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To The Members of
SADHANA NITRO CHEM LIMITED
Your Directors take pleasure in presenting the 45th Annual Report together with Audited Financial Statements for the Financial Year ended 31st March, 2018.
1. FINANCIAL RESULTS (?InLakhs)
|Revenue from operations (Net) & Other Income||11,115||5,949||11,464||5,737|
|Profit before Finance Cost, Depreciation, Exceptional item and Tax (EBIDTA)||3,500||912||3513||875|
|Profit/(Loss) before exceptional item and taxation||2828||94||2,800||51|
|Profit/(Loss) after tax||3,137||94||3,109||51|
|Other Comprehensive Income||(42)||(12)||(42)||(12)|
|Total Comprehensive Income||3,095||82||3,067||39|
Yours Directors are pleased to recommend dividend of ? 1.00 per equity share of ? 10.00 each for financial year 2017-18.
Your Board of Directors have approved and shall pay preference dividend of ? 0.10/- Per 1% NonCumulative Non Convertible Preference shares of? 10/ each, to the Preference Shareholders.
This will entail an out go of? 103 Lakhs.
There is no unclaimed dividend which remains to be transferred to Investor Education & Protection Fund (IEPF).
3. TRANSFER TO RESERVES:
The Board of Directors has not appropriated and transferred any amount to any Reserve and have decided to retain the entire amount in Profit and Loss account. .
4. REVIEW OF OPERATIONS:
The total revenue of your company for the financial year ending 31st March, 2018 has been? 11,115 Lakhs as compared to? 5,949/- lakhs in the previous years, registering a significant growth of 87 %.
Focus efforts have been placed on expanding the end applications of companys product line over the last several years which has helped in yield strong results this year, offering healthy sustainability for the years to come.
This diversification, in end application has also simultaneously diversified clients and end destinations for companys products globally, de-risking our portfolio from any single customer, application or market.
The level of operations has been steadily increased over the last several year and has reached satisfactory level. This has helped in economies of scale and made company competitive on the global front.
Because of your companys product quality standards, we have been able to maintain steady relationships with our long standing customers along with building relationships with several new customers.
The result of all the above factors has led to companys best year to date, registering companys highest ever turnover, and the highest ever Profit After Tax (PAT) of ? 3,137 lakhs. (P.Y. ? 94 Lakhs) from normal operation registered in 3237 % growth.
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs , the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules ,2015 with effect from April 1,2017. As such the financial statements for the year ended as at March 31,2017 have been restated to conform to Ind AS.
The company has a very strong order book position and expect to maintain the same or higher growth trend. The cost control at every stage of operations with the increase level of operations resulted in product cost improvement.
This resulted in outstanding performance and best ever year, the EBIDTA from normal operation for 2017-18 was ? 3500 lakhs (PY EBIDTA of ?. 913 lakhs) which represents a growth of 283 %. Moreover, the profit for the last quarter of 2017-18 from normal operation was of ?2186 lakhs (Last quarter of PY profit of ? 125 lakhs).
With the increase in competitiveness of your company on a global front, it has stable exports to across Europe, Japan, Korea, North and South America, and with a significant quantity being sold to China.
While our local market is growing steadily companys turnover is still focused on the export market with this years exports being a total of? 8163 lakhs compared to last years ? 4,152 lakhs registering a growth of 96 %
Exports constituted about 76 % of the overall revenue from operation including other income. Companys Exports are well diversified in terms of product range as well as the Countries of Export.
The company has resumed manufacture of Colour formers, a performance chemical it used to manufacture in the past. It is the key raw material for the coating of thermal paper, a presently growing industry. Due to global demand and growth of thermal paper, your company is expanding its production lines of colour former to capture the current global requirements
There is increased demand of Meta Amino Phenol and Aniline 2,5 Disulphonic acid globally, two of your companys key products, due to which your company is in the process of increasing its capacity by 50% in both products.
The proposed expansion will be put to use and operationalise its entire capital work-in progress during the year 2018-19. In addition to this the estimated project cost will be around ? 50 Crores. The above expansions are being funded through internal accruals and are likely to be completed by the end of this financial year. The additional positive effect on your companys results due to these expansions will take effect in the financial year ending March 2020
Your company has strong long term fundamentals. The company has practically reduced all its borrowing, and has started the year debt free. It is looking towards leveraging its unique product offering along with its competitive strengths towards a long term diverse sales pipeline with sustainable cash flows for the foreseeable future. Your company is looking to utilise its cash flow towards expanding product lines as well as diversifying into downward derivatives of its existing products to create a maintainable long term revenue pipeline.
8. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:
The performance and financial position/ salient features of the financial statement of each of the subsidiaries, associates and j oint venture companies for the year ended 31 st March ,2018 is given in Form AOC-1 and is attached and marked as Annexurelandformspartof this Report.
