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Your Directors are pleased to present their 41st Annual Report together with the Audited Statement of Accounts of the Company for the year ended March 31, 2018.
1. Summary Financial Results
The Financial Results of the Company for the year ended March 31, 2018, were as follows:
(Rs in Cr)
|Year Ended 31st March 2018||Year Ended 31st March 2017*||Year Ended 31st March 2018||Year Ended 31st March 2017*|
|Profit before Interest, Depreciation and Tax||181.09||185.54||167.59||169.21|
|Finance Cost (including interest)||50.12||34.42||52.38||35.91|
|Profit before Tax||85.47||114.70||64.00||91.19|
|Provision for Taxation|
|- Current Tax||15.33||20.50||15.82||20.68|
|- Deferred Tax||(14.75)||(13.78)||(16.25)||(15.25)|
|Profit After Tax||84.89||107.98||64.43||85.74|
|Profit after Tax Including Extraordinary Item||84.89||107.98||64.43||85.74|
Note: The Company has adopted Indian Accounting Standard (referred to as Ind AS) with effect from April 1, 2017 and accordingly these financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated therein, prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles generally accepted in India.
2. Overview of Performance
In financial year 2018, Net Sales increased by 22% to Rs 1936 crores from Rs 1587 crores in financial year 2017. Sales volume grew by 25% with 20% growth in Speciality films. BOPP film margins continued to be volatile and wiped out gains of volume increase and better product mix.
Companys continuous focus on improving operational efficiencies helped in maintaining EBIDTA level. Consolidated EBIDTA for the financial year 2018 is Rs 168 crores against Rs 169 crores in financial year 2017. PAT and EPS dropped from last year primarily due to higher interest and depreciation of the new BOPP line commissioned last year. Consolidated PAT for financial year 2018 is Rs 64 crores against Rs 85 crores to that of last year.
Creating Customer Centric Culture including Robust Service Offer, New Offices Overseas, CRM, Establishing tripartite partnership between us, Converters and Brand Owners
Improving Product Mix towards Value Add, in line with objective to de-commoditize the business model. Speciality Films sale grew 20% over last year.
Improving utilisation of new BOPP capacity commissioned in 2017, which resulted in 25% increase in volume.
Continuous focus on improving Internal Operational Efficiencies Company launched many new products during the financial year. Under Packaging films category, BOPP Conduction Sealing Film, High Metal Bond CPP Film, BOPP Film for SOAP Wrapping were launched. Under Label category, Metalized Label Film was introduced. Under Industrial film category, Cosmo Synthetic Paper and Tape Release Film was launched. Besides these in the Lamination Category, Universal PET Lidding Film and Black and Metalised Velvet Film was launched.
In the coming year, management focus shall continue to be on expanding speciality, close to optimum utilisation of capacity and improving internal efficiencies.
The Company continues to strengthen its exports through brand visibility initiatives taken during the year. Exports during the year increased to Rs 777 Crores from Rs 638 Crores in financial year 2017.
4. Share Capital
During the year under review, there was no change in the Companys issued, subscribed and paid-up equity share capital. On March 31, 2018, it stood at
Rs 19.44 Crores divided into 1,94,40,076 equity shares of Rs 10/- each.
5. General Reserve
The Company has not transferred any amount to General Reserve during the Year.
Equity dividend of Rs 6.00/- per share (Previous Year Equity dividend of Rs 10.00/- per share) has been recommended by the Board of Directors for the year ended March 31, 2018 amounting to Rs 11.66 Crores (Previous Year Rs 19.44 Crores) on the Equity Share capital.
7. Details of Subsidiaries
During the year under review, CF (Netherland) Holding Limited B.V., a wholly owned subsidiary of the Company has setup a wholly owned step down subsidiary in Poland namely Cosmo Films Poland SP. Z.O.O. for the purpose of sale and distribution of its products manufactured by Company and/or its subsidiaries.
The Company now has seven wholly owned subsidiaries. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries.
Consolidated Financial Statements form part of this Annual Report. Statement containing the salient feature of the financial statement of the Companys subsidiaries in Form AOC-1, is enclosed to this Annual Report.
In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the Subsidiary Companies on its website at www.cosmsofilms.com.
