DIRECTORS REPORT Your Directors have pleasure in presenting the 29th Annual report and audited accounts of the company for the year ended 31st March 2015 2. Performance during the Financial Year under Report 2.1 State of Company's Affairs Your Company has achieved Gross Sales of Rs. 105.66 crore during 2014-2015 which were 8.30% higher as compared with the sales of previous year. The sales of Synthetic Leather Division at Rs. 83.93 crore during 2014-2015 were 17.34% higher as compared with the sales of previous year. The sales of Electronic Gauging Division at Rs. 21.73 crore during the year were 16.52% lower as compared with the previous year, due to recessionary conditions in user industry, both domestic and international. The Company Operating Profit Before Interest, Depreciation, Deferred Tax increased by 11.48% to Rs. 9.34 crore during 2014-2015 as compared with Rs. 8.38 crore during the previous year despite higher cost of Power, Salary/ Wages and Freight costs. The Interest and Finance Charges decreased to Rs. 02.16 crore (previous year Rs. 02.42 crore) despite higher sales, due to effective working capital management. The Net profit after Interest, Depreciation & Taxes has increased to Rs. 03.09 crore during the year which is 61.81% higher as compared with the Net profit of Rs. 01.91 crore in the previous year. Keeping in the view weak economy resulting in stagnant sales realization and all around increase in the cost of inputs due to inflationary conditions, the management considers overall performance to be satisfactory in a difficult year. The Board has not proposed carrying of any amounts to reserves. During the year, there has not been any change in nature of business of the company. No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. The Financial Statements of the Company have been audited by Independent Statutory Auditors, who have previously subjected themselves to peer review. Their Audit Report, which is annexed, is self-explanatory and does not contain any qualification, reservation, adverse remark or disclaimer calling for comments by the Board. 2.2 Material Changes and commitments, if any, affecting the Financial Position of the Company No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors' Report. Future Prospects The Company is continuously upgrading its technology and modernizing plant & machinery to maintain competitive edge in the market. Despite tough competition in the market, its sales are growing every year. For some time now, the Company has been concentrating on PU resin where completion is somewhat less. Taking a cue from the "Make in India" campaign of Government of India, the Company explored the opportunities of developing high quality, breathable and import substitution products. The Company has been successful in developing breathable PU resin using high quality resins. These products, which offer higher margins, have been well accepted by market. The Company is also in the process of modifying its production line, which promises better products and significant energy saving. These measures are expected to give some measurable boost to Company's margins. To conserve working capital, the Management has not proposed any dividend for the year ended on 31st March, 2015 5 Directors & Key Managerial Personnel The Board of Directors is the apex body constituted by shareholders for overseeing the Company's overall functioning. The Board provides and evaluates the Company's strategic direction, management policies and their effectiveness, and ensures that shareholders' long-term interests are being served. The decision making process at the Company is institutionalized. Stakeholder's interests are taken into account, before making any business decision. The Chairman and Managing Director (CMD) provides overall direction and guidance to the Board. The Board has constituted three Committees, namely Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and is empowered to constitute additional functional Committees from time to time, depending on business needs. For statements on composition of the Board, Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and their Meetings held during the Financial Year under Report, Independent Directors, their brief resume, the declarations of Independence given them and appointment of Key Managerial Personnel, please refer to Annexure A. (Corporate Governance Report) which forms an integral part of this Report. Terms and conditions of appointment of Independent Directors can be accessed from the website of the Company at the following web link: www.jaschindustries.com/Filings & Disclosures/ Appointment & Training of IDs. During the year under report, Shri Om Prakash Garg, Executive Director resigned w.e.f. 30-04-2014 citing his personal commitments. Dr. Ashok Kumar Mittal, Director also resigned w.e.f. 30-04-2014 stating that he is not qualified for appointment as independent director under the Companies Act, 2013. The management would like to place on record the rich contribution made by them on the Board of Directors of the Company. Shri Naresh Kumar was appointed nonexecutive Additional Director (Independent) w.e.f. 30-05-2014 and the members of the Company in their meeting held on 29th September, 2014 appointed him as Director. Shri Manish Garg, Director retires by rotation at this Annual General Meeting and being eligible, offers himself for re-appointment. On the recommendations of the Nomination & Remuneration Committee, the Board of Directors proposes to re-appoint Shri Manish Garg as Director (subject to retirement by rotation) and also re-appoints or take on record afresh the appointments of Dr. SK Khandelwal, Dr. KC Varshney, Shri Kuldeep Singal and Shri KL Khetarpaul as Independent Directors for a period of five years under the new Act (without being liable to retire by rotation). The Board recommends their (re) appointments 6 Particulars of Employees The Company does not have any employees whose particulars are required to be disclosed in the Directors' Report pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 7 Board & Board Committee Meetings Details of Board and Committee Meetings are given in the Corporate Governance Report, which is annexed as Annexure A ibid which forms integral part of this Report. 