DIRECTORS' REPORT THE MEMBERS VISHNU CHEMICALS LIMITED Your Directors are happy to present their Twenty Second Annual Report on the business and operations of the Company and the financial statements for the year ended on 31st March, 2015. OPERATIONS Your Company is strong enough to face typhoons like 'Hud Hud', which has effected Visakhapatnam severely including our unit and our team is equally strong enough and reinstated the operations within three weeks. This year is a special year for the Company operations as it is entering into Silver Jubilee year of operations. The Company started with a humble turnover of Rs.1 Crore during 1990 and within a span of 25 years the Company has reached almost Rs.500 Crores turnover by building world class plant,world class product quality with world class people. Today infact Vishnu Chemicals Limited is a world class player in this segment and exporting to more than 50 countries all over the world competing against American, European, Russian and German Companies. During the year of operations the Company's sales have increased by 19% whereas the profitability increased by 67% and the earning per Equity share is increased by almost 100%. For any organization building a strong base is important and having achieved this, now the Company will look forward for the fast growth in the coming years. No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. 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. FUTURE PLANS Now the Company's immediate task is further optimization of the usage of resources i.e., production, marketing, finance and human resources by completing the related balance works and to reach a turnover of Rs. 1000 Crores in next two years. SUBSIDIARY The operations of the Vishnu Hong Kong Limited, wholly owned subsidiary of the Company, are yet to be commenced and planning to commence the activities during the current financial year, DIRECTORS Your Company has 6 (Six) Directors consisting of 2 (Two) Promoter and Executive Directors (Chairman & Managing Director and Whole-time Director), 1 (One) Promoter and NonExecutive Director and 3 (Three) Independent Directors, as on March 31, 2015. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL Sri Ch. Siddartha, Whole-time Director of the Company retires by rotation and being eligible offers himself for re-appointment. The Board of Directors of the Company has appointed Sri T.S. Appa Rao, as an Additional Director, at their meeting held on 19.03.2015 and his office as Additional Director will be ceased at the ensuing Annual General Meeting. The proposal for appointment of Sri T.S. Appa Rao, as Independent Director is being placed before the shareholders for approval and the relevant details are forming part of the AGM notice. DIRECTORS RESIGNATIONS During the period under review, Sri V. Vimalanand resigned from the Board of Directors of the Company w.e.f. 19.03.2015. Dr. S. Chandrasekhar resigned from the Board of Directors of the Company w.e.f. 20.05.2015. COMPANY SECRETARY The Company has appointed Sri L. Narasimha Rao, a Fellow Member (FCS-7406) of The Institute of Company Secretaries of India, New Delhi as the full time Company Secretary and Compliance Officer and also designated as Key Managerial Personnel of the Company with effect from 27.04.2015 and the same was approved by the Board at their meeting held on 20.05.2015, in place of Sri B.S. Harikrishna. DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND REAPPOINTMENT, IF ANY In compliance of sub-section (7) of Section 149 of the Companies Act, 2013, all the Independent Directors of the Company have submitted their declarations stating that, they meet the criteria of independence as provided in sub-section (6) of Section 149 of the above said Act and Clause 49 of the Listing Agreement with the Stock Exchanges. CORPORATE GOVERNANCE - CLAUSE 49 OF THE LISTING AGREEMENT A separate Section on Corporate governance with a detailed compliance report thereon is annexed to the Annual Report. The Practicing Company Secretary's Certificate with respect to compliance with the provisions of Corporate Governance, as required by clause 49 of Listing Agreement, is also annexed. DIVIDEND During the year under review, the Board of Directors had declared and paid an interim dividend of Rs. 1.00 per equity share of Rs.10/- each (10%) for the financial year 2014-15. Your Directors also recommend a final dividend of Rs. 1.00 per equity share of Rs.10/- each (10%) for the year ended March 31, 2015 [the total dividend will be Rs.2/- per equity share of Rs. 10/- each (20%)], subject to the approval of the Members at this Annual General Meeting. TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, an amount of Rs. 161,645/- being unclaimed dividend pertaining to the financial year 2006-07 was transferred to the Investor Education and Protection fund (IEPF) on July 8, 2014. FIXED DEPOSITS Your Company has not accepted any deposits covered by the provisions of Section 73 of the Companies Act, 2013 and the Rules framed there under. INDUSTRIAL RELATIONS Your Directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year. Your Directors record their appreciation for sincere efforts, support and co-operation of all employees being extended from time to time to accelerate the growth of the Company. AUDITORS The Statutory Auditors M/s C.K.S. Associates (Firm Regn. No.007390S), Chartered Accountants, Hyderabad were re-appointed for three years at the last Annual General Meeting held on 30.09.2014, subject to ratification by the members at every Annual General Meeting. They have confirmed their eligibility and willingness to accept the assignment as Statutory Auditors of the Company, if ratified. AUDITORS' REPORT Auditors Observations: 1. The Auditors have mentioned in their Report that, the brought forward reserves are overstated due to capitalisation of interest of Rs.312.82 lakhs on Term Loans during the year 2007-08 in contravention of AS-16 issued by the ICAI, which also resulted in overstatement of fixed assets by Rs.312.82 lakhs, depreciation for the period by Rs.11.13 lakhs and total accumulated depreciation till March 31, 2015 by Rs.96.87 lakhs. As a result, the profit for the year is understated by Rs.11.13 lakhs. 2. The Auditors have mentioned in their Annexure report as point 7.1 that there is Rs.267.92 lakh of Entry Tax outstanding as at the last day of the financial year under audit for a period of more than six months from the date it became payable. Management Replies: 1. The management already clarified in the year 2007-08 that since, the operations with respect to the first line of production, which was commissioned, were at very insignificant level at that point of time and the plant becoming an integrated unit only subsequent to the commissioning of second line, it was not deemed inappropriate to capatalise the interest. 2. The Company has filed Special Leave Petition (Civil) before the Hon'ble Supreme Court of India along with other assesses in this regard and will act based on the decision of the Hon'ble Supreme Court. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013, the Central Government has prescribed Cost Audit of the Company. Based on the recommendations of the Audit Committee M/s. N.V.S Kapardhi (Firm Regn. No. 100231), Cost Accountants, Hyderabad were re-appointed as Cost Auditors of the Company for the year 2015-16. SHARE CAPITAL The paid up Equity and Preference Share Capital as on March 31, 2015 was Rs.59.44 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity nor made any provision of money for purchase of or subscription for, shares in the Company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the Company as provided in the rules of Companies (Share Capital and Debentures) Rules, 2014. BOARD MEETINGS Five meetings of the Board of Directors were held during the period under review and further details are set out in the Corporate Governance Report forming part of the Directors' Report. AUDIT COMMITTEE Four meetings of the Audit Committee of the Board were held during the period under review and further details are set out in the Corporate Governance Report forming part of the Directors' Report. INDEPENDENT DIRECTORS' MEETING The performances of the members of the Board, the Board level Committees and the Board as a whole were evaluated at the meetings of the Independent Directors and the Board of Directors of the Company held on May 20, 2015. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES Your Company recognizes the value of transparency and accountability in its administrative and management practices. The Company promotes the ethical behavior in all its business activities. The Company has adopted the Whistle Blower Policy and Vigil Mechanism in view to provide a mechanism for the Directors and employees of the Company to approach Audit Committee of the Company to report existing/probable violations of laws, rules, regulations or unethical conduct. NOMINATION AND REMUNERATION COMMITTEE Your Company has a Nomination and Remuneration Committee and further details are set out in the Corporate Governance Report forming part of the Directors' Report. The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Persons (KMP), Senior Management and their remuneration. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statements are provided in the Annual Report. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 disclosed in Form No. AOC -2 and is set out as Annexure and forms part of this report. RISK MANAGEMENT Your Company has a Risk Management Committee and further details are set out in the Corporate Governance Report forming part of the Directors' Report. The Company has a Risk Management Policy and framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. SECRETARIAL AUDIT REPORT Pursuant to Section 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s L.D. Reddy & Co., Practicing Company Secretaries, Hyderabad as its Secretarial Auditors to conduct the secretarial audit of the Company for the financial year 2014-15. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the financial year 2014-15 is set out as Annexure and forms part of this report. Secretarial Auditor's observations: i. There were delays in the payment of wages to the employees before the due date as per Payment of Wages Act,1936. ii. All Statutory Payments like Service tax, Income Tax, Professional Tax, Entry tax, PF, ESI, VAT, TDS, Self assessment tax, Excise Duty etc., are paid with delay as per the provisions of the relevant Acts. iii. A separate meeting of Independent Director was not held during the year as per the provisions of Companies act 2013. Management replies: i. The payments of wages to employees are up-to-date. However, the Company is taking all possible steps to pay the wages within the stipulated time. ii. The Company is taking all possible steps to pay the statutory dues within the stipulated time. iii. Separate meeting of Independent Directors was held on 20.05.2015 and will be complied in future within the stipulates schedule. DIRECTORS' RESPONSIBILITY STATEMENT The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 and of the profit and loss of the Company for that period; (c) the directors had 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 other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors, in the case of a listed Company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the period under review, such controls were tested and no reportable material weakness in the design or operation was observed. EXTRACT OF THE 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 is set out as Annexure and forms part of this report. QUALITY Your Company accord to high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard. INSURANCE All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately covered. LISTING OF COMPANY'S SECURITIES Your Company's shares are currently listed on Bombay Stock Exchange Limited (BSE), Ahmedabad Stock Exchange Limited and the Company also listed it's shares in the National Stock Exchange of India Limited (NSE), Mumbai on 05.03.2015. DEMATERIALIZATION OF SHARES Your Company's shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). CORPORATE SOCIAL RESPONSIBILITY In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities is setout as Annexure and forms part of this report. STAKEHOLDERS' RELATIONSHIP COMMITTEE Your Company has a Stakeholders' Relationship Committee and further details are set out in the Corporate Governance Report forming part of the Directors' Report. The Committee will monitor expeditious redressal of investors / stakeholders grievances relating to non-receipt of annual reports, notices, non-receipt of declared dividend / interest, change of address for correspondence etc. and to monitor action taken. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report. EQUITY SHARES IN THE SUSPENSE ACCOUNT Your Company is not having any shares lying in the suspense accounts in terms of Clause 5A(I) and Clause 5A(II) of the Listing Agreement. ENERGY CONSERVATION, 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 . PARTICULARS OF EMPLOYEES The percentage of increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2014-15, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2014-15 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under: During the period under review, no employee of the Company is employed throughout the financial year and in receipt of Rs.60 lakhs or more, or employed for part of the year and in receipt of Rs.5 lakhs or more a month, under Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ACKNOWLEDGEMENTS Your Directors take this opportunity to express their deep and sincere gratitude to the Bankers, Financial Institutions, Customers and Suppliers for their unstinted and continued support to the Company. Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz., customers, banks, members, dealers, vendors and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company. By Order of the Board Ch. Manjula Director Ch. Krishna Murthy Chairman & Managing Director Place: Hyderabad Date : 20th May, 2015 |