The Company has two wholly owned subsidiaries viz. Anuchem B.V.B.A. Belgium - a Foreign Subsidiary, and during the year your company acquired Strix Wireless Systems Pvt. Ltd, an Indian Subsidiary. The Audited Financial Statement of the said subsidiaries is considered for the purpose of preparing Consolidated Financial statements.
9. RELATED PARTY TRANSACTIONS
The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Act, the Rules thereunder and the Listing Regulations. The Policy on Related Party transactions has been hosted on website of the Company.
The particulars of contracts or arrangements with related parties referred to in subsection (1) of section 188 of the Companies Act, 2013 in the prescribed Form AOC-2 is attached as Annexure-II to the Boards Report.
The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the Act or the details of deposits which are not in compliance with the Chapter V of the Act is not applicable.
11. Particulars of Loans, Guarantees or Investments
Pursuant to the provisions of Section 186 of the Companies Act, 2013, read with The Companies (Meetings of Board and its Powers) Rules, 2014 as amended from time to time (including any amendment thereto or reenactment thereof for the time being in force), Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Note No.5 & 8 to the financial statements provided in this Annual Report.
III. Issue of Sweat Equity Shares
As per provisions of Section 54(l)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014, details of sweat equity shares issued by the Company during the financial year under review is furnished in Annexure HI attached herewith which forms part of this Report.
IV. Employees Stock Option Plan
The Company has received in principle approval for issued of ESOP pursuant to scheme approve by members. However, the same has not been granted till date.
11. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT:
Aquisition/Takeover: The Board, at its meeting held on January 19,2018 recommended and which is duly approved by shareholder Aquisition of Spidigo Net Pvt. Ltd., Indian Company
12. RELEASE OF ENCUMBRANCE OF SHAREHOLDING OF HOLDING COMPANY
On the clearance of the dues corresponding to pledge the encumbrance on the part of the shareholding held by the holding company were released on April 24,2018.
13. ISO CERTIFICATION
Your Company has certification as per ISO 9001-2008, ISO 14001:2004 and OHSAS B.S. 18001:2007 granted by the certifying body RINA for development and manufacture of Chemical Intermediates.
The assets of your Company are adequately insured. Your Company has also taken out suitable cover for Public Liability.
15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate Internal Control System commensurate with the size and nature of its business. The preparation designing and documentation of Policy on Internal Financial Control are in place and implemented which is reviewed periodically and modified suitably to ensure controls.
The internal audit are carried out by a separate firm of Chartered Accountants. The periodical audit reports, including significant audit observations and corrective actions thereon, are presented to the Chairman of the Audit Committee.
16. ESTABLISHMENT OF VIGIL MECHAMSM/WHISTLF. BLOWER AND RISK MANAGEMENT POLICY
The Board of Directors of the Company has, pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and Regulation 22 of Listing Regulations the Company has established "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements andreports, etc.
The employees of the Company have the right/option to report their concem/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. The Company also adopted Risk Assessment Procedure. The details of the same are mentioned in the Corporate Governance Report.
17. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSOSNNEL I. Declarations by Independent Directors:
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(l)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
n. Board Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder relationship Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
In a separate meeting of Independent Directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive director. The same was discussed in the Board meeting held subsequently to the meeting of the independent directors, at which the performance of the Board, its Committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
EIL Remuneration Policy:
The Board has, on the recommendation of the Nomination & Remuneration Committee framed policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.
IV. Number of Board Meetings:
The Board met Five times during the financial year ended 31 st March, 2018 in accordance with the provisions of the Companies Act, 2013. The details of which are given in the Corporate Governance Report. The intervening gap between any two Meetings was within the period prescribed by the Companies Act, 2013 and the Listing Regulation.
V. Board of Directors and Key Managerial Persons:
Appointment of Directors and Key Managerial Personnel (KMP1
The existing agreement with Shri Asit D. Javeri Chairman & Managing Director Mrs. Seema A. Javeri, Executive Director (Administration) and Shri. Ahhishek A. Javeri, Executive Director & CFO of the Company was terminated as on 30th April, 2018 and they were subject to the approval of the members in the General Meeting and subject to further approval of central govt, if required re-appointed on 1st May, 2018 on the recommendation of the Nomination & Remuneration Committee.
Mr. Amit M. Mehta (DIN: 00073907), was appointed as an Additional Independent Director of the Company with effect from 3 0th April, 2018.
The terms of appointment of Shri Nitin R. Jani, Company Secretary who retire on 13th November, 2018 was extended further by 3 (Three) years upto 13thNovember,2021.
Mr. D.M.Shah resigned as Director of the Company with effect from 19th January,2018 due to personal reasons. The hoard appreciates and takes on record his valuable advice and contribution during his tenure.
I. Retirement By Rotation
In accordance with the provisions of the Act, none of the Independent Directors is liable to retire by rotation.
