPF.
FIXED DEPOSITS
All the unclaimed fixed deposits/ unclaimed Fixed deposit warrants have
been transferred to Investor Education & Protection Fund, as required
under Section 205C of the Companies Act, 1956. Since, the Company no
longer accepts deposits from public, there are no outstanding/unclaimed
deposits as at 31 March 2014.
INSURANCE
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
HEALTH, SAFETY AND ENVIRONMENT
The Company follows a well established and responsible policy on
health, safety and environment, which every employee is expected to
follow and also carefully monitor various practices and procedures
which are adopted. The sustainability of the business itself reflects
the sincere commitment of the management to implement the health,
safety and environment policy in its totality. Direct and indirect
employees are trained in technical skills required to handle various
hazardous chemicals, fire fighting jobs and first aid cases. The
Company conducts pre-employment as well as regular periodic medical
checkups across all employees including contractors'' employees to
monitor their health on a regular basis. The Company''s management
wishes to reiterate its deep and abiding commitment to this cause.
TOTAL QUALITY MANAGEMENT
The company continues to be certified for ISO 9000 (Quality Management
Systems), ISO 14001 (Environment Management Systems), OHSAS-18001
(Occupational Health & Safety System Standards) as well as for TS 16949
(Quality System for Automotive Sector). We are happy to mention that
the company enjoys an exemplary track record in all these four systems.
The Quality Control Laboratory of the Company is certified for ISO
17025.
RESEARCH & DEVELOPMENT
Research & Development and implementation of Technology continue to be
one of the key focus areas and business strategy for NOCIL, to ensure
continuous and sustainable growth in its business. Dahej plant as you
already know is based entirely on in-house Research and was translated
into a commercial venture, by NOCIL Technical and Engineering Teams.
Your Board would like to make a special mention about the excellent
work that is being done by the R&D and Technology groups of the
Company. Some of the initiatives taken in this connection by the
Company are expected to yield excellent short as well as long term
benefits for the organization, which in financial terms would be
significant.
RISK ASSESSMENT AND MANAGEMENT
Your Company has a well defined Risk Management System in place, as a
part of its good Corporate Governance practices. Your Company has
assigned the ownership of key risks to various Risk Owners and has made
the concerned departments and officials responsible for mitigation
plans and review of these risks from time to time. All the risks are
identified at various departmental levels and suitable mitigation
measures are thereafter adopted. These are subjected to a quarterly
review by the Risk Co-ordination Committee as well as the Board.
Adequate internal controls, systems, and checks are in place,
commensurate with the size of the Company and the nature of its
business. The management exercises financial control on the operations
through a well defined budget monitoring process and other standard
operating procedures. Your Company has appointed an external
professional agency i.e. M/s. Aneja Associates, Chartered Accountants,
to conduct the internal audit, and the findings and recommendations of
the Internal Auditors are placed before the Audit Committee of your
Board regularly.
SUBSIDIARY COMPANY
We wish to inform you that PIL Chemicals Private Limited, a wholly
owned subsidiary of the company, recorded a Profit before Tax of Rs.
34.47 lakhs, for the year under review.
Consequent to passing of Companies Act, 2013, this wholly owned
subsidiary will be converted into a public limited company. All the
necessary formalities have been completed and an application has been
filed with the authorities in this regard.
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans/Advances made to and investments made in the
subsidiary have been furnished in Notes forming part of the Accounts.
A statement (as required pursuant to Section 212 of the Companies Act,
1956) relating to the Company''s interest in the Subsidiary Company is
provided separately.
The Ministry of Corporate Affairs, Government of India, has granted a
general exemption from attaching Balance Sheet, Profit and Loss
Statement and Schedules thereto and Reports of Board of Directors and
Auditors vide its General Circular no. 2/2011 dated 8 February 2011. In
view of this circular your Company has not annexed Audited Annual
Accounts of its subsidiary viz. PIL Chemicals Pvt. Ltd. for the year
ended 31 March 2014. Your Board of Directors in their meeting held on
30 May 2012 has by resolution also given consent for not attaching the
Balance Sheet of the subsidiary Company for financial year 2011 -12 and
subsequent financial years. Shareholders interested in obtaining copies
of annual reports of subsidiary company are requested to get in touch
with the Office of the Company Secretary.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors'' Report thereon form part of the Annual Report. The financial
statements have been prepared as per revised Schedule VI issued by the
Ministry of Corporate Affairs.
PERSONNEL
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
STOCK OPTIONS
In terms of your approval, read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in
Annexure-1 to this Report.
PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 (Section 134
of the Companies Act, 2013), forms a part of this Report and will be
sent on demand to the shareholders. Any shareholder interested in
obtaining a copy of the said statement may write to the Company
Secretary.
DIRECTORS
The Board of Directors in their meeting held on 18 December 2013
decided to appoint Mr S.R. Deo, Sr. Vice President (Technical) as
additional director designated as Executive Director and President
(Technical) from 1 January 2014 for a period of five years subject
tothe applicable provisions of the Companies Act, 1956.
Pursuant to Section 152(6) of the Companies Act, 2013, Mr. H.A.
Mafatlal retires by rotation at the forthcoming Annual General Meeting.
Being eligible, he offers himself for reappointment.
Pursuant to Sections 149, 152 and any other applicable provisions of
the Companies Act, 2013, Mr. C.L. Jain, Mr. N. Sankar, Mr. Rohit Arora,
Mr. D.N. Mungale, and Mr. PV. Bhide, have been appointed as Independent
Directors to hold office for five consecutive years.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under section 134(5) of the Companies Act, 2013, (erstwhile
Section 217 (2AA) of the Companies Act, 1956) we hereby state that:-
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanations
relating to material departures, if any.
2. We 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 as at 31 March 2014 and of the profit for the year ended on
that date.
3. We 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.
4. We have prepared the annual accounts on a going concern basis.
REPORTON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports
on "Corporate Governance" and "Management Discussion and Analysis" are
attached and form a part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
It may be noted that, your Company has always been in the forefront in
discharging its social responsibilities. Accordingly, your Board
sanctioned a sum of Rs. 15 lakhs by way of a donation to Shri Sadguru
Seva Sangh Trust, which has been conducting over 140,000 eye operations
annually in the rural areas. The Trust is also involved in providing
quality and affordable education to the children of the economically
weaker sections of the society, support in the field of women
empowerment, dairy farming and has also provided relief to those
affected by natural calamities and disasters.
Your company, in addition to its continued endeavors in greening it''s
surrounding areas, it also provides Medical Aid to the nearby villages
on various occasions. It also organises Disaster Management / Safety
Training Programmes for its neighboring industries.
In line with the new provisions of the Companies Act, 2013 and the
rules framed there under with respect to the Corporate Social
Responsibility (CSR) which has become mandatory from financial year
2014-15. Your company has formulated a Policy on CSR and has also
constituted a CSR Committee to recommend and monitor expenditure on
CSR.
OTHER PARTICULARS
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 217(1)(e) of the Companies Act, 1956, read
with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is set out in Annexure - II and forms a
part of this Report.
AUDITORS
The term of M/s Deloitte Haskins and Sells LLP, Chartered Accountants,
Mumbai as Statutory Auditors, expires at the conclusion of this Annual
General Meeting and being eligible, they offer themselves for
re-appointment. Pursuant to the new requirement of Section 139(1)of the
Companies Act, 2013,theAudit Committee has recommended to the Board the
re-appointment of M/s. Deloitte Haskins and Sells LLP, Chartered
Accountants as Statutory Auditors of the Company for the further period
of 3 years. The Auditors have given a Certificate to the effect that
the re- appointment, if made, will be within the prescribed limits
specified under section 141 of the Companies Act, 2013 (erstwhile Section
224(1 B) of the Companies Act,1956).
COST AUDITOR
In terms of the MCA Circular No. 52/26/CAB-2010 dated 24 January 2012
and 6 November 2012, the Company is now required to carry out Cost
Audit effective from 1 April 2012 and to comply the requirements, the
Audit Committee has appointed M/s. Kishore Bhatia and Associates, Cost
Auditors, holding Firm Registration No. 00294 to carry out Cost Audit
of the Company for the financial year 2014-15 and their appointment is
subject to approval of the Central Government, Ministry of Corporate
Affairs, New Delhi.
The Cost Auditors have given a Certificate to the effect that the
appointment, if made, will be within the prescribed limits specified
under section 141 of the Companies Act, 2013.
The Audit Committee has obtained a certificate from the Cost Auditor
certifying their independence and arm''s length relationship with the
Company. The Cost Audit Report in respect of FY 2013-14 will be filed
on or before the due date i.e. 27 September 2014.