8 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, the directors individually as well as its Committees. This was done in accordance with the criteria suggested by the Nomination & Remuneration Committee, which includes attendance and participation at Board, Committee and General Meetings; quality of individual director's contribution to Board, relationship of an individual director with other Board members; ability to follow up the views expressed by him/her earlier; ability to contribute to and monitor the corporate governance practices; ability to restrict litigation to the minimum; ability to take unanimous decisions; ability to adopt international best practices; ability to actively participate in long-term strategic planning, ability to fulfill directors' legal obligations and fiduciary responsibilities; self-appraisal of Key Result Areas (in case of whole time directors), etc. The Board and the Independent Directors were of the unanimous view that performance of the Board as a whole was satisfactory. 9 Remuneration Policy, Remuneration of Directors & Appointment Of Directors For a policy on Directors' appointment, remuneration and criteria of evaluation required to be disclosed under Section 178(3) of the Companies Act, 2014 and under Clause 49 of the Listing Agreement please refer to Annexure B, which forms part of this Report. 10 Disclosure under Section 197(12) of the Act and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The requisite details relating to ratio of remuneration, percentage increase in remuneration, etc. of managerial personnel, as stipulated under the above Section/Rules are annexed as Annexure C to this Report, which forms part of this report. 11. Subsidiaries, Consolidated Accounts and materiality Indev Gauging Systems Inc (INDEV), is a wholly owned subsidiary of Jasch North America Ltd (JNAC) (the latter in turn being the wholly owned subsidiary of Jasch Industries Ltd). Incorporated in the United States both these entities existed as subsidiaries of the Company at the beginning and at the end of the Financial Year under Report, during which no other entity became or ceased to become subsidiary or joint venture entity or associate company of the Company. A subsidiary company is considered as material if the holding Company's investment in the subsidiary company exceeds twenty per cent of consolidated net worth of holding company as per holding company's audited balance sheet of the previous financial year or if the subsidiary company has generated twenty per cent of the consolidated income of the holding company during the previous financial year. Performance and financial position: JNAC does not perform any business, except supporting INDEV by way of providing share capital or investment or guarantee. Calendar year is the financial year of both these subsidiaries. Due to slump in US economy INDEV could earn a net profit of only INR 40,673 on a gross sales and other income of USD equivalent of INR 9,63,28,293. In accordance with the requirements of accounting standard (AS) 21 prescribed by The Institute of Chartered Accountants of India, the consolidated accounts of the Company, which include those of its wholly owned subsidiaries, are annexed to this report. 12. Financial Audit & Financial Auditors' Report M/s Arora and Choudhary Associates, Chartered Accountants, who have subjected themselves to peer review, have carried out statutory audit of Company's financial accounts during the financial year 2014-15. They hold office till the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limit under Companies Act, 2013 and that they are not disqualified for reappointment. The Directors and the Audit Committee recommend their re-appointment. Auditors' Report is self-explanatory and does not contain any qualification, reservation, adverse remark or disclaimer. 13. Secretarial Audit & Secretarial Auditors' report During the financial year under Report, the Company subjected itself to Secretarial Audit by Independent Secretarial Auditors, M/s Mukesh Arora & Co, Company Secretaries and their report in Form MR-3 is at Annexure D, which forms part of this Report. 14. Cost Audit & Cost Record In compliance with an order issued by the Audit Branch of Ministry of Corporate Affairs, Government of India, vide F. No. 52/26/CAB-2010 dated 24th January, 2012, the Board, in its Meeting held on 31st May, 2014 had re-appointed M/s Vipul Bhardwaj & Co as Cost Auditors (subject to approval of Central Government and Members in the Annual General Meeting) for the Financial Year 2014-15 under the aforesaid notification which was still in force at that time. Thereafter, the law changed and the Company was no longer required to appoint Cost Auditors. Therefore, their re-appointment for the Financial Year 2014-15 was not being put up to the Members for their approval. However, the Company was required to maintain, and maintained, cost records for the financial year under Report. For the financial year 2015-16, Audit of Cost Records has again become mandatory for the Company. 