DIRECTORS' REPORT To The Members, Your Directors have pleasure in presenting the 25th Annual Report alongwith the Accounts for the year ended March 31, 2015. OPERATIONS During the year, there was only marginal increase of Rs.13 Lacs in the turnover of your Company. More than 91.4% of sales amounting to Rs.3014 Lacs were from exports. However, exports were lower by 5.22% against the previous year exports of Rs.3180 Lacs, due to unexpected fluctuation in foreign currency rates and tough competition in the international market particularly from Chinese products. As a result net profit after deferred tax during the year was Rs.467 Lacs as against Rs.541 Lacs in the preceding year. The consolidated financial results during the year including that of its Subsidiary Company were better i.e. sales Rs.9485 Lacs, profit before tax Rs.2125 Lacs and profit after tax Rs.1608 Lacs as compared to Rs.8464 Lacs, Rs.1944 Lacs and Rs. 1767 Lacs respectively for the previous year. DIVIDEND Your Directors do not recommend any dividend for the year under review considering the fund requirements for future business expansion. FUTURE OUTLOOK AND PLANS Your Company foresees a good scope for the exports of its products. Inroads in some untapped markets have been made and we should see results coming soon. However, frequent and wide fluctuations in foreign currency and tough competition in the international market continues to be a challenge for your Company. Efforts are going on to develop more products of Toner and your Company is hopeful to achieve the desired results with the help of the research team. Some other value added products have been added in the product list, like the wide format printer toners and MICR toners. The management of your Company is actively exploring opportunities to invest in some new projects. ITDL Imagetec Limited a subsidiary of your Company in Sitarganj (Uttrakhand), for the manufacture of Toners with a manufacturing capacity of 1200 MT., is doing very well and giving satisfactory results which are attached with the Annual Report. During the year, this subsidiary Co. has completed its expansion to increase its manufacturing capacity from 1200 MT to 1800 MT and already started giving more production. With this expansion, the performance of your subsidiary Company will be better in the coming years. RESEARCH AND DEVELOPMENT ACTIVITIES Your Company continued the research and development activities during the year in the key areas of product, process and material development. Your Company has always given prime importance to Research & Development which is the basis of your Company's success. With the help of the Pilot Plant, your Company has successfully developed new quality products at competitive prices to face the global competition and is very optimistic to develop many more products in the times to come. Continuing recognition by the Department of Scientific and Industrial Research, Ministry of Science & Technology to your In - House R & D Unit is a moral boosting and an encouraging feature for the team of your Research & Development Centre. During the year the Company has incurred R & D expenses of Rs. 57.68 Lacs in various heads in addition to Rs.6.00 Lacs for purchase of capital items. Your Company has exhaustive programme of R & D activities in the coming years. SUBSIDIARY COMPANIES: The Company has one subsidiary viz. M/s ITDL Imagetec Limited. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings/behaviours of any form and the Board has laid down the directives to counter such acts. The Code has been posted on the Company's website www.indiantoners.com The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure "1". NUMBER OF BOARD MEETINGS HELD The Board of Directors duly met 4 times during the financial year from 1st April, 2014 to 31st March, 2015. The dates on which the meetings were held are as follows: 21st May, 2014, 8th August, 2014, 6th November, 2014 and 9th February, 2015. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) the directors have 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 of the company for that period; c) the directors have taken proper and sufficient care 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 directors have prepared the annual accounts on a going concern basis; e) the directors have laid down internal financial controls in the company that are adequate and were operating effectively. f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively. REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report and also available on the Company website www.indiantoners.com PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. Requirements of Regulation 8 (Code of Fair Disclosure) & Regulation 9 (Code of Conduct) of SEBI (Prohibition of Insider Trading) Regulations, 2015 have been noted and complied with by the Company. STATUTORY AUDITORS & AUDITORS' REPORT M/s. K. N. Gutgutia & Co. Chartered Accountants, (Firm Registration No. 304153E) were appointed as Statutory Auditors of the Company at the last Annual General Meeting held on 30.08.2014 for a period of three years subject to ratification by members at every Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The consolidated accounts along with the Statement pursuant to Section 129 of the Companies Act, 2013 are annexed. SECRETARIAL AUDIT REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Mukesh Agarwal & Co. (CP No.:3851, FCS: 5991), Company Secretaries to undertake the Secretarial Audit of the company. The Secretarial Audit Report is annexed as Annexure "2". INTERNAL AUDITORS Pursuant to the provisions of Section 138 of the Companies Act, 2013 and other applicable provisions, if any, the Board of Directors on the recommendations of the Audit Committee have appointed M/s B.K. Shroff & Co., Chartered Accountants, 3/7-B, Asaf Ali Road, New Delhi - 110 002, as Internal Auditors of the Company for the year 2015-16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. RELATED PARTY TRANSACTIONS Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There was no materially significant related party transactions with the Company's Promoters, Directors, Key Managerial Personnel or other designated persons or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is annexed as Annexure "3". The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the Rules framed thereunder and the Listing Agreement. This Policy as considered and approved by the Board has been uploaded on the website of the Company at www.indiantoners.com . The gist of the policy is appended below:- PROCEDURE 1. All Related Party Transactions (RPTs) of the company as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement will be approved by the Audit Committee of the Board from time to time. 2. Each Director who is a Related Party with respect to a particular Related Party Transaction shall disclose all material information to the Committee concerning such Related Party Transaction and his or her interest in such transaction. 