GREEN INITIATIVE
Your Directors would like to draw your attention to the recent Circular
No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011
issued by the Ministry of Corporate Affairs allowing paperless
compliances and also service of notice/documents (including annual
report) through electronic mode to its members. To support this green
initiative of the Central Government in full measure, we hereby once
again appeal to all those members who have not registered their e-mail
addresses so far are requested to register their e-mail address in
respect of electronic holdings with their concerned depositary
participants and / or with the Company.
ACKNOWLEDGEMENTS
Your Directors would like to acknowledge the continued support and
co-operation from its Bankers, Government Bodies, and Business
Associates which has helped the company to sustain its growth even
during these challenging times..
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Date : 30 April 2014 Chairman
Mar 31, 2013
Dear Members,
The Directors are pleased to present their Report together with the
Audited Accounts of the Company for the year ended 31 March 2013.
FINANCIAL RESULTS
(Rs.Incrore)
For the
year ended For the
year ended
KaraCUlare 31 March 2013 31 March 2012
Net Revenue 488.18 481.49
Other Income 13.87 23.25
Total Income 502.05 504.74
Profit before Tax 44.13 46.91
Profit after Tax 42.49 33.99
Earnings per share (
of Rs.10/-each)
Proposed Dividend 9.65 9.65
Tax on Dividend 1.64 1.57
PERFORMANCE OF THE COMPANY
The year experienced one of the most challenging business environments
which the rubber chemicals industry has ever faced. Most major
customers of your Company undertook significant production cuts to
align their production with the decline in the demand from the
automobile sector. This in turn, resulted in lower demand for Rubber
Chemicals.
Despite this, the turnover of your Company, for the year under review,
touched Rs. 527 crore as compared to Rs.511 crore in the previous year,
representing an increase of about 3%. The production of rubber
chemicals and their intermediates, for the year under review was 33341
MT as against 37173 MT, representing a decrease of about 10% as
compared to the previous year.
On the back of high crude oil and benzene prices, the prices of
practically all our major inputs rose to levels seldom witnessed over
the last 5-7 years. Unfortunately, we could not pass commensurate price
increases to our customers, in view of the aggressive dumping of rubber
chemicals into the country by the Chinese/Korean/ European suppliers.
Your Company, therefore, on occasion had to curtail the production of
certain key products, in line with the reduced residual demand post
this dumping.
Efforts however were made from the fourth quarter of this year, to pass
on some increases to customers to mitigate, at least partially, the
impact of some of the cost increases.
As reported last year, one of the major initiatives undertaken by your
Company''s management, was to set-up a new manufacturing facility at
Dahej in Gujarat, with a much improved process technology, to produce a
key intermediate for an important product in our range of rubber
chemicals. We are happy to inform you that the said facility commenced
commercial production from early March 2013.
Although, the overall business conditions at this critical juncture do
not look very healthy, your Company''s management is confident that your
Company will tide over this situation soon, as some more realignment in
the global rubber chemicals industry is expected, which should improve
the market conditions.
We are also hopeful that, pursuant to our petition to the GOI
authorities against the dumping, we will receive suitable relief by way
of imposition of antidumping duties. Consequently, our operational
performance should improve from the current levels.
EXPORTS
The slowdown in the European and Japanese economies affected our export
volumes, as the demand for rubber chemicals in these markets got
adversely impacted. Your Company recorded an export sales turnover of
Rs.188 crore, for the year under review as against Rs.193 crore in the
previous year.
PROJECT
Our Project at Dahej in Gujarat was commissioned for trial runs, from
the second half of the year. Commercial Production at Dahej Site
commenced on successful completion of a sustained and stable production
run, and on receiving product approvals from all our major customers.
It is noteworthy that the entire project was completed and commissioned
by a dedicated in-house technical and engineering team. We are proud to
mention that this was a project where no external technical
collaboration was sought, particularly when such a complex and
intricate chemical process was involved. Only a couple of producers in
the world, have succeeded in using this chemical process.
The Project could have been commissioned a few months earlier, had
timely and adequate power supply been made available by the Electricity
Board. Production at the plant is expected to be optimized during the
first half of the coming year. This project will enable the Company to
improve its operational performance, through the technological
innovations/improvements made in the new manufacturing process.
The total expenditure incurred for this project is well within the
original sanctioned amount of Rs.250 crore, and the debt component of the
project will be less than the originally estimated amount.
FINANCE & RATING
Your Company has enhanced its working capital facilities, to cover
Dahej operations as well. Besides the existing banks, IDBI Bank has
also been inducted for the Working Capital Facilities,
Credit Rating Agency, CARE, in their recent evaluation, has upgraded
our Long Term Credit Rating from CARE "A " to CARE "AA-" and reaffirmed
their rating of "CARE A1 " for short term borrowings. The improvement
in ratings, is an acknowledgement from CARE towards the consistent
performance of your Company, in spite of the prevailing difficult
market conditions.
DIVIDEND
Your Directors are pleased to recommend payment of dividend of Re.0.60
per share of Rs.10/- each (6%), on the equity share capital of the
Company [previous year Re.0.60 per share of Rs.10/- (6%)]. The dividend,
together with the tax on Dividend, will absorb a sum of Rs.11.29 crore
(previous year Rs.11.22 crore).
TRANSFER OF UNPAID DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION
FUND
In terms of the provisions of section 205C of the Companies Act, 1956,
all unpaid dividends including and up to final dividend for the F.Y
1997-98 have been deposited with the Investor Education and Protection
Fund in FY 2005-06. There was no unpaid dividend which was lying
unclaimed with the Company up to 31 March 2006, hence during the year
amount transferred to the Investor Education and Protection Fund was
Nil. Unclaimed Dividend for the financial year 2005-06 declared on 31
July 2006 and paid on 7August 2006 is due for transfer to Investor
Education and Protection Fund on 7 August 2013.
FIXED DEPOSITS
All the fixed deposits which have matured on or before 31 March 2005
and remained unclaimed, the entire unclaimed amount of fixed deposits
has been transferred to Investor Education & Protection Fund, as
required under Section 205C of the Companies Act, 1956. Since, the
Company no longer accepts deposits from public, there are no
outstanding/unclaimed deposits as at 31 March 2013.
INSURANCE
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
HEALTH SAFETY AND ENVIRONMENT
The Company follows a well established and responsible policy on
health, safety and environment, which every employee is expected to
follow and also carefully monitor various practices and procedures
which are adopted. The sustainability of the business itself reflects
the sincere commitment of the management to implement the health,
safety and environment policy in totality. Direct and indirect
employees are trained in technical skills required to handle various
hazardous chemicals, fire fighting jobs and first aid cases. The
Company conducts pre-employment as well as regular periodic medical
checkups across all employees including contractors'' employees to
monitor their health on a regular basis. The Company''s management
wishes to reiterate its deep and abiding commitment to this cause.
TOTAL QUALITY MANAGEMENT
The Company continues to be certified for ISO 9000 (Quality Management
Systems) and ISO 14001 (Environment Management Systems) as well as for
OHSAS-18001 (Occupational Health & Safety System Standards). We are
happy to mention that the Company enjoys an exemplary track record in
all these three systems. The Quality Control Laboratory of the Company
is certified for ISO 17025 In addition to ail these, the Company is
also certified for TS 16949 (Quality System for Automotive Sector)
RESEARCH & DEVELOPMENT
Research, Development and implementation of Technology, continue to be
one of the key focus areas and business strategy for NOCIL, to ensure
continuous and sustainable growth in its business. Dahej project is
based entirely on in-house Research and was translated into a
commercial venture, by NOCIL Technical and Engineering Team.
Your Board would like to make a special mention about the excellent
work done by the R&D and Technology groups of the Company. Some of the
initiatives taken in this connection by the Company are expected to
yield excellent long term benefits for the organization.
RISK ASSESSMENT AND MANAGEMENT
Your Company has a well defined Risk Management System in place, as a
part of its good Corporate Governance practices. Your Company has
assigned the ownership of key risks to various Risk Owners and has made
the concerned departments and officials responsible for mitigation
plans and review of these risks from time to time. All the risks are
identified at various departmental levels and suitable mitigation
measures are thereafter adopted. These are subjected to a quarterly
review by the Risk Co-ordination Committee as well as the Board.
