Fine Organic Industries Ltd Directors Report.
Your Directors take the great pleasure in presenting the Seventeenth Annual Report on the business and operations of the Company together with the Audited Financial Statements for the financial year ended March 31, 2019.
र in lakhs
|REVENUE & PROFITS|
|Total Revenue from Operations||1,04,397.20||86,513.25||1,06,033.28||86,466.10|
|Profit before Interest, Tax & Depreciation||24,248.17||18,035.70||25,007.04||17,438.62|
|Less: Interest & Finance Charges||179.05||312.25||183.92||315.45|
|Less : Depreciation||1,744.84||2,003.92||1,745.37||2,004.41|
|Profit for the year before Tax||22,324.28||15,719.52||23,077.75||15,118.76|
|Less: Provision for Taxation|
|Short (Excess) provision for earlier years||726.23||18.01||726.23||18.01|
|Net Profit/(Loss) after Tax||12,901.37||10,133.50||13,625.53||9,532.74|
|Other Comprehensive Income||(318.88)||(15.59)||(318.88)||(15.59)|
|Total Comprehensive Income||12,582.49||10,117.91||13,306.65||9,517.15|
|Opening Balance of Retained Earnings||38,190.39||31372.64||36,978.32||30,761.33|
|Add: Profit for the year||12,901.37||10,133.50||13,625.53||9,532.74|
|Corporate Dividend Tax on Dividend||436.92||468.12||436.92||468.12|
|Transferred to Other Reserve/Non Controlling Interest||-||548.13||4.56||548.13|
|Balance as at end of the year||48,508.64||38,190.39||48,016.17||36,978.32|
For FY 2018-19, the Board of Directors has recommended a dividend of र 7/- per equity share i.e. 140% of nominal value of र 5/- each for the financial year 2018-19. If declared by the members at the ensuing Annual General Meeting (AGM), the total dividend outgo during FY 2019-20 would amount to र 2,146.20 lakhs excluding dividend tax. The said dividend shall be paid to those members whose name appears in the register of beneficial owners/register of members as at the close of business hours on July 26,2019.
TRANSFER TO RESERVES
The closing balance of the retained earnings of the Company for FY 2018-19, after all appropriation and adjustments was र 48,508.64 lakhs.
During the year under review, your Company reported a top-line growth of 21.92% over the previous year. At Standalone level, the Revenue from Operations (net off taxes) amounted to र 1,04,397.20 lakhs as against र 85,628.50 lakhs in the previous year. The Operating Profit before Tax amounted to र 22,324.28 lakhs as against र 15,719.52 lakhs in the previous year. The Net Profit for the year amounted to र 12,901.37 lakhs as against र 10,133.50 lakhs reported in the previous year and total comprehensive income for the year amounted to र 12,582.49 lakhs as against र 10,117.91 lakhs in the previous year. The Consolidated Revenue from Operations (net off taxes) amounted to र 1,06,033.28 lakhs as against र 85,581.35 lakhs in the previous year, registering a growth of 23.90 %. The Consolidated Operating Profit before Tax amounted to र 23,077.75 lakhs as against र 15,118.76 lakhs in the previous year. The Consolidated Net Profit after Tax amounted to र 13,625.53 lakhs as against र 9,532.74 lakhs in previous year and Consolidated Total Comprehensive Income for the year amounted to र 13,306.65 lakhs against र 9,517.15 lakhs in previous year.
SHARE CAPITAL AND INITIAL PUBLIC OFFERING
During the year, there was no change in the share capital of the Company. The Paid up share capital of the Company as on March 31, 2019 is र 1,533.00/- lakhs divided into 3,06,59,976 equity shares of र 5/- each. Pursuant to Initial Public Offer by way of an offer for sale, the Equity shares of the Company have been listed on BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE) with effect from July 2, 2018.
SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURE
As on March 31, 2019, the Company has two subsidiaries i.e. Fine Organics USA Inc. and Fine Organics Europe BVBA and two joint venture companies i.e. Fine Zeelandia Private Limited and FineADD Ingredients GmbH. Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Companys subsidiaries and joint ventures in Form AOC-1 is attached to the financial statements of the Company.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its subsidiaries and associates for FY 2018-19 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Listing Regulations as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statements together with the Auditors Report thereon form part of this Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;
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, 2019 and of the profit of the Company for that period;
c the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act 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 had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) 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.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Board of Directors of the Company comprises 5 (five) Executive Directors and 5 (five) Non - Executive - Independent Directors including one woman Director. During the period under review, there has been no change in the Board of Directors. Key Managerial Personnel of the Company as on March 31, 2019 are as follows:
|Prakash Kamat||- Chairman and Whole Time Director|
|Mukesh Shah||- Managing Director|
|Jayen Shah||- Whole Time Director and Chief Executive Officer|
|Tushar Shah||- Whole Time Director and Chief Financial Officer|
|Bimal Shah||- Whole Time Director|
|Pooja Gaonkar||- Company Secretary|
Retire by rotation
Mr. Jayen Shah retires by rotation and being eligible offers himself for re-appointment.
Declarations by Independent Directors
Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed there under and Regulation 16(l)(b) of the Listing Regulations.
Five meetings of the Board were held during the year under review. The details of the Board meetings and the attendance of Directors thereat are provided in the Corporate Governance Report forming part of the Annual Report.
COMMITTEES OF THE BOARD
In order to strengthen its functioning, the Board of Directors has constituted the following Committees as per the requirement of the Companies Act, 2013 and the Listing Regulations:
1. Audit Committee
2. Nomination & Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
Details of the Committees along with their charter, composition and meetings held during the year, are provided in the Corporate Governance Report which forms part of this Annual Report.
ANNUAL EVALUATION OF DIRECTORS, COMMITTEES AND BOARD
Pursuant to the provisions of the Companies Act, 2013 and Rules made there under read with the Listing Regulations, the evaluation of Directors, Committees and Board as a whole was carried out on the basis of various criteria as recommended by the Nomination and Remuneration Committee of the Company (NRC).
The NRC committee carried out the evaluation of the Board, its committees and each of the Directors after seeking inputs from all directors on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
In a separate meeting of independent directors, performance of non-independent directors, the board as a whole and the Chairman of the Company was evaluated by the Independent Directors.
The NRC reviewed the performance of the Board, its Committees and of the Directors. The same was discussed in the Board Meeting that followed the meeting of the Independent Directors and NRC, at which the feedback received from the Directors on the performance of the Board and its Committees, was also discussed.
NOMINATION REMUNERATION POLICY
The Company has in place a Nomination Remuneration Policy for the Directors, KMP and other employees pursuant to the provisions of the Act and the Listing Regulations which is available on website of the Company i.e https://www.fineorganics.com/investor- relations/corporate-governance/policies .
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and nature of its operations. These have been designedtoprovide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards, safeguarding of its assets, prevention and detection of errors and frauds. The Company uses an established ERP system to record day to day transactions for accounting and financial reporting. The details of internal control system are given in the Management Discussion and Analysis Report, which forms part of this Annual Report.
I. Statutory Auditors
M/s. B Y & Associates, Chartered Accountants, Mumbai (Firm Registration No. 123423W) were appointed as the statutory auditors of the Company to hold office for a term of 5 years from the conclusion of the 15th Annual General Meeting held on July 10, 2017 until the conclusion of the 20th Annual General Meeting of the Company to be held in the year 2022. As per the provisions of Section 139 of the Act, they have confirmed that they are not disqualified from continuing as Auditors of the Company. Further, the report of the Statutory Auditors along with notes to schedules is a part of the Annual Report.
The Auditors Report is unmodified i.e. it does not contain any qualification, reservation or adverse remark.
II. Cost Auditors:
M/s Y. R. Doshi & Associates, Cost Accountants in practice were appointed as the Cost Auditors of the Company to audit the cost records for the Financial Year 2019-20. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be ratified by the shareholders. Accordingly, a resolution seeking ratification by the members for the remuneration is listed as Item No. 4 of the AGM Notice as Ordinary Resolution.