The subsidiaries of Cosmo Films Limited as on March 31, 2018 are listed hereunder:
CF (Netherlands) Holdings Limited B.V.
Cosmo Films Japan, GK
Cosmo Films Singapore Pte Limited
Cosmo Films Korea Limited
Cosmo Films Inc.
CF Investment Holding Private (Thailand) Company Limited
Cosmo Films Poland SP. Z.O.O.
8. Research and Development (R&D)
The Company takes pride in its continuous research and development which focus on providing innovative solutions as opposed to simply producing commodity films. With these consistent efforts in research and development activities, Cosmo is well placed to benefit from accelerated growth and drive new product development globally.
Expenditure on Research & Development
(Rs in Cr)
|Particulars||31st March, 2018||31st March, 2017|
The Company is focussing its research activities on speciality labels, high barrier films and synthetic paper film. Other focus area include:
The identification of technical (product/ applications) growth areas through customer activities, exhibitions, publications and technical interactions;
Increasing the occupancy of value adds in the product baskets;
Efforts towards down gauging in products;
Reducing consumption of raw materials & fuel thereby reducing the carbon footprint
9. Capital Expenditure
Your Company has five state of the art manufacturing facilities spread across India (3), US (1) and Korea (1), with a total installed capacity of 196,000 MT per annum of BOPP films, 40,000 MT per annum of Thermal Lamination Films, 22,200 MT per annum of Metalized Films,10,000 MT per annum of Coated Films and 10000 MT per annum of CPP Films. The Company has recently added new line for production of CPP Films and metalized films at Karjan Gujarat. This line is having capacity of 7500 MT per annum. During the year under review, your Company incurred capital expenditure of Rs 71.09 Cr as compared to Rs 22.10 Cr for F.Y. 2017.
10. Corporate Governance
Cosmo is committed to maintaining best standards of Corporate Governance and has always tried to build the maximum trust with shareholders, employees, customers, suppliers and other stakeholders.
A separate section on Corporate Governance forming part of the Directors Report and the certificate from the Practicing Company Secretary confirming compliance of the Corporate Governance norms as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is included in the Annual Report in
11. Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.
The Internal Financial control is supplemented by an extensive program of internal audit conducted by in house trained personnel and external firm of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee to ensure effectiveness of the Internal Financial Control System. The internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.
12. Risk Management
Cosmo has a robust process in place to identify key risks across the organisation and prioritise relevant action plans to mitigate these risks. The Risk Management Committee has been entrusted with the responsibility to assist the Board members about the risk assessment and its minimization procedures, which includes discussing the management submissions on risks, prioritising key risks and approving action plans to mitigate such risks.
The risk management procedure is reviewed by the Audit Committee and Board of Directors on regular basis at the time of review of quarterly financial results of the Company. A report on the various risks that may pose challenge to your Company are set out as a part of Management, Discussion and Analysis section of this report.
Cosmos Risk Policy has been uploaded on Companys website at www.cosmofilms.com.
13. Vigil Mechanism / Whistle Blower Policy
The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism for the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy without fear of reprisal. The policy is accessible on the Companys website.
14. Diversity of the Board
The Company believes that diversity is important to the work culture at any organisation. In particular, a diverse Board, among others, will enhance the quality of decisions by utilizing different skills, qualifications and professional experience for achieving sustainable and balanced development.
Mr. Ashok Jaipuria, is the Chairman & Managing Director of the Company.
(b) Appointment and Reappointment
Ms. Alpana Parida is Non Executive and Non Independent Director of the Company and is retiring by rotation. She being eligible offers herself for reappointment at the ensuing Annual General Meeting.
Mr. Anil Wadhwa has been appointed as Additional Director under the category of Independent Director w.e.f. 23rd May, 2018.
(c) Status of Directors
Mr. Anil Kumar Jain is Whole Time Director of the Company. Mr. Rajeev Gupta, Mr. H.K. Agrawal, Mr. Ashish Guha, Mr. Pratip Chaudhuri, Mr. H. N. Sinor and Mr. Vivek Nangia are the Independent Directors of the Company.