Adequate internal controls, systems, and checks are in place,
commensurate with the size of the Company and the nature of
its business. The management exercises financial control on the
operations through a well defined budget monitoring process and other
standard operating procedures. Your Company has appointed an external
professional agency i.e. M/s. N. Aneja Assurance Pvt. Ltd., Chartered
Accountants to conduct the internal audit, and the findings and
recommendations of the Internal Auditors are placed before the Audit
Committee of your Board regularly.
SUBSIDIARY & AMG GROUP COMPANIES
We wish to inform you that PIL Chemicals Pvt Ltd, a wholly owned
subsidiary of the Company, recorded a Profit before Tax of Rs.26.81
lakhs, for the year under review.
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans/Advances made to and investments made in the
subsidiaries have been furnished in Schedules forming part of the
Accounts.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to the Company''s interest in the Subsidiary Companies is
provided separately.
The Ministry of Corporate Affairs, Government of India, has granted a
general exemption from attaching Balance Sheet, Profit and Loss
Statement and Schedules thereto and Reports of Board of Directors and
Auditors vide its General Circular no. 2/2011 dated 8 February 2011 In
view of this circular your Company has not annexed Audited Annual
Accounts of its subsidiary viz. PIL Chemicals Pvt. Ltd. for the year
ended 31 March 2013. Your Board of Directors in their meeting held on
30 May 2013 has by resolution also given consent for not attaching the
Balance Sheet of the subsidiary Company for financial year 2012-13.
Shareholders interested in obtaining copies of annual reports of
subsidiary companies are requested to get in touch with the Office of
the Company Secretary.
The Board is also pleased to inform that post successful restructuring
of Mafatlal Industries Ltd (MIL) from BIFR, and on receipt of repayment
of loan advanced by your Company to MIL, the dimunition in the value of
investments amounting to Rs.22.25 crores made in the earlier years is now
reversed and shown as an exceptional item in the Statement of Profit
and Loss.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors'' Report thereon form part of the Annual Report. The financial
statements have been prepared as per revised Schedule VI issued by the
Ministry of Corporate Affairs. The previous year figures have been
recast in accordance with the revised Schedule VI of the Companies Act,
1956.
PERSONNEL
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
STOCK OPTIONS
In terms of your approval, read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in
Annexure - I to this Report.
PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 forms a part
of this Report and will be sent on demand to the shareholders. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary.
DIRECTORS
At the forthcoming Annual General Meeting, Mr. C.L. Jain, Mr. D.N.
Mungale and Mr. P.V.Bhide retire by rotation, pursuant to Article 145
of the Articles of Association of the Company. Being eligible, they
offer themselves for reappointment.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, we
hereby state that:-
1. In the preparation of the annual accounts, all the applicable
accounting standards have been followed along with proper explanations
relating to material departures, if any.
2. The Directors 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 as at 31 March 2013 and of the profit for the year ended on
that date.
3. The Directors 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.
4. The Directors have prepared the annual accounts on a going concern
basis.
REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports
on "Corporate Governance" and "Management Discussion and Analysis" are
attached and form a part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has always been in the forefront in discharging its social
responsibilities. Accordingly, your Board sanctioned a sum of Rs.15 lakhs
by way of a donation to Shri Sadguru Seva Sangh Trust, which has been
conducting over 140,000 eye operations in the rural areas. The Trust is
also involved in providing quality and affordable education to the
children of the economically weaker sections of the society, support in
the field of dairy farming, women empowerment and has provided relief
to those affected by natural calamities and disasters.
Your Company, in addition to its continued endeavours in greening its
surrounding areas, also provides Medical Aid to the nearby villages on
various occasions. It also organises Disaster Management / Safety
Training Programmes for its neighbouring industries.
OTHER PARTICULARS
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 217(1 )(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is set out in Annexure - II and forms a
part of this Report.
AUDITORS
The term of Messrs. Deloitte Haskins and Sells, Chartered Accountants,
Mumbai as Statutory Auditors, expires at the conclusion of this Annual
General Meeting and being eligible, they offer themselves for
reappointment. The Audit Committee has recommended to the Board the
reappointment of M/s. Deloitte Haskins and Sells, Chartered Accountants
as Statutory Auditors of the Company. The Auditors have given a
Certificate to the effect that the reappointment, if made, will be
within the prescribed limits specified under section 224(1 B) of the
Companies Act, 1956.
COST AUDITOR
In terms of the MCA Circular No. 52/26/CAB-2010 dated 24 January 2012
the Company is now required to carry out Cost Audit effective from 1
April 2012 and to comply with the requirements, the Audit Committee has
appointed Kishore Bhatia and Associates, Cost Auditors holding Firm
Registration No. 00294 to carry out Cost Audit of the Company for the
financial year 2013- 14 and their appointment is subject to approval of
the Central Government, Ministry of Corporate Affairs, New Delhi.
The Cost Auditor has given a Certificate to the effect that the
appointment, if made, will be within the prescribed limits specified
under section 224(1 B) of the Companies Act, 1956.
The Audit Committee has obtained a certificate from the Cost Auditor
certifying his independence and arm''s length relationship with the
Company. The Cost Audit Report in respect of FY. 2012-13 will be filed
on or before the due date i.e. 27 September 2013.
GREEN INITIATIVE
Your Directors would like to draw your attention to the recent Circular
No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011
issued by the Ministry of Corporate Affairs allowing paperless
compliances and also service of notice/documents (including annual
report) through electronic mode to its members. To support this green
initiative of the Central Government in full measure, we hereby once
again appeal to all those members who have not registered their e-mail
addresses so far are requested to register their e-mail address in
respect of electronic holdings with their concerned depositary
participants and / or with the Company.
ACKNOWLEDGEMENTS
Your Directors would like to acknowledge the continued support and
co-operation from its Bankers, Government Bodies, and Business
Associates which has helped the Company to sustain its growth even
during these challenging times.
For and on behalf of the Board of Directors
Place : Mumbai Hrishikesh A. Mafatlal
Dated: 30 May 2013 Chairman
Mar 31, 2012
The Directors are pleased to present their Report together with the
Audited Accounts of the Company for the year ended 31 March 2012.
FINANCIAL RESULTS ( Rs. in crore)
For the year ended For the year ended
Particulars 31 March 2012 31 March 2011
Profit before Depreciation,
Interest 56.11 56.12
and Taxation
Less: Depreciation 8.99 7.99
Less: Interest 0.28 0.12
Add: Exceptional Items 0.22 -
Profit before Tax 47.06 48.00
Provision for Taxation 13.07 14.68
Profit after Tax 33.99 33.32
Proposed Dividend 9.65 9.65
Tax on Dividend 1.57 1.57
PERFORMANCE OF THE COMPANY
The year under review was most challenging for the entire manufacturing
sector. The business sentiment was most often negative and at best
stable. The adverse news about some countries of European Union (EU)
coupled with slowdown in the Automobile sector in India as well as most
major markets in the world resulted in considerable fluctuations in
supply of rubber chemicals to key customer accounts.
Despite this, the turnover of your Company for the year under review
touched Rs.513 crore as compared to Rs.480 crore in the previous year,
representing an increase of about 7%. The production of rubber
chemicals and their intermediates was 37169 MT for the year under
review as against 38264 MT, representing a marginal decrease of about
3% as compared to the previous year.
The growth in turnover, in volume terms in the domestic market was more
or less fat as compared to the previous year. This was primarily due to
the production cuts effected by our customers on account of the high
and volatile price of natural and synthetic rubber for most part of the
year. Continuing dumping and large imports of Rubber Chemicals at
unrealistic prices also contributed to the lack of growth.
As mentioned last year, we initiated a Mid Term Review about the
continued Dumping, more particularly concerning Imports sourced from
Korea and also a Safeguards Petition for one of the main products of
your Company against its imports from various countries. Whilst we are
pleased to inform you that the concerned Authorities have upheld our
contention about the dumped and injurious imports and have imposed Anti
Dumping Duty/Safeguard Duty on the key products. However, due to
further intensified aggressive pricing/dumping adopted by the concerned
competitors, the expected improvement in the domestic off take and
margins did not materialise. As a result, our capacity utilization for
the year under review suffered and was in fact, somewhat lower than
that of previous year.
Further, unlike during the previous slowdown in 2008, crude oil price
has not shown any signs of softening and even today its price is over
US $100 per barrel. Consequently, this has pushed up the prices of
practically all our major inputs. Moreover, on some of the inputs, anti
dumping and safeguard duties have also been levied. General inflationary
conditions have added to this burden. To mitigate the effect of this
burden, even though only partially, the Management of your company
undertook various initiatives including that of better managed
utilities through a more economic source of fuel (Natural Gas).
