DIRECTORS' REPORT (Including Management Discussion and Analysis Report) Dear Members, Your Directors are pleased to present this 26th Annual Report, together with the Audited Financial Accounts of the company, for the year ended 31st March, 2016. Nature of Business The company is primarily in the business of chemical distribution and chemical manufacturing, as well as textile manufacturing and renewable energy generation. The chemical distribution business consists mainly of import and sales of specialty and performance chemicals manufactured by overseas and domestic principals. Chemical manufacturing is currently focused on the production of a single product, acryl amide. The textile business is engaged in the manufacture of fabrics and industrial made-ups such as safety gloves and the renewable energy activity supplies the State Electricity Boards of Rajasthan and Gujarat with wind-generated power. Operational Performance The year 2015 - 2016 saw a fall in costs accompanied by a reduction in sales price of many of the company's distribution products as well as of acryl amide. This resulted in lower turnovers (reduction of 9.6%) despite volume growth. Acrylamide sales posted strong growth, and the company reached 100% capacity utilization during Q4. The performance of our subsidiary in Japan was mostly unchanged over the previous year. Profitability was improved due to the higher operation rate of the acryl amide plant and the company ended the year with a rise in EBIDTA of 39% bringing the standalone EBIDTA margin to 7.5%. Profit after tax increased to Rs. 164.38 as compared to a profit of Rs. 52.74 lacs in the previous year. A detailed analysis of the company's operations is provided later in the Management Discussion and Analysis Report. Dividend Your Directors are unable to recommend payment of a dividend for the financial year 2015 - 2016 as the company intends to conserve funds for its working. Business Scenario The global economic scenario did not improve during the 2015 - 2016 fiscal year. Despite the continuing slowdown in most of the world's major economies, the US economy slowly but steadily strengthened and the Federal Reserve raised interest rates in December, 2015. This resulted in a sudden and steep depreciation of the Indian rupee to almost Rs. 69 per US dollar. In addition to this, oil prices fell to below US$30 per barrel in February 2016 with high production and reduced demand, pulling down prices of chemicals and other products. In India, poor market liquidity and high interest rates continued to plague industry as it did in the previous year. The business scenario is discussed later in more detail in the Management Discussion and Analysis Report. Acryl amide Plant at Jhagadia, Gujarat The company's acrylamide plant steadily increased its capacity utilisation during the year and achieved 100% capacity utilization at the end of the year. An in-depth explanation about the plant operations is given in the Management Discussion and Analysis Report. Subsidiary - B.R. Chemicals Co., Ltd., Japan During the year under review, the turnover of the company's wholly owned subsidiary incorporated in Japan marginally decreased as compared to previous year reporting close to Rs. 49 crores. The subsidiary showed a small profit of around Rs. 3 lacs. The nature of business of the subsidiary company remained unchanged during the year. The performance and financial position of company's subsidiary B.R. Chemicals Co., Ltd. for the year ended 31st March, 2016 is attached to the financial statements hereto. Material Changes and Commitments There have been 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. Directors Mr. Atmaram Jatia (DIN 00293154) resigned as Director of the Company on November 3, 2015. Your Directors place on record their appreciation of the valuable services rendered by Mr. Jatia during his tenure as Director of the Company. Pursuant to section 152 of the Companies Act, 2013, Mr. Anup Jatia (DIN 00351425), Executive Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Further, shareholders at their 25th Annual General Meeting appointed Mr. Anup Jatia as Executive Director of the Company with effect from May 1, 2016 for a period of five years. Pursuant to the Companies Act, 2013 and the Listing Regulations, all the four Independent Directors Mr. Shivhari Halan, Mr. Sujay Sheth, Mr. Basant Kumar Goenka and Mrs. Garima Tibrawalla continue to act as Independent Directors not liable to retire by rotation. Pursuant to the provisions of Section 149(7) of the Companies Act, 2013 and the rules made there under, 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. Key Managerial Personnel As on date Mr. Anup Jatia, Executive Director, Mr. Chiranjilal P. Vyas, Company Secretary and Mr. Ratan Kumar Agrawal, Chief Financial Officer of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. Corporate Social Responsibility Although the company is not governed by the provisions of Section 135 of the Companies Act, 2013, Corporate Social Responsibility forms an integral part of overall business policy and is aligned with its business goals. Directors' Responsibility Statement Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors to the best of their knowledge and belief confirm the following: i) that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii) that such accounting policies as mentioned in note 1 of 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 March 31, 2016 and of the profits of the company for the year ended on that date; iii) 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 safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv) that the annual financial statements have been prepared on a going concern basis; v) that proper internal financial controls were in place and that the financial controls were adequate and were operative satisfactorily, however, as this reporting requirement is in a evolving stage, the management is in a process of establishing effective implementation with the help of internal and external consultations and confident that the same will be fully implemented within few months. vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Deposits During the year under review, the company did not accept any deposits in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014. Consolidated Financial Statements Pursuant to Clause 32 of the Listing Agreement, the company has prepared Consolidated Financial Statements in accordance with Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by The Institute of Chartered Accountants of India. The Consolidated Financial Statements form part of this Annual Report. Extract of Annual Return Pursuant to the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return for the financial year ended 31st March, 2016 in the prescribed format is given in Annexure I and forms part of this Annual Report. Board Meetings, Committees, and Policies Board Meetings The Board of Directors met six times during the financial year ended 31st March, 2016 in accordance with the provisions of Companies Act, 2013 and rules made thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations). Committees Pursuant to Section 177 and 178 of the Companies Act, 2013 and the rules made thereunder and in accordance with Listing Regulations, your Board of Directors has constituted three committees, namely Audit Committee, Nomination and Remuneration Committee, and Stakeholders Relationship Committee. The company has been employing women employees in various grades within its offices and factory premises. The company has constituted an Internal Compliant Committee as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress any complaints received from employee(s) of the Company. The Company is strongly opposed to sexual harassment and all the employees are made aware about the consequences of such acts and the constitution of