DIRECTORS' REPORT TO THE MEMBERS OF POLYCHEM LIMITED Your Directors' present the Fifty Ninth Annual Report and Statement of Accounts for the year ended 31st March, 2016. 1. DIVIDEND: For the year under review, the Directors have recommended Dividend of Rs.2.50/- per share of Rs 10/- each i.e. 25% (Rs. 2.50/-per share for the previous year) on the Equity shares of the Company aggregating to Rs. 1,216,000/- (including Dividend Tax). The dividend payment is subject to approval of the Members at the ensuing Annual General Meeting. 2. STATE OF COMPANY'S AFFAIRS: During the year ended 31st March, 2016 your Company has made profit after tax of Rs.42.15 lacs against profit of Rs.94.33 lacs after tax in previous year. The sales of Specialty Chemicals during the year ended was Rs.1,228.97 lacs compared to Rs.1,734.01 lacs during the previous year and for property development Rs. Nil during the current and previous year. 3. GUJARAT POLY-AVX ELECTRONICS LIMITED (GPAEL) - ASSOCIATE COMPANY: The sale of GPAEL during the year ended 31st March, 2016 was Rs. 1,152.93 lacs as against sale of Rs. 1,115.42 lacs in the previous year. GPAEL has made profit of Rs. 39.34 lacs during the current year as compared to loss of Rs. 17.49 lacs in the previous year. GPAEL manufactures as wells as outsources ceramic capacitors & marketing the same. 4. AUDIT COMMITTEE: The Audit Committee during the year consisted of 4 members. More details on the committee are given in Corporate Governance Report. 5. VIGIL MECHANISM/WHISTLE BLOWER POLICY : The Board has establish a vigil mechanism for directors and employees to report genuine concerns to be disclosed, the details of which is placed on the website of the company. The Board has also formulated the whistle blower policy, same has been uploaded on the website of the company <http://www.polychemltd.com/download/Whistle%20Blower%20Policy_14.pdf>. There were no reporting made by any employee for violations of applicable laws and regulations and the Code of Conduct for the F.Y. 2015-16. 6. NOMINATION AND REMUNERATION COMMITTEE: The Board has re-constituted its committee which comprises of 3 members, more details on the committee are given in Corporate Governance Report. 7. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 134 of the Companies Act, 2013 the Directors confirm that: a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. Appropriate accounting principles have been selected and applied consistently and have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended 31st March, 2016; c. 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. The annual accounts have been prepared on a going concern basis; e. The directors have laid down internal financial controls to be followed by the company; and f. The directors have devised proper systems to ensure compliance with the provisions of all applicable laws. 8. TAXATION: The Company's Income Tax assessments have been completed up to the year ended 31st March, 2013. 9. DEPOSITS: Company has repaid all deposits and there are no outstanding deposits. 10. INDUSTRIAL RELATIONS: Industrial Relations with the employees of the Company were cordial during the year under report. 11. CONSERVATION OF ENERGY: Report on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo etc. is given in Annexure I forming part of this report. 12. DIRECTORS: Mr. A. H. Mehta retires from Office by rotation, but being eligible, offers himself for re-appointment. 13. NUMBER OF BOARD MEETINGS HELD DURING THE YEAR: During the year 2015-16, five Board Meetings were held on the following dates: (a) 11th May, 2015 (b) 27th July, 2015 (c) 13th August, 2015 (d) 30th October, 2015; and (e) 2nd February, 2016 14. DECLARATION ABOUT INDEPENDENT DIRECTORS UNDER SUB-SECTION 6 OF SECTION 149: The Company has received the declaration from Independent Directors that they meet the criteria of independence laid down under section 149(6) of the Companies Act, 2013 and under regulation 16(b) of SEBI (LODR) Regulations, 2015. 15. FORMAL ANNUAL EVALUATION: As required under the act, evaluation of every director's performance was carried out. An evaluation sheet was given to each director wherein certain criteria was set out for which ratings are to be given. 16. COMPANY'S POLICY ON DIRECTORS APPOINTMENT, REMUNERATION ETC.: The Nomination and Remuneration Committee recommends to the Board the policy relating to remuneration for the Directors, Key Managerial Personnel and other employees, same has been uploaded on the website of the Company. <http://www.polychemltd>. com/download/Criteria%20for%20Appointment%20&%20Evaluation%20of%20Board%20of%20Directors_14.pdf 17. RELATED PARTY TRANSACTIONS: All Related Party Transactions (RPT) entered into by the Company during the year under review were at arm's length basis and in ordinary course of business. All RPT are placed before Audit Committee for its approval. The Company has granted loan of Rs.446 lacs to Gujarat Poly-AVX Electronics Ltd at the rate of interest of 13% p.a which is now revised to 12% w.e.f 1st November, 2015. There are no contracts or arrangements under sub-section (1) of Section 188. Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014: 1. Details of contracts or arrangements or transactions not at arm's length basis: NIL 2. Details of material contracts or arrangement or transactions at arm's length basis: NIL The Board on recommendation of Audit Committee, adopted a policy on related party transactions to regulate transactions between the Company and its related parties, in compliance with the applicable provisions of the Companies Act, 2013, the Listing Agreement and SEBI (LODR) Regulations 2015, The policy is uploaded and can be viewed on the Company's website <http://www.polychemltd.com/download/Related%20Party%20Transaction%20Policy_14.pdf> 18. DONATION: The Company has given donation of Rs. 3,10,000/- to the charitable trusts. 