Besides, efforts were also made to recover some of these cost increases
by way of price corrections; however, these were only partially
successful due to the continued stiff competition from various
international competitors more particularly from China and Korea at
totally unrealistic price levels.
EXPORTS
The adverse impact of the economic slow-down in the European economies
due to sovereign debt related issues and the severe effect of the
natural disaster in Japan affected overall Indian Industry export
scenario. Your Company however, managed to maintain more or less
similar volumes as those of the previous year. The export sales
turnover of Rs. 195 crore was higher by about 8.20% as compared to Rs.
180 crore achieved in the previous year.
The downgrading of some of the European Countries by the rating
agencies is likely to extend the recessionary trend further and some
experts predict a larger and sustained weak trend in the global economy
as a whole. Your company has however made efforts to tap newer markets
due to which, despite these adverse conditions, we hope to achieve at
least some growth in Export Sales Volumes in the coming year.
BUSINESS SCENARIO
The global economic scenario has shown some mixed signs and we
therefore need to watch the developments in this regard carefully in
the coming year.
The Rubber Chemicals market remains competitive and continued dumping
by international suppliers into India remains a matter of serious
concern.
Company's competitors from China, Korea and the European region
continue to be very aggressive in low pricing of their products in the
Indian Market. Your Company, in response to this aggressive approach,
decided to selectively participate in markets where the prices were at
less unrealistic levels. The Management, as a prudent policy feels, it
is better to stay away rather than participate in contracts which are
highly loss making propositions.
Despite these problems, your Board is pleased to convey that most of
the domestic and international tyre customers continue to do healthy
business with your Company for their regular requirements of rubber
chemicals. Your Company enjoys a very good acceptance of its products
with all its customers and they in turn have accepted the status of
your Company as a dependable manufacturer of rubber chemicals with very
high technological capabilities. The setting up of the new state of the
art plant at Dahej will not only strengthen our relationship with all
our major customers but is also expected to improve our competitiveness
and our market share in the overall rubber chemicals market.
Certain recent international developments which have resulted in the
restructuring of some of the capacities and closing down of operations
by some of the company's competitors are likely to bring down the
surplus supply of a few important rubber chemicals. This, we hope will
correct the existing unrealistic pricing scenario for these products.
We would like to assure our shareholders that your company will
continue to strike for improving its margins and its market share
despite all odds with continued improvements in its manufacturing
process, further optimizing its product mix and by offering a wider
range of products to its customers through its technological strengths.
PROJECT
As mentioned in our last annual report, the new Project at Dahej is
nearing completion and is expected to go on-stream by August 2012. We
are pleased to inform you that the total expenditure committed on this
project is well within the original sanctioned amount of Rs.250 crores.
We are also proud to mention that the entire project, right from the
conceptualization stage to execution, was executed by your company's
own team with no foreign technical know-how. Further you would be
happy to learn the debt component of the project will be less than the
originally earmarked amount.
Preliminary discussions have already been initiated by the company's
Management with Major Domestic and International tyre companies for the
product approvals necessary for the new Dahej plant. We are pleased to
inform you that the response from these customers has been very
positive.
FINANCE & RATING
We are happy to inform you that Mafatlal Industries Ltd., who owed your
Company & its Subsidiary a sum of Rs.21.85 crores have repaid the loan
extended to them.
The Credit Rating Agency CARE, in their recent evaluation has upgraded
our Credit Rating for Long Term Bank Borrowing from CARE A to CARE A
and for Short Term Bank Borrowings from CARE A1 to CARE A1 on the back
of consistent performance of your company.
DIVIDEND
Your Directors are pleased to recommend payment of dividend of Re.0.60
per share of Rs. 10/- each (6%), on the equity share capital of the
Company (previous year Re.0.60 per share of Rs.10/- (6%). The
dividend, together with the tax on Dividend, will absorb a sum of
Rs.11.22 crore (previous year Rs.11.22 crore).
TRANSFER OF UNPAID DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION
FUND
In terms of the provisions of section 205C of the Companies Act, 1956,
all unpaid dividends including and up to final dividend for the F.Y.
1997-98 have been deposited with the Investor Education and Protection
Fund in F.Y. 2005-06. There was no unpaid dividend which was lying
unclaimed with the Company up to 31 March 2005, hence during the year
amount transferred to the Investor Education and Protection Fund was
Nil.
FIXED DEPOSITS
As on 31 March 2012, fixed deposits amounting to Rs. 3 lakhs have not
been claimed by the depositors from the Company. All these fixed
deposits have matured on or before 31 March 2005 and accordingly the
entire amount as it remained unclaimed since then, has been transferred
to Investor Education & Protection Fund, as required under Section 205C
of the Companies Act, 1956.
INSURANCE
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
HEALTH, SAFETY AND ENVIRONMENT (HSE)
The company is certified for ISO 14001: 2004 (Environment Management
System) and BS OHSAS 18001: 2007 (Occupational health & Safety System).
Your Company's objectives of HSE are not merely to comply with the
standards, for which the company is certified, but to adopt practices
which are considered to be the best in the industry.
Your company has well established policy & norms for HSE and ensures
their implementation through regular training, safe attitude
encouragement interactions, audits and close monitoring of environment.
All employees are trained in safety procedures, technical skills, first
aid and free fighting. A periodic review of the same is carried out to
ensure that the safety practices adopted are uniform and that we follow
the well laid out policies and procedures. Employees are also trained
for handling emergencies through periodic drills.
Your company conducts pre-employment as well as regular periodic
medical checkups across all employees including contractors' employees
to monitor their health on regular basis.
All the environment protection and pollution abatement measures are
carried out inside the company itself to ensure that all the stipulated
environment norms are strictly followed. "Green Chemistry" section of
R&D focuses on the environmental standard improvement. The company's
decision to change the methodology of generating steam from liquid fuel
to gas based is one such step implemented in field of "Green Chemistry".
Continual improvement in the environment standard is an important
aspect of your Company's business objectives.
Your Company regularly extends support towards training for free
fighting, safe handling of chemicals & medical aid to all the
neighboring industries and various agencies in and around Navi Mumbai
area as its corporate social responsibility.
Your Company is recognized as a benchmark in the field of HSE and it
rejects the sincere commitment of the management towards Health, Safety
and Environment. Your Company's management further wishes to reiterate
its deep and abiding commitment towards HSE.
We are pleased to inform you all that the regulatory authorities at
Dahej have complimented your Company for adopting and designing the
best of HSE systems at the company's Dahej Plant right from the
beginning.
TOTAL QUALITY MANAGEMENT
As mentioned above, your Company continues to be certified for "total
Quality management System" which comprises of ISO 9001:2008 (Quality
Management Systems), ISO 14001:2004 (Environment Management Systems)
and BS OHSAS 18001:2007 (Occupational Health & Safety System
Standards). We are happy to mention that your Company enjoys an
exemplary track record in Total Quality Management System in view of
continual improvements in this area. The Quality Control Laboratory of
your Company has also been certified for ISO 17025 (Quality Assurance
System) which is a unique feature in this field and assures highest
quality standards to all its internal and external customers.
In line with the long term objectives of adopting world class quality
systems, your Company decided to get itself certified for quality
systems as prescribed under TS 16949 of the Automotive Sector. We are
pleased to announce that your Company has now been certified for "Good
Quality Systems" under the TS 16949 as well.
RESEARCH & DEVELOPMENT
As mentioned in our previous year's report, your Board would like to
make a special mention about the excellent work done by the R&D and
Technology groups of your Company. Some of the initiatives taken in
this connection by your Company are expected to yield excellent long
term benefits for the organization. The expansion project in Dahej which
is now under implementation is based on the processes developed in
house by these groups.
RISK ASSESSMENT AND MANAGEMENT
Your Company has a well defined Risk Management System in place as a
part of its good Corporate Governance practices. Your Company has
assigned the ownership of key risks to various Risk Owners and has made
the concerned departments and officials responsible for mitigation plans
and review of these risks from time to time. All the risks are
identified at various departmental levels and suitable mitigation
measures are thereafter adopted. These are subjected to a quarterly
review by the Risk Co-ordination Committee as well as the Board.
Adequate internal controls, systems, and checks are in place,
commensurate with the size of the Company and the nature of its
business. The management exercises financial control on the operations
through a well defined budget monitoring process and other standard
operating procedures. Your Company has appointed an external
professional agency to conduct the internal audit and the findings and
recommendations of the Internal Auditors are placed before the Audit
Committee of your Board regularly. The Board has effective April 2012
appointed M/s. N. Aneja Assurance Pvt. Ltd., Chartered Accountants, to
oversee the internal controls prevalent in the Company besides
conducting internal audits.
