DIRECTORS' REPORT Your Directors have pleasure in presenting their 25th Annual Report on the business and operations of the Company along with the Audited Financial Statement of your Company for the financial year ended March 31, 2015. Dividend Your Directors are pleased to recommend final dividend of Rs.3.50 (35.00%) per equity share on the face value of Rs.10 each subject to approval of the shareholders in the ensuing Annual General Meeting. The final dividend, if declared as above would involve an outflow of Rs.430 lac towards dividend and Rs.86 lac towards dividend distribution tax. During the previous financial year, the Company had paid a dividend of Rs.3.50 per equity share. Transfer to Reserve Your Company proposes to transfer Rs.150 lac (Previous Year Rs.150 lac) to the General Reserves. An amount of Rs.6,727 lac is proposed to be retained in the Statement of Profit and Loss. State of the Company Affairs General The year 2014-15 continued to be a challenging year. The world largest economy, the US saw better growth, while the countries in the Euro zone registered marginal growth. There was a marked slowdown in China and Japan witnessed near stagnation. The key factors that affected the global economy included a steep decline in oil and commodity prices. The Indian economy too struggled with high interest cost, high energy prices and depreciation of Indian Rupee. However, there was persistent correction in crude oil prices. The market of the Pthalo pigments was also sluggish during the year, which challenged the volume. During the year under review, Hon'ble High Court of Gujarat vide certified order dated November 29, 2014 sanctioned the Scheme of Arrangement in the nature of demerger and transfer of enter assets and liabilities of CPC division of the Company to AksharChem (India) Limited from Appointed date April 1, 2014. The Scheme have been effective from December 2, 2014 from the date filing the certified order with the Registrar of Companies, Gujarat. Accordingly, revenue for the current period does not include the business of CPC Green Division. Financial Performance During the year under review, the Company earned a total income of Rs.24,047 lac compared to Rs.30,264 lac in the previous year. The total sales of the Company stood at Rs.23,953 lac (Previous Year Rs.30,201 lac). The profit after tax (PAT) increased by 21% from Rs.1,459 lac to Rs.1,770 lac in the previous year. Operations Exports During the year under review, the total exports value to Rs.20,533 lac compared to Rs.25,840 lac during the previous year. Your Company is trying to locate new export markets for its products and see good potential for growth to the export business. Capital Expenditure The Company has carried out routine modernization and improvements in the plant and incurred a capital expenditure of Rs.679 lac in the year under review compared to Rs.1,740 lac in the previous year. Material Changes and Commitments, if any, between Balance Sheet date and date of Directors Report There was no material changes and commitments between the Balance Sheet date and date of Directors' Report affecting the financial position of the Company. Composite Scheme of arrangement and change(s) in the Nature of Business During the year under review, the Hon'ble High Court of Gujarat vide its order dated October 17, 2014, sanctioned the Composite Scheme of Arrangement under Sections 391 and 394 read with Sections 78 and 100 to 103 of the Companies Act, 1956 between the Company and AksharChem (India) Limited and their respective shareholders and creditors in the nature of de-merger and transfer of CPC Green Division of the Company to AksharChem (India) Limited with all its assets and liabilities transferred to AksharChem (India) Limited with effect from April 1, 2014 (Appointed Date). The Scheme was effective with effect from December 2, 2014 i.e. date of filing of the certified copy of the order of the Hon'ble High Court of Gujarat with the Registrar of Companies, Gujarat. Consequent to the scheme becoming effective, shareholders of the Company were allotted 5 fully paid up equity shares of Rs.10 each of AksharChem (India) Limited for every 26 equity share held by them in the Company as on the record date i.e. February 3, 2015. However, during the year under review, there is no change in the nature of business. The Company continues to manufacture and exports pigments. Authorised Share Capital On the Scheme of Arrangement sanctioned by the Hon'ble High Court of Gujarat in the nature of demerger and transfer of CPC Green Division from the Company to AksharChem (India) Limited becoming effective from December 2, 2014, on filing the certified true copy of the order with Registrar of Companies, Gujarat, the Authorised Share Capital of the Company amounting to Rs.350 Lac has been transferred to AksharChem (India) Limited as per the scheme. Accordingly, Authorised Share Capital of the Company has automatically reduced from Rs.2,000 Lac to Rs.1,650 lac. Share Capital a) Issue of equity Shares with differential rights The paid up Equity Share Capital of the Company as on March 31, 2015 was Rs.1,227 Lac. During the year under review, no equity shares with differential rights as