BOARD'S REPORT Dear Shareholders, Your Directors are pleased to present the 113th Annual Report on the business and operations of the Company together with the audited financial statements for the financial year ended 31st March, 2015. Consolidated Financial Statement The consolidated financial statements of the Company for the financial year 2014-15, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as entered into with Stock Exchanges. The consolidated financial statements have been prepared on the basis of audited financial statements of the Company and its subsidiary companies. Share Capital During the year under review, there was no change in the Company's paid-up equity share capital. During the current financial year up to the date of this report, the Company has issued 14,750 equity shares of Rs. 2/- each upon exercise of stock options under the Company's ESOP Scheme i.e. 'ESOP 2013'. Consequently, the paid-up equity share capital of the Company as on the date of this report stood at Rs. 3,78,85,700 divided into 1,89,42,850 equity shares of Rs. 2/- each. General Reserve The Company has not transferred any amount to the General Reserve during the financial year ended 31st March, 2015. Dividend In view of the loss during the year under review, the Directors did not recommend any dividend. Transfer of amount to Investor Education and Protection Fund In terms of Sections 205C of the Companies Act, 1956, the Company is required to transfer the amount of dividend remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account to the Investor Education and Protection Fund (IEPF). The dividend for the financial year 2006-07, which remained unpaid/unclaimed, aggregating to Rs.Rs.2,87,310 (Rupees two lakh eighty-seven thousand three hundred ten only) was transferred to IEPF during the year under review. Deposits The Company has neither accepted nor renewed any deposit during the year. There was no unpaid/unclaimed deposit as at 31st March, 2015. Tinting Systems The Company continued with its policy of installation of tinting systems in various retail outlets across the country with a view to increase the demand for its high value products, especially water based products. ISO Certifications Nashik and Sikandrabad Plants of the Company are ISO 9001:2008 accredited. Credit Ratings The Company has been accorded credit rating of CARE BBB+ for long term bank facilities, CARE BBB+/CARE A3+ for long/short term bank facilities and CARE A3+ for short term bank facilities by Credit Analysis and Research Limited on 13th October, 2014. Employee Stock Option Plan (ESOP) Pursuant to Employee Stock Option Scheme, 2013 i.e. 'ESOP 2013' of the Company, the details of ESOPs granted, vested and exercised by permanent employees of the Company during the financial year under review, as required under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and as per the provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 and other applicable Regulations, is annexed as 'Annexure - A' to this report. Directors and Key Managerial Personnel Appointments, Re-appointments, Retirements & Resignations During the financial year 2014-15, in compliance with the provisions of Sections 149, 150 and 152, read with Schedule IV and other applicable provisions of the Companies Act, 2013 and relevant Rules made there under (including any statutory modification(s) or re-enactment thereof, for the time being in force Mr. Aditya Vikram Lodha, Mr. Pujit Ravikiran Aggarwal, Mr. Rajiv Rajvanshi and Ms. Pushpa Chowdhary were appointed as Independent Directors on the Board of Directors of the Company at the 112th Annual General Meeting of the Company held on 26th September, 2014 to hold office for a term of 5 (five) consecutive years with effect from the date of the said Annual General Meeting. Dr. R. Srinivasan, Non-Executive, Independent Director had expressed his unwillingness to be re-appointed at the 112th AGM of the Company held on 26th September, 2014 and accordingly ceased to be a Director with effect from 26th September, 2014. Mr. Sameer Nagpal, Managing Director and CEO and Mr. Pujit Aggarwal, Non-Executive, Independent Director, had resigned from the Board of the Company with effect from 30th May, 2015 and 16th June, 2015, respectively. The Board placed on record their sincere appreciation for the guidance and contribution made by them during their tenure on the Board. Mr. Chandan Arora, who was appointed as the Chief Financial Officer with effect from 1st September, 2014, had resigned from the Company with effect from 30th April, 2015. Mr. Pumit Kumar Chellaramani, Company Secretary, had resigned with effect from 15th November, 2014. The Board at its meeting held on 30th May, 2015 had appointed Ms. Bernadette Dominic as the Company Secretary and Compliance Officer. Mr. Surender Kumar was appointed as an Additional Director by the Board of Directors of the Company at its meeting held on 30th May, 2015 and will vacate his office at the ensuing Annual General Meeting. A notice in writing was received from a member of the Company in terms of Section 