During the year, the Company undertook the SAP Ã ERP Implementation
programme and the same has gone live from April 2012.
SUBSIDIARY COMPANIES
We are pleased to inform you that Hon'ble Bombay High Court has
approved the Merger of the two subsidiary companies viz. Ensen Holdings
Ltd and Urvija Investments Ltd with PIL Chemicals Pvt Ltd. vide its
order dated 2 December 2011 and Merger is effective from 28 December
2011 with appointed date as 1 April 2010.
The Audited Financial statements of the PIL Chemicals Pvt. Ltd have
been prepared considering the financial impacts of the merger.
We are also pleased to inform you that PIL Chemicals Pvt Ltd, continued
to record Profit before Tax in excess of Rs. 100 lakhs for the third
consecutive year and has declared its second dividend for the year FY
2011-12.
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans / Advances made to and investments made in the
subsidiaries have been furnished in Schedules forming part of the
Accounts.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to the Company's interest in the Subsidiary Companies is
provided separately.
The Ministry of Corporate Affairs, Government of India, has granted a
general exemption from attaching Balance Sheet, Profit and Loss
Statement and Schedules thereto and Reports of Board of Directors and
Auditors vide its General Circular no. 2/2011 dated 8 February 2011. In
view of this circular, your Company has not annexed Audited Annual
Accounts of its subsidiary viz. PIL Chemicals Pvt. Ltd. for the year
ended 31 March 2012. Your
Board of Directors in their meeting held on 30 May 2012 has by
resolution also given consent for not attaching the Balance Sheet of
the subsidiary Company for financial year 2011-12 and subsequent
financial years. Shareholders interested in obtaining copies of annual
reports of subsidiary company are requested to get in touch with the
office of the Company Secretary.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors' Report thereon form part of the Annual Report. The financial
statements have been prepared as per revised Schedule VI issued by the
Ministry of Corporate Affairs. The previous year figures have been
recast in accordance with the revised Schedule VI of the Companies Act,
1956.
PERSONNEL
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
STOCK OPTIONS
In terms of your approval read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in
Annexure à i to this Report.
PARTICULARS OF EMPLOYEES
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 forms a part
of this Report and will be sent on demand to the shareholders. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary.
DIRECTORS
The Board of Directors places on record its immense loss on the sad
demise of Mr. Arvind N. Mafatlal, Founder and Chairman Emeritus of the
company, and is truly indebted and grateful for his lifetime
contribution to the company as well as to the growth of Indian Industry
and the well being of weaker sections of Indian Society.
At the forthcoming Annual General Meeting, Mr. V.R. Gupte and Mr. N.
Sankar retire by rotation pursuant to Article 145 of the Articles of
Association of the Company. Being eligible, they offer themselves for
reappointment.
Mr. Berjis Desai, Director, retires by rotation at the ensuing Annual
General Meeting of the Company and has expressed his inability to seek
re-appointment. The Company does not intend to fill the vacancy caused
by the retirement of Mr. Berjis Desai.
The Board of Directors places on records its sincere appreciation of
the valuable contribution made by Mr. Berjis Desai during his tenure as
Director.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, we
hereby state that:-
1. In the preparation of the annual accounts, all the applicable
accounting standards have been followed along with proper explanations
relating to material departures, if any.
2. The Directors 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 as at 31 March 2012 and of the profit for the year ended on
that date.
3. The Directors 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.
4. The Directors have prepared the annual accounts on a going concern
basis.
REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports
on "Corporate Governance" and "Management Discussion and Analysis" are
attached and forms a part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has always been in the forefront in discharging social
responsibilities. Accordingly, your Board sanctioned a sum of Rs. 15
lakhs by way of a donation to Shri Sadguru Seva Sangh Trust which
continues to offer unique health care services to the poorer sections
of the society by performing about 1,20,000 eye surgeries free of cost
every year. Your Board will always remain committed in discharging its
Corporate Social Responsibilities.
OTHER PARTICULARS
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is set out in Annexure à ii and forms a
part of this Report.
AUDITORS
The term of Messrs Deloitte Haskins and Sells, Chartered Accountants,
Mumbai as Statutory Auditors, expires at the conclusion of this Annual
General Meeting and is eligible for reappointment. The Audit Committee
has recommended to the Board the reappointment of M/s. Deloitte Haskins
and Sells, Chartered Accountants as Statutory Auditors of the Company.
The
Auditors have given a Certificate to the effect that the reappointment,
if made, will be within the prescribed limits specified under section
224(1B) of the Companies Act,1956.
COST AUDITORS
In terms of the MCA Circular No. 52/26/CAB-2010 dated 24 January 2012
the Company is now required to carry out Cost Audit effective from 1
April 2012 and to comply the requirements, the Audit Committee has
appointed Kishore Bhatia and Associates, Cost Auditors holding Firm
Registration No. 00294 to carry out Cost Audit of the Company for the
financial year 2012-13 and their appointment is subject to approval of
the Central Government, Ministry of Corporate Affairs, New Delhi.
The Cost Auditor has given a Certificate to the effect that the
appointment, if made, will be within the prescribed limits specified
under section 224(1B) of the Companies Act,1956.
The Audit Committee has obtained a certificate from the Cost Auditor
certifying his independence and arm's length relationship with the
Company.
GREEN INITIATIVE
Your Directors would like to draw your attention to the recent Circular
No. 17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011
issued by the Ministry of Corporate Affairs allowing paperless
compliances and also service of notice/documents (including annual
report) through electronic mode to its members. To support this green
initiative of the Central Government in full measure, we hereby once
again appeal to all those members who have not registered their e-mail
addresses so far are requested to register their e-mail address in
respect of electronic holdings with their concerned depositary
participants and / or with the Company.
ACKNOWLEDGEMENTS
Your Directors would like to acknowledge the continued support and
co-operation from the Bankers, Government Bodies, and Business
Associates which has helped the company to sustain its growth even
during these challenging times.
For and on behalf of the Board of directors
Place : Mumbai Hrishikesh A. mafatlal
Date : 30 May 2012 chairman
Mar 31, 2011
The Directors present their Report together with the Audited Accounts
of the Company for the year ended 31 March 2011.
Particulars For the year ended For the year ended
31 March 2011 31 March 2010
Profit before
Depreciation, 56.12 57.91
Interest and Taxation
Less : Depreciation 7.99 7.63
Less : Interest 0.12 0.15
Profit before Tax 48.01 50.13
Provision for Taxation
(including wealth tax and 14.69 16.10
fringe benefit tax)
Profit after Tax 33.32 34.03
(Deficit) / Surplus brought 43.86 21.12
from previous period
Proposed Dividend 9.65 9.65
Tax on Dividend 1.57 1.64
Balance carried to Balance 65.96 43.86
Sheet
PERFORMANCE OF THE COMPANY
The turnover of your Company for the year under review was Rs480 crore
as compared to Rs 460 crore, representing an increase of about 4.50%
over the previous year. The production of rubber chemicals and their
intermediates was 38264 MT for the year under review as against 36697
MT, representing an increase of about 4% as compared to the previous
year.
During the year 2010-11, your company witnessed relatively stable
business conditions in the first half of the year. However, right from
the beginning of the second half, prices of most of its inputs started
hardening on the back of surge in the crude oil price as well as the
prices of various derivatives of crude oil.
During the year, the Sales volumes in the Domestic segment witnessed a
growth of 5% as compared to the previous year. This was despite the
fact that many small Non-Tyre Rubber units were forced to cut back on
production and had to curtail their business operations during the year
on account of the huge surge witnessed in the price of Natural Rubber.
This resulted in either no growth or very small growth in some of our
Non-Tyre market segments. At the same time, we also continue to face
very aggressive competition from the dumped Imports of Rubber Chemicals
into India. Whilst we endeavored to maintain the selling prices for
most part of the year, margins remained under significant pressure due
to the continued dumping of the products.
In order to be able to participate in the large domestic demand which
we have not been able to access on account of the dumped imports, we,
during the year, initiated a Mid Term Anti Dumping Petition on Imports
sourced from Korea and also a Safeguards Petition for one of the main
products of your Company. The concerned Authorities have accepted our
petitions and have already initiated investigations in this connection.
Both these matters are currently at an advance stage of completion and
their final findings are due shortly. We are hopeful of getting some
relief in these cases which should help us in improving our capacity
utilization and market share for the said product.
