DIRECTORS' REPORT To, The Members, VIDHI DYESTUFFS MANUFACTURING LIMITED The Directors have pleasure in presenting the Twenty-Second Annual Report of the Company and the Audited Financial Statement for the financial year ended March 31,2015. 2. Brief description of the Company's working during the year/State of Company's affair: The Company is manufacturing synthetic food colors and preservative. There was no change in nature of business activity during the year. During the year under review your Company has achieved a turnover of Rs. 18,300.21 Lacs as compared to turnover of Rs.14078.32 Lacs of previous year registering a growth of 29.99%. The net profit after tax was also increased by 107.93 % to Rs. 1242.28 Lacs as compared to profit after tax during previous year of Rs.597.45 Lacs. Due to fire there was major break down of one of the critical equipment at the Company's factory premises situated at 68, MIDC, Dhatav, Roha, Dist. Raigad, Maharashtra - 402 116, on September 07, 2014, which affected approx 25%-30% of production of food colors, however Company had made arrangement to procure the said material from other suppliers to meet the order book. The said equipment had been successfully repaired / replaced and is in full use. The Company has manufactured 2275.20 M. Tons of Food colours against 1905.45 M. Tons in the previous year. Your Company has increased its export market share as well as local trading Sales on account of persistent marketing efforts. Your Directors assure to keep the growth momentum in coming years and strive for bright future for your Company. 3.Dividend The Company's strong cash generation and positive growth momentum led the Board of your Company to distribute profit to its Members and accordingly the Board of Directors in their meeting held on November 14, 2014 had declared interim dividend to the shareholders @ 25% (Rs 0.25/- per equity shares) amounting to Rs. 124.86 Lacs (Excluding Dividend Distribution Tax to be paid by the Company). Further, your Directors are please to recommend Final Dividend of @ 25% (Rs 0.25/- per equity shares) for the Financial Year ended March 31, 2015, amounting to Rs. 124.86 Lacs (Excluding Dividend Distribution Tax to be paid by the Company), payable to those shareholders whose names appear in the Register of Members/Beneficial Holders as on the Record Date. The Dividend payout on final dividend is subject to the approval of the Members at the ensuing Annual General Meeting. 4. Reserves The Board during the year has transferred Rs. 175.73 Lacs in General Reserve. 5. Directors & Key Managerial Persons: In accordance with the requirements of the Companies Act, 2013 and Articles of Association of the Company, Mr. Mihir M. Manek (DIN: 00650613), Joint Managing Director of the Company, retire at the ensuing Annual General Meeting and being eligible, offer himself, for re-appointment pursuant to provision of Section 152ofthe Act. The Board of Directors, on recommendation of Nomination and Remuneration Committee, in their meeting held on September 30, 2014 has appointed Mr. Rahul Berde (DIN: 06981981) as Additional Independent Director in the Company, not liable to retire by rotation, whose appointment shall be subject to approval of members in the ensuing Annual General Meeting. The Company has received notice in writing from a Member along with the requisite deposits under section 160 of the Act proposing the candidature of Mr.Rahul Berde (DIN: 06981981) as Independent Director and the Board of Directors recommends his appointment. The Company has also received the relevant declarations from Mr. Rahul Berde (DIN: 06981981), pursuant to Section 149(7) of the Act, that he meet the criteria of independence as provided under section 149(6) of Companies Act, 2013 and that he is not disqualified to become Director under the Act; and in the opinion of the Board of Directors, he fulfil the conditions specified in the Act, rules made there under, read with the Clause 49 of the listing agreement as amended, for his appointment as Independent Director of the Company and that he is independent of the management. The Board of Directors, on recommendation of Nomination and Remuneration Committee, in their meeting held on July 6, 2015 has, subject to the approval of the Members, re-appointed Mr. Mihir M. Manek (DIN: 00650613) as Joint Managing Director of the Company for a further period of three years w.e.f. July 15,2015 till July 14,2020. Also during the year, the members in the 21s1 Annual General Meeting held on September 27, 2014 has approved the appointment of Mr. Prafulchandra Shah (DIN 00417022), Mr. Chetan P. Bavishi (DIN 01978410) and Mr. Niren D. Desai (DIN 01978382) as an Independent Non-Executive Director in the Company, not liable to retire by rotation, forthe term of 5 years i.e. till September 26,2019. The Board recommended their appointment/ re-appointment to the Members. The Company has received declarations u/s 149(7) of the Act 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 Listing Agreement with Stock Exchanges. The Company has also received Disclosure of Interest by Directors as perthe provisions of Section 184 of Companies Act, 2013. The Board of Directors in their Meeting held on May 30,2015, on recommendation of Nomination and Remuneration Committee, has appointed Mr. Anuj Gandhi (Membership No. A39240) as Whole Time Company Secretary and Compliance officer of the Company w.e.f. June 1,2015. The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. The said Policy isput up on the website of the Company at the link: http://www.vidhifoodcolour.com/financials.php?m=52 On the basis of policy for performance evaluation, the Board carried out an annual performance evaluation of its own performance, the individual Directors as well as the working of the Committees of the Board. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-independent Directors was carried out by Independent Directors. Details of the same are given in the Report on Corporate Governance annexed hereto and marked as Annexure-7. The Company believes that the Board be continuously empowered with the knowledge of the latest developments in the Company's business and the external forces affecting the industry in which Company operates. The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.vidhifoodcolour.com/financials.php?m=52 The following policies of the Company are attached herewith marked as Annexure-1: a) Policy forselection of Directors & senior Management and determining Directors independence; and b) Remuneration Policy for Directors, Key Managerial Personnel and other employees. Further, brief resume of the Directors proposed to be appointed/ re-appointed, relevant information, nature of their expertise in specific functional areas, names of the companies in which they hold directorships and the memberships/ chairmanships of Committees of the Board and their shareholding in the Company, as stipulated under clause 49 of the Listing Agreement entered into with the Stock Exchanges, have been furnished separately in the Notice convening the 22nd Annual General Meeting read with the Annexure thereto forming part of this Report. Details of the number of meetings of the Board of Directors have been furnished in the Report on Corporate Governance. 6. 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 There was no material change during the reporting period. 7. Details in respect of adequacy of internal financial controls with reference to the Financial Statements. The Company has devised appropriate systems and framework for adequate internal financial controls with reference to financial statements commensurate with the size, scale and complexity of its operations including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, risk based internal audit framework, risk management framework and whistle blower mechanism. The Audit Committee regularly reviews the internal control system to ensure that it remains effective and aligned with the business requirements. In case weaknesses are identified as a result of the reviews, new procedures are put in place to strengthen controls. The Company has implemented various policy such as code of conduct, whistle-blower policy, insider trading policy, Risk Management Policy, etc. and has also prepared Standard Operating Practices (SOP) for each of its processes. During the year, controls were tested and no reportable material weakness in design and operation were observed. 8. Auditors and Audit Reports: A) Statutory Auditors: At the Annual General Meeting held on September 27, 2014, M/s. Bhuta Shah & Co., Chartered Accountants (Firm Registration No. 101474W), was appointed as Statutory Auditors of the Company for three consecutive financial year i.e. till the financial year 2016-17 who shall hold office till the conclusion of Annual General Meeting to be held for the financial year 2016-17. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the ratification of appointment of M/s. Bhuta Shah & Co., as Statutory Auditors of the Company for the financial year 2015-16, is recommended to the Members in ensuing Annual General Meeting for their approval. In this regard, the Company has received a certificate from the auditors to the effect that if there appointment is ratified in ensuing Annual General Meeting, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Members are requested to ratify the appointment of the Statutory Auditors as aforesaid and fix their remuneration. There are no qualifications, reservation or adverse remark or disclaimer made by the Statutory Auditors in its report and therefore, there are no further explanations to be provided for in this Report. B) Cost Auditors: As per the provisions of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended by MCA notification dated December 31, 2014, the Company is required to maintain Cost records however, Cost Audit is not mandatory for the financial year 2015-16. The Cost Audit Report forthe financial year 2013-14 has been filed on October 4, 2014. The Cost Audit Report for the financial year 2014-15 will be filed on/ before the due date (i.e. within 180 days from the close of the financial year). C) Secretarial Auditors: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Hemanshu Kapadia & Associates, Practicing Company Secretary, to undertake the Secretarial Audit of the Company for the financial year 2014-15 and issue Secretarial Audit Report. Secretarial Audit Report issued by M/s. Hemanshu Kapadia & Associates for the financial year 2014-15 in Form MR-3 forms part of this report and marked asAnnexure-2. 