19. OTHER DISCLOSURES AS PER SECTION 134 OF THE COMPANIES ACT, 2013: (a) There are no qualifications, reservations or adverse remark or disclaimer by the Statutory Auditor or by Secretarial Auditor in their respective reports. (b) There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company, to which the financial statements relate and the date of the report. (c) Extract of the Annual Report as provided in sub-section 3 of section 92, which is given in Annexure II forming part of this report. 20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The policy is uploaded and can be viewed on the Company's website <http://www.polychemltd.com/Download/Anti-Sexual%20Harassement%20Policy.pdf> The Company has also formed an Internal Complaints Committee (ICC) which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. The Company has not received any complaints on sexual harassment during the year. 21. MANAGERIAL REMUNERATION : i. The ratio of remuneration of Mr. P. T. Kilachand, Managing Director and Mr. A. H. Mehta, Dy. Managing Director with the median remuneration of the employees of the company is 8.12 and 5.22 respectively. ii. Increase in remuneration of Mr. P. T. Kilachand, Managing Director is 29.99%, Mr. A.H. Mehta, Dy. Managing Director is 11.12% and Mrs. K.V. Panchasara, Chief Financial officer is 20.34%. iii. There is an increase of 16.92 % in the median remuneration of employees in the financial year. iv. There are 21 permanent employees in the company. v. There is a decrease of 29.13 % in Company's Performance for the year considering the revenue from the operations and the average increase in the remuneration of the Company is 14.18 % for the year. The increase in the remuneration was on account of the reasons as under: Ms. D.V. Chauhan, Company Secretary and Compliance officer of the Company who was appointed w.e.f. 20th Feb, 2015 drew remuneration of Rs. 40,418/- till 31st March, 2015. Against the remuneration of Rs. 389,544/- for the year 2015-16. vi. During the financial year 2015-16, remuneration to Key Managerial Personnel is Rs. 5,794,000/- as against the Company's performance is Rs. 122,896,000/- remuneration to performance ratio comes to 4.71%. vii. There is a decrease in Market Capitalisation and increase in Price earning ratio of the Company. Market capitalisation for current year is Rs 158,668,471/- and for Previous year it was Rs 199,759,848/-. Price earning ratio for current financial year is 37.65 times, whereas for the previous financial year it was 21.17 times. viii. Average increase in the salaries of employees other than the managerial personnel was 11.15 %. x. The key parameters for the variable component of remuneration availed by the directors are considered by the Board of directors based on the recommendation of Nomination and Remuneration committee as per Remuneration Policy for Directors, Key Managerial Personnel and other Employees. xi. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year - NOT APPLICABLE; and xii. It is hereby affirmed that the remunerations paid is as per the remuneration policy of the company. • Average increase in remuneration in point no. (v) relates to all the employees including managerial remuneration. Whereas increase in remuneration in point no. (viii) relates to the employees excluding Managerial remuneration. 22. REGISTRAR AND TRANSFER AGENT: In pursuance of SEBI Ex Parte - Ad - Interim Order No. WTM/RKS/MIRSD2/41/2016 dated 22nd March, 2016, the Company has appointed M/s Link Intime India Pvt Ltd in place of M/s Sharepro Services (I) Pvt Ltd with effect from 23rd May, 2016. 23. CORPORATE GOVERNANCE: Pursuant to Regulation 34(3), Schedule V of SEBI (LODR) Regulations, 2015 and Clause 49 of the Listing Agreement a separate report on Corporate Governance and a certificate from the Auditors of the Company are annexed to the Directors' Report. 24. AUDITORS: You are requested to appoint Auditors for the current year. The retiring Auditors, M/s.G.M.Kapadia & Co., Chartered Accountants, Mumbai, are eligible for re-appointment. 25. SECRETARIAL AUDITOR: Complying with the provisions of Section 204 of the Companies Act, 2013 the Audit Committee has recommended and the Board of Directors has appointed M/s.Ragini Chokshi & Co., Company Secretaries, (Membership No.2390 & C.P. No.1436), being eligible and having sought re-appointment, as Secretarial Auditor of the Company to carry out the Secretarial Audit of the Company for the year ending March 2017. The Secretarial Audit Report for F.Y 2015-16 is enclosed and marked as Annexure III. 26. ACKNOWLEDGEMENT: The Directors extend their sincere thanks to the State and Central Government Authorities and Members for their co-operation and continued support during the difficult times being experienced by the Company. Sincere thanks are also due to the management team and the staff for their valuable contribution despite adverse circumstances being faced by the Company. Corporate Identification Number (CIN): L24100MH1955PLC009663 Registered Office : 7, Jamshedji Tata Road, Churchgate Reclamation, Mumbai 400 020. By Order of the Board of Directors TANIL KILACHAND Chairman Dated : 17th May, 2016. |