The Antidumping authorities have also concluded their proceedings of
the Sunset review for some of the products of your company on which
Anti-Dumping Duties had been imposed five years ago. We are happy to
inform you that the authorities have recommended continuation of the
said anti dumping duties on some products for a further period of 5
years. However, duty has been withdrawn on one product from one source.
The final customs notification to this effect is yet to be issued.
As stated earlier, our input prices rose sharply as a result of rising
Crude and other feedstock prices. We are happy to inform you that
despite the cost increases, through a combination of timely booking of
orders at best possible prices, better management of various
operational parameters, coupled with optimization of utilities
management, the margins for the year remained more or less at the
similar level of the previous year.
We are happy to inform you that, after evaluating your CompanyÃs
overall performance, the Credit Rating Agency, CARE has improved our
Credit Rating for Short term borrowings from PR 2+ to PR 1, while
retaining the rating at A for Long Term borrowings.
EXPORTS
During the year under review, your Company continued to export
significant volumes in view of inadequate demand for the product in the
domestic market as a consequence of aggressive dumping of a number of
rubber chemicals in the Country. The exports at Rs181 crore were
marginally lower than Rs186 crore in the previous year. The export
volumes though were marginally higher by about 1% as compared to the
previous year. The reduction in value is mainly due to a combination of
product mix and appreciation of Indian Rupee. Your Company hopes to
optimize its export and local presence in future once the company is
adequately protected against dumping of its product.
The continued news about the not so healthy economic situation in the
western world and Japan has also come in the way of our increasing
export volumes beyond the levels existing before the recession of
2008-09. The economic recovery in these markets continues to be
fragile. We have however tapped new destinations due to which we could
achieve the small growth in Sales Volumes for the year.
BUSINESS SCENARIO
Although the global economic scenario has shown some signs of
improvement, we need to watch the developments in the coming year
carefully.
The Rubber Chemicals market continues to remain competitive and dumping
by international suppliers into India continues to be a matter of
concern.
The competitors from China, the European region as well as South Korea
continue to be aggressive in pricing in the Indian Market. Your
company, in response to this aggressive pricing, decided not to
participate in markets where the prices were at totally unrealistic
levels.
Despite these problems, your Board is pleased to convey that most of
the major international tyre customers continue to rely on and do
healthy business with your Company for their regular requirements of
rubber chemicals. Your Company enjoys good acceptance of its products
with all its domestic and international customers and they in turn have
accepted the status of your Company as a dependable manufacturer of
rubber chemicals with very high technological capabilities.
PROJECT
During the year, the Management appointed an independent reputed
agency, which is approved by Banks, to do an evaluation of Techno
Commercial feasibility of its Project in Dahej. The said agency has
since submitted its report thereon. Further, your Company has also
concluded the financial closure for the capital Investment required for
the Project, estimated at Rs250 Crore.
The Civil Construction of the Plant is almost at the final stages of
completion. Your Company has also placed orders/contracts for delivery
of most of the machineries and equipments. All major long delivery
equipment orders have been released well in time to ensure their timely
arrival. Most of the infrastructural work too has been completed.
The project is expected to be completed and the new plant expected to
be commissioned within the next twelve months. On its successful
implementation, your Company will make efforts to strengthen its
position not only in terms of higher market share but also in terms of
more cost effective and cleaner processes.
DIVIDEND
Your Directors are pleased to recommend payment of dividend of Rs 0.60
per share of Rs10/- each (6%), on the equity share capital of the
Company (previous year Rs 0.60 per share of Rs 10/- (6%). The dividend,
together with the tax on Dividend, will absorb a sum of Rs 11.21 crore
(previous year Rs 11.29 crore).
TRANSFER OF UNPAID DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION
FUND
In terms of the provisions of section 205C of the Companies Act, 1956,
all unpaid dividends including and up to final dividend for the F.Y.
1997-98 have been deposited with the Investor Education and Protection
Fund in F.Y. 2005-06. There was no unpaid dividend which was lying
unclaimed with the Company up to 31 March 2004, hence during the year
amount transferred to the Investor Education and Protection Fund was
Nil.
FIXED DEPOSITS
As on 31 March 2011, fixed deposits amounting to Rs0.11 crore have not
been claimed by the depositors from the Company. The fixed deposits
which have matured on or before 31 March 2004 amounting to Rs 0.08 crore
but remained unclaimed since then, have been transferred to Investor
Education & Protection Fund, as required under Section 205C of the
Companies Act, 1956.
INSURANCE
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
HEALTH, SAFETY AND ENVIRONMENT (HSE)
The company is certified for ISO 14001: 2004 (Environment Management
System) and BS OHSAS 18001: 2007 (Occupational health & Safety System).
Your CompanyÃs objectives of HSE are not merely to comply with the
standards, for which the company is certified, but to adopt practices
which are considered to be the best in the industry.
Your company has a well established policy & norms for HSE and ensures
its implementation through regular training, safe attitude
encouragement interactions, audits and close monitoring of environment.
All employees are trained in safety procedures, technical skills, first
aid and fire fighting. A periodic review of the same is carried out to
ensure that the safety practices adopted are uniform and follow the
well laid out policies and procedures. Employees are also trained for
handling emergencies through periodic drills.
Your company conducts pre-employment as well as regular periodic
medical checkups across all employees including contractorsà employees
to monitor their health on regular basis.
All the environment protection and pollution abatement measures are
carried out inside the company itself to ensure that all the stipulated
environment norms are strictly followed. "Green Chemistry" section of
R&D focuses on the environmental standard improvement. Continual
improvement in the environment standard is an important aspect of your
companys business objectives.
Your Company regularly extends support towards training for fire
fighting, safe handling of chemicals & medical aid to all the
neighboring industries and various agencies in and around Navi Mumbai
area as its corporate social responsibility.
Your Company is recognized as a benchmark in the field of HSE and it
reflects the sincere commitment of the management towards Health,
Safety and Environment. Your CompanyÃs management further wishes to
reiterate its deep and abiding commitment towards HSE.
TOTAL QUALITY MANAGEMENT
As mentioned above, your Company continues to be certified for "Total
Quality Management System" which comprises of ISO 9001:2008 (Quality
Management Systems), ISO 14001:2004 (Environment Management Systems)
and BS OHSAS 18001:2007 (Occupational Health & Safety System
Standards). We are happy to mention that your Company enjoys an
exemplary track record in Total Quality Management System in view of
continual improvements in this area. The Quality Control Laboratory of
your Company has also been certified for ISO 17025 (Quality Assurance
System) which is a unique feature in this field and assures highest
quality standards to all its internal and external customers.
RESEARCH & DEVELOPMENT
Your Board would like to make a special mention about the excellent
work done by the R&D and Technology groups of your Company. Some of the
initiatives taken in this connection by your Company are expected to
yield excellent long term benefits for the organization. The expansion
project in Dahej which is now under implementation is based on the
processes developed in house by these groups. Your Company has also
patented some of the work done by its R&D.
RISK ASSESSMENT AND MANAGEMENT
Your Company has a well defined Risk Management System in place as a
part of its good Corporate Governance practices. All the risks are
identified at various departmental levels and suitable mitigation
measures thereafter are adopted. These are subjected to a quarterly
review by the Risk Co-ordination Committee as well as the Audit
Committee of your Board. Your Company has assigned the ownership of key
risks to various Risk Owners and has made the concerned departments and
officials responsible for mitigation plans and review of these risks
from time to time.
There are adequate internal controls, systems, and checks in place,
commensurate with the size of the Company and the nature of its
business. The management exercises financial control on the operations
through a well defined budget monitoring process and other standard
operating procedures. Your Company has appointed an external
professional agency to conduct the internal audit and the findings and
recommendations of the Internal Auditors are placed before the Audit
Committee of your Board regularly, for further corrective actions.
SUBSIDIARY COMPANIES
The Ministry of Corporate Affairs, Government of India, has granted a
general exemption from attaching Balance Sheet, Profit and Loss
Statement and Schedules thereto and Reports of Board of Directors and
Auditors vide its General Circular No. 2/2011 dated 8 February 2011. In
view of this circular your Company has not annexed Audited Annual
Accounts of its subsidiaries viz. Ensen Holdings Ltd., Urvija
Investments Ltd. and PIL Chemicals Pvt. Ltd. for the year ended 31
March 2011. Your Board of Directors in their meeting held on 23 March
2011 has by resolution also given consent for not attaching the Balance
Sheet of the subsidiary Companies. Shareholders interested in obtaining
copies of annual reports of subsidiary companies are requested to get
in touch with the Office of the Company Secretary.