3. Management shall present to the Audit Committee the following information, to the extent relevant, with respect to actual or potential Related Party Transactions: a. A general description of the transaction(s), including the name of the related party and nature of relationship, duration of the contract and particulars of the contract or arrangement, the material terms and conditions. b. The Related Party's interest in the transaction(s), including the Related Party's position or relationship with, or ownership of, any entity that is a party to or has an interest in the transaction(s). c. The manner of determining the pricing and other commercial terms. d. any advance paid or received for the contract or arrangement, if any and the approximate value of the transaction(s) and the approximate value of the Related Party's interest in the transaction(s). e. In the case of a lease or other transaction providing for periodic payments or installments, the aggregate amount of all periodic payments or installments expected to be made in the financial year. f. In the case of indebtedness, the aggregate amount of principal to be outstanding and the rate or amount of interest to be payable on such indebtedness. g. Whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors and any other material information regarding the transaction(s) or the Related Party's interest in the transaction(s). 4. Consent of the Board and the Shareholders would also be taken in respect of all RPTs, provided that such consent would not be required in the following cases: a. The transactions are entered into by the company in its ordinary course of business and are on an arms' length basis; and b. The transaction / transactions to be entered into individually or taken together with previous transactions during a financial year does not exceed 5% of the annual turnover or 20% of the net worth of the company (i.e. Indian Toners & Developers Limited), as per the last audited financial statements of the company, whichever is higher. 5. Where Board consent / shareholders' approval is required as per para 4 above, a) the agenda of the Board meeting at which the resolution is proposed to be moved and b) explanatory statement to be annexed to the notice of such general meeting, shall disclose all such details / information about the contract as are prescribed under the Companies (Meetings of Board and its Powers) Rules, 2014. 6. Where RPTs require approval of the Board and the shareholders through special resolution as per para 4 above, (a) any director who is interested in any contract or arrangement with a related party, shall not be present at the meeting during discussions on the subject-matter of the resolution relating to such contract or arrangement and b) such Related Party(ies) shall abstain from voting on such resolutions of the shareholders. 7. If a Related Party Transaction will be ongoing, the Committee may establish guidelines for the Company's management to follow in its ongoing dealings with the Related Party. Thereafter, the Committee shall periodically review and assess ongoing relationships with the Related Party. Any material amendment, renewal or extension of a transaction, arrangement or relationship previously reviewed under this Policy shall also be subject to subsequent review under this Policy. 8. The Audit Committee periodically shall review this Policy and may recommend amendments to this Policy from time to time as it deems appropriate. In addition to guidelines for ongoing Related Party Transactions, the Audit Committee may, as it deems appropriate and reasonable, establish from time to time guidelines regarding the review of other Related Party Transactions. 9. This Policy on Related Party Transactions shall be governed by the Companies Act, 2013 read with Rules made thereunder, as may be in force for the time being as well as Clause 49 of the Listing Agreement or such other Rules / Regulations, as may be notified by SEBI from time to time. DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards report. At present the Company has not identified any element of risk which may threaten the existence of the Company. The policy of the Company on Risk Management is provided on the Company's website at www.indiantoners.com . CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE Your Directors have already constituted the Corporate Social Responsibility (CSR) Committee comprising of Shri Sanjeev Goel as the Chairman, Shri Sushil Jain and Shri Arun Kumar Garg as other members. As part of its initiatives under "Corporate Social Responsibility" (CSR), the company has contributed entire funds to the Prime Minister's National Relief Fund. The Annual Report on CSR Activities is annexed as Annexure "4". BOARD EVALUATION Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the Chairman and the working of its Audit, Nomination & Remuneration, Corporate Social Responsibility and Stakeholders Relationship Committees. The manner in which the evaluation has been carried out has been explained in Corporate Governance Report. VIGIL MECHANISM/WHISTLE BLOWER POLICY In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour the company has adopted a Vigil Mechanism Policy. This policy is posted on the website of company. DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 REMUNERATION RATIO OF THE DIRECTORS/KEY MANAGERIAL