DIRECTORS' REPORT To, The Members, NATIONAL PLASTIC INDUSTRIES LIMITED Your Directors present their 28th Annual Report together with the Audited Accounts of the Company, for the year ended 31st March, 2015. BUSINESS ENVIRONMENT The business environment was challenging during the year due to the volatility in the market conditions and the foreign currency rates. But the outlook remained positive. In our view, the new government at the Centre in India is doings its best to boost the economic environment by bringing about various changes thereby positively impacting the investor sentiments. The year 2014-2015 was challenging year due to various factors. Inflationary pressures continued unabated during the year. High volatility in fuel prices, raw material prices and fluctuations in exchange rates added to the product cost leading to moderate increase in sales volumes. Despite the above factors, the year 2014-15 was a satisfactory year for the Company. The Company was able to achieve a turnover close to Rs. 100 Crs as projected by the management. Persistent efforts have been made by the Company to maintain higher sales volume and reduce finance costs. There was intense competition both from the organized market players as well as the local unorganized manufacturers. The Management believes that the overall growth and new entrants in the organized market, executing business transactions through the ecommerce portals will bring transparency in doing business and a shift from unorganized market players to organized market players. STATE OF AFFAIRS During the financial year ended 31st March 2015, the Total Sales & Other Income for the year was at Rs. 96.39 Crores as against Rs. 89.37 Crores for the year 2013-14. Out of this, exports were Rs. 23.43 Crores as against Rs. 18.60 Crores for the year 2013-14, representing an increase of 26% over the corresponding period of the previous year. Your Company is working further on consolidating its strengths in the key markets to increase export sales in the coming years. Net Sales were Rs. 82.84 Crores as against Rs. 74.95 Crores in the previous year. The profit after tax for the year under review was at Rs. 127.78 Lacs representing an increase of 31% over the previous year. Due to various initiatives taken by the Company, the Interest and Finance cost have decreased by Rs. 53.14 Lacs i.e. from Rs. 459.69 Lacs to Rs. 406.54 Lacs. The Company has endeavored to bring out new & unique moulded furniture for improving the sales of the products. The Company is taking all necessary steps to reduce wastages and make production cost efficient and will surely be able to achieve its targets. The PVC flooring Mats business in Nellore, Andhra Pradesh in the southern part of the country under the brand name INSTA had been subdued during the year 2014-15 due to the persistent power issues faced by the Company. DIVIDEND The Board of Directors of your Company are pleased to recommend a Dividend of Rs. 1/- per equity share (10%) as compared to Nil in the previous year. The total outflow on account of Equity Dividend will be Rs. 109.89 Lacs (inclusive of tax of Rs. 18.59 lacs) which is provided in the accounts for the purpose of Dividend. The Dividend payout is subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. SUBSIDIARY COMPANY The Company does not have any Subsidiary Company. EXTRACT OF ANNUAL RETURN Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at 31st March, 2015 forms part of this report as Annexure 1. NUMBER OF MEETINGS OF THE BOARD Regular meetings of the Board are held to discuss and decide on various business policies, strategies and other businesses. The Board met sixteen (16) times during the FY 2014-15 viz. on 25th April 2014, 29th May 2014, 2nd June 2014, 19th June 2014, 27th June 2014, 11th July 2014, 5th August 2014, 11th August 2014, 26th August 2014, 3rd September 2014, 5th November 2014, 11th November 2014, 1st December 2014, 17th December 2014, 11th February 2015 and 30th March 2015. The maximum interval between any two meetings did not exceed 120 days. NUMBER OF MEETINGS OF COMMITTEES OF THE BOARD OF DIRECTORS The Company has the following Committees of the Board: 1. Audit Committee The Audit Committee is constituted as required under Section 177 of the Companies Act, 2013. The scope of activities and powers of the Audit Committee includes the areas prescribed under Section 177 of the Companies Act, 2013. During the year under review, the terms of reference of the Audit Committee were amended in accordance with Section 177 of the Companies Act, 2013 read with the rules framed thereunder. Seven (7) Audit Committee meetings were held during the financial year 2014-2015 on 25th April 2014, 29th May 2014, 19th June 2014, 5th August 2014, 11th November 2014, 11th February 2015 and 30th March 2015. The composition of the Audit Committee and the attendance of the Audit Committee Members at the said meetings are as below: 2. Share Transfer and Stakeholders Relationship Committee The Share Transfer and Stakeholders Relationship Committee met nineteen (19) times during the financial year 2014-15 viz. on 21st April 2014, 16th May 2014, 7th July 2014, 28th July 2014, 14th August 2014, 26th August 2014, 15th September 2014, 29th September 2014, 3rd November 2014, 11th November 2014, 21st November 2014, 4th December 2014, 12th January 2015, 19th January 2015, 28th January 2015, 6th February 2015, 2nd March 2015, 10th March 2015 and 24th March 2015. 