DIRECTORS’ REPORT To THE MEMBERS, Your Directors are pleased to present the 37th Annual Report of the Company together with the Audited Statements of Accounts for the year ended March 31, 2016. PERFORMANCE REVIEW During the year under review your Company has achieved gross revenue of Rs. 257.87 crore as against Rs. 245.27 crore in the previous year. The Profit before finance cost and depreciation amounted to Rs. 50.94 crore as against Rs. 44.24 crore in the previous year. Profit before tax during the year worked out to Rs. 47.89 crore as compared to Rs. 42.05 crore in the previous year. DIVIDEND During the year the Board of Directors declared an Interim dividend of Rs. 0.90 per equity share of Rs. 2/- each (45%) on November 4, 2015 which has been paid. The Directors are pleased to recommend a final dividend of Rs. 1.50 per equity share of Rs. 2/- each (75%) for the financial year 2015-2016 thus making a total dividend of 120%. Subject to the approval of shareholders at the ensuing Annual General Meeting, the final dividend will be paid to those shareholders whose name appears on the register of members of the company as on May 27, 2016. INVESTOR EDUCATION AND PROTECTION FUND Dividend which was declared by the company for the year ended March 31, 2009 at the Annual General Meeting held on July 22, 2009 and remained unclaimed will be transferred to the Investor Education and Protection Fund of the Central Government on August 21, 2016 pursuant to the provisions of Companies Act, 2013. Thereafter no claim shall lie on dividend for the year ended March, 2009 from the shareholders. Notice for unpaid dividend is attached with the Notice convening 37th Annual General Meeting. INDUSTRY EXPERIENCE The tyre retreading industry gained some respite from a decline in the prices of crude oil and natural rubber, which are major raw materials for manufacturing of precured tread rubber. However, the industry faced competition from cheap, single-life tyres in the marketplace from China. As these tyres are not suitable for retreading, eventually they cost more and end up as scrap, thereby adding to pollution and wastage. OPPORTUNITIES AND THREATS Government’s focus on infrastructure development, investment in highways, and implementation of GST will give boost to retreading industry. Radialization will get more tyres for retreading, as casing can be retreaded multiple times. However, cheap Chinese tyres will continue to be a threat to retreading industry, unless anti-dumping duty is levied. RISK AND AREA OF CONCERN The company has laid down a well defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitor and non-business risks. The Audit Committee and the Board periodically review the risks and suggest steps to be taken to manage/ mitigate the same through a properly defined framework. During the year, a risk analysis and assessment was conducted and no major risks were noticed, which may threaten the existence of the company. MATERIAL CHANGES EFFECTING FINANCIAL POSITIONS OF THE COMPANY No material changes have occurred and commitments made, affecting the financial position of the company, between the end of the financial year of the company and the date of this report. There is no order passed by any regulator or court or tribunal against the company, impacting the going concern concept or future operations of the company. INTERNAL CONTROL SYSTEM The Company has adequate internal control systems and procedures designed to effectively control the operations at its Head Office, Plants and Depots. The internal control systems are designed to ensure that the financial and other records are reliable for the preparation of financial statements and for maintaining assets. The Company has well designed Standard Operating Procedures. Independent Internal Auditors conduct audit covering a wide range of operational matters and ensure compliance with specified standards. Planned periodic reviews are carried out by Internal Audit. The findings of Internal Audit are reviewed by the top management and by the Audit Committee of the Board of Directors. Based on the deliberations with Statutory Auditors to ascertain their views on the financial statements including the Financial Reporting System and Compliance to Accounting Policies and Procedures, the Audit Committee was satisfied with the adequacy and effectiveness of the Internal Controls and Systems followed by the company. DIRECTORS AND KEY MANAGERIAL PERSONNEL On the recommendation of Nomination and Remuneration Committee, the Board appointed Sh.Shiv Khemka, as an Additional Director of the company with effect from August 14, 2015, who shall hold office upto the Annual General Meeting, and is eligible for appointment as Director as provided under the Articles of Association of the Company. The Company has received notice under Section 160 of the Companies Act, 2013 from a member signifying his intention to propose the candidature of Sh.Shiv Khemka for the office of Director. Pursuant to the terms of appointment, the office of Sh.K.K.Kapur as Whole time Director will expire on May 31, 2016. As recommended by the Nomination and Remuneration Committee, the Board reappointed Sh.K.K.Kapur as Whole time Director (Key Managerial Personnel) with effect from June 1, 2016 for a further period of 3 years, subject to the approval of the shareholders. We seek your approval for the appointment of Sh.K.K.Kapur as Whole time Director in the ensuing AGM. As per the provisions of the Companies Act, 2013, Sh.K.K.Kapur will retire by rotation at the ensuing AGM and being eligible offered himself for re-appointment. The Board recommends his re-appointment. Sh. K.M.S Ahluwalia, who was appointed as the Independent Director of the company on July 25, 2014 has resigned from the Board on February 10, 2016. The Board of Directors records their appreciation for the services rendered by Sh. K.M.S. Ahluwalia during his tenure. The information on the particulars of Director eligible for appointment in terms of Regulation 33 of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 has been provided in the notes to the