to dividend, voting or otherwise where issued. b) Issue of sweat equity shares The Company has not issued any sweat equity share during the year under review. c) Issue of employee stock options During the year under review, no Stock Options were granted, vested or exercised. No stock options are in force as on date. Subsidiaries, Joint Ventures and Associate Companies During the year under review, the Company does not have any subsidiaries, joint ventures and Associate Companies. Finance and Insurance The Company has been financed by State Bank of India for both working capital and term loans. Pursuant to Scheme of Arrangement sanctioned by the Hon'ble High Court of Gujarat in the nature of Demerger and transfer of CPC Division to AksharChem (India) Limited, term loans pertaining to CPC Green Division outstanding amounting to Rs.304 Lac as on March 31, 2014 has been transferred to AksharChem (India) Limited on the appointed date. All assets and insurable interests of your Company including building, plant and machinery, stocks, vehicles, stores and spares have been adequately insured against various risks and perils. Credit Rating CARE has reaffirmed credit rating of "CARE A+" (Single A Plus) for long term bank facility, "CARE A1+" (A One Plus) for the short term bank facilities and given "CARE A1+" (A One Plus) for Short Term Debt (including Commercial Paper). Listing The Equity Shares of the Company continue to be listed on BSE Limited and National Stock Exchange of India Limited and Listing Fees for the year 2015-16 has been paid to them. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended March 31, 2015 are given as per "Annexure - A" forming part of this Report. Risk Management Policy The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Many risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. The Board is of the opinion that there are no identifiable risks which may threaten the existence of the Company. Board Evaluation Evaluation of performance of all Directors of the Company is done annually. The Company has implemented a system of evaluating performance of the Board of Directors and its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects. The Board of Directors has expressed their satisfaction with the evaluation process. Public Deposits During the year under review, the Company has not accepted any deposits from the public falling under Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the balance sheet date. Policy on Appointment and Remuneration of Directors and Key Managerial Personnel The appointment and remuneration of Directors and Key managerial Personnel is as per policy of your Company. Annual Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges, the Board access and evaluate the effectiveness of functioning of the Committees and the individual directors by seeking their inputs on various aspects of the Board/Committee Governance. The Nomination and Remuneration Committee and the Board have reviewed the performance of the individual directors and the Chairperson. The details of programme for familiarization of the independent directors of your company is available on the Company's website at www.asahisongwon.com <http://www.asahisongwon.com>. Remuneration Policy The Board has on the recommendation of the Nomination and Remuneration Committee framed the Remuneration Policy of your Company which is attached as per "Annexure - B". Particulars of Employees The information required Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as per "Annexure - C" to this report. Corporate Social Responsibility In terms of the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 the Board of Directors of your Company has constituted a Corporate Social Responsibility ('CSR") Committee which is Chaired by Mrs. Paru M. Jaykrishna the Chairperson & Managing Director of the Company, the other members of the committee are Mr. Gaurang N. Shah and Dr. Pradeep Jha who are independent directors of the Company. Your Company also has in place a CSR policy and the same is available on the website of the Company at www.asahisongwon.com <http://www.asahisongwon.com>. The committee places before the Board the details of the activities to be undertaken during the year. A detail report is attached as "Annexure - D" forming part of this report. Independent Director Statement The Company has received declarations from all its Independent Directors, confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges. Directors and Key Managerial Personnel Mr. Gokul M. Jaykrishna, Joint Managing Director of the Company is due to retires by rotation at the ensuing Annual General Meeting in terms of Section 152(6) of the Companies Act, 2013 and is eligible for re-appointment. The Board recommends the reappointment of above director of the Company. As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, brief profile of the Director proposed to be reappointed, nature of their expertise in specific functional areas, names of the Companies in which he hold directorships and shareholding are provided in the Notice attached forming part of the Annual Report. Mr. Chandravadan R. Raval has been appointed as Chief Financial Officer of the Company