15. Internal Audit, Internal Control Systems & Their Adequacy The Company has engaged CMA Jyoti Gandhi as its Internal Auditor. The scope of their work includes review of processes for safeguarding the assets of Company, effectiveness of systems and processes and assessing the internal control strengths in all areas. Management is having tight control on all the operations of the Company. All expenses are scrutinized and approved by the top management. The Company has adequate system so as to have proper check and control on every department. Deviation from established system, if any are placed before Audit Committee of the Board for review and corrective action to be taken, if any. 16. Vigil Mechanism : In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.jaschindustries.com under the link Filings and Disclosures / RPT, Vigil & other policies. 17. Risk management policy A statement indicating business risks and the management policy to manage the risks, forms part of Management Discussion & Analysis Report attached with Directors' Report. 18. Extract of Annual Return Extract of Annual Return is attached at Annexure E. 19. Deposits The Company did not accept any deposits during the year under report. No deposits remained unpaid or unclaimed as at the end of the year. There has been no default in repayment of deposits or payment of interest thereon. All the unsecured loans from relatives of Directors which existed at the beginning of the financial year and which, by a change in law, came to be included in the definition of "deposits", were suitably dealt with and at the end of the year there were no deposits which were not in compliance with the requirements of Chapter V of the Act. 20. Loans & Advances During the year under Report, the Company did not give any reportable loans or advances. 21. Related Parties Transactions On the recommendation of the Audit Committee, the Board of Directors of the Company has adopted a policy to regulate transactions between the Company and parties related to it. This Policy has been uploaded on the website of the Company at www.jaschindustries.com under the link Filings & Disclosures /RPT, Vigil and other policies. All the related party transactions that were entered into during the financial year, were on arm's length basis and were in the ordinary course of the business. Transactions with related parties by the Company in the normal course of business were placed before the Audit Committee for its approval and the particulars of contracts entered during the year as per Form AOC-2 are enclosed as Annexure - F. There were no material significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. 22. Corporate Governance Report And Certificate The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. Corporate Governance Report, together with requisite certificate from the Independent Statutory Auditors of the Company, confirming compliance with the conditions of corporate governance as stipulated under the Listing Agreement is attached at Annexure - A ibid and forms an integral part of this Report. 23. Management Discussion And Analysis Report For Management Discussion & Analysis Report, please refer to Annexure - G, which forms a part of this Report. 24. Disclosure Pursuant To Section 22 of Sexual Harassment of Women At Workplace (Prevention, Prohibition & Redressal) Act, 2013 In order to prevent sexual harassment of women at work place a new Act "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" has been notified on 9th December, 2013. Under the said Act every company is required to disclose in its Annual Report, the complaints received by it relating to sexual harassment at work place of any women employee. During the Financial Year under report, no cases were filed or disposed of under that Act. 25. Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo Information required under section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure H to this report. 26. Credit Rating & ISO Certification The company's performance and financial position was rated by CRISIL Ltd, the premier credit rating agency in the country, which has assigned BBB Stable rating to fund based long term bank loans and P3 rating to non-fund based facilities from HDFC Bank. Our rating reflects moderate safety to timely payment of financial obligations and comes under Investment Grade rating. The Company has obtained ISO 9001:2008 and ISO 9001:2000 Quality Certificates for its Synthetic Leather and Electronic Gauge Division respectively. 27. Listing The Shares of the Company are listed on Stock Exchanges at Mumbai and Kolkata. 28. Corporate Social Responsibility Provisions relating to Corporate Social Responsibility were not applicable to the Company during the Financial Year under Report. 29. Directors' Responsibility Statement Pursuant to Section 134 of the Companies Act, 2013, the Directors affirm that: (I) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation, if any, relating to material departures; (ii) Appropriate accounting policies had been selected and applied consistently, and judgments and estimates made were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profits of the Company for the year ended 31st March, 2014. (iii) Proper and sufficient care had 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. (iv) The annual accounts had been prepared on a going concern basis. (v) Internal financial controls were laid down to be followed by the Company and such internal financial controls were adequate and were operating efficiently. (vi) Proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively. 30. Appreciation Your directors wish to place on record their appreciation of the devoted services rendered by the by the workers, the staff and the executives of the Company and for the continued support from the shareholders, the lenders and other associates. For & on behalf of the Board (J. K. Garg) Chairman Place : Sonipat Date : 31st July, 2015 |