DIRECTORS' REPORT TO THE MEMBERS Your Directors have pleasure in presenting the Thirty Fourth Annual Report with the Audited Balance Sheet, Statement of Profit & Loss Cash Flow Statement and the notes and schedules thereon for the year ended 31st March 2015. 2. TRANSFER TO RESERVES There are no transfers to any specific reserves during the year. 3. REVIEW OF OPERATIONS During the year under review your company achieved a sale of Rs. 8832.79 lakhs (previous year Rs. 7886.80 lakhs) resulting in an increase of 12% over the previous year. The profit before tax is at Rs. 1285.91 lakhs (previous year Rs. 670.93 lakhs) resulting in an increase of 92%. 4. DIVIDEND I n order to conserve resources, your directors do not recommend dividend for the year ended 31st March 2015. 5. FUTURE PROSPECTS The demand growth for the company's product is strong. The product range includes human and veterinary active pharmaceutical ingredients, pharmaceutical intermediates and finished formulations. The focus of the company is towards strengthening customer relationships, new product launches and better penetration of the markets. 6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND. During the financial year the Company has transferred unpaid and unclaimed dividend amounting to Rs. 82,362/- to Investor Education and Protection Fund in terms of Section 205C of the Companies Act, 1956 7. CONSERVATION OF ENERGY-TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE ETC. The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished as Annexure A to Director's Report. 8. STATEM ENT CONCERNING DEVELOPM ENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed also discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The risk management policy is available on the website of the company: www.nglfinechem.com 9. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 1 35 of the Companies Act, 2013 read with Companies Corporate Social Responsibility (Policy) Rules, 2014. The CSR Committee was constituted by the Board of Directors of the Company at its meeting held on 6th February 2015. The Committee consists of following Directors: 1. Mr. Milind Shinde-Chairman 2. Mr. Rajesh Lawande-Member 3. Mrs. Ajita Nachane-Member As per provision of Section 135 of the Companies Act, 2013 read with Rule 8 of Companies Corporate Social Responsibility (Policy) Rules, 2014, the Board has approved CSR Policy which is attached as Annexure B to Director's Report. The Company has not made the relevant provisions for CSR activities in the Books of Accounts as it is scrutinizing various projects for which the money can be spent. Based on this scrutiny, the Company shall submit the relevant report in the ensuing year. The Company could not spend the money before finalizing this report as the company could not identify any suitable project. 10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 The particulars of investment made under Section 186 of the Companies Act, 2013 have been disclosed in the financial statements in Schedule 13 of the Balance Sheet. The Company has not given any loans or given any guarantees. 11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013, is appended as Annexure C to Director's Report 12. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS The auditors' report and secretarial auditors' report does not contain any qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report. 13. ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished as Annexure D to Director's Report 14. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW During the financial year, the Board had met four times on 26th May, 2014, 30th July, 2014, 7th November, 2014 and 6th February, 2015. 15. DIRECTORS RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013 The Board of Directors of the Company hereby confirm: (i) That in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure. (ii) That the selected accounting policies were applied consistently and the directors 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 that of the profit 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 accounts have been prepared on a going concern basis. ( v) The Board has laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.- (vi) 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 16. DEPOSITS The Company has neither accepted nor renewed any deposits during the year under review. 17. PARTICULARS OF REMUNERATION No details as required under section 197 (12) of the Companies Act 201 3 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been provided as there are no employees drawing remuneration in excess of the prescribed limits. The information as required under section 197 (12) of the Companies Act 2013 with regard to the comparative statement of remuneration paid to Directors and the median salary paid to the employees of the company is available for inspection at the company's registered office during business hours. The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 6, 2015 that the remuneration is as per the remuneration policy of the Company. The policy is available on the company's website: www.nglfinechem.com 18. DIRECTORS Mr. Suman Shantaram Lad, resigned from the office of Directorship with effect from 5th August, 2015. Your Directors place their appreciation for the work done by him during his tenure. Mr. Jayaram Sitaram was inducted as an Additional Director on the Board of the Company on 5th August, 2015 pursuant to the provisions of section 149, 150, read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014. He would hold office till the conclusion of ensuing Annual General Meeting. Company has received a notice in writing under Section 160 of the Companies Act, 2013 from a member proposing his candidature to appoint as an I ndependent Director of the Company to hold office for 5 consecutive years commencing from 5th August 2015 to 4th August 2020. Your Directors hereby recommend his appointment as Independent Director of the Company and resolution for his appointment is put forward for your approval Mrs. Ajita Nachane was inducted as an Additional Director on the Board of the Company on 15th September 2014 in order to comply with the provisions of