DIRECTOR'S REPORT Dear Members, Your Directors are pleased to present the 36th Annual Report together with the Audited Accounts for the year ended on 31st March 2016. Business & Operational Performance • The Company's total sales has increased by 25.5 % as compared to previous year. • EBITDA for the year has been 41.8 crores as compared to 28.03 crores in previous year, an increase of 49% over last year. EBITDA margins during the year increased from 15.46% in FY 15 to 18.30% in the current year, an increase of 284 basis points. • The Profit Before Tax (PBT) is Rs. 2141.5 lacs, which has increased by 43.76% compared to P.Y. which was Rs. 1489.67 lacs. • The Net Profit for the year is Rs. 1549.20 lacs, as compared to Rs. 1300.88 lacs in FY 15. This represents an increase of 19% over last year. Your Company has been awarded as the TOP Exporter of Engineering Plastic Components from INDIA for the years 2013-14 and 2014-15 by the "The Plastics Export Promotion Council (PLEXCONCIL)". The Company has been awarded with this recognition since the Year 2005. Your Company has, this year, obtained Quality Certification ISO 15378:2011 for Manufacturing and supply of Plastic Moulded Components and/or assemblies used as Primary Packaging Material for medicinal products. The Company has substantially expanded its Export Oriented Unit (EOU) plant during this year. All significant accounting policies and material transactions have been disclosed in notes on accounts to the Balance Sheet as on 31st March 2016. India is a growing market for plastics and consumes about 11 million tonnes annually against a global consumption of 275 million tonnes per year and worldwide. The plastics and polymer consumption is growing at an average rate of 10 percent and is expected to touch 16.5 million tonnes by 2016. The Plastics Industry grew by 13 per cent annually in the last five years and is expected to continue a double-digit growth beyond 2016-17, according to a study on Plastics Industry. In order to cater to the increased demand of plastics consumption, the plastics processing industry will need to grow from a current installed processing capacity of 30 MMT to 45 MMT per annum by 2020. Shaily's Strategy Your Company focuses on quality, technology and innovation as cornerstones of its long term strategy. We continue to invest in expansion of our manufacturing and engineering capabilities. We keep customer at the centre stage of all our actions and get involved in customer projects at an early stage of development. This helps us in our endeavours to position Shaily as a preferred partner of our customers. The key to Shaily's success lies in a combination of varied factors; performance on existing operations, cost effectiveness through innovative manufacturing solutions, on time and within cost delivery of new projects. These are important not only to delight the customer but also for your growth and improved profitability. Consistent implementation of initiatives to improve market excellence, operational excellence and people excellence, your Company strives not only to achieve profitable growth but to also improve its long term competitiveness in the business. Dividend The Board of Directors are pleased to recommend for consideration of the shareholders at the ensuing Annual General Meeting, payment of dividend at 40 % (Rs. 4/- per equity share) on the paid up capital of the company for the year ended on 31st March 2016. Directors The Board of Directors, has in its meeting held on May 18, 2016, upon recommendation of the Nomination & Remuneration Committee appointed Mr. Dilip Shah as an Additional Independent Director with effect from May 18, 2016. His appointment is proposed to be regularized in the ensuing 36th Annual General Meeting. Ms. Tilottama Sanghvi, Whole Time Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The Board of Directors, in its meeting held on February 11, 2016, upon recommendation of the Nomination & Remuneration Committee recommended extension of tenure of Mr. Mahendra Sanghvi and Mr. Laxman Sanghvi as Executive Chairman and Executive Director, respectively with effect from April 01, 2016, for a period of 3 years, i.e. from 01.04.2016 to 31.03.2019, subject to the approval of members at the forthcoming 36th Annual General Meeting. A brief resume of and particulars relating to the above directors is given in the Notice of the 36th Annual General Meeting. Mr. A S Anandkumar, Independent Director of the Company has tendered his resignation effective from May 19, 2016. The necessary legal formalities in connection thereto, have been complied with. Details of all the Directors seeking appointment/re-appointment are included in the notice calling the 36th Annual General Meeting. Your directors have pleasure in recommending their appointment re-appointment. Key Managerial Personnel (KMP) Pursuant to the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointaient and Remuneration of Managerial Personnel) Rules, 2014, following persons are acting as Key Managerial Personnel of the Company as on March 31, 2016 :- - Mr. Mahendra Sanghvi, Executive Chairman - Mr. Laxman Sanghvi, Executive Director - Ms. Tilottama Sanghvi, Whole Time Director - Mr. Amit Sanghvi, Managing Director - Mr. Sanjay Shah, CFO & Vice President - Finance - Ms. Preeti Sheth, Asst. Company Secretary Ms. Preeti Sheth, holding an Associate Membership of the Institute of Company Secretaries of India, has been appointed as a Company Secretary, designated as Asst. Company Secretary of the Company, effective from November 09, 2015. Ms. Apeksha Patel, Asst. Company Secretary, has resigned from the Company effective from