w.e.f. March 12, 2015. Women Director The composition of the Board of Directors of the Company includes a women director viz. Mrs. Paru M. Jaykrishna. Accordingly, the Company is in compliance with the requirement of Section 149(1) of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014. Independent Director At the 24th Annual General Meeting held on September 26, 2014, the members of the Company had appointed existing Independent Directors viz. Mr. H. K. Khan, Mr. R. K. Sukhdevsinhji, Mr. Arvind Goenka, Mr. Gaurang N. Shah and Dr. Pradeep Jha as Independent Director of the Company under the Act each for a term of five years up to the conclusion of the 29th Annual General Meeting of the Company in the calendar year 2019. Directors' Responsibility Statement Your Directors state that; (i) in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed with no material departures; (ii) 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 as on March 31, 2015 and of the profit or loss of the Company for the year ended on that date; (iii) 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; (iv) the Directors have prepared the annual financial statements for the year ended March 31, 2015 on a going concern basis; (v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively ; and (vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Number of Meetings of the Board of Directors During the year under review, the Board of Directors of your Company met 6 (Six) times to deliberate on various matters, details of which are given in the Corporate Governance Report. Audit Committee The Board has constituted the Audit Committee comprises of three members: As per the Section 177 (8) of the Companies Act, 2013 the Board has accepted all the recommendations of the Audit Committee during the Financial Year 2014-15. Further details on the Audit Committee are provided in the Corporate Governance Section of the Annual Report. Internal Financial Controls and their Adequacy Your company has in place adequate internal control systems commensurate with the size of its operations. The internal control systems, comprises of policies and procedures which are designed for safeguarding the assets, optimal utilization of resources, sound management of company's operations. These are continually reviewed by the Company to strengthen the same wherever required. The internal control systems are supplemented by internal audit carried out by an Independent Cost Accountant and periodical review by management. The Audit Committee of the Board addresses issues, if any, raised by both, the Internal Auditors and the Statutory Auditors. Statutory Auditors and Auditors' Report In accordance with Section 139 of the Companies Act, 2013, M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad (Firm Registration No.1 1 1072W) were reappointed by the members of the Company at the 24th Annual General Meeting held on September 26, 2014, as Statutory Auditors of the Company for a period of 3 years to hold office until the conclusion of the 27th Annual General Meeting of the Company to be held in the calendar year 2017. In accordance with the provisions of Sections 139, 141, 142 and other applicable provisions of the Companies Act, 2013 and of the Companies (Audit and Auditors) Rules, 2014, the appointment of the Statutory Auditors is required to be ratified by the shareholders at every Annual General Meeting during their tenure. M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad have confirmed that they are eligible for having their appointment as Statutory Auditors ratified at this Annual General Meeting. Your Directors recommend the ratification of their appointment as Statutory Auditors of the Company for the financial year 2015-16. The Auditors' Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2015. The statements made by the Auditors in their Report are self explanatory and do not call for any further comments. Related Party Transactions During the financial year, your Company has entered into related party transactions which were on an arm's length basis and in the ordinary course of business. The Company has not entered into any transaction with any related party which could be considered material in accordance with the Listing Agreement and the Policy of the Company on materiality of related party transactions. All related party transactions have been approved by the Audit Committee of the Board of Directors of the Company and the same are being reviewed by it on a periodic basis. The Policy on the Related Party Transactions as approved by the Audit Committee and the Board of your Company is posted on the Company's website www.asahisongwon.com . The details of contracts and arrangement with related parties of your Company for the financial year ended March 31, 2015 is given in Note No. 32 to the financial statements. Form AOC-2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as "Annexure - E" to this Report. Extract of Annual Return In terms of the provisions of Section 92 (3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of the Company for the financial year ended March 31, 2015 in Form MGT - 9 is annexed herewith as "Annexure - F". Particulars of Loans, Guarantees or Investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meeting of Board and its Powers) Rules, 2014 are given in the Note to the Financial Statements. 