DIRECTORS REPORT To, The Members, Your Directors have pleasure in presenting their 74th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015. 2. DIVIDEND: The Company would like to reserve its profits for its growth; and hence your Directors do not recommend dividend for the Financial Year. 3.INFORMATION ON THE STATE OF COMPANY'S AFFAIR The Company achieved a turnover of Rs. 1,07,68,39,241/- during the current year, as against Rs. 1,00,58,51,966/-during the previous year. The profit during the year has been Rs. 6,54,77,189/- as against Rs. 4,31,19,547/- during the previous year 2013-14. The Company is engaged only in one segment which is of manufacturing synthetic organic tanning substance. The highlights of the Company's performance are as under: •Revenue from operations increased by 7.1% to Rs.10390.54/- lacs •Exports increased by 13.60% to Rs. 7314.71/- lacs •PBDIT increased by 16.68% to Rs.1930.49/- •Profit before tax increased by 43.68% to Rs. 957.76/- lacs •Cash Profit increased by 27.14% to Rs. 1173.31/- •Gross Margin 26.91% for the year ended March 31, 2015. 4.MATERIAL CHANGES AND COMMITMENTS BETWEEN END OF FINANCIAL YEAR AND DATE OF REPORT: There have been no material changes and commitments, if any, 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. 5.DIRECTORS' RESPONSIBILITY STATEMENT: As per the clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the Directors' state that: a)in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b)the directors had 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 at the end of the financial year and of the profit and loss of the company for that period; c)the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d)the directors had prepared the annual accounts on a going concern basis; and e)the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. f)the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 6.DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES During the year under review, the Company has following subsidiaries: A.Direct Subsidiary The Company has one wholly owned subsidiary during the financial year; • Dudhwala Builders Private Limited B.The Company does not have any jointly held subsidiary; step down subsidiaries and Joint Venture. C.Associate Companies: The Company does not have associates companies in which it holds more than 50% shareholding. F. Companies which have ceased to be subsidiary Dudhwala Builders Private Limited, a wholly owned subsidiary of the Company in the financial year 2011-2012. The Board of Directors of the Company in their meeting held on September 17, 2014 have approved the proposal of disinvestment of its entire stake in Dudhwala Builders Private Limited and, accordingly, ceased to be the subsidiary of the Company w.e.f.15.06.2015. The results of the Company's subsidiary are given in their Annual Reports and Accounts appended to this Report. 9.DEPOSITS Company has not accepted any deposit from the public within the meaning of chapter V of the Companies Act, 2013 during the year under review. The details relating to deposits, covered under Chapter V of the Act,-N.A. a.accepted during the year-N.A. b.remained unpaid or unclaimed as at the end of the year-N.A. c.whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved- •at the beginning of the year-N.A. •maximum during the year-N.A. •at the end of the year-N.A. 10.SHARE CAPITAL a.Issue of equity shares with differential rights: During the year under review, The Company has issued not issued equity shares with differential rights. b.Issue of sweat equity shares: During the year under review, the Company has not issued sweat equity shares. c.Issue of employee stock options : During the year ended March 31, 2015, the Company has not issued employee stock options. d.Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees: During the year Company has not made any provision for purchase of its own shares by its employees or by trustees. 11.RISK MANAGEMENT POLICY The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Company manages monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Polson Management System (PMS) that governs how the Company conducts the business of the Company and manages associated risks. 12.DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS. The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. 13.MANAGEMENT DISCUSSION AND ANALYSIS REPORT: As required by Clause 49 of the Listing Agreements with Stock Exchanges, the Management discussion and Analysis Report is enclosed as a part of this report (Annexure - I). 14.CORPORATE GOVERNANCE CERTIFICATE The Compliance certificate from the auditors regarding compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing agreement has been annexed with the report. 15.NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS: The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board / Committee Meetings are prescheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board's approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting. During the year under review, the meeting of the Board of Directors was conducted 10 times on 24/5/14; 14/8/14; 06/09/14; 17/09/14; 14/11/14; 25/11/14; 20/01/15; 06/02/15; 14/02/15 and 26/03/15. 16.DIRECTORS: A) Changes in Directors and Key Managerial Personnel -1- Post financial year under review, Mr. Nakul Patel (DIN 00332824) resigned from the post of Directorship due to pre-occupancy. -I- Mr. Amol Kapadia (DIN 01462032) retires by rotation and being eligible offers himself for re-appointment. -1- Post financial year Mr. Haren Sampat was appointed as an Independent Director w.e.f August 14, 2015. B)Declaration by an Independent Director(s) and re- appointment, if any The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. C)Annual Evaluation of the Board The evaluation framework for assessing the performance of Directors comprises of the following key areas: i.Attendance of Board Meetings and Board Committee Meetings ii.Quality of contribution to Board deliberations iii.Strategic perspectives or inputs regarding future growth of Company and its performance iv.Providing perspectives and feedback going beyond information provided by the management v.Commitment to shareholder and other stakeholder interests The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation. 