DIRECTORS' REPORT TO, THE MEMBERS, PRATIKSHA CHEMICALS LIMITED Your Directors have pleasure in presenting herewith their 24th Annual Report on the business and operation of the Company together with the Audited Statements of Accounts of the Company for the year ended on 31st March, 2015, 2. DIVIDEND: With a view to enlarge the business operations of the Company, the Directors did not recommend dividend for the Current Year. 3. DIRECTORS AND KEY MANAGERIAL PERSONNEL: Pursuant to the provisions Section 152 (6) of the Companies Act, 2013, MR. JAYESH PATEL (DIN: 00401109), Technical Director of the Company retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment. Pursuant to the provisions Section 149 & 152 of the Companies Act, 2013, MRS. LALITHAMMA RAMAKRISHNAN ACHARYA (DIN: 06983383), a Director of the Company, be appointed as Independent Director for term of Five years with effect from her initial appointment i.e. 30th September, 2014. Pursuant to the provisions Section 149 & 152 of the Companies Act, 2013, MR. SOMABHAI PATEL & MR. UPENDRA ADHVARYU have been appointed as an Independent Directors for term of Five years with effect from 30th September, 2014. Further, MRS. LALITHAMMA RAMAKRISHNAN ACHARYA has been appointed as Woman Director with effect from 30th September, 2014. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section 6 of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement which is hereby enclosed as 'Annexure: I'. Also, MR. HARISH BHATT has been appointed Chief Financial Officer with effect from 14th August, 2014. The terms of Managerial Remuneration paid of MR. HARISH BHATT & MR. JAYESH PATEL are revised as per as per the Schedule V as provided in the newly enacted Companies Act, 2013. 4. MEETINGS: During the year. Four Board Meetings and Five Audit Committee Meetings were duly convened and held. The following are the dates on which the said Board Meetings held: May 30, 2014, August 14,2014, November 14, 2014 & February 13, 2015. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 5. COMMITTEES: The company has several committees which have been established as a part of best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statues. The Board has constituted following Committees: > Audit Committee > Nomination and Remuneration Committee > Stakeholder's Relationship Committee > Share transfer Committee The details with respect to the compositions, powers, roles, terms of reference etc. of relevant committees are given in detail in the 'Report on Corporate Governance' of the company which forms part of this Annual Report. 6. EXTRACTS 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 extracts of the Annual Return as at March 31, 2015 forms part of this Directors' Report as 'Annexure: II'. 7. STATUTORY AUDITORS & AUDIT REPORT: Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/S. H K SHAH & CO.. Chartered Accountants, (Firm Registration No. 109583W), have been appointed as statutory auditors of the company at the Twenty Third Annual General Meeting held on September 30, 2014 to hold office from the conclusion of twenty eight Annual General Meeting (AGM) till the conclusion of the Twenty Seventh Annual General Meeting of the Company, subject to ratification by the shareholders annually. Accordingly, ratification of appointment of Statutory Auditors is being sought from the members of the company at the ensuing AGM. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Auditors comments on your company's accounts for year ended March 31, 2015 are self explanatory in nature and do not require any explanation as per provisions of Section 134 (3) (0 of the Companies Act, 2013. There following qualifications, reservation or adverse remark or disclaimer made by Statutory Auditor in its report: 1. Adhering to significant accounting policy, the Company is accounting for Gratuity & Leave Encashment on cash basis. This is not according with Accounting Standard - 1 on "Disclosure of Accounting Policies" and Accounting Standard - 15 on "Employee Benefits" prescribed by the institute of Chartered Accounting of India and contrary to provision contained in Section 128 (1) of the Companies Act, 2013. The extent of noncompliance in terms of value is not ascertainable. 2. Accounting Standard - 2 for "Valuation of Inventories" has not been followed. The technical valuation claimed by the Company is not quantifiable hence; we are not in a position to quantify the effect on the Profit and Loss Account and Balance Sheet The Board of Directors has undertaken to take the corrective steps for the above mentioned qualifications in current year. 8. INTERNAL AUDIT & CONTROLS: Pursuant to provisions of 138 of the Companies Act, 2013, and Rule 13 of Companies (Accounts] Rules, 2014, M/S. LAVINGIYA & ASSOCIATES. Chartered Accountants, Ahmedabad, has been appointed as an Internal Auditor of the Company for the Financial Year 2014-15. During the year, the Company continued to implement their suggestions and recommendations to improve and control the environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. 9. SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT: Pursuant to Section 204 of the Companies Act, 2013, your company had appointed M/S. A. SHAH & ASSOCIATES. Practising Company Secretaries, Ahmedabad, as its Secretarial Auditors to conduct the Secretarial Audit of the company for F.Y. 2014-15. The Report of the Secretarial Auditor for the F.Y. 2014-15 is annexed to this report as Annexure: III' to the Directors' Report. Secretarial Auditors have qualified their report to the Members of the Company & in this connection; the Board of Directors of the Company has discussed the same at arm's length and agreed to take the corrective steps on following Qualifications: 1. The Company is yet to comply with Clause 47 (a) of Listing Agreement 2. The Company is not in compliance with the provisions of Section 203 (1) (it) of the Companies Act, 2013. 3. The Managerial Remuneration paid to the Directors of the Company is subject to compliance of provisions of Schedule V to the Companies Act, 2013. 4. The Company is in part compliance with Clause 41 (III) for the financial year Secretarial Auditor Report (MR-3) is annexed herewith this Directors' Report, and as it is self explanatory and therefore do not call for any further comments. 