3. Nomination and Remuneration Committee In terms of Section 178 of the Companies Act, 2013 read with rules framed thereunder, the Board of Directors of the Company have constituted Nomination and Remuneration Committee. During the financial year 2014-15, the Company held two (2) Nomination and Remuneration Committee meetings on - 3rd September 2014 and 30th March 2015. All the members of the Committee attended both the meetings held during the financial year under review. DIRECTORS Your Company has four (4) Directors consisting of two (2) Non-executive Independent Director, Managing Director and Joint Managing Director as on 31st March, 2015. Mrs. Jyoti M. Palekar was appointed as the Additional Director of the Company w.e.f. 14th August, 2015 and she holds office upto the date of the ensuing Annual General Meeting pursuant to Section 161 of the Companies Act, 2013. The Board of Directors in terms of Section 149 and 152 of the Companies Act, 2013, proposes to appoint Mr. Dilip M. Thaker and Mrs. Jyoti M. Palekar as the Independent Directors of the Company for the period of 5 (five) years with effect from the date of this Annual General Meeting of the Company and that they shall not be liable to retire by rotation. Further, Mrs. Jyoti M. Palekar has been appointed in compliance of Section 149(1) of the Companies Act, 2013, providing for appointment of a Woman Director on the Board of the Company. Brief resume of the Directors proposed to be appointed and their shareholding forms part of the Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, your Directors confirm that: i. in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanations relating to material departures; ii. they have 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 31st March, 2015 and of the profits of the Company for the financial year ended 31st March, 2015; iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they had prepared the annual accounts on a going concern basis; v. they 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 vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION FROM INDEPENDENT DIRECTORS The Board has received declarations from the Independent Directors as per the requirement of Section 149(7) of the Companies Act, 2013 that they meet all the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013. APPOINTMENTS / RESIGNATIONS FROM THE BOARD OF DIRECTORS There were no appointments or resignation of Directors during the year. PERFORMANCE EVALUATION OF THE BOARD Pursuant to the provisions of the Companies Act, 2013, the performance of the Non-Independent Directors and the Board as a whole were evaluated at the meeting of the Independent Directors held on 30th May, 2015. The parameters on which performance is evaluated are skills, knowledge, participation in meetings, compliance with code of ethics, contribution towards growth of the Company etc. The performance evaluation of the Independent Directors was carried out by the entire Board pursuant to the provisions of the Companies Act, 2013 on parameters such as participation in the meetings, performance of duties, level of oversight, professional conduct and independence etc. The Directors expressed their satisfaction with the evaluation process. DETAILS OF REMUNERATION TO DIRECTORS The information relating to remuneration of directors as required under Section 197(12) of the Companies Act, 2013 is given in Annexure 2. POLICY RELATING TO DIRECTORS The policy framed by the Nomination & Remuneration Committee under Section 178(3) of the Companies Act, 2013 is as below: Appointment Criteria and Qualifications a) The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment. b) The Committee shall identify the extent to which the appointee is likely to contribute to the overall effectiveness of the Board, work constructively with the existing directors and enhance the efficiencies of the Company; c) The Committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position. Remuneration to Directors i. Remuneration to Whole-time / Executive / Managing Director: The Remuneration/ Compensation/ Commission etc. to be paid to Director /Managing Director etc. shall be governed as per provisions of the Companies Act, 2013 and rules made there under including any amendments thereto or any other enactment for the time being in force. The Whole-time / Executive / Managing Director shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee. The break-up of the pay scale and quantum of perquisites including employer's contribution to PF, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and Central Government, wherever required. If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration in accordance with the provisions in Schedule V of the Companies Act, 2013 and if it is not able to comply with such provisions, with the previous approval of the Central Government. If, any Whole-time Director/Managing Director draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Companies Act, 2013 or without the prior sanction of the Central Government, wherever required, he/she shall refund such excess remuneration to the Company and until such sum is refunded, hold it in trust for the Company. The recovery of such sums refundable shall not be waived by the Company