17. MANAGERIAL REMUNERATION: A) Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. (i)the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year- 21:73 (ii)the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;-Nil (iii)the percentage increase in the median remuneration of employees in the financial year-20% (iv)the number of permanent employees on the rolls of company;-48 employees (v)the explanation on the relationship between average increase in remuneration and company performance;-N.A. (vi)comparison of the remuneration of the Key Managerial Personnel against the performance of the company;-The remuneration of Key Managerial Personnel is not increased as increase in Turnover is not substantial. (vii)The price earnings ratio of the Company as at March 31, 2015 is 545.64, as against 359.33 as at March 31, 2014. (viii)average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year differs from employee to employee. (ix)comparison of the each remuneration of the Key Managerial Personnel against the performance of the company-N.A. (x)the key parameters for any variable component of remuneration availed by the directors-The key parameters for the variable component of remuneration availed by the directors are considered by the Board of Directors based on the recommendations of the Nomination and Remuneration Committee as per the Remuneration Policy for directors, Key Managerial Personnel. (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-N.A. (xii)affirmation that the remuneration is as per the remuneration policy of the company-It is affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and Senior Management adopted by the Company. C)Details of the every employee of the Company as required pursuant to 5(2)& 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: The following employees were in receipt of remuneration more than Rupees Sixty lakh per annum of Rs. 5 Lacs p.m.: There are no employees who draw remuneration more than Rupees Sixty Lakh per annum of Rs. 5 lacs per month. C) Any director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company shall receive any remuneration or commission from any Holding Company or Subsidiary Company of such Company subject to its disclosure by the Company in the Board's Report. (u/s 197)-The Company has not paid any commission to its director and managing director. D)The following disclosures shall be mentioned in the Board of Director's report under the heading "Corporate Governance", if any, attached to the financial statement:— (i)all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors; (ii)details of fixed component and performance linked incentives along with the performance criteria; (iii)service contracts, notice period, severance fees; (iv)stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable. 18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: C. The Company has not any made investment during the year. The amount of loan given is within the limits prescribed u/s 186 of the Companies Act, 2013. 20.PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto has been disclosed in Form No. AOC -2. (Format enclosed) 21.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO: The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows: A) Conservation of energy: Operations of the Company are not Energy Intensive. However, the Company has endeavoured to optimize the use of energy resources and taken adequate steps to avoid wastage and use latest technology and equipments, wherever feasible, to reduce energy consumption. (i)The steps taken or impact on conservation of energy: - Energy conservation dictates how efficiently a company can conduct its operations. Polson has recognized the importance of energy conservation in decreasing the deleterious effects of global warming and climate change. The Company has undertaken various energy efficient practices that have reduced the growth environmental pollution and strengthened the Company's commitment towards becoming an environment friendly organization. The Company continued using Natural Raw Materials like Hirda, Tamaring Testa etc in the manufacturing process. The residue of these raw materials is further used as FUEL for Boiler, thus reducing the consumption of Furnace Oil. A dedicated "Energy Cell" is focusing on energy management and closely monitor energy consumption pattern across all manufacturing plants. (ii)The steps taken by the company for utilising alternate sources of energy:- The Company does not have alternate sources of energy. (iii)The capital investment on energy conservation equipment's:-Nil (B) Technology absorption: i.the efforts made towards technology absorption; ii.the benefits derived like product improvement, cost reduction, product development or import substitution; iii.in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- a.the details of technology imported; b.the year of import; c.whether the technology been fully absorbed; d.if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; iv.The expenditure incurred on Research and Development. (C) Foreign exchange earnings and Outgo: Foreign exchange earnings and outgo (including dividend) during the year under review were Rs. 7032.62/-(previous year: Rs. 6588.24/-) and Rs. 338.70/- (previous year Rs. 331.80/-) respectively. 23.CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Committee was constituted by the Board of Directors of the Company at its meeting held on February 14, 2015. The CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure A to this Report. 24.COMMITTEES OF THE BOARD During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees and also formed a Corporate Social Responsibility Committee. There are currently four Committees of the Board, as follows: •Audit Committee •Corporate Social Responsibility Committee •Nomination and Remuneration Committee •Stakeholders' Relationship Committee Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report. 25.DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES The Company has adopted vigil mechanism policy under the provision of Sec 177 of the Companies Act, 2013. The vigil mechanism provides adequate safeguards against victimization of employees and directors who avail of the vigil mechanism and provides direct access to the Chairperson of the Audit Committee. 26.STATUTORY AUDITORS M/s. A. S. Madon & Co., Statutory Auditors, retire at the ensuing Annual General Meeting and are eligible for reappointment. The Audit Committee of the Board has recommended their reappointment. M/s. A. S. Madon & Co. have, under Rule-4 of the Companies (Audit & Auditors) Rules, 2014, furnished the certificate of their eligibility for reappointment. Requisite resolution is being placed for the shareholder's approval. 27.AUDITORS' OBSERVATION & REPORT: Auditor's observations are suitably explained in notes to the Accounts and are self-explanatory. 28.SECRETARIAL AUDIT REPORT A Secretarial Audit Report given by M/s. SPS & Co., a company secretary in practice has been annexed with the report. 29.EXTRACT OF THE ANNUAL RETURN The extract of the annual return has been annexed with the report. 30.ACKNOWLEDGEMENTS The Board of Directors wish to acknowledge the continued support and co-operation extended by the Securities and Exchange Board of India, Reserve Bank of India, Stock Exchanges, Ministry of Corporate Affairs, Forward Markets Commission, other government authorities, Bankers, material suppliers, customers and other stakeholders for their support and guidance. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company at all the levels. For and on behalf of the Board of Directors Chairperson Place: Mumbai Date: 31.08.2015 |