Section 149 of the Companies Act, 2013 requiring a listed Company to have a woman director. She will hold office till the conclusion of ensuing Annual General Meeting. Your Directors hereby recommend her appointment as Director of the Company and resolution for her appointment is put forward for your approval. The Board of Directors at their meeting held on August 5, 201 5 approved re-appointment of Mr. Rajesh Lawande as E xecutive Director and CF O subject to approval of Shareholders at ensuing Annual General Meeting of your Company for a further period of three years commencing from June 1, 2015 to May 31, 2018. Mr. Rahul Nachane is liable to retire by rotation in this Annual General Meeting and being eligible he has offered himself for reappointment. The Company has received notice in writing from member along with requisite fee proposing candidature of Mr. Rajesh Lawande, Mr. Jayaram Sitaram and Mrs. Ajita Nachane as Directors of the Company. Your Directors recommend their appointment. 19. DECLARATION OF INDEPENDENT DIRECTORS The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 1 49(7) of the Companies Act, 201 3 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 201 3 and the relevant rules. 20. RATING The company has been rated by Crisil Ltd for SME and bank rating. The SME rating has been awarded "SE 1B" indicating highest performance capability and moderate financial strength. The bank rating has been awarded BBB-/Stable. The company has also been rated by ICRA Ltd for bank borrowing and has been awarded BBB-/Stable. 21. STATUTORY AUDITORS M/s Bharat Gandhi & Co., Chartered Accountants, Mumbai bearing ICAI Firm Registration No as 101214W were appointed as Statutory Auditors at their Annual General Meeting held on 12th September, 2014 for the period of three (3) years. i.e for the Annual General Meeting to be held in year 2017 subject to ratification at each Annual General Meeting. The Company has received letter from them to the effect that their 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 from appointment. The resolution for ratification of his appointment is put forward for your approval in the ensuing Annual General Meeting. 22. INTERNAL AUDITORS The company has appointed M/s R Devarajan & Co, Chartered Accountants, Mumbai, (ICAI firm registration number 102415W) as internal auditors of the company for financial year 2015-16. 23. SECRETARIAL AUDITOR The Company has appointed M/s HS Associates, Company Secretaries, as Secretarial Auditors of the Company to carry out the Secretarial Audit for the Financial Year 20141 5 and to i ssue Secretarial Audi t R eport as per the prescribed format under rules in terms of Section 204(1 ) of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 201 4. Their report is appended to this report as Annexure E to Director's Report. 24. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management's 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 annexed to this Annual Report. 25. CORPORATE GOVERNANCE The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Certificate from the practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is also published elsewhere in this Annual Report. 26. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES The company does not have any subsidiary, joint venture or associate company and therefore provision with respect to Section 129 of the Companies Act, 2013 are not applicable to the Company. 27. CORPORATE GOVERNANCE REPORT Corporate Governance Report prepared by H S Associates, Company Secretaries, is annexed hereto as Annexure F. 28. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM The Audit Committee consists of the following members • Mr. Milind Shinde - Chairman • Mr. Jayaram Sitaram - Member • Mr. Rajesh N. Lawande - Member • Mr. Suman Lad (Resigned on 5th August,2015)-Chairman The above composition of the Audit Committee consists of independent directors, viz., Mr. Jayaram Sitaram and Mr. Milind Shinde who form the majority. The Company has established a vigil mechanism policy to oversee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to Mr. Rahul Nachane, Chief Ethics Counsellor on reporting issues concerning the interests of co-employees and the Company. The Vigil Mechanism Policy is available at the website of the company: www.nglfinechem.com 29. Annual evaluation by the Board The evaluation framework for assessing the performance of Directors comprises of the following key areas: i. Attendance of Board Meetings and Board Committee Meetings ii. Quality of contribution to Board deliberations iii. Strategic perspectives or inputs regarding future growth of Company and its performance iv. Providing perspectives and feedback going beyond information provided by the management v. Commitment to shareholder and other stakeholder interests vi. The evaluation involves self-evaluation by the Board members and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation. 30. COMMITTEES OF THE BOARD During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees and also formed a Corporate Social Responsibility Committee. There are currently four Committees of the Board, as follows: i. Audit Committee ii. Corporate Social Responsibility Committee iii. Nomination and Remuneration Committee iv. Stakeholders' Relationship Committee Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report. 31. OTHER DISCLOSURES The company does not have any Employees Stock Option Scheme in force and hence particulars are not furnished, as the same are not applicable. 32 ACKNOWLEDGEMENTS Your Directors take this opportunity to express their gratitude for the continued co-operation extended by the employees and stakeholders of the company. It is with great sorrow that the Board has to inform the members of the Company that the founder of the Company, Mr. Narayan Ganesh Lawande passed away this year on January 4, 2015. His towering personality and inspirational ideas have shaped the company for the past three decades. The Board and employees of the Company deeply mourn this loss and will miss his advice and guidance. For and on behalf of the Board of Directors sd/- Rahul Nachane Chairman & Managing Director Place : Mumbai, date : August 5, 2015. |