160 of the Companies Act, 2013 signifying the intention to propose the appointment Mr. Surender Kumar as a Director of the Company. Mr. Surender Kumar, was also appointed as the Whole-time Director and Chief Operating Officer (COO) and Chief Financial Officer (COO) by the Board of Directors of the Company at its meeting held on 30th May, 2015 for a period of three years with immediate effect, subject to the approval of the members of the Company and the Central Government. Mr. Girish Jhunjhnuwala, Non-Executive, Non-Independent Director is liable to retire by rotation at the ensuing Annual General Meeting (AGM) pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of the Company and being eligible has offered himself for re-appointment. A brief profile of the Directors proposed to be appointed and re-appointed, as required under Secretarial Standard 2 and Clause 49 of the Listing Agreement, is appended as an Annexure to the Notice of the ensuing AGM. The Board recommends the same for the approval of the shareholders of the Company. Declaration by Independent Directors 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 Clause 49 of the Listing Agreement. The Independent Directors have also confirmed that they have complied with the Company's Code of Conduct. Nomination and Remuneration Policy Considering the requirement of skill set on the Board, eminent people having an independent standing in their respective field/profession and who can effectively contribute to Company's business and policy decisions are considered by the Nomination and Remuneration Committee for appointment as a Director on the Board. The Committee considers ethical standards of integrity, qualification, expertise and experience of the person for appointment as Director and accordingly recommend to the Board his/her appointment. In compliance with the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors on the recommendation of the Nomination and Remuneration Committee has approved and adopted the Nomination and Remuneration Policy which sets out the criteria for determining qualifications, positive attributes, independence of a director, board diversity, remuneration for the directors, key managerial personnel and other employees etc. The detailed policy is available on the Company's website link at: <http://www.shalimarpaints.com/upload/investor> reports/ Nomination%20and%20Remuneration%20Policy.pdf and is also annexed as 'Annexure - B' to this report. Annual Evaluation of Directors, Committees and Board In compliance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of the Nomination and Remuneration Committee has approved and adopted the Evaluation Policy, setting out the process, format, attributes and criteria for the performance evaluation of the Board, Board Committees and Individual Directors. On the basis of the consolidated report on questionnaire/feedback form received from the individual directors, the Board evaluated the performance of the Board, Board Committees and Individual Directors and noted its satisfaction on the outcome. Board and its Committees The Board of Directors met four times during the financial year 2014-15. The details of the Composition of the Board and its Committees and number of Board and Committee meetings held during Financial Year 2014-15 and attendance of Directors and members of the Committee at the said meetings are provided in the Report on Corporate Governance, which forms part of this Report. Subsidiaries As on 31st March, 2015, the Company has two subsidiaries, namely Shalimar Adhunik Nirman Limited (SANL) and Eastern Speciality Paints & Coatings Private Limited (ESPCPL). None of the Companies has become or ceased to be the Company's subsidiaries, during the year under review. Since no business activity was carried out either by SANL or by ESPCPL during the year under review, these subsidiaries have not prepared the Statement of Profit & Loss for the year 2014-15. In accordance with Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts of Companies) Rules, 2014, the Company has prepared consolidated financial statements of the Company and its subsidiaries which forms part of the Annual Report. A statement in Form AOC- 1, containing the salient features of financial statements of the above mentioned subsidiaries of the Company is annexed as 'Annexure - C' to this Report. The audited financial statements of the subsidiary companies are available for inspection at the Company's Registered Office. Any member desirous of obtaining a copy of said financial statements may write to the Company Secretary at Company's Registered Office. The Company does not have any associate and/or joint venture company. Auditors & Audit Report Statutory Auditors Messrs Chaturvedi and Partners, the Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has received confirmation from Messrs Chaturvedi and Partners, Chartered Accountants to the effect that their 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 to act as Auditors of the Company, if re-appointed. The Audit report on the financial statements for