DIRECTORS' REPORT To, The Members, Flexituff International Limited The Board of Directors hereby presents its 23rd Director's Report on business & operations of your Company ('the Company' or 'FIL') alongwith Audited Financial Statements for the financial year ended 31st March, 2016. 1. STATE OF COMPANY'S AFFAIR Company's total income on a standalone basis increased to Rs.11748.89 Million from Rs. 10641.25 Million in the previous year. Company's profit before interest, depreciation and tax increased to Rs. 1583.01 Million from Rs. 1249.58 Million in the previous year. Company's total income on a consolidated basis increased to Rs. 13313.42 Million from Rs. 11890.78 Million in the previous year. Company's profit before interest, depreciation and tax increased to Rs. 1617.98 Million from Rs. 1268.40 Million in the previous year. 2. DIVIDEND In view of the planned business growth, your Directors deem it proper to preserve the resources of the Company for its activities and therefore, do not propose any dividend for the Financial Year ended 31st March, 2016. 3. SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2016 was Rs. 24.88 Crore divided into 2,48,82,806 shares of Rs. 10/-each. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. 4. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 forms part of the Notes to the Financial Statements provided in this Annual Report. 5. CREDIT RATING As per Audited Financials of March 2015, M/s India Rating and Research Private Limited has assigned "IND A-'' rating for the long term debts and "IND A2+" for the short term debts, which indicates "stable" outlook regarding timely servicing of financial obligations. 6. AWARDS & CERTIFICATIONS The Company is certified for British Retail Consortium Certificate (BRC), ISO 14001:2004 (for Environmental Management), ISO 22000:2005 (for Food and Safety Management), OHSAS 18001:2007 (for Industrial Health and Safety) and ISO 9001:2008 (for Quality Management System). During the year, Company achieved A Grade under Global Standard for Packaging & Packaging Material. 7. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES During the year under review, 1. There were no such companies which have become Subsidiaries/ Joint Venture/ Associate Companies. 2. M/s Lakshmi Incorporated, USA was dissolved w.e.f. November 1,2015. Hence ceased to be Subsidiary of the Company. Your Company has 2 Direct Subsidiaries, 2 Indirect Subsidiaries & 3 Joint Ventures as on 31st March, 2016. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of thesubsidiaries and Joint Ventures. Direct Subsidiaries M/s Nanofil Technologies Private Limted, Kolkata M/s Flexiglobal Holdings Limited, Cyprus Indirect Subsidiaries M/s Flexiglobal (UK) Limited, UK M/s Lakshmi Incorporated, USA - Dissolved w.e.f. November 1,2015 Joint Venture Flexituff Javed Ahmed LLP Flexituff Hi-Tech LLP Flexituff SA Enterprise LLP Pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company and shall be made available upon request of any