unless permitted by the Central Government. ii. Remuneration to Non- Executive / Independent Director: The Non-Executive/Independent Director may receive remuneration / compensation /commission as per the provisions of Companies Act, 2013 and the rules made thereunder. The amount of sitting fees shall be subject to ceiling/ limits as provided under Companies Act, 2013 and rules made there under including any amendments thereto or any other enactment for the time being in force. The Independent Director shall not be entitled to any stock option of the Company. APPOINTMENTS / RESIGNATIONS OF THE KEY MANAGERIAL PERSONNEL Mr. Paresh Parekh, Managing Director; Mr. Ketan Parekh, Joint Managing Director; Mr. Harsh Parekh, Chief Financial Officer and Ms. Swati Zawar, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. Mr. Paresh Parekh, Managing Director; Mr. Ketan Parekh, Joint Managing Director and Ms. Swati Zawar, Company Secretary were already in office before the commencement of the Companies Act, 2013. The Board of Directors of the Company has appointed Mr. Harsh Parekh as the Chief Financial Officer of the Company with effect from 30th March, 2015. None of the Key Managerial Personnel has resigned during the year under review. AUDITORS M/s. Sheth Doctor & Associates, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the forthcoming Twenty Eighth Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. The Company has received letter from the auditor to the effect that his re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Ms. Jayshree A. Lalpuria, Company Secretary in practice, as its Secretarial Auditor. Secretarial Audit Report as per Section 204 of the Companies Act, 2013 for the financial year ended 31st March, 2015 is annexed to this report at Annexure 3. Explanations or Comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the Company Secretary in Practice in her Secretarial Audit Report 1. With regards to the Auditor's qualification No. 1 on non-appointment of Woman Director, the Directors wish to clarify that the Company had approached few persons for the position of Woman Director on the Board. The Company had not received acceptance/consent from either of them for the position of Woman Director. The Directors further wish to clarify that the Company received consent from Mrs. Jyoti M. Palekar to act as an Independent Director of the Company on 3rd August, 2015. The Company has appointed Mrs. Jyoti M. Palekar as the Additional (Independent) Director of the Company at the Board of Directors Meeting held on 14th August, 2015 with immediate effect and she holds office upto the date of the ensuing Annual General Meeting pursuant to Section 161 of the Companies Act, 2013. Further, the Board of Directors proposes the Resolution at Item No. 9 as set out in the Notice, for the approval of the shareholders of the Company with regard to appointment of Mrs. Jyoti M. Palekar as the Independent Director of the Company for a term of 5 (five) consecutive years. 2. With regards to the Auditor's qualification No. 2, the Directors wish to clarify that with a view to comply with Section 152(6) of the Companies Act, 2013, it is proposed that the new set of Articles of Association of the Company be adopted and the terms of appointment of Mr. Paresh V. Parekh and Mr. Ketan V. Parekh be amended to provide that they shall be liable to retire by rotation at the Annual General Meeting of the Company as explained in the Explanatory Statement to the Notice of this Meeting. Hence, the Board of Directors has proposed the Resolutions at Item No. 5 & 6 as set out in the Notice, for the approval of the shareholders of the Company. 3. With regards to the Auditor's qualification No. 3 on constitution of Nomination and Remuneration Committee of the Board of Directors, the Directors wish to clarify that with a view to comply with the requirement of the composition of the Nomination and Remuneration Committee, it was decided to broad base the Board and hence the Board of Directors at their meeting held on 14th August, 2015 appointed Mr. Jyoti M. Palekar as the Additional (Independent) Director of the Company. Further, the Board at the aforesaid meeting also approved re-constitution of the Nomination and Remuneration Committee by adding Mrs. Jyoti M. Palekar as the member of the Committee. The Board of Directors also proposes the Resolution at Item No. 8 & 9 as set out in the Notice, for the approval of the shareholders of the Company. COST AUDIT Pursuant to Sec. 209 (1)(d) of the Companies Act, 1956, the Cost Audit report for the financial year ended 31st March, 2014 was submitted to the Central Government on 6th February, 2015. LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 The Company has not given, during the year under review, any loan, guarantee or invested any funds falling under the purview of Section 186 of the Companies Act, 2013. Details of outstanding investments are given in the notes to financial statements. RELATED PARTY TRANSACTIONS All the related party transactions that were entered into during the financial year were at arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions with the Directors, Promoters, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. (Annexure 4) All Related Party Transactions as required under Accounting Standards AS-18 are reported in Note 26B - Notes