the year 2014-15 does not contain any qualifications, reservations or adverse remarks Cost Auditors Your Board had appointed Messrs D. Sabyasachi & Co., Cost Accountants, to carry out the Cost Audit in respect of Paints & Varnishes for the financial year 2014-15. However, in terms of Rule 4(2) of the Companies (Cost Records and Audit) Rules, 2014, the Cost Audit is not applicable to the Company for the financial year 2015-16. The Cost Audit report for the financial year ended 31st March, 2014 has been filed with the Ministry of Corporate Affairs, Cost Audit Branch, Government of India on 16th December, 2014, vide SRN S34705392. Secretarial Auditors The Company had appointed Ms. Shipra Chattree, Practicing Company Secretary, to conduct Secretarial Audit for the financial year ended 31st March, 2015. The Secretarial Auditor has submitted her report in the prescribed Form MR-3, confirming compliance by the Company of all the provisions of applicable corporate laws. The Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed as 'Annexure - D' to this Report. Corporate Social Responsibility Corporate Social Responsibility (CSR) is traditionally driven by a moral obligation and philanthropic spirit. Through CSR there is a formation of a dynamic relationship between a Company on one hand and the society and environment on the other. The main responsibilities of the Company towards society at large are to eradicate hunger, poverty and malnutrition; promote education, promote preventive health care and sanitation and making available safe drinking water, promoting gender equality and empowering women. In accordance with the requirements of Section 135 of the Companies Act, 2013, the Company had constituted a CSR Committee. The composition and terms of reference of the CSR Committee is provided in the Report on Corporate Governance, which forms part of this Report. The CSR Policy of the Company, is available on the Company's website link at: <http://www.shalimarpaints.com/upload/> investor reports/Corporate%20Social%20Responsibility%20Policy.pdf. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as 'Annexure - E' to this Report. Management Discussion and Analysis The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing is included in Point No.11 <http://No.11> of the Report on Corporate Governance, which forms part of this Report. Listing During the year, The Company's equity shares continue to be listed with BSE Limited, the National Stock Exchange of India Limited and the Calcutta Stock Exchange Limited. In wake of an application made by the Company pursuant to the Securities & Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, the Company's equity shares have been delisted from the Calcutta Stock Exchange Limited with effect from 3rd July, 2015. The Company has paid annual listing fees to the respective Stock Exchanges. As the trading in equity shares of the Company is permitted only in dematerialized form, the Company has made the requisite arrangements with National Securities Depository Limited and Central Depository Services (India) Limited to enable investors to hold shares in dematerialized form. Risk Management Risks Management is an integral part of Company's operating framework and is committed towards identifying key risks and managing them in a proactive and efficient manner. The Company periodically assesses both internal as well as external risks to which the Company is exposed to. Company, through its risk management system strives for timely identification, assessment, minimization and management of risks affecting the Company in the foreseeable future. Detailed discussion on Risk Management has been given as a part of Management Discussion & Analysis under the section 'Risks and Concerns', in the Report on Corporate Governance, which forms part of this Annual Report. Internal Financial Control The Company has in place adequate and comprehensive internal financial control system ensuring orderly, effective and efficient conduct of its business. Detailed discussion on internal control has been given as a part of Management Discussion & Analysis under the section 'Internal Control System', in the Report on Corporate Governance, which forms part of this Annual Report. Audit Committee As on 31st March, 2015, the Audit Committee of the Board of Directors of the Company comprised of Mr. Rajiv Rajvanshi, Mr. Aditya Vikram Lodha, Mr. Pujit Aggarwal and Ms. Pushpa Chowdhary, under the Chairmanship of Mr. Rajiv Rajvanshi. All the recommendations made by the Audit Committee were accepted by the Board. Whistle Blower Policy/Vigil Mechanism In compliance with the provisions of Section 177 (9) and (10) of the Companies Act, 2013 and the Clause 49 of the Listing Agreement, the Company has established a Vigil Mechanism for Directors and Employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. This mechanism provides adequate safeguards against victimization of whistle blower who avails of the mechanism and it also provides direct access to the Chairman of the Audit Committee in exceptional cases. During the