We are pleased to inform you that PIL Chemicals Pvt. Ltd., a Company
which was acquired by your Company continued to record Profit Before
Tax in excess of Rs100 lakhs for the second consecutive year and has
declared its maiden dividend for the year FY 2010-11.
As you are aware that there was a proposal to merge the two inoperative
subsidiary companies viz. Ensen Holdings Ltd and Urvija Investments Ltd
with PIL Chemicals Pvt Ltd. The subsidiary companies have filed
requisite Petitions with HonÃble Bombay High Court for approval of
Scheme of Merger with effect from 1 April 2010 and the final hearing of
the petition is expected to take place shortly. The financial
statements of the subsidiary companies do not reflect the effect of the
merger. The same will be given only on receipt of the final court
order.
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans / Advances made to and investments made in the
subsidiaries have been furnished in Schedules forming part of the
Accounts.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to the CompanyÃs interest in the Subsidiary Companies is
provided separately.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditorsà Report thereon form part of the Annual Report.
PERSONNEL
The relations, during the year, between the employees and the
management of your Company continued to be cordial.
The Management has recently concluded a Long Term wage Agreement with
its workersà Union for a period of 4 years w.e.f 1 January 2011.
Your Directors wish to thank all the employees for their continued
support and co-operation during the year under review.
STOCK OPTIONS
In terms of your approval read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employees Stock Purchase Scheme) Guidelines, 1999, are set out in
Annexure à I to this Report.
PARTICULARS OF EMPLOYEES
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 forms a part
of this Report and will be sent on demand to the shareholders. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary.
DIRECTORS
At the forthcoming Annual General Meeting, Mr. H.A.Mafatlal, Mr. Rohit
Arora and Mr. Vishad P. Mafatlal will retire by rotation pursuant to
Article 145 of the Articles of Association of the Company. Being
eligible, they offer themselves for reappointment.
DIRECTORSÃ RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, we
hereby state that:Ã
1. In the preparation of the annual accounts, all the applicable
accounting standards have been followed along with proper explanations
relating to material departures, if any.
2. The Directors 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 as at 31March 2011 and of the profit for the year ended on
that date.
3. The Directors 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.
4. The Directors have prepared the annual accounts on a going concern
basis.
REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports
on "Corporate Governance" and "Management Discussion and Analysis" are
attached and forms a part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has always been in the forefront in discharging social
responsibilities. You are aware that at the Annual General Meeting held
on 29July 2009, the Members gave consent to your Board of Directors to
contribute from time to time, to charitable institutions or such funds
etc. in terms of Section 293(1)(e) of the Companies Act, 1956, subject
to a maximum of Rs 15 lakhs per year. Accordingly, the Board of
Directors has ensured that a significant portion of the said amount has
been given to Shri Sadguru Seva Sangh Trust which has provided yeomen
service to the underdeveloped districts of Madhya Pradesh, Chhatisgarh,
Uttar Pradesh etc. Shri Sadguru Seva Sangh Trust is involved in
providing quality and affordable education to the children of the
economically weaker sections of the society, support in the field of
diary farming, women empowerment and has provided relief to those
affected by natural calamities and disasters and has been providing eye
care for rural masses. Several recognitions have been given to the
Trust by various agencies from time to time. Your Board will always
remain committed in discharging its Corporate Social Responsibilities.
OTHER PARTICULARS
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is set out in Annexure à II and forms a
part of this Report.
AUDITORS
The term of Messrs. Deloitte Haskins and Sells, Chartered Accountants,
Mumbai as Statutory Auditors, expires at the conclusion of this Annual
General Meeting and are eligible for reappointment. The Audit Committee
has recommended to the Board the reappointment of M/s. Deloitte Haskins
and Sells, Chartered Accountants as Statutory Auditors of the Company.
The Auditors have given a Certificate to the effect that the
reappointment, if made, will be within the prescribed limits specified
under section 224(1B) of the Companies Act,1956.
GREEN INITIATIVE
Your Directors like to draw your attention to the recent Circular No.
17/2011 dated 21.04.2011 and Circular No. 18/2011 dated 29.04.2011
issued by the Ministry of Corporate Affairs allowing paperless
compliances and also service of notice/documents (including annual
report) through electronic mode to its members. To support this green
initiative of the Central Government in full measure, we hereby appeal
to all those members who have not registered their e-mail addresses so
far, are requested to register their e-mail address in respect of
electronic holdings with their concerned depositary participants and /
or with the Company.
ACKNOWLEDGEMENTS
Your Directors would like to acknowledge the continued support and
co-operation from the Bankers, Government Bodies, Business Associates
which has helped the company to sustain its growth even during these
challenging times.
For and on behalf of the Board of Directors
Mumbai Hrishikesh A. Mafatlal
Dated : 30May 2011 Chairman
Mar 31, 2010
The Directors present their Report together with the Audited Accounts
of the Company for the year ended 31 March 2010.
Particulars For the year ended For the year ended
31 March 2010 31 March 2009
Profit before Depreciation,
Interest and Taxation 57,91 65.74
Less:Depreciation 7,63 7.61
Less: Interest 0,15 3.98
Profit before Tax 50,13 54.15
Provision for Taxation (including
wealth tax and fringe
benefit tax) 16.10 17.99
Profit after Tax 34.03 36.16
(Deficit)/Surplus brought from
previous period 21.12 (3.76)
Proposed Dividend 9.65 9.65
Tax on Dividend 1.64 1.64
Balance carried to Balance Sheet 43.86 21.12
PERFORMANCE OF THE COMPANY
The turnover of the Company for the year under review was Rs.460 crore
as compared to Rs.499 crore representing a decrease of 7.87% over the
previous year. The production of rubber chemicals and their
intermediates was 36697 MTfor the year under review as against 33573 MT
representing an increase of 9.30 % as compared to the previous year.
The year 2009-10 started with an unprecedented negative outlook due to
the global financial meltdown. Fortunately, the situation in India had
started turning positive as compared to the Western world. As a result,
the domestic Tyre industry got back to normal production levels and
consequently demand for our rubber chemicals showed a healthy trend in
the domestic market.
We are therefore happy to inform you that the Company experienced
positive volume growth during the year under review and this growth as
mentioned earlier was driven mainly by Domestic Sales. However on the
export front, after a very sudden drop in volumes, your Company managed
to substantially recover its volumes in the Second Half.
The selling prices remained more or less flat for the most part of the
year in the domestic market although costs kept going up. During the
last quarter of the year, an attempt was made to increase the selling
prices of select products to recover some of the cost increases
witnessed during the period.
Raw material prices started hardening from the beginning of the 2nd
half of the year consequent to crude prices surging to
US$ 80 per barrel. We are happy to inform you that despite the cost
increases, through a combination of timely bookings of raw materials at
best possible prices, better management of various operational
parameters coupled with some increases in selling prices, the actual
profits for the year remained more or less at the same level as that of
the previous year.
During the year, the Company managed to pay off all its secured loans
in the first quarter of the year itself. Even the unsecured loan taken
from SICOM has been paid during May 2010. We are happy to inform you
that as of date, the Company is completely debt free and this is
particularly significant since we are in the process of raising funds
for the proposed expansion Project in Dahej, Gujarat.
EXPORTS
During the year under review, the Company was able to achieve exports
of Rs. 181 crore as against Rs. 231 crore in the previous year. The
export volumes also, were lower by about 8% as compared to the previous
year due to reduced demand in the international market. Rupee
appreciation also adversely affected our exports realizations. Export
volumes did however improve substantially in the 2nd half of the year
under review over the 1 st half consequent to partial recovery in the
overseas markets. Given this background, we are hopeful of further
recovery in volumes in the FY 2010-11 as compared with the FY 2009-10.
BUSINESS SCENARIO
Although the global economic scenario has shown some signs of
improvement, we need to carefully watch the developments in the coming
year.
The Rubber Chemicals market, remained competitive and the dumping by
international exporters into India continues to be a concern.
Chinas export subsidies arid undervalued currency continues to keep
our product pricing depressed, although input costs have risen
significantly over the year putting pressure on margins. Due to weak
demand in their own domestic markets, competition from developed
countries in the European Union region as well as South Korea continues
to be intense in the Indian market. The Company is responding to this
with concerted efforts to improve its share with existing customers as
well as trying to create new opportunities in untapped markets.
Despite these problems, your Board is pleased to convey that most of
the major international tyre customers continue to rely on and do
healthy business with the company for their regular requirements of
rubber chemicals. The Company continues to maintain a very strong and
long term relationship with all its domestic and international
customers and they in turn have accepted the status of the Company as
one of the leading global manufacturers of rubber chemicals with very
high technological capabilities.