to Accounts of the financial statements of the Company. All related party transactions are placed before the Audit Committee and the Board for approval. TRANSFER TO RESERVES The Company has not appropriated any profits to general reserves for the year 2014-15. CORPORATE GOVERNENCE Pursuant to the SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated 15th September, 2015, the compliance with the revised Clause 49 of the Listing Agreement with the Stock Exchange is not mandatory, for the time being, for the Company. Hence, the Report on Corporate Governance as stipulated under Clause 49 does not form part of the Annual Report. DEPOSITS The Company has not accepted any Deposit covered under Section 73 of the Companies Act, 2013 from the Shareholders or the Public during the year. INSURANCE All the insurable interests of the company including inventories, building, plant & machinery etc. are adequately insured. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place a policy on Prevention of Sexual Harassment at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy provides for protection against Sexual Harassment of Women at Workplace and for prevention and redressal of complaints. No complaints were received from any employee during the financial year 2014-15 and hence no complaints are outstanding as on 31st March, 2015 for redressal. VIGIL MECHANISM The Company has formulated a Vigil Mechanism Policy for Directors and employees to report their genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or policy. The necessary mechanism is in line with the requirements under the Companies Act, 2013. It provides for adequate safeguards against victimization of Directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. None of the Whistle Blowers have been denied access to the Audit Committee. The said policy is available on the Company's website www.nationalplastic.com under the Investor Section. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed pursuant to Section 134 of the Companies Act, 2013 form part of this report and are set out in the Annexure 5 attached herewith. EMPLOYEES None of the employees of the Company were drawing a remuneration exceeding Rs. 60,00,000/- per annum or Rs. 5,00,000/- per month or part thereof. Hence, no particulars of employees as per Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished. Your Directors value the commitment of the employees towards the Company and appreciate their valuable contributions for the progress and growth of the Company. RISK MANAGEMENT POLICY The Board of Directors of your Company has formulated a Risk Management Policy for the Company. It aims to identify, evaluate risks associated with the business viz. economic environment and market conditions, fluctuations in foreign currency, political environment, contractual compliance, credit risks, technology obsolescence, inflation, commodity prices, price fluctuation of raw materials and finished goods etc. Mitigation plans for the identified risks are drawn up based on the type of risks. In the opinion of the Board, none of the above mentioned risks threaten the existence of the Company. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company's internal control systems, commensurate with the size of the Company and nature of its business, has defined policies and procedures ensuring that all transactions are authorized, recorded and correctly reported, all assets are safeguarded and protected against loss from unauthorized use or disposition, reducing wastages and maintenance of proper accounting records for ensuring accuracy and reliability of its financial information. As a matter of proactive planning, the Board has also constituted an Audit Committee which meets periodically to review the financial performance and the accuracy of financial records. The Management duly considers and takes appropriate action on the recommendations made by the Statutory Auditors and the Audit Committee of the Board of Directors. STATUTORY DISCLOSURE a. There is no change in the nature of business of the Company. b. In terms of the first proviso to Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to all the shareholders and is available on the Company's website. c. There have been no material changes and commitments, if any, 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. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company's operations in future. LISTING FEES The Company has paid the Annual Listing fees to BSE Ltd. for the Financial Year 2015 - 2016. ACKNOWLEDGEMENTS Your Directors would like to place on record their gratitude for the co-operation and support they have received from the State Government Authorities, Statutory Authorities, Local Bodies, Banks and Financial Institutions and other Regulatory agencies during the year. Your Directors warmly acknowledge the faith and confidence reposed in the Company by its channel partners, dealers and customers in supporting its business activities and growth. Your Directors express their gratitude to the other business associates of the Company for their unstinting support. Your Directors are thankful to the Members for extending the trust and confidence shown. For and on behalf of the Board of Directors Paresh V. Parekh Managing Director Ketan V. Parekh Joint Managing Director Place: Mumbai Date: 14th August, 2015 |