November 07, 2015. Independent Directors' Declaration The Company has received the declarations in the prescribed format from each Independent Director confirming that they meet the criteria of independence as envisaged in the provisions of Section 149 of the Companies Act, 2013, read with Regulation 16 of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015. Related Disclosures Remuneration and other details of the Key Managerial Personnel for the year ended 31st March, 2016 are mentioned in the Extract of Annual Report which is attached as Annexure and forms part of the Report of Board. (ANNEXURE - E) The details of Familiarisation Programme and Annual Board Evaluation process have been provided under the Corporate Governance Report. Meetings A calendar of Meetings is prepared and circulated in advance to the Directors. During this year, four Board and Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under Companies Act, 2013 and the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with the erstwhile Listing Agreement. Statement indicating the manner in which formal annual evaluation has been made by the board of its own performance and that of its committees and individual directors has been given in the Report on Corporate Governance. Deposits The Company has not accepted deposits from the public falling within the ambit of section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Particulars of Loans given, Guarantees given, Investments made and Securities provided Details of Loans, Guarantees and Investments covered under the provisions of section 186 of the Companies Act, 2013 are given in the Note 14 to the Financial Statements. Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo - need to mention in details. Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is as hereunder: A) Conservation of Energy The Company has installed in-built energy mechanism to conserve energy and looks at various options in Conservation of Energy. B) Technology Absorption - Research and Development: The Company has developed several dies and moulds, which were earlier imported. The Company has also developed several plastic components, which were earlier imported. The activities in development are carried out by the technicians, and the expenditure thereon is debited to the respective heads. - Technology absorption, adaptation and innovation: The Company has manufactured varied plastic components of international standard/quality, which are import substitutes for diverse applications. C) Foreign exchange earnings and outgo Total Foreign Exchange outgo used is Rs. 6969 lacs and total Foreign Exchange earned is Rs. 16867 lacs. There were no material changes and commitments, pursuant to Section 134(3)(l) of the Companies Act, 2013, which has affected the financial position of the Company, between the end of the Financial Year 2015-16 and the date of the report. Management Discussion and Analysis A report on Management Discussion and Analysis, as required in terms of Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Report and it deals with the Business Operations and Financial Performance, Research & Development Expansion & Diversification, Risk Management, Marketing Strategy, Safety & Environment, Human Resource Development, etc. (ANNEXURE - A) Corporate Governance The Company has been following the principles and practices of good Corporate Governance and has ensured compliance of the requirements stipulated under Clause 49 of the erstwhile Listing Agreement read with Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015. A detailed report on Corporate Governance as required under Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, is appended alongwith the Corporate Governance Report, issued by M/s Samdani Shah & Asso., Company Secretaries, Vadodara (Gujarat), the Company's Secretarial Auditors, confirming the compliance of conditions on Corporate Governance forms part of the Boards Report. (ANNEXURE - B) Particulars of Employees and related disclosures Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, has been appended to this Report. (ANNEXURE - D). Vigil Mechanism Your Company has a well-defined "Whistle Blower Policy" and has established Vigil Mechanism to provide for adequate safeguards against victimisation of Directors and employees who follow such mechanism and has also made provisions for direct access to the Chairman of Audit Committee in appropriate cases. The Vigil Mechanism Policy of the Company is available on the Company's website at the weblink - <http://> www.shaily.com downloads.aspx Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place a Policy against Sexual Harrasment at workplace in line with the requirement of Sexual Harrasment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding Sexual Harrasment. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. No Complaint has been received by the Committee during the year. Directors Training & Familiarization The Directors are regularly informed during the meetings of the Board and the Committees, of the activities of the Company, its operations and issues facing the Plastics Industry. Considering the long association of the Directors with the Company and their seniority and expertise in their respective areas of specialization and knowledge of the plastics industry, their training and familiarization were conducted in the below mentioned areas : 1. The Roles, Rights, Responsibilities and Duties of Independent Directors. 2. Business Development Strategy and Plans. 3. Changes brought in by the introduction of the Securites Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. 