Directors' Report [(Disclosure Under Section 134(3) Of The Companies Act, 2013) {Read With Companies (Accounts) Rules, 2014}] To The Members, Emmbi Industries Limited, (Formerly known as Emmbi Polyarns Limited) Your Directors are presenting the 21st Annual Report of your Company and the Audited Accounts for the year ended 31st March, 2015. OPERATIONS During the year under review, your Company has achieved Revenue from Operations and the Income aggregating to Rs. 1,843.78 million as against Rs. 1,591.09 million during the previous year, registering an increase of about 16% over the previous year. Profit after providing for taxes is Rs. 59.65 million as against Rs. 43.34 million during the previous year, registering an increase of about 38% over the previous year. DIVIDEND Your Directors are pleased to recommend a dividend of Rs. 0.30 per share of the face value of Rs. 10/- each for the year ended on 31st March, 2015 (Rs. 0.25 per share for the previous year) subject to the Members' approval. The dividend payment amounts to Rs. 5.31 Million. In addition Rs. 1.06 Million is payable towards distribution tax on dividend. TRANSFER TO RESERVES Out of the Total Profit After Tax of Rs. 59.65 million for the financial year, NIL amount is proposed to be transferred to the General Reserve. EXPORTS Value of Exports during the year under review were Rs. 1,019.91 million as against Rs. 867.43 million that is a net year on Year Growth of around 18%. Exports in the current financial year contributed to 55% in the net sales. Company has expanded its presence in 51 countries from 45 Countries in the previous year which has resulted healthy growth in the territory of operation. HUMAN RESOURCE DEVELOPMENT As a manufacturer we understand, and appreciate the value of human capital, and in its development. We continue to align the skill sets and capabilities of our current workforce, and the talent available in the market with the organization’s ongoing and future business plans, to maximize return on investment and secure continual success. We also emphasise this through the blue colour in the company’s logo, as it reflects the loyalty and trust that we bring to our blue collared workforce. The human resource philosophy and strategy of your company has been designed to attract and retain the best talent on offer. In practice it creates and nurtures work place challenges that keep employees engaged, motivated and innovative. A robust manpower planning processensures that all steps from business requirements to sourcing and staffing are seamlessly aligned. Your Company has been successful in building a performance oriented culture with high levels of engagement and empowerment in an environment of teamwork. This is reflective of its staff right from the factory to the corporate office. We have started various self-development initiatives that includes relevant training programmes and seminars, that addresses the needs of the workforce as well as the senior management. Company has taken a membership of Sedex which is an internationally acclaimed web exchange for the information interchange about the ethical practices and safety issues towards the people working in the company. Your company has also prepared a model code of conduct for the behavior with employees inspired from the ETI model code of conduct. QUALITY INITIATIVES "Manufacturing" is the heart of Emmbi's activities. In order to achieve the improvement in the manufacturing, company has adopted the concepts of Lean manufacturing. We are successfully practicing the same and the result can be seen in the in the increase of defect free production in year after year. The Company is in the process of implementing Lean Enterprise Management throughout the organisation. We anticipate that this would increase productivity and profitability in the coming years. The above initiatives and our continuous adherence to strict quality standards has created tangible as well as intangible benefits to strengthen brand Emmbi. AUDITORS M/s. K. J. Shah & Associates, Chartered Accountants, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits as specified in Section 139 of the Companies Act, 2013 and that they are not disqualified for re-appointment. OBSERVATIONS - AUDITOR & SECRETARIAL AUDITOR There are no qualifications, reservations or adverse remarks contained in the Auditors Report and Secretarial Audit Report and therefore, there are no further explanations to be provided for in this Report. MATERIAL CHANGES AND COMMITMENTS, 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 Your Directors further states that there are no material changes and commitment 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. PUBLIC DEPOSITS Your Company has not accepted any fixed deposits from the public and there are no outstanding fixed deposits from the public as on 31st March, 2015. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the regulators/ courts that would impact the going concern status of the Company and its future operations. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: (i) that in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; (ii) 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 31st March, 2015 and of the profit 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 accounts on a going concern basis; (v) the directors, further state that they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively and (vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. BOARD PERFORMANCE The performance evalution of the non- executive directors is done by the Board annually. This evalution is based on the attendance and contri bution of the member at the board/committee meetings. The process also considers core competency, expertise, personnel characteristic and specific responsibility of the concerned Director. The performance evalution of the Chairman & Manging Director and the Chief Financial Officer was carried out by the Independent Directors. The Board of Directors experssed their satisfaction with the entire evalution procedure. BOARD MEETINGS During the year under review, Five (5) Board Meetings were convened and held. Detailed information on the meetings of the Board and all its Committees are included in the report on Corporate Governance, which forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the listing agreement entered into with the stock exchanges. AUDIT COMMITTEE The Board has constituted the Audit Committee which comprises of Mr. Sanjay Rathi, Independent Director as Chairman and Mr. Prashant Lohiya, Independent Director, Dr. Venkatesh Joshi, Independent Director, Mrs. Rinku Appalwar, CFO as the members. More details on the Committee are given in the Corporate Governance Report which forms part of this Annual Report. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE A Corporate Social Responsibility Committee was constituted on 27th May, 2014 with Dr. Venkatesh Joshi, Independent Director as Chairman and Mr. Sanjay Rathi, Independent Director, Mr. Prashant Lohiya, Independent Director, Mrs. Rinku Appalwar, CFO as the members. The Committee met during the year on 14th February, 2015 to finalize the Corporate Social Responsibility Policy. The Policy was approved by the Board on 14th February, 2015, is available on the Company's website www.emmbiindustries.com . The Terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, and attendance of the Directors are given separately in the attached Corporate Governance Report. The Company wishes to inform the members that it is well aware of its responsibility towards fulfilling its social responsibility. Towards this initiative we have formed "Emmbi Foundation Trust" and the spending on the Corporate Social Activities will be carried through the Emmbi Foundation Trust (we are awaiting registration formalities). Further the obligations towards the Corporate Social Activities will be complied in the coming financial year i.e., 2015-2016 (including that relevant for the previous financial year i.e., 2014-2015) and accordingly the required disclosures will be made in the next financial year. NOMINATION AND REMUNERATION COMMITTEE (B) Benefits: The Company has constituted a Nomination and Remuneration Committee pursuant to Section 178(1) of the Companies Act, 2013 which comprises of Mr. Sanjay Rathi, Independent Director as Chairman and Mr. Prashant Lohiya, Independent Director, and Dr. Venkatesh Joshi, Independent Director as the members. More details on the Committee are given in the Corporate Governance Report which forms part of this Annual Report. The Company has defined the policy on Director's appointment and payment of remuneration including criteria for determining qualifications, positive attributes, independence of a Director. The nomination & remuneration policy adopted by the Company has been posted on the Company's website www.emmbiindustries.com . LOANS, GUARANTEE & INVESTMENTS The Company has not given any loan, guarantees or made any investments exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more, as prescribed in Section 186 of the Companies Act, 2013. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS AND OUTGOINGS: The information as required under Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorption and foreign exchange earnings is given below: 1. CONSERVATION OF ENERGY: a. Steps are taken to institutionalized process of identifying and understanding increase and decrease in energy use by monitoring energy consumption trends to determine future energy use when planning future changes in the business and diagnose specific areas of wasted energy. b. Significant reductions in energy consumption and cost of production of goods have been observed by the implementation of above referred measures. c. Implementation of referred measures have resulted in increased facility reliability as well as improved equipment performance. 