notice convening the Annual General Meeting. INDEPENDENT DIRECTORS DECLARATION The Independent Directors have confirmed and declared that they are not disqualified to act as an Independent Director in compliance with the provisions of Section 149 of the Companies Act, 2013 and the Board is also of the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Directors. BOARD MEETINGS The details of number and dates of meetings held by the Board and its Committees, attendance of Directors and sitting fee/ commission/ remuneration paid to them is given separately in the attached Corporate Governance Report. EVALUATION OF THE BOARD’S PERFORMANCE In compliance with the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the performance evaluation of the Board was carried out during the year under review. More details on the same are given in the Corporate Governance Report. REMUNERATION POLICY The company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination and Remuneration Committee and the Board. More details on the same are given in the Corporate Governance Report. STAKEHOLDER RELATIONSHIP COMMITTEE Stakeholder Relationship Committee comprises of Sh.R.Parameswar as Chairman and Sh.Nand Khemka and Sh.K.K.Kapur as members. The details of term of reference of the Committee member, dates of meeting held and attendance of the Directors are given separately in the Corporate Governance Report. AUDIT COMMITTEE The Audit Committee comprises of Sh. R. Parameswar as Chairman and Sh. Nand Khemka and Sh. P.R.Khanna as members. The details of term of reference of the Audit Committee member, dates of meeting held and attendance of the Directors are given separately in the Corporate Governance Report. VIGIL MECHANISM The company has a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the company’s Code of Conduct. The mechanism provides for adequate safeguards against victimization of Directors and employees who avail of the mechanism. In exceptional cases, Directors and employees have direct access to the Chairman of the Audit Committee. The Vigil Mechanism (Whistle Blower Policy) is available on the company’s website. CODE OF CONDUCT Directors, Key Managerial Personnel and senior management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by the CEO & Whole Time Director is attached as Annexure ‘I’ which forms a part of this Report of the Directors. The Code of Conduct is available on the Company’s website www.indagrubber.com HUMAN RESOURCE MANAGEMENT, HEALTH AND SAFETY During the year the Company had cordial relations with workers, staff and officers. The shop floor management is done through personal touch, using various motivational tools and meeting their training needs requirements. The company has taken initiative for safety of employees and implemented regular safety audit, imparted machine safety training, wearing protective equipments etc. The Company believes in empowering its employees through greater knowledge, team spirit and developing greater sense of responsibility. On the job training as well as classroom training by way of seminars, conventions, functional and managerial programs for capability development and building technical expertise were attended by respective functions such as Sales & Marketing, Finance & Accounts, Procurement, Supply Chain, HR etc. The Company organized a diagnostic camp to monitor health as well as physical and emotional well-being of all employees and workers. There were 371 regular employees as at March 31, 2016. DISCLOSURE AS PER THE SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The company has a policy on prohibition, prevention and redressal of Sexual Harassment of women at workplace and matters connected there with or incidental there to covering all the aspects as contained under “The Sexual Harassment of women at workplace (Prohibition, Prevention and Redressal) Act, 2013”. During the financial year 2015-16, no complaint was received under the policy. PARTICULARS OF EMPLOYEES Information in accordance with the provisions of Section 134(3)(q) and Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, regarding employees is given in Annexure ‘II’. COMMITMENT TO QUALITY AND ENVIRONMENT Indag recognizes quality and productivity as a pre-requisite for its operations and has implemented ISO 9001:2008 standards and ISO 14001:2004 standards. Anti-pollution systems are fully installed and operational. Continuous efforts to preserve the environment are pursued. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility Committee comprises of Sh. Nand Khemka as the Chairman and Sh.P.R.Khanna and Sh. K.K.Kapur as the members. During the year we focused on improving the quality of life of the community in and around Nalagarh through health and sanitation, education and skill based training, sports and infrastructure development. Details about the CSR policy and initiatives taken by the Company during the year are available on your company’s website www.indagrubber.com. The Report on CSR activities is given in Annexure ‘III’ forming part of this Report. AUDITORS M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company hold office upto the conclusion of 38th Annual General Meeting, who were appointed in the 35th AGM to hold office until the conclusion of 38th AGM. Your company seeks ratification of the appointment of Statutory Auditors at the ensuing Annual General Meeting. There are no qualifications or reservation or remarks made by the Auditors in their Report. SECRETARIAL AUDIT A Secretarial Audit was conducted during the year by the Secretarial Auditor M/s. RMG & Associates, Practicing Company Secretaries. The Secretarial Auditors Report is attached as Annexure ‘IV’. There are no qualifications or observations or remarks made by the Secretarial Auditor in their Report. COST AUDITORS The Board of Directors has on the recommendation of Audit Committee, approved the appointment of M/s. Shome & Banerjee, Cost Accountants, as the Cost Auditors of the company for the year 2016-2017 at a remuneration of Rs. 1 lac plus out of pocket expenses. The proposed remuneration of the