the Internal Compliant Committee. During the year there was no complaint received from any employee and hence no compliant is outstanding as on 31st March, 2016. Evaluations Pursuant to the provisions of Companies Act, 2013 and rules made there under, the Board has carried out an annual performance evaluation of its own performance, and of the Directors individually, as well as evaluation of the working of its Audit Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee. Further, the Independent Directors, at their exclusive meeting held during the year reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. Policies In line with the new Listing Regulations, the Board of Directors of the Company has formulated Policy on Determination of Materiality of Any Events or Information and Document Retention and Archival Policy. The above policies have been uploaded on the company's website and forms part of this report. Particulars of Employees The Statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable as none of the employees of the company is covered under the provisions of the said rules. The ratio of the remuneration of each Director to the median employees remuneration and other details in terms of 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 annexed herewith as Annexure IV and forms part of this Annual Report. Listing Agreement Your company has entered into new Listing Agreement with BSE Limited, in compliance with Regulation 109 of Securities and Exchange Board of India (Issue of Capital and Disclosures Requirements) Regulations, 2008 as amended by SEBI. Internal Financial Controls The company has a proper and adequate Internal Financial Control System that is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audits conducted by trained personnel appointed by the Board on the recommendation by the Audit Committee. The audit observations and corrective action 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. Loans, Guarantees and Investments The particulars of loans, guarantees and investments given/made during the financial year under review and governed by the provisions of Section 186 of the Companies Act, 2013 have been furnished in Annexure II which forms part of this Annual Report. Contracts and Arrangements with Related Parties All the contracts, arrangements and transactions entered by the company during the financial year with related parties were in the ordinary course of business and are on arm's length basis, hence Section 188(1) is not applicable and consequently no particulars in Form AOC - 2 are required to be furnished. During the year, the company had not entered into any contract, arrangements or transactions with related parties which could be considered material. All the contracts, arrangements and transactions with related parties are placed before the Audit Committee as also the Board, as may be required, for approval. Orders passed by Regulators or Courts or Tribunals No significant and material orders have been passed by any regulators or courts or tribunals which can have an impact on the going concern status of the Company and its future operations. Reporting of Frauds There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act and Rules framed there under. Auditors and their Reports Statutory Auditors Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. Karnavat & Co., Chartered Accountants, the Statutory Auditors of the Company, hold office up to the conclusion of the 27th Annual General Meeting. However, their appointment as Statutory Auditors of the company is subject to ratification by the members at every Annual General Meeting. The Company has received a certificate from the said Auditors that they are eligible to hold office as the Auditors of the Company and are not disqualified for being so appointed. The resolution for ratification of appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members. The independent statutory auditors' report does not contain any qualification, reservation or adverse remark on the accounts for the year ended 31st March, 2016 except a disclaimer of opinion on Internal Financial Controls. Management note on disclaimer of opinion on Internal Financial Controls is stated below: As the system of Internal Financial Controls over financial reporting is a new requirement, the management is in a process of establishing effective implementation with the help of internal and external consultations and confident that the same will be fully implemented within few months. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made there under, the Board of Directors had appointed M/s. ND & Associates, Company Secretary in Whole - Time Practice as Secretarial Auditor to undertake the Secretarial Audit of the Company. As required under provisions of Section 204 of the Companies Act, 2013, the report in respect of the Secretarial Audit carried out by M/s. ND & Associates, Company Secretary in Whole - Time Practice in Form MR - 3 for the FY 2015 - 16 forms part to this report. The said report does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. Cost Auditors In terms of the provisions of Section 148 of the Companies Act, 2016 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have approved the appointment of M/s. S. Poddar& Co., Cost Accountants as the Cost Auditors of the Company to conduct audit of cost accounting records maintained by the Company for the year ending March 31, 2016 on a remuneration as mentioned in the Notice of 26th Annual General Meeting for conducting the audit of the cost records maintained by the Company. A certificate from M/s. S. Poddar& Co., Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and rules framed thereunder. A resolution seeking Member's ratification for the remuneration payable to Cost Auditor forms part of the 26th Annual General Meeting of the Company and same is recommended for Member's consideration and approval. Listing The company's shares are listed on the Bombay Stock Exchange Limited and the applicable listing fees have been paid. 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 rules made there under is annexed herewith as Annexure III and forms part of this Annual Report. Service of Documents through Electronic Means All documents, including the Notice and Annual Report shall be sent through electronic transmission in respect of members whose e-mail 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. Acknowledgement The Board of Directors greatly values the support and cooperation received during the year from the company's bankers, statutory authorities, and all organisations connected with the company's business. The directors also take pleasure in commending the valuable contributions made by the company's employees at all levels during the year under review. Cautionary Statement Certain statements in this Directors' Report and in the Management Discussion and Analysis Report describing the company's objectives, estimates, and projections may be forward-looking statements and are based on certain expectations. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference in the company's operations include the availability of raw material/product, cost of raw material/product, changes in demand from customers, fluctuations in exchange rates, changes in government policies and regulations, changes in tax structure, economic developments within India and the countries in which business is conducted, and various other incidental factors. We cannot guarantee that these forward - looking statements will be realised, although we believe we have been prudent in making any assumptions. We undertake no obligation to publicly update any forward - looking statements, whether as a result of new information, future events, or otherwise. For and on behalf of the Board Shivhari Halan Director Anup Jatia Executive Director Place: Mumbai Dated: May 23, 2016 |