9. Extract of the Annual Return In accordance with Section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT- 9 is annexed to the Directors' Report and marked as Annexure-3. 10. Conservation of energy, technology absorption and foreign exchange earnings and outgo The information as per Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Account) Rules, 2014 with respect to conservation of energy, technology absorption & foreign exchange earnings and outgo are given in Annexure-4 forming part of this report. 11. Details of Committees of the Board Currently the Board has 4 Committees: the Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Corporate Social Responsibility Committee. The Composition of various committees and compliances, are as per the applicable provisions of the Companies Act, 2013 along with the Rules and Listing agreement, Brief details of various Committees is provided separately in the Corporate Governance report. 12. Audit Committee Composition: The Board has an Audit Committee in conformity with the provisions of Section 177 of the Companies Act, 2013 and Listing Agreement which comprising five Directors. Mr. Mitesh Manek, Compliance officer of the Company, acted as Secretary of the Committee during the financial year 2014-15. However after appointment of Mr. Anuj Gandhi as Company Secretary & Compliance Officer of the Company, he was appointed as secretary of the Committee in place of Mr. Mitesh Manek w.e.f. June 1,2015. The composition of the Audit Committee is as follows: All the members of the Audit committee are financially literate and have accounting or related financial management expertise as required underthe Companies Act, 2013 and Clause 49 of the Listing Agreement. The scope and terms of reference of the Audit Committee have been amended in accordance with the Act and the Listing Agreement entered into with the Stock Exchanges. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee. 13. Nomination and Remuneration Committee: The Board has Nomination and Remuneration Committee in conformity with the provisions of Section 178 of the Companies Act, 2013. The composition of the Nomination and Remuneration Committee is as follows: Your Company has devised the Nomination Policy for the appointment of Directors and Key Managerial Personnel (KMP) of the Company who have ability to lead the Company towards achieving sustainable development. The Company has also framed Policy relating to the remuneration of Directors, Key Managerial Personnel and other Employees. 14. Corporate Social Responsibility Committee: In line with the new provisions of Section 135 of the Companies Act, 2013 and the rules framed there under with respect to the Corporate Social Responsibility (CSR), your company has constituted a CSR Committee to recommend and monitor expenditure on CSR. The Board of Directors of the Company has approved CSR Policy based on the recommendation of the CSR Committee. The Company's policy is put up on the website of the Company at the link: http://www.vidhifoodTOlour.com/financials.php7trR52 The amount equal to 2% of the average net profit for the past three Financial Years is Rs. 26.99 lakhs, the minimum amount which the Company was required to spend on CSR activities. Since it has not finalised the project for CSR expenditure, it has not spent any amount towards CSR activities. The Annual Report on CSR activities is annexed herewith marked as Annexure-5. 15. Disclosure unde rthe Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013: The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment 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 harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral. No complaints pertaining to sexual harassment were received during the Financial Year 2014-15. 16. Details of establishment of vigil mechanism fordirectors and employees The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, to provide Directors and Employees to report their concerns and has also taken steps to safeguard any person using this mechanism from victimization and in appropriate and exceptional cases, there is direct access to approach Mr. Niren D. Desai (DIN: 01978382), Chairperson of the Audit Committee. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: http://www.vidhifoodcolour.com/financials.php?m=52 17. Number of meetings of the Board of Directors: The Board of Directors met Five (5) times during the Financial Year. The intervening gap between any two meetings was not more than 120 days as prescribed by the Companies Act, 2013. Details of date of Board meetings are provided separately in Corporate Governance report. 