Mangalam Organics Ltd Directors Report.
To the members of Mangalam Organics Limited
Your Directors have pleasure in presenting the Thirty Seventh Annual Report on the performance of the Company together with the audited financial statements for the Financial Year (FY) ended March 31, 2019.
The financial performance of your Company for the year ended March 31, 2019 is summarized below:
|(Rs. in Lakhs)||(Rs. in Lakhs)|
|Revenue from operations||42,462.48||24,423.73|
|Profit before depreciation and finance costs||11,044.28||2,645.44|
|Depreciation and amortization expense||621.17||550.28|
|Profit after depreciation, finance costs and exceptional items and before tax||10,162.58||1,838.89|
|Profit for the year||7,265.75||1,445.56|
|Other comprehensive income||26.24||13.23|
|Total comprehensive income for the Year||7,239.51||1,432.33|
NATURE OF BUSINESS AND FINANCIAL PERFORMANCE
Your Company is in the business of chemicals manufacturing and has Terpenes and Synthetic Resins as primary segment, which falls under a single segment of chemicals. Your Company has performed well in F.Y. 2018-19. Your Company has achieved Net Sales Turnover of Rs. 424.62 Cr. with a Profit after Tax of Rs. 72.39 Cr. during F.Y. 2018-19. Approximately 95% of the revenue has come from Terpene Chemicals. There was no change in nature of the business of the Company, during the year under review.
The Directors are pleased to recommend a dividend of Re.1 per equity share of the face value of Rs. 10/- each for the year ended March 31, 2019 (previous year: Re.1 per Equity Share). The dividend, as recommended by the Board, if declared at the ensuing Annual General Meeting will be paid to those members whose names appear in the Register of Members at the end of business hours on September 13, 2019. In respect of shares held in dematerialized form, the dividend will be paid on the basis of beneficial ownership, as per the details to be furnished for the purpose by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the end of business hours on September 13, 2019.
UNCLAIMED AND UNPAID DIVIDEND AND TRANSFER OF SHARES TO IEPF
As on March 31, 2019 amount of Rs. 3,86,213/- was lying in the unpaid equity dividend account of the Company in respect of the dividends for FY 2017-18. Members who have not yet received/ claimed their dividend entitlements are requested to contact the Company or the Registrar and Transfer Agents of the Company. The list of such shareholders for unpaid and unclaimed dividend for FY 2017-18 is placed on the Companys website www.mangalamorganics.com.
Pursuant Section 124 of the Companies Act, 2013 read with the Investor Education Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("Rules"), all dividends remaining unpaid or unclaimed for a period of seven years and also the shares in respect of which the dividend has not been claimed by the shareholders for seven consecutive years or more are required to be transferred to Investor Education Protection Fund in accordance with the procedure prescribed in the Rules. In this regard, all dividends remaining unpaid or unclaimed for a period of seven years and also the shares in respect of which the dividend have not been claimed by the shareholders for seven consecutive years for FY 2010-11 have been transferred to Investor Education Protection Fund (IEPF) account on November 2, 2018 and February 15, 2019 respectively. The members can claim the transfer of such shares from IEPF in accordance with the procedure and on submission of the documents as prescribed from time to time. The list of such shareholders whose shares and dividend has been transferred to IEPF is placed on the Companys website www.mangalamorganics.com.
TRANSFER TO RESERVE:
The Board of Directors have decided to retain the entire amount of profits for FY 2018-19 in the Retained Earnings.
Consequent upon the completion of the buyback of shares by the Company on May 08, 2018, the paid up equity share capital changed from Rs. 9,05,26,800/- divided into 90,52,680 Equity shares of the face value of Rs. 10/- each to Rs. 8,56,44,400/- divided into 85,64,440 Equity shares of the face value of Rs. 10/- each.
During the year under review, your Company neither accepted any deposits nor there were any amounts which were classified as Deposits in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014.
SUBSIDIARY/JOINT VENTURES / ASSOCIATES COMPANIES:
The Company does not have any subsidiary/ joint venture or associate Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Board of Directors and Key Managerial Personnel
The Board of Directors of the Company comprises 6(Six) Directors. Out of the said Directors 4(Four) are Independent Directors including a Woman Director and 2(Two) are Executive Directors. There was no change in the composition of Board of Directors during the year under review.