PROJECT
As informed to you last year, the Company had decided to go slow on the
proposed expansion Project in Dahej, Gujarat, due to the global
recessionary conditions. Given the present automobile sector growth in
India and also the major expansion plans being implemented by the
Domestic Tyre Companies coupled with the fact that the Global Tyre
industry is also operating close to their normal levels, we are
confident that the Company can now go ahead and implement the first
phase of the Project and we see more than adequate demand for the
additional capacities that will come up with this Project. A suitably
modified plan for the said project has been finalized and we are happy
to inform you that the overall Engineering Package is in the advanced
stages of completion. The Company now plans to implement this phase of
the project at a cost of approximately Rs. 250 crore. Discussion for
financing the project are at an advanced stage with prospective
lenders.
The project is expected to be commissioned during the Second half of FY
2011-12. On its successful implementation, your Companys position in
the market place will strengthen not only in terms of higher market
share but also in terms of more cost effective and cleaner processes.
As already stated in the previous reports, all the necessary
Clearances from the Central and the State Government authorities have
also been obtained. Most of the infrastructural work too has been
completed. The Company has so far spent a sum of Rs.24 crore on the
project.
DIVIDEND
Your directors are pleased to recommend payment of dividend of Re. 0.60
per share of Rs.10/- each (6%), on the equity share capital of the
Company. The dividend, together with the tax on Dividend, will absorb a
sum of Rs. 11.29 crore.
TRANSFER OF UNPAID DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION
FUND
As per the provisions of section 205C of the Companies Act, 1956, all
unpaid dividends including and up to final dividend for the year
1997-98 and the Fixed Deposits lying unclaimed with the Company up to
31 March 2003 have been transferred to the Investor Education and
Protection Fund.
FIXED DEPOSITS
As on 31 March 2010, fixed deposits amounting to Rs. 0.20 crore have
not been claimed by the depositors from the Company. The fixed
deposits which have matured on or before 31 March 2003 but remained
unclaimed since then, have been transferred to Investor Education &
Protection Fund, as required under Section 205C of the Companies Act,
1956.
INSURANCE
The Company has taken all the necessary steps to insure its properties
and insurable interests, as deemed appropriate and also as required
under the various legislative enactments.
HEALTH, SAFETY AND ENVIRONMENT
The Company is certified for ISO 14001:2004 (Environment Management
Systems) and BS OHSAS18001:2007 (Occupational Health & Safety System
Standards), and ensures continuous improvements in the area of Health,
Safety and Environment.
The Company follows a well established and responsible policy on
health, safety and environment, which every employee is expected to
follow and also carefully monitor various practices and procedures
which are adopted. The sustainability of the business itself reflects
the sincere commitment of the management to implement the health,
safety and environment policy in totality. Direct and indirect
employees are trained in technical skills required to handle various
hazardous chemicals, fire fighting jobs and first aid cases. The
Company conducts pre-employment as well as regular periodic medical
checkups across all employees including contractors employees to
monitor their health on a regular basis. The Companys management
wishes to reiterate its deep and abiding commitment to this cause. I am
happy to inform you that your Company has been regularly extending
support on Safety & Medical front to those affected in the vicinity of
our plant including the fire department of Navi Mumbai Municipal
Corporation as part of our continued Corporate Social responsibility.
TOTAL QUALITY MANAGEMENT
As mentioned above, the Company continues to be certified for "Total
Quality Management System" which comprises of ISO 9001:2008 (Quality
Management Systems), ISO 14001:2004 (Environment Management Systems)
and BS OHSAS 18001:2007 (Occupational Health & Safety System
Standards). We are happy to mention that the Company enjoys an
exemplary track record in Total Quality Management System in view of
continual improvements in this area. The Quality Control Laboratory of
the Company has also been certified for ISO 17025 (Quality Assurance
System) which is a unique feature in this field and assures highest
quality standards to all its internal and external customers.
RESEARCH & DEVELOPMENT
Your Board would like to make a special mention about the excellent
work done by the R&D and Technology groups of the Company. Some of the
initiatives taken in this connection by the Company are expected to
yield excellent long term benefits for the organization. The expansion
project in Dahej which is now under implementation is based on the
processes developed in house by these groups. The Company has also
patented some of the work by its R&D.
RISK ASSESSMENT AND MANAGEMENT
The Company has a well defined Risk Management System in place as a
part of its good Corporate Governance practices. All the risks are
identified at various departmental levels and suitable mitigation
measures are adopted. These are subjected to a quarterly review by the
Risk Co-ordination Committee as well as the Audit Committee of your
Board. The Company has assigned the key risks to various Risk Owners
and has made them responsible for mitigation plans and review of these
risks from time to time.
There are adequate internal controls, systems, and checks in place,
commensurate with the size of the Company and the nature of its
business. The management exercises financial control on the operations
through a well defined budget monitoring process and other standard
operating procedures. The Company has appointed an external
professional agency to conduct the internal audit and the findings and
recommendations of the Internal Auditors are placed before the Audit
Committee of your Board regularly for further corrective actions.
SUBSIDIARY COMPANIES
The Annual Reports of its three subsidiaries viz. Ensen Holdings
Limited, Urvija Investments Limited and PIL Chemicals Private Limited
for the year ended 31 March 2010 are enclosed separately and form an
integral part of the Annual Report of NOCIL Limited.
We are pleased to inform you that PIL Chemicals Pvt Ltd, a Company
which was acquired by your Company has not only started making profits
but also managed to wipe out its accumulated losses in its 3rd year of
operation under the NOCIL Management.
In view of insignificant operations of both Ensen Holdings Ltd and
Urvija Investments Ltd and to consolidate the operations of subsidiary
companies, the Board of Directors of the respective subsidiary
Companies approved in principle the merger of M/s. Ensen Holdings Ltd.
and M/s. Urvija Investments Ltd., with M/s PIL Chemicals Pvt. Ltd.
which is operating company and doing processing work for your Company
with effect from 1 April 2010.
The subsidiary companies are in the process of filing necessary
Petition with Honble Bombay High Court for approval of Scheme of
Merger.
Pursuant to the requirements of Clause 32 of the Listing Agreement, the
details of Loans / Advances made to and investments made in the
subsidiaries have been furnished in Schedules forming part of the
Accounts.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to the Companys interest in the Subsidiary Companies is
provided separately.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared by your Company in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors Report thereon form part of the Annual Report.
PERSONNEL
The relations between the employees and the management, during the
year, have been cordial. The Directors wish to thank all the employees
for their continued support and co-operation during the year under
review.
STOCK OPTIONS
In terms of your approval read with the Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, the details required to be provided under the
Securities and Exchange Board of
India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999, are set out in Annexure -1 to this Report.
PARTICULARS OF EMPLOYEES
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 forms a part
of this Report and will be sent on demand to the shareholders. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary.
DIRECTORS
At the forthcoming Annual General Meeting, Mr. C. L. Jain, Mr. D.N.
Mungale and Mr. N. Sankar will retire by rotation pursuant to Article
145 of the Articles of Association of the Company. Being eligible,
they offer themselves for re-appointment.
DIRECTORS RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, we
hereby state that:-
1. In the preparation of the annual accounts, all the applicable
accounting standards have been followed along with proper explanations
relating to material departures, if any.
2. The Directors 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 as at 31 March 2010 and of the profit for the year ended on
that date.
3. The Directors 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.
4. The Directors have prepared the annual accounts on a going concern
basis.
REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports
on "Corporate Governance" and "Management Discussion and Analysis" are
attached and forms a part of this Report.
OTHER PARTICULARS
Additional information on conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of section 217(1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is set out in Annexure - II and forms a
part of this Report.
AUDITORS
The term of M/s. Deloitte Haskins and Sells, Chartered Accountants,
Mumbai as Statutory Auditors, expires at the conclusion of this Annual
General Meeting and are eligible for re-appointment. The Audit
Committee has recommended to the Board the re-appointment of M/s.
Deloitte Haskins and Sells, Chartered Accountants as Statutory Auditors
of the Company. The Auditors have given a Certificate to the effect
that the re-appointment, if made, will be within the prescribed limits
specified under section 224 (1B) of the Companies Act,1956.
ACKNOWLEDGEMENTS
Your Directors would like to acknowledge the continued support and
co-operation from the Bankers, Government Bodies, Business Associates
which helped the company to sustain its growth even during these
challenging times.
For and on behalf of the Board of Directors
Hrishikesh A. Mafatlal
Chairman
Mumbai
Dated:25 May2010.
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