4. New SEBI Regime - Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015. The details of the Familiarization Programme, so imparted, can be viewed at the following weblink - <http://> www.shaily.com downloads.aspx Annual Evaluation Your Company believes that systematic evaluation contributes significantly to improved performance at three levels - Organizational, Board and Individual Board Member. It encourages the leadership, teamwork, accountability, decision making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understanding of Board dynamics, board-management relations and thinking as a group within the Board. Pursuant to the provisions of the Companies Act, 2013 and Regulations 17 & 19 read with Part D of Schedule II to the Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, the Board has carried out an annual performance evaluation of its own, and that of its Committees and Individual Directors on certain parameters set out in the Nomination and Remuneration Policy adopted by the Board. Performance evaluation criteria for the Board, its Committees, the Directors and the Chairman of the Company were circulated to and responded by the Directors. A consolidated summary of the ratings as provided by the Directors, was prepared by the Company Secretary. Independent Directors in their meeting have, evaluated performance of the 'Board', the 'Non-independent Directors' as well as the 'Chairman' of the Company and submitted their recommendation to the Board. The Nomination and Remuneration Committee has further carried out evaluation of all Directors including Independent Directors. The report of performance evaluation, so arrived at, was then noted and discussed by the Nomination and Remuneration Committee and the Board in their respective meetings. Nomination and Remuneration Policy Your Board has adopted a Nomination and Remuneration Policy as required by Section 178 of the Companies Act, 2013, The Policy provides for the appointaient and removal of Directors, Key Managerial Personnel and Senior Management employees and their remuneration. The terms of reference of the Nomination and Remuneration Committee are given in the Report on Corporate Governance under the section "Nomination & Remuneration Committee". The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board and separate its functions of governance and management. On March 31, 2016, the Board consists of eight members, four of whom are Executive, and four are Independent Directors. The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013, the SEPL Nomination and Remuneration Policy, is available on the Company's website at the weblink - <http://www.shaily.com/downloads.aspx> . There has been no change in the policy since last financial year. We affirm that the remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company. Audit Committee The Audit Committee of the Board consists of Four Independent Directors. The composition, role, terms of reference as well as power of the Audit Committee are in accordance with the provisions of Regulation 18 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 and Section 177 of the Companies Act, 2013 and rules/regulations made thereunder. The details of all related party transactions are placed periodically before the Audit Committee. All the recommendations made by the Audit Committee were accepted by the Board. The Company has in place, Vigil Mechanism; details of which are available on the Company's website at weblink - http: www. shaily.com downloads.aspx. The Committee has also been delegated the responsibility for monitoring and reviewing risk management assessment and minimization procedures, implementing and monitoring the risk management plan and identifying, reviewing and monitoring all elements of risks which the company may be exposed to. The details of terms of reference of the Committee, Number and dates of meeting held, attendance of the Directors and remuneration paid to them are given in the attached Corporate Governance report under the section "Audit Committee". (ANNEXURE -B) Risk Management Policy Your Company has implemented a mechanism for risk management and has formulated a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the company's competitive advantage. Internal Financial Control system and their adequacy The company has an internal control system, commensurate with the size, scale and complexity of its operation. Contracts and Arrangements with Related Parties The transactions with the related parties are governed by prevailing regulatory requirements and Company's policy on dealing with such transactions. All related party transactions that were entered during the financial year were placed before the Audit Committee, as also the Board for their approval. All the transactions with the Related Parties entered during the year were carried on arm's length basis and there are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated person which may have potential conflict with the interest of the Company at large. Therefore, the information pertaining to Section 188(1) read with Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, (Form AOC-2) is not required to be annexed to this Report. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. i.e. www.shaily.com and could be viewed at the weblink ; (<http://www.shaily.com/downloads.aspx> ). Corporate Social Responsibility (CSR) Being an Indian company, we are motivated by the Indian ethos of Dharma as a key plank for organisational self-realisation. The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. The Company continues its spend to support local initiatives health medical, education and sanitation• cleanliness purpose as Corporate Social Responsibility initiatives. Guided by the prevailing regulatory requirements, the Company has constituted a 'Corporate Social Responsibility (CSR) Committee' and framed a Policy on CSR, summary of which together with details of CSR activities undertaken by the Company during the financial year 2015-16, have been covered in separate report on CSR annexed to this report. (ANNEXURE - C) The Committee met once during the year on 16th May, 2015, to peruse the spending's and budget for CSR Activities. The Policy on Corporate Social Responsibility is available on the Company's website and can be viewed at the weblink ; <http://www.shaily.com/downloads.aspx> Nomination & Remuneration Committee In compliance with Section 178 of the Companies Act, 2013, Your Company has in place a "Nomination & Remuneration Committee". The powers, role and terms of reference of the Nomination and Remuneration Committee covers the areas as contemplated under Regulation 19 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 178 of the Companies Act, 2013, and rules and regulations, made thereunder, besides other terms as may be referred by the Board of Directors. The terms of reference of the Nomination & Remuneration committee, number and dates of meeting held, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance report under the section "Nomination & Remuneration Committee". (ANNEXURE - B) AUDITORS ? Statutory Auditors M/s Deloitte Haskin & Sells (Registration No.: 117364W), the Statutory Auditors of the Company hold office until the conclusion of the ensuing 36th Annual General Meeting and are recommended for re-appointment for the Financial Year 2016-17 & 2017-18. i.e. until the conclusion of the 38th Annual General Meeting of the Company, subject to ratification of members in the 37th AGM. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors propose their re-appointment in the 36th Annual General Meeting of the Company. ? Internai Auditors M/s Shah Jain & Hindocha, Chartered Accountants, Vadodara, have been appointed as Internal Auditors of the Company in terms of Section 138 of the Companies Act, 2013 and rules and regulations, made thereunder, for the Financial Year 2016-17 by the Board of Directors, upon recommendation of the Audit Committee. ? Cost Auditors M/s Y.S. Thakar & Co., Cost Accountants, Vadodara (Firm Registration No. 000318) were appointed as Cost Auditors to carry out the audit of cost records of the Company for the Financial Year ending on 31st March, 2016. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have appointed them and recommend the ratification of remuneration to be paid to the Cost Auditors for the Financial Year 2016-17. ? Secretarial Auditors M/s Samdani Shah & Associates, a firm of Company Secretaries in practice, based in Vadodara, Gujarat, were appointed as Secretarial Auditors, to carry out Secretarial Audit of the Company. In terms of provisions of Section 204 of the Companies, Act, 2013, a Secretarial Audit Report has been annexed to this Report. (ANNEXURE - F) Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditor's reports; There have been no disqualifications, reservations, adverse remarks or disclaimers in the auditor's reports, requiring explanation or comments by the Board. Extract of Annual Return As per the regulatory requirements "Extract of Annual Return" (Form MGT-9), is provided in a separate report annexed to this Report as ANNEXURE - G. Orders passed by the Regulators or the Courts or the Tribunals. There are no significant and material orders passed by the Regulators or Courts or Tribunals that may impact the going concern status of the Company's operation. Directors' Responsibility Statement Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that: (i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed; (ii) The accounting policies have been selected and these have been applied consistently and judgements and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company for the year ended on 31st March, 2016 and of the profit of the Company for that period; (iii) 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; (iv)Annual Accounts have been prepared on a 'going concern' basis. (v) Internal Financial Controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively. (vi)Proper systems to ensure compliance with the provisions of all applicable laws have been devised. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and External Consultants and the reviews performed by the Management and the Audit Committee, the Board is of the opinion that the Company's Internal Financial Controls were adequate and effective during the financial year ended March 31, 2016. Acknowledgement Your Directors wish to place on record their sincere appreciation to employees at all levels for their hard work, dedication and commitment. The Board places on record their appreciation for the support and co-operation your Company has been receiving from its suppliers, customers, business partners and others associated with the Company. Your Company looks upon them as partners in its progress and has shared with them the rewards of growth. It will be Company's endeavor to build and nurture strong links with the trade based on mutuality of benefits, respect to and cooperation with each other, consistent with consumer interests. Your Directors also take this opportunity to thank all investors, clients, vendors, banks, regulatory and government authorities and stock exchange, for their continued support. For and on behalf of the Board Mahendra Sanghvi Executive Chairman DIN: 00084162 Vadodara, May 18, 2016 |