As per the provisions of Section 152 of the Companies Act, 2013, Mr. AbhishekA. Javeri retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
18. AUDIT COMMITTEE:
The Audit Committee of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit Committee is in conformity with the provisions of the said section. The details of Composition and meetings of the Audit Committee held has been mentioned in the Corporate Governance Report.
19. NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee of Directors as constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act.
The details of composition of the Committee and the number of meetings held by the committee are mentioned in the Corporate Governance Report.
The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013. formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees.
Major criteria / gist are defined in the Remuneration policy framed for appointment of and payment of remuneration to the Directors of the Company. The remuneration policy is stated in the Corporate Governance Report.
20. STAKEHOLDERS RELATIONSHIP COMMITTEE
The Board of Directors of the company has constituted, pursuant to Section 178 of the Companies Act, 2013; the Board of Directors of the Company has constituted the Stakeholders Relationship Committee.
The details of composition of the Committee and the number of meetings held by the committee are mentioned in the Corporate Governance Report.
I. Statutory Auditors of the Company and their observations on accounts for the year ended 31st March, 2018.
At the 44th Annual General Meeting held on August 2, 2017, the Members approved appointment of M/s. Chandrashekar Iyer & Co., Chartered Accountants (Firm registration No: 114260W) to hold office from the conclusion of the 44th Annual General Meeting until the conclusion of the 49th Annual General Meeting to he held for the financial year 2022 subj ect to ratification of their appointment at every AGM on such remuneration as may be fixed by the Board apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose oi audit.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Makarand M. Joshi & Co., Company Secretaries in Practice, Mumbai, has been appointed to undertake the Secretarial Audit of the Company for the financial year 201819. The Secretarial Audit Report in form MR-3 for the financial year 2017-18 is annexed herewith as Annexure IV.
The replies to the comments of Secretarial Auditors in Auditors Report are as follows:-
1. The Company has not filed e-Form MGT - 14 as mandated under Section 179(3) read with Section 117 of the Companies Act, 2013 for the following purposes:
a) Availment of loan from Hero Fincorp to the extent of Rs. 136 crores approved in the Board Meeting held on 26ti
h) Delegation of authority to Mr. Asit Javeri and Abhishek Javeri to borrow from Banks/NBFC/ICD to the extent of Rs 75 Crores approved in the Board Meeting held on 26th April, 2017.
The filing of the ahovementioned forms are inadvertently missed. However the company is in process of taking necessary corrective action.
2. The Outcome of Board Meetings held on 13th September, 2017, 04th December, 2017 and 19th January, 20If pertaining to approval of Quarterly Financial results have been submitted to the Stock Exchange beyond the mandated time period of 30 minutes.
On account of technological constraint the said filing were made in delay.
3. ADesignated Employee of the Company has made contra trade which is a contravention of the provisions of Insider Regulations.
The company is in process of taking necessary action against the designated Employee.
22. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT.
Pursuant to Regulations 17 to 27, clauses (b) to (i) of Regulation 46(2) and Para C, D and E of Schedule V ofSEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the corporate governance report together with Auditor report on the compliance on the same is attached as Annexure-V and the Management Discussion andAnalysis report is attached as Annexure VI.
23. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS-23 and AS-27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.
24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules,2014, is annexed herewith as Annexure-VII.
25. 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 31st March 2018 made under the provisions of Section 92(3) of the Act is attached as Annexure-VIH which forms part ofthis Report.
26. PARTICULARS OF EMPLOYEES
Employee drawing Remuneration in excess of the limits prescribed by the Companies Act, 2013. The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure IX
27. HUMAN RESOURCE/INDUSTRIAL RELATIONS
Human Resource programs and initiatives are aligned to meet the business needs. Your company believes in investing in people to develop and expand their capability. The Company has been able to create a favourable work environment that motivates performance; customer focus and innovation in your companys strategies are based, inter alia, on processes of continuous learning and improvement.
28. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014
The disclosures as per Rule 5 of Companies (Appointment & Remuneration) Rules, 2014 have been marked as Annexure IX.
29. SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
30. 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 31 st March, 2018, the Board of Directors hereby confirms that
(a) that in the preparation of the annual financial statements for the year ended 31st March,2018,the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2018 and of the profit of the Company for the year ended on that date;
(c) that 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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Your Directors would like to express their appreciation - for the assistance and cooperation received from the Bankers, Central and State Government Departments, customers, vendors, and other business partners. The Directors also wish to place on record their appreciation to all the employees of the Company for their cooperation and continued contribution to the Company. Last but not least the Directors place on record their gratitude to the Investors, Clients and Shareholders of the Company for their support and trust reposed.
|For and On Behalf of the Board of Directors|
|Place: Mumbai Date: 30th April, 2018||ASIT D. JAVERI
CHAIRMAN & MANAGING DIRECTOR DIN:00268114