Cost Auditors would be approved by the members in the ensuing AGM. The due date for filing the Cost Audit Report of the Company for the Financial Year ended 31st March, 2015 was 30th September, 2015 and the Cost Audit Report was filed in XBRL mode on 16th September, 2015. LOANS, GUARANTEES OR INVESTMENT In compliance with Section 186 of the Companies Act, 2013, loans to employees bear interest at applicable rates. The company has made investments in securities of other body corporate(s), the details of which are given in Note ‘9’ to Financial Statements, which are within the limits prescribed under Section 186 of the Companies Act, 2013. FIXED DEPOSIT Your company has not accepted any fixed deposit and, accordingly no amount was outstanding as at the Balance Sheet date. SUBSIDIARIES The company has framed a Policy for determining Material Subsidiaries. However the company does not have any subsidiary within the meaning of the Companies Act, 2013. RELATED PARTY TRANSACTIONS All related party transactions are in the ordinary course of business and at arm’s length basis, which are not material in nature. All related party transactions are with the approval of the Audit Committee and periodically placed before the Board for review. EXTRACT OF ANNUAL RETURN The particulars required to be furnished under Section 134(3)(a) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 as prescribed in Form No. MGT-9 is given in Annexure ‘V’. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO The particulars required to be furnished under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Disclosure of particulars of Board of Directors) Rules, 1988 are set out in Annexure ‘VI’, which forms part of the report. LISTING The equity shares of your Company are listed with the Bombay Stock Exchange. DEMATERIALISATION OF SHARES The shares of your Company are being traded in electronic form and the Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, Members are requested to avail the facility of dematerialization of shares with either of the Depositories as aforesaid. As on March 31, 2016, 97.30% of the share capital stands dematerialized. CORPORATE GOVERNANCE A separate report of the Board of Directors of the Company on Corporate Governance is included in the Annual Report as Annexure ‘VII’ and the Certificate from M/s RMG & Associates, Practicing Company Secretaries confirming compliance with the requirements of Corporate Governance as stipulated in Schedule V of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 is annexed as Annexure ‘VIII’. MANAGEMENT DISCUSSION & ANALYSIS REPORT The Management Discussion and Analysis Report, as required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are already dealt with in various sections of this Report. ANNEXURES FORMING A PART OF DIRECTOR’S REPORT The Annexures referred to in this Report and other information which are required to be disclosed are annexed herewith and form a part of this Report: Annexure Particulars I CEO & Whole Time Director’s Certificate under Schedule V Part D of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 on compliance of Code of Conduct II Particulars of Employees under Section 134(3)(q) and Section 197(12) of the Companies Act, 2013 III Report on Corporate Social Responsibility IV Secretarial Audit Report V Extract of the Annual Return in Form MGT-9 VI Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo VII Corporate Governance Report VIII Certificate from Practicing Company Secretary on Corporate Governance Report CAUTIONARY STATEMENT Statements in this report, describing the Company’s objectives, expectations and/or anticipations may be forward looking within the meaning of applicable Securities Law and Regulations.Actual results may differ materially from those stated in the statement. Important factors that could influence the Company’s operations include global and domestic supply and demand conditions affecting selling prices of finished goods, availability of inputs and their prices, changes in the Government policies, regulations, tax laws, economic developments within the country and outside and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of the forward-looking statements, which may undergo changes in future on the basis of subsequent developments, information or events. DIRECTOR’S RESPONSIBILITY STATEMENT Your Directors wish to inform Members that the Audited Accounts containing Financial Statements for the Financial Year 2015-16 are in conformity with the requirements of the Companies Act, 2013. They believe that the Financial Statements reflect fairly, the form and substance of transactions carried out during the year and reasonably present the Company’s financial condition and results of operation. In terms of provisions of Section 134(3)(c) of the Companies Act, 2013, your Directors further confirm as under: i) That in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii) That 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 financial period and of profit or loss of the Company for that period; except for change in accounting policy for dividend, details of which are given in Note “2” to Financial Statements. iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) That the Directors have prepared the annual accounts on a “going concern basis”. v) That 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; and vi) That the Directors had devised proper system to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively. The Company’s Internal Auditors have conducted periodic audits to provide reasonable assurance that the Company’s approved policies and procedures have been followed. APPRECIATIONS Your Directors wish to place on record their appreciation for the continuous support received from the Members, customers, suppliers, bankers, various statutory bodies of the Government of India and the Company’s employees at all levels. For and on behalf of the Board of Directors Indag Rubber Limited P. R. Khanna Director DIN: 00048800 K. K. Kapur CEO & Whole Time Director DIN: 00745117 Place : New Delhi Date : April 14, 2016 |