year under report, there has been no incidence reported under Vigil Mechanism and no personnel has been denied access to the audit committee. The Company has adopted a Whistle Blower Policy which is posted on the Company's website link at: <http://www.shalimarpaints.com/upload/investor> reports/Whistleblower-Policy.pdf. Extract of Annual Return In terms of provisions of Section 92, 134(3)(a) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return of the Company in the prescribed Form MGT-9 is annexed as 'Annexure - F' to this Report. Significant and Material Orders There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. Particulars of Loans, Guarantees or Investments Particulars of loans, guarantees and investments form part of Note no 2.12 to the Financial Statements provided in the Annual Report. Related Party Transactions All transactions entered into by the Company, during the year under review, with the Related Parties, as defined under the Companies Act, 2013, Rules framed thereunder and revised Clause 49 of the Listing Agreement with the Stock Exchanges, were in the 'ordinary course of business' and 'on arm's length' basis. As such, provisions of Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules 2014, are not applicable to the Company during the year under review. There has been no materially significant Related Party Transactions during the period under review, which would have any potential conflict with the interest of the Company. Your Company did not have any Related Party Transaction which required prior approval of the Shareholders. Necessary disclosures required under the Accounting Standards (AS-18) have been made in the Notes to Financial Statements. Your Board has approved and adopted a Related Party Transaction Policy and the same is available on the Company's Website link at: <http://www.shalimarpaints.com/upload/investor> reports/Related-Party-Transaction-policy.pdf. Sexual Harassment of Women at Workplace As required under the provisions of the Sexual Harassment of Women at the Workplace Prevention, Prohibition & Redressal) Act, 2013 read with the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Rules, 2013, an Internal Complaints Committee (ICC) with requisite number of representatives has been set up to redress complaints sexual harassment, if any. The following is a summary of sexual harassment complaints received and disposed off during the year ended 31st March, 2015: No. of Complaints received : Nil No.of Complaints disposed off : Nil Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The details of energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Companies Act, 2013, read with Rule 8 of the Companies Rules, 2014 is annexed as 'Annexure-G' to this Report. Particulars of Employees The information, as required to be provided in terms of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) & 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/employees of your Company is set out in 'Annexure-H' to this Report. Corporate Governance The Company continues to comply with the requirements of the Listing Agreement with the Stock Exchanges where the Company's shares are listed. The report on Corporate Governance for the financial year ended 31st March, 2015, together with Certificate on its compliance, pursuant to requirements of Clause 49 of the Listing Agreement with Stock Exchanges is annexed as 'Annexure-I' to this Report. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that: (a) in the preparation of the annual accounts for the year under review, the applicable accounting standards have been followed and there are no material departures; (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 at the end of the financial year i.e., as at 31st March, 2015 and of the profit and loss of the Company for that period; (c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; (d) the Directors have prepared the annual accounts on a going concern basis; (e) the Directors have 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 have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Based on the framework of internal controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15. Industrial Relations and Personnel Industrial relations remained cordial and satisfactory. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by all officers, staff and workers of the Company. Acknowledgements The Directors would like to place on record their grateful appreciation of the co-operation and assistance received from the financial institutions, banks, investors, valued customers, various government agencies and business associates during the year under review. The Directors value the trust shown by the shareholders in their ability to manage the Company. We expect that with the ongoing encouragement and support of our shareholders, we shall be successful in achieving the desired objectives in the nearfuture. For and on behalf of the Board Surender Kumar Whole-time Director and COO & CFO DIN: 00510137 Rajiv Rajvanshi Director DIN: 00036605 Place: New Delhi Date : 20th July, 2015 |