10.NOMINATION AND REMUNERATION POLICY: The Board has on the recommendation of Nomination and Remuneration / Compensation Committee framed a policy on directors' appointment and remuneration of Directors including criteria for determining qualification, positive attributes, independence of directors and remuneration for Directors, Key Managerial Personnel and other employees. The policy is annexed to this report as 'Annexure: IV. 11. BOARD EVALUATION: 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 Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreement. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the 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. In addition, the Chairman was also evaluated on the key aspects of his role. 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 directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. 12.FIXED DEPOSITS: Your Company has not accepted any fixed deposits from the public within the provisions of Section 73 to 76 of the Companies Act, 2013. Hence, the disclosures required as per Rule 8(5)(v)&(vi) of the Companies [Accounts] Rules, 2014, read with Section 73 to 76 of the Companies Act, 2013 are not applicable to your Company. 13.CORPORATE GOVERNANCE: The Company believes that good Corporate Governance is a continuous process and it is our continuous endeavor to achieve good governance, by way of a conscious and conscientious effort whereby ensuring the truth, transparency, accountability and responsibility in all our dealings with all our stakeholders. A separate section on Corporate Governance Standards followed by your Company, as stipulated under Clause 49 of the Listing Agreement is enclosed as Annexure to this Report The Report on Corporate Governance also contains certain disclosures required under Companies Act, 2013. A Certificate from M/S. H. K. SHAH & CO.. Chartered Accountants, (Firm Registration No. 109583W), conforming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to this Report. 14.F0REIGN EXCHANGE EARNINGS / OUTGO: The Company has earned the Foreign Exchange by the way of Export Sales to the tune of Rs. 3,81,06,450/- during the Financial Year 2014-15. 15. VIGIL MECHANISM: In pursuant to the provisions of section 177 (9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.pratikshachemicals.in under investors / policy documents / Vigil Mechanism Policy link. 17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: All Related Party Transactions those were entered during the financial year were in ordinary course of the business of the company and were on arm's length basis. There were no materially significant related party transactions entered by the Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the company. All such Related Party Transactions are placed before the Audit Committee for approval. The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is has been uploaded on the website of the Company at www.pratikshachemicals.in under investors / policy documents / Related Party Transaction Policy. The particulars of every contract or arrangements entered into by the Company with related parties referred to the sub-section (1) of section 188 of the Companies Act, 2013, are disclosed in Form No. AOC-2 'Annexure: V the same forms part of this report, pursuant to Section 134 (3) (h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014. 18.PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186: In terms of provisions of Section 134 (3) (g) of the Companies Act 2013, the Particulars of Loans, Guarantees or Investments under Section 186, is annexed hereto as 'Annexure: VI* and forms part of this Report. 19.PARTICULARS OF EMPLOYEES REMUNERATION: A. The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197, of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as 'Annexure: VII' to the Directors' Report. B. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not provided as no employees is paid remuneration of Rs. 5 Lac Per month if employed for part of the year and Rs. 60 Lacs Per Annum if employed for the whole year. 20.SEXUAL HARASSMENT OF WOMEN AT WORKPLACE fPREVENTION. PROHIBITION AND REDRESSAL1 ACT. 2013: Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment 21. HUMAN RESOURCES DEVELOPMENT: Your Company treats its "Human Resources" as one of its most significant assets. The Company continues its focus on retention through employee engagement initiatives and provides a holistic environment where employees get opportunities to realize their potential. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. The Company's Health and Safety Policy commits to provide a healthy and safe work environment to all employees. 22. CHANGE IN NATURE OF THE BUSINESS: There has been no change in the nature of business of the company during the year under review. 23.MANAGEMENT DISCUSSION AND ANALYSIS: As per Clause 49 of listing agreement with the Stock Exchanges, a separate section on Management Discussion and Analysis outlining the business of the Company is set out in Annexure forming part of this Report. 24.SIGNIFICANT OR MATERIAL ORDERS AGAINST COMPANY: No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company's operation in future. 25.STATEMENT OF DIRECTORS' RESPONSIBILITY: Pursuant to requirement under 134 (3) (c) of the Companies Act, 2013 (Act), Directors, confirm that: (a) in the preparation of the annual accounts for the year ended on 31st March, 2015, the applicable accounting standards read with requirement set out under Schedule 111 to the Act, have been followed and there are no material departures from the same; (b) the Directors 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 March 31, 2015 and of the profit of the company for the year ended on that date; (c) the Directors 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; (d) the Directors had prepared the annua) 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 are operating effectively and; (f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 26. ACKNOWLEDGEMENT: Your Directors wish to place on record their gratitude and sincere appreciation for the assistance and co-operation received from the financial institutions, banks. Government authorities, customers, vendors and members during the year under review. Your Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Company in its continued robust performance on all fronts. ON BEHALF OF THE BOARD OF DIRECTORS, FOR, PRATIKSHA CHEMICALS LIMITED MR. JAYESH PATEL TECHNICAL DIRECTOR (DIN: 00401109) DATE: 14/08/2015 PLACE: AHMEDABAD |