III. 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 Company has appointed M/s KS & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for Financial year 2019-20. Further the Report of the Secretarial Auditor for the Financial Year 2018-19 is appended as "Annexure A" to this Report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 "OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT"
Pursuant to provisions of Section 143 (12) of the Companies Act, 2013, the Statutory Auditors have not reported any incident of fraud to the Audit Committee during the year under review.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. Major risks identified by the Companys business and functions are systematically addressed through mitigating actions on a continuing basis.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Particular of loans, guarantees and investments covered under Section 186 of the Companies Act, 2013, form part of the notes to the Standalone Financial Statements provided in this Annual Report.
RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in "Annexure B" in Form No. AOC-2 and the same forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors has constituted Corporate Social Responsibility Committee (CSR Committee) consisting of members viz. Mr. Jayen Shah (Chairman), Mr. Mukesh Shah, Mr. Tushar Shah, Mr. Kaushik Shah, Mr. Prakash Apte. The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company is available at https://www.fineorganics.com/ investor-relations/corporate-governance/policies.
Report on Corporate Social Responsibility as Per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is prepared and the same is enclosed as "Annexure - C" to this Report.
EXTRACT OF ANNUAL RETURN
As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return for FY 2018-19 is given in "Annexure D" in the prescribed Form No. MGT-9, which is a part of this report. The same is available on https://www.fineorganics.com/investor- relations .
PARTICULARS OF EMPLOYEES & MANAGERIAL REMUNERATION:
The information required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "Annexure E" to this report. The statement containing particulars of employees as required under section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and accounts are being sent to the members and others entitled thereto, excluding the information on employees particulars which is available for inspection by members at the Registered office of the Company during business hours on working days of the Company. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.
In compliance with Regulation 34 and other applicable provisions of the Listing Regulations, a separate report on Corporate Governance along with the Certificate of compliance from the Secretarial Auditor forms an integral part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review, pursuant to Regulation 34 of the Listing Regulations, is presented in a separate section forming an integral part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report pursuant to Regulation 34 (2) (f) of Listing Regulations is presented in a separate section forming an integral part of this Annual Report.
DIVIDEND DISTRIBUTION POLICY
In accordance with Regulation 43A of Listing Regulations, it is mandatory for the top 500 listed entities, based on market capitalisation, as on 31 March of every financial year to formulate a Dividend Distribution Policy (Policy) and disclose the same in the Annual Report and on the website of the Company. Accordingly, the Board of Directors of the Company has adopted the Policy which endeavours for fairness, consistency and sustainability while distributing profits to the shareholders. The Policy is available on the Companys website under the Investors section at https://www.fineorganics.com/investor- relations/corporate-governance/policies.
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and requirements ofRegulation 22 of the Listing Regulations, your Company has a vigil mechanism which has been incorporated in the Whistle Blower Policy for Directors and Employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of code of prevention of Insider Trading. The Whistle Blower Policy is uploaded on the website of your Company at https://www.fineorganics . com/investor-relations/corporate-governance/policies.
PREVENTION OF SEXUAL HARASSMENT
The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted prevention of Sexual Harassment Policy, in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaints Committee has also been set up to redress complaints received on sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2018-19.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology absorption, 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 is furnished in "Annexure F" to this report.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on the following items during the year under review:
1. Deposits covered under Chapter V of the Act;
2. Material changes and/ or commitments that could affect the Companys financial position, which have occurred between the end of the financial year of the Company and the date of this report;
3. Significant or material orders passed by the Regulators or Courts or Tribunals, which would impact the going concern status and Companys operations in future;
4. Non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014;
5. Receipt of any remuneration or commission from any of its subsidiary companies by the Managing Director or the Whole-time Directors of the Company
Your Directors wish to place on record their appreciation for continued support and cooperation by the customers, shareholders, suppliers, investors, bankers, business partners/associates, financial institutions and regulatory bodies and other stakeholders. Your Directors would also like to take this opportunity to express their appreciation to the hard work and dedicated efforts put in by the employees of the Company.
|For and On Behalf of the Board|
|Mumbai, May 27, 2019||Executive Chairman|