2. TECHNOLOGY ABSORPTION: (A) Research and Development: Since Inception of the company and in pursuit of R & D endeavors the company is regularly incurring expenditure on R & D on the following activities • Design and Development of New Products; • Continuous improvement of existing products for enhanced durability and performance; • Product optimization using advanced technology; • Testing and adaptation of New Materials ; • New processes, up gradation & production process improvement of existing processes; • Redesigning of the manual processes in to Automation; • Environment compliance by products and processes. Benefits derived as a result of R & D: It has resulted in the improvement of quality of the products and reduced operation cost. Up gradation of products to the new requirements has been possible because of R & D done in the company on a continuous basis. This has resulted into enhanced customer satisfaction, new business opportunities, reduced costs, higher quality and adapting the latest technologies. (C) Future Plan of action: Future R&D efforts will continue along similar lines, as at present, but with more focus, thrust and endeavours. The company is planning to apply to Government of India for recognition of its Research & Development activities at Silvassa under "In-house R&D Centre" during the current year. (D) Expenditure on R&D: Since Inception of the Company and in pursuit of R & D endeavors the Company is regularly incurring expenditure on R & D, the same is reflected in the Annual accounts clubbed with regular heads of account in balance sheet. 3. FOREIGN EXCHANGE EARNINGS AND OUTGO: The Company has continued to maintain focus and avail of export opportunities based on economic considerations. During the year the Company has exports (FOB value) worth Rs. 962.50 millions. Particulars 2014-15 2013-14 (In Millions) Foreign exchange earnings 962.50 811.32 Foreign exchange outgo 37.55 36.62 DIRECTORS AND KEY MANAGERIAL PERSONNEL Dr. (Mrs.) Mitravinda Appalwar (DIN: 02716731), Director of the Company, retires by rotation at the ensuing Annual General Meeting of the Company. She does not offer herself for re-appointment. The following are the Key Managerial Personnel of the Company pursuant to Section 203 of the Companies Act, 2013: Sr. No. Name of the Person Designation 1 Mr. Makrand Appalwar Chairman & Managing Director 2 Mrs. Rinku Appalwar Chief Financial Officer 3 Mr. Kaushal Patvi Company Secretary RISK MANAGEMENT POLICY A statement including development and implementation of a risk management policy for the Company is attached to the Directors Report and forms a part of the Annual Report. RELATED PARTY TRANSACTIONS The Company has not entered into any contracts or arrangements with related parties referred to in Section 188(3) of the Companies Act, 2013. EXTRACT OF ANNUAL RETURN The extract of Annual Return in Form No. MGT 9, as provided under sub-section (3) of Section 92 of the Companies Act, 2013, annexed herewith Board report. SECRETARIAL AUDIT The Board of Directors have appointed M/S Sanjay Dholakia and Associates, Practicing Company Secretaries, to conduct Secretarial Audit for the financial year 2014-2015 as required under section 204 of the Companies Act, 2013 and the rules framed thereunder. The Secretarial Audit report for the financial year 2014-2015 forms part of the Directors' Report as Annexure 2. MANAGERIAL REMUNERATION The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2015 is given in a separate Annexure to this Report. The above Annexure is not being sent along with this Report to the Members of the Company in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office and the Corporate Office of the Company. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Company before the 21st Annual General Meeting and upto the date of the ensuing Annual General Meeting during the business hours on working days. None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of its business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES The Company does not have any subsidiary company. The Company has one associate company in the name of Global Bag sro. Details of the same is given in Annexure 1 to Directors' Report. WHISTLE BLOWER POLICY The Company has a Whistle Blower Policy in place for vigil mechanism. The said policy has been formulated keeping in view of the amendments in the Companies Act, 2013 and Clause 49 of the Listing Agreement. The said policy may be referred to, at the Company's official website, www.emmbiindustries.com . CORPORATE GOVERNANCE A separate section on Corporate Governance is included in the Annual Report and the Certificate from the Company's auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges is annexed thereto. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management discussion and analysis report has been attached to this report and forms a part of this report. ACKNOWLEDGEMENT Your Directors would like to express their appreciation for the assistance and co-operation received from the shareholders, customers, dealers, suppliers, banks, financial institutions, Export Promotion Council, Government authorities, other semi Government & local authorities, Administration of Union Territory of Dadra & Nagar Haveli, Stock Exchanges and business associates at all levels during the year under review. The Directors also wish to place on record their deep appreciation for the committed services and excellent work done by the employees of the Emmbi family at all levels during the year. For and on behalf of the Board of Directors Makrand Appalwar Chairman & Managing Director DIN: 00171950 Place: Mumbai Date: 28th May, 2015 |