PERSONNEL (KMP)/EMPLOYEES: (i) The percentage increase in remuneration of each Director, Chief Executive Officer, Company Secretary and Chief Financial Officer during the financial year 2014-15, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2014-15 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under: i)The median remuneration of employees of the Company during the financial year was Rs.1.61 Lacs. ii) In the financial year, there was an increase of 5.23% in the median remuneration of employees; iii) There were 98 permanent employees on the rolls of the Company as on March 31, 2015; iv) Relationship between average increase in remuneration and company performance:- The Profit before Tax for the financial year ended March 31, 2015 decreased by 12.17% whereas the increase in median remuneration was 5.23%. The average increase in median remuneration was in line with the performance of the Company. v) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company: The total remuneration of Key Managerial Personnel increased by 11.10% from Rs.114.33 Lacs in 201314 to Rs.127.02 Lacs in 2014-15 whereas the Profit before Tax decreased by 12.17% to Rs.619.49 Lacs in 2014-15 (Rs.705.33 in 2013-14). vi) a) Variations in the market capitalization of the Company : The market capitalization as on March 31, 2015 was Rs.72.41 Crores (Rs.23.11 Crores as on March 31, 2014) b) Price Earnings ratio of the Company was 5.79 as at March 31, 2015 and was 6.71 as at March 31, 2014 c) Percent increase over decrease in the market quotations of the shares of the company as compared to the rate at which the company came out with the last public offer in the year- The Company had come out with initial public offer (IPO) in 1992. An amount of Rs. 1,000 invested in the said IPO would be worth Rs.10,150 as on March 31, 2015 indicating a Compounded Annual Growth Rate of 11.11%. vii) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2014-15 was 7.56% whereas the increase in the managerial remuneration for the same financial year was 11.10%. viii) 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 and other Employees. ix) 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 x) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees. DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP) Pursuant to the provisions of the Section 161(1) of the Companies Act, 2013 read with the Articles of Association of the Company, Mrs. Neena Jain was appointed as an Additional Director and she will hold office only up to the date of this Annual General Meeting. The Company has received a notice in writing from a member proposing the candidature of Mrs. Neena Jain for the office of a Director under the provisions of Section 160 of the Companies Act, 2013. Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Mrs. Neena Jain as Independent Director for five consecutive years. Details of the proposal for appointment of Mrs. Neena Jain are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 25th Annual General Meeting. During the year 2014-15, Sh. M.R. Jain and Sh. P.K. Kanoria, Directors of the Company have ceased to be Directors w.e.f. 21.5.2014 and 6.11.2014 respectively. The Board took on record the services rendered by them during their tenure as Director. During the year 2014-15, Sh. Sushil Jain and Sh. Naresh Kumar Maheshwari have been appointed as Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the Company respectively. Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Kewal Krishan Dhiman, Director, will retire at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment. The Company has received declaration from all the Independent Directors confirming that they meet with the criteria of Independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchange. PERSONNEL Cordial Industrial relations continue to prevail thereby further strengthening employees' commitment to the growth of the Company. The Board wishes to express its deep appreciation to all sections of the Employees for their whole hearted efforts, co-operation and outstanding contribution to the growth of the Company during the year. Particulars of employees as required under the provisions contained in Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report. However, the information is not being sent alongwith the Annual Report as per proviso of the above rule. Any shareholder interested in obtaining such particulars may write to the Company at its Corporate/Registered Office. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE Additional information to the extent applicable on conservation of energy, technology absorption, foreign exchange earning and outgo is required to be disclosed in terms of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given as Annexure 'A' and forms part of this report. MANAGEMENT'S DISCUSSIONS AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. DISCLOSURES UNDER LISTING AGREEMENT Your Company is now listed only with BSE Limited. The Company is regular in paying the listing fees on demand and it has paid fee upto the current financial year. DEMATERIALISATION OF SECURITIES As informed earlier, the shares of your Company were included in the compulsory list for trading in dematerialization form with effect from 30.10.2000 and your company had entered into necessary agreements with both the Depositories i.e. NSDL (National Securities Depository Limited) and CDSL (Central Depository Securities Limited). It is, therefore, advisable to trade in the shares of the company in dematerialization form which is convenient and safe. CORPORATE GOVERNANCE In terms of Clause 49 of the Listing Agreement, a Report on Corporate Governance alongwith a certificate from the Auditors of the Company on the compliance of the conditions of Corporate Governance is provided elsewhere in this Annual Report. ACKNOWLEDGEMENT Your Directors acknowledge the cooperation and assistance extended by various agencies of the Central and State Governments, State Bank of India and Customers. Your Directors also thank the shareholders for their continued support. For & on behalf of the Board (SUSHIL JAIN) CHAIRMAN & MANAGING DIRECTOR PLACE : New Delhi DATE : 23rd May, 2015 |