18. Particulars of loans, guarantees or investments under section 186: Particulars of loans given, investments made, guarantees given and securities provided as covered under Section 186 of the Companies Act, 2013, if any, along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial Statement (Please refer Note No. 11,12 and 16) forming part of the Annual Report. 19. Particulars of contracts or arrangements with related parties: The Company, during the year, has not entered into any transaction, as specified under section 188(1) of the Companies Act, 2014, with related parties. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013, in Form AOC - 2 is not applicable. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at the Web link: http://www.vidhifoodrolour.com/financials.php7iTR52 Your Directors draw your attention to Note No 27 to the financial statements which set out related party disclosures. 20. Directors' Responsibility Statement: As stipulated under section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, your Directors hereby state and confirm that: a) In preparation of the annual accounts for the financial year ended March 31,2015, the applicable accounting standards had been followed and there are no material departures from the same; 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 as at March 31,2015 and of the profit and loss of the Company forthe year ended on that date; c) the Directors had 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 had prepared the annual accounts on a 'going concern' basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively during the financial yearended March 31,2015; and 0 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 effectively during the financial year ended March 31,2015. 21. Managerial Remuneration: The information required to be disclosed with respect to the remuneration of Directors and KMPs in the Directors' Report pursuant to Section 197 of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is set out as an Annexure-6 to this Report. The Company doesn't have any employee falling within the preview of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 hence, no such details to be provided. 22. Corporate Governance: The Company has successfully implemented and complied with all the requirements and disclosures of the Code of Corporate Governance as required under clause 49 of the Listing Agreement (as amended) entered into with the Stock Exchanges. A report on Corporate Governance as stated above, along with a Certificate from the Statutory Auditors confirming compliance of the conditions of Corporate Governance, annexed to the Directors' Report and marked as Annexure-7. 23. Risk Management: The Company's robust risk management framework identifies and evaluates all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks. The Company recognises that these risks need to be managed and mitigated to protect its shareholders and other stakeholders, to achieve its business objectives and enable sustainable growth. The risk framework is aimed at effectively mitigating the Company's various business and operational risks, through strategic actions. Risk management is integral part of our critical business activities, functions and processes. The risks are reviewed for the change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risks and future action plans. The Audit Committee oversees Enterprise Risk Management Framework to ensure execution of decided strategies with focus on action and monitoring risks arising out of unintended consequences of decisions or actions and related to performance, operations, compliance, incidents, processes, systems and transactions are managed appropriately. The Company believes that the overall risk exposure of present and future risks remains within risk capacity. 24. Other Disclosures/Reporting: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: a) Details relating to deposits covered under Chapter V of the Act. b) Issue of equity shares with differential rights as to dividend, voting or otherwise. c) Issue of shares (including sweat equity shares) to employees of the Company under any scheme. d) The Company does not have any Subsidiaries and/or Joint Venture and/or Associate Company. e) Details of payment of remuneration or commission to Managing Director or Joint Managing Director of the Company from any of its subsidiaries as the Company does not have any Subsidiaries/Joint Venture/Associate Company. f) Voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Companies Act, 2013). g) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 25. Acknowledgements Your Directors express their deep gratitude for the co-operation and support extended to the Company by its Members, customers, suppliers, bankers and various government agencies. Your Directors also place on record the commitment and involvement of the employees at all levels and looks forward to their continued co-operation. For and on behalf of the Board of Vidhi Dyestuffs Manufacturing Limited, Bipin M. Manek Chairman & Managing Director (DIN: 00416441) Address:Flat No. 12, Somerset House, Off. Bhulabhai Desai Road, Warden Road, Mumbai -400026 Date: August 12,2015 Place: Mumbai |