(d) Independent Directors Declaration
The Company has received necessary declaration from each Independent Director under section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
16. Key Managerial Personnel
1. Mr. Ashok Jaipuria, Chairman & Managing Director
2. Mr. A. K. Jain, Director of Corporate Affairs
3. Mr. Pankaj Poddar, Chief Executive Officer
4. Mr. Neeraj Jain, Chief Financial Officer
5. Ms. Jyoti Dixit, Company Secretary
17. Familiarization Programme for the Independent Directors
The Company follows a well-structured induction programme for orientation and training of Directors at the time of their joining so as to provide them with an opportunity to familiarise themselves with the Company, its management, its operations and the industry in which the Company operates.
At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director of the Company. The Director is also explained in detail the Compliance required from him under the Companies Act, 2013, the Listing Regulations and other relevant regulations and affirmation taken with respect to the same.
The induction programme includes:
1) For each Director, a one to one discussion with the Chairman and Managing Director to familiarise the former with the Companys operations
2) An opportunity to interact with the CEO, CFO
& Company Secretary, business heads and other senior officials of the Company, who also make presentations to the Board members on a periodical basis, briefing them on the operations of the Company, strategy, risks, new initiatives, etc.
The details of the familiarisation programme may be accessed on the Companys corporate website (www.cosmofilms.com).
18. Remuneration Policy
Your Company is driven by the need to foster a culture of leadership with mutual trust. Cosmos remuneration policy, which is aligned to this philosophy, is designed to attract, motivate, retain manpower and improve productivity by creating a congenial work environment, encouraging initiative, personal growth and teamwork besides offering appropriate remuneration package. Pursuant to the applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors.
Members can download the complete remuneration policy on the Companys website (www.cosmofilms.com).
Disclosure of details of payment of remuneration to Managerial Personnel under Schedule V Part II, Section II (A) forms part of this Corporate Governance Report
19. Performance Evaluation of the Board
In terms of provisions of Companies Act, 2013 read with the Rules issued thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board of Directors on recommendation of the HR, Nomination and Remuneration Committee, have evaluated the effectiveness of the Board/Director(s) for the year.
20. Board and Committee Meetings
The Company prepares a calendar and circulates to all the directors in advance. During F.Y. 2018, Five (5) meetings of the Board of Directors and Five (5) Audit Committee meetings were held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.
Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report.
There have been no instances of non-acceptance of any recommendations of the Audit Committee by the Board during the Financial Year under review.
(a) Statutory Auditors
M/s. Walker, Chandiok & Co. LLP Chartered Accountants were appointed as Statutory Auditors of the Company in the 38th AGM (held on 06th August, 2015) to hold office for a period of 5 years until the conclusion of the 43rd Annual General Meeting subject to ratification at every Annual General Meeting
However, in accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting. Therefore, they will continue as Statutory Auditors for next financial year. There are no observations (including any qualification, reservation, adverse remark or disclaimer) of the Auditors in their Audit Report that may call for any explanation from the Directors. Further, the notes to accounts referred to in the Auditors Report are self-explanatory.
(b) Cost Auditors
M/s. Jayant B. Galande, Cost Accountants were appointed as Cost Auditors of the Company for the Financial Year F.Y. 2018. In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by shareholders at the ensuing AGM.
(c) Secretarial Auditors
The Company has appointed M/s. DMK Associates, Company Secretaries, New Delhi, to conduct its Secretarial Audit for the Financial Year ended March 31, 2018. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of the applicable corporate laws. Auditors mentioned in their report that the Company is not having valid renewal of Fire NOC for its plant located at Waluj, Aurangabad, Maharashtra. Company has already applied for its renewal.
22. Related Party Transaction
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered into by the Company during the Financial Year, were in the ordinary course of business and on an arms length basis. The details of the related party transactions as required under Accounting Standard are set out in Note 42 to the standalone financial statements forming part of this Annual Report.
No Material Related Party Transactions, i.e. transactions amounting to ten percent or more of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. 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. As per the Listing Regulations, all related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee has been obtained for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval are presented to the Audit Committee by way of a statement giving details of all related party transactions. The Company has developed a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions and can be accessed on the Companys website (www.cosmofilms.com).