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 Mr. Bipin L. Makwana, Company Secretary in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith an "Annexure - G". The Secretarial Auditors Report does not contain any qualification, reservation or adverse remark and is self - explanatory and thus does not require any further comments. Cost Auditors During the year under review, cost audit was not applicable to the Company. Significant an material orders passed by the regulations / courts / tribunals impacting the going concern status and the Company's operation in future There were no significant and material orders passed by the regulator or court or tribunals impacting the going concern status of the Company and its operations in future. Vigil mechanism and whistle blower policy In compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the listing Agreement with the Stock Exchanges, your Company has in place a vigil mechanism for the directors and employees to report concerns about unethical behaviour and actual or suspected fraud or violation of your Company Code of Conduct. The Company has established a Vigil Mechanism and Whistleblower Policy for the Directors and employees and same is posted on the website of the Company at www.asahisongwon.com . Disclosure under the sexual harassment of women at work place (prevention, prohibition & redressal) Act, 2013 The Company has in place a Policy on prevention of Sexual Harassment in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. During the year under review, the Company had not received any compliant. Management discussions and analysis report A detailed review of operations performed and future outlook of your Company and business is given in the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) is presented in "Annexure - H" a separate section forming part of the Directors' Report. Corporate governance Your Company has been practicing principle of Corporate Governance over the years. During the year under review, your Company was in compliance with the provisions of Clause 49 of the Listing Agreement with the Stock Exchange(s) pertaining to the corporate governance compliances. The Report on Corporate Governance as stipulated under Clause 49 of the Listing agreement forms part of this Annual Report. M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad, Statutory Auditors of the Company certificate confirming compliance with the Clause 49 of the Listing Agreement with the Stock Exchange(s) is set out in the "Annexure - I" forming part of this report. Transfer to investor education and protection fund As provided in Companies Act dividend amount which was due and payable and remained unclaimed for a period of seven years has to be transferred to Investor Education & Protection Fund. The Company has transferred an amount of Rs.68,714/- remaining unclaimed was transferred to Investor Education and Protection Fund (IEPF) during the year. Human Resources and Industrial Relations The industrial relations of the Company during the year continued to be cordial and amicable. Your Directors wish to place on record their sincere appreciation for the devoted services of all the employees and workers of the Company. Environment, Health and Safety Your Company continues to give greater importance to health and safety of its employees and its neighbourhood. Safety and environmental standards are periodically reviewed and upgraded. The Company preserves in its efforts to educate safe and environmentally accountable behavior in every employee, as well as its vendors. The solid waste generated at the Works, after treatment of its liquid effluent is shifted to a Gujarat Pollution Control Board (GPCB) approved site. The Company has maintained a greenbelt around its sites as a part of its commitment to environment management. The Company continues to demonstrate its commitment to a clean and safe environment. The state of the art effluent treatment plant continues to run satisfactorily, so that the treated wastewater discharged is well within the stipulated norms set by GPCB. As a part of water conservation efforts, the Company has implemented suitable engineering solution to utilize recycled water as much as possible in cleaning, gardening and other utilities. Your Company has ISO 14001:2004 certification of its both Units and ISO 9001-2008 for quality management system. Appreciation and Acknowledgements Your Directors would like to express their appreciation for the assistance and cooperation received from the Government of India, Government of Gujarat, Electricity supply companies and Bankers during the year under review. The Company is thankful to the shareholders for reposing trust in the Company and their unflinching enthusiasm and patronage. For and on behalf of the Board of Directors MRS. PARU M. JAYKRISHNA Chairperson & Managing Director DIN No. 00671721 Place: Ahmedabad Date: August 12, 2015 Registered Office: 167-168, Village Indrad Kadi - Kalol Road, Dist: Mehsana Gujarat - 382 715 (India) CIN:L24222GJ1990PLC014789 |