During the year, the Board of Directors appointed Mr. Sanjay Bhardwaj, as the Chief Executive Officer with effect from March 19, 2019 and Ms. Heena Tank as the Company Secretary & Compliance Officer with effect from March 19, 2019. Mr. Ankur Gala ceased to be the Company Secretary and Compliance Officer with effect from March 6, 2019. As on the date of this report, the Company has following Key Managerial Personnel:
1. Mr. Kamalkumar Dujodwala, Executive Director
2. Mr. Pannkaj Dujodwala, Managing Director
3. Mr. Sanjay Bhardwaj, Chief Executive Officer
4. Mr. Shrirang Rajule, Chief Financial Officer
5. Ms. Heena Tank, Company Secretary
In accordance with the provisions of Section 152 read with Section 149(13) of the Companies Act, 2013, Mr. Pannkaj Dujodwala is liable to retire by rotation. The said Director has offered himself for reappointment and resolution for his reappointment, is incorporated in the Notice of the ensuing Annual General Meeting.
Declarations by Independent Directors
Pursuant to the provisions of sub-section (7) of Section 149 of the Companies Act, 2013, the Company has received individual declarations from all the Independent Directors confirming that they fulfill the criteria of independence as specified in Section 149(6) of the Companies Act, 2013.
In accordance with the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 ("the Act") and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("SEBI (Listing Regulations)"), as amended from time to time, Mr. Sharad Kumar Saraf (DIN: 00035843) and Mr. Rajkumar Jatia (DIN: 00136303), who were appointed as an Independent Directors of the Company for a term of five years up to September 18, 2019, by the members at the 32th Annual General Meeting, in terms of Section 149 of the Companies Act, 2013, are eligible to be re-appointed as an Independent
Director of the Company to hold office for further term of five years with effect from September 19, 2019 to September 18, 2024 and resolution for their reappointment, is incorporated in the Notice of the ensuing Annual General Meeting.
Annual Evaluation of Directors, Committee and Board
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. The performance evaluation was carried out by way of obtaining feedback from the Directors through a structured questionnaire prepared in accordance with the policy adopted by the Board and also taking into consideration the Guidance Note on Board Evaluation issued by SEBI. The structured questionnaire prepared to evaluate the performance of the board included criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. The evaluation of performance of individual directors was carried out on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. The questionnaire for performance of the committees included 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, taking into account the views of executive directors and nonexecutive directors.
DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES
The Board of Directors met 6 times during the financial year ended March 31, 2019 in accordance with the provisions of the Companies Act, 2013 and rules made there under. The details of the meetings of Board are given separately in the Corporate Governance Report forming part of this Annual Report.
Directors Responsibility Statement
In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2019, the Board of Directors hereby confirms that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures, wherever applicable;
b) such accounting policies have been selected and applied consistently and the Directors 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 profits of the Company for the year ended on that date;
c) proper and sufficient care was 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;
d) the annual accounts of the Company have been prepared on a going concern basis;
e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Committees of Board
The Company has constituted the following Committees of Board:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
The details of the composition, terms of reference, meetings, etc. are given in the Corporate Governance Report forming part of the Annual Report.
I. STATUTORY AUDITORS
M/s. NGST & Associates, Chartered Accountants, Mumbai (Firm Registration No. 135159W) were appointed as the statutory auditors of the Company to hold office for a term of 5 years from the conclusion of the 34th Annual General Meeting held on September 30, 2016 until the conclusion of the 39th Annual General Meeting of the Company to be held in the year 2021. 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. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report
II. COST AUDITORS:
The Board of Directors based on recommendation of the Audit Committee has appointed M/s. NKJ & Associates, Cost Accountants in practice, to audit the cost accounts of the Company for the Financial Year 2019-20. In term 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 had appointed Mr. Yogesh M Sharma, Practicing Company Secretary to undertake the Secretarial Audit of the Company for Financial year 2018-19. As required under provisions of Section 204 of the Companies Act, 2013, the report in respect of the Secretarial Audit carried out by Mr. Yogesh M Sharma, Company Secretaries, in Form MR-3 for the FY 201819 forms part to this report. The said report does not contain any adverse observation or qualification or modified opinion requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on www.mangalamorganics.com
MANAGEMENT DISUSSION AND ANALYSIS
Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Management Discussion and Analysis is presented in a separate section forming part of this Annual Report.
CORPORATE GOVERNANCE REPORT
The Company has complied with the Corporate Governance requirements under the Act and as stipulated under the Listing Regulations. A report on the Corporate Governance along with the certificate from the statutory auditors is separately given in this Annual Report.
As on March 31, 2019, the Company has following credit ratings from CRISIL:
Long Term Rating: CRISIL A-/Stable (outlook revised from BBB+/Positive and Rating reaffirmed)
Short Term Rating: CRISIL A2+ (outlook revised from A2 and Rating reaffirmed)
DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013
Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position, have occurred between the end of the financial year of the Company and date of this report.
INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Statutory Auditors and the Internal Auditors of the Company on the inefficiency or inadequacy of such controls.
RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS
Adequate internal control systems commensurate with the nature of the Companys business and size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.
DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL
No significant and material orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Companys operations in future.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has formulated a Policy on Related Party Transactions and manner of dealing with related party transactions which is available on the Companys website at the link: www.mangalamorganics.com
Particulars of contracts/arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 entered by the Company during the year under review in the prescribed Form AOC-2 is appended as Annexure II to the Boards Report
PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS UNDER SECTION 186
The particulars of loans, guarantees and investments given/ made, if any during the financial year under review and governed by the provisions of Section 186 of the Companies Act, 2013 has been furnished in financial statements as on March 31, 2019.
LOAN FROM DIRECTORS
Pursuant to the provisions of Section 179(3)(d) and any other applicable provisions of the Companies Act, 2013 read with Rules thereunder, your Company has borrowed a sum upto Rs. 7.21 Crore (Rupees Seven Crore Twenty One Lakhs only) from the Directors of the Company on the terms and conditions as furnished in Annexure III. The aforesaid loan was approved by
the Board in its meeting of May 11, 2019. The Company has received a declaration from the Directors that the amount to be extended by them to the Company is not being given out of the funds acquired by them by borrowing or accepting loans and deposits from others.
VIGIL MECHANISM FOR THE DIRECTORS AND EMPLOYEES
In compliance with the provisions of Section 177(9) of the Companies Act, 2013, the Board of Directors of the Company has framed the "Whistle Blower Policy" as the vigil mechanism for Directors and employees of the Company.
The Whistle Blower Policy is disclosed in Investors section on the website of the Company at www.mangalamorganics.com
The Company has in place a Nomination and Remuneration Policy for the Directors, KMP and other employees pursuant to the provisions of the Act and the SEBI Listing Regulations which is placed on the website of the Company on www. mangalamorganics.com.
During the year under review, no instances of fraud were reported by the Statutory Auditors of the Company.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information as required under the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure IV attached herewith and which forms part of this report. The relation between the Company and its employees continue to be cordial. There were no employees during the year drawing remuneration more than prescribed ceiling under section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.
EXTRACT OF ANNUAL RETURN:
Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended March 31, 2019 made under the provisions of Section 92(3) of the Act is attached as Annexure V and which forms part of this Report.
Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:
Conservation of energy, technology absorption and foreign exchange earnings and outgo:
The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy and technology absorption have been furnished in Annexure VI with respect to the nature of activities undertaken by the Company during the year under review.
Service of documents through electronic means
Subject to the applicable provisions of the Companies Act, 2013, all documents, including the Notice and Annual Report shall be sent through electronic transmission in respect of members whose email IDs are registered in their demat account or are otherwise provided by the members. A member shall be entitled to request for physical copy of any such documents.
Internal Complaints Committee
The Internal Complaints Committee of the Company as required under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 exists for both Factory and Administrative Office of the Company. The Company is strongly opposed to sexual harassment and employees are made aware about the consequences of such acts and about the constitution of the said Committee.
During the year under review, no complaints were filed with the Committee of the Company under the provisions of the said Act and no such complaints were outstanding at the end of the FY 2018-19.
SAFETY, ENVIRONMENTAL CONTROL AND PROTECTION
The Company is conscious of the importance to environmental friendly and safe operations. The Companys policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliance of environmental regulations and preservation of natural resources. All plants of the Company are fully complied with the laws, regulations and requirements stipulated by the concerned pollution Control Board.
ACKNOWLEDGMENTS AND APPRECIATION:
Your Directors take this opportunity to thank the employees, customers, suppliers, bankers, business partners/associates, financial institutions and various regulatory authorities for their consistent support/ encouragement to the Company.
Your Directors would also like to thank the Members for reposing their confidence and faith in the Company and its Management.
For and on behalf of the Board of Directors Sd/-
Kamal kumar Dujodwala
Date: August 12, 2019