23. Managements Discussion and Analysis Report
Pursuant to regulations 34 of the Listing Regulations, Managements Discussion and Analysis Report for the year is presented in a separate section forming part of the Annual Report.
The Company has not accepted deposit from the public within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.
25. Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo
The details of energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014 is annexed herewith as Annexure - C to this report.
26. Particulars of Loans, Guarantees or Investments
The Company have duly complied with the provision of Section 186 of the Companies Act, 2013 during the year under review. The details of loans, guarantees and investments are covered in the notes to the Financial Statements.
27. Significant and Material Orders Passed by The Regulators or Courts
During the year under review, no significant / material orders were passed by the regulators or the Courts or the Tribunals impacting the going concern status and the Companys operations in future.
28. Change in Nature of Business, if any
There was no change in the nature of business during the year under review.
29. Material Changes and Commitments, if any, Affecting Financial Position of The Company
There were no other material changes / commitments affecting the financial position of the Company or that may require disclosure, between March 31, 2018 and the date of Boards Report.
30. Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the year F.Y. 2018 to the NSE and the BSE where the Companys equity shares are listed.
31. Extract of the Annual Return
Pursuant to the provisions of section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT 9 is enclosed as Annexure - D to this Annual Report.
32. Corporate Social Responsibility
As a socially responsible Company, Cosmo is committed to increasing its Corporate Social Responsibility (CSR) impact with an aim of playing a bigger role in sustainable development of our society. In pursuit of this objective, a Corporate Social Responsibility (CSR) Committee had been formed by the Company which oversees and facilitates deliberation on the social and environmental consequences of each of the decisions made by the Board.
The Company has in place a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.
The initiatives undertaken by your Company during the year have been detailed in CSR Section of this Annual Report. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out herewith as Annexure - E to this Report.
33. Promotion of Womens Well Being at Work Place
Cosmo Films has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. There have been no complaints of sexual harassment received during the year.
34. Particulars of Employees And Related Disclosures
The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is also enclosed as Annexure - F to this Report.
The information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to the top ten employees in terms of remuneration drawn and their other particulars also form part of this report. However, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
35. Employee Stock Options
The Company has an Employee Stock Option Plan for the Employees of the Company and its Subsidiaries named as "Cosmo Films Employee Stock Option Plan, 2015". The Plan is in compliance with the SEBI (Share Based Employee Benefits) Regulations 2014 and is administered by the HR, Nomination and Remuneration Committee of the Board constituted by the Company pursuant to the provision of Section 178 of the Companies Act, 2013.
The details of the Employee Stock Options Plan form part of the Notes to accounts of the Financial Statements in this Annual Report and also available on our website www.cosmofilms.com
36. Directors Responsibility Statement
Pursuant to the section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of knowledge and belief and according to the information and explanations obtained by them, hereby confirm that:
I. In preparation of the annual accounts, applicable accounting standards have been followed along with proper explanation relating to material departures II. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates are made so as to give a true and fair view of the state of affairs of the Company as of 31st March, 2018 and of the profits of the Company for the year ended on that date
III. Proper and sufficient care has been taken 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 annual accounts of the Company have been prepared on a going concern basis.
V. Proper Internal Financial Controls were in place and that the Financial Controls were adequate and were operating effectively.
VI. Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
37. Awards & Recognition
During the Year, Company has been awarded the prestigious SAP HANA Visionary Award and SIES SOP and IFCA Star award.
38. Compliances with Secretarial Standards
During the year, the Company is in compliance of both erstwhile and revised Secretarial Standard -1 (Meetings of the Board of Directors), Secretarial Standard-2 (General Meetings) effective from 1st October, 2017 and Secretarial Standard - 3 (Dividend) effective from 1st January, 2018.
Your Directors would also like to extend their gratitude for the co-operation received from financial institutions, the Government of India and regulatory authorities, and the governments of the countries we have operations in. The board places on record its appreciation for the continued support received from customers, vendors, retailers and business partners, which is indispensable in the smooth functioning of Cosmo. Your Directors also take this opportunity to thank all investors and shareholders, and the stock exchanges for their continued support. Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. Their contribution to the success of this organization is immensely valuable.
|For and on behalf of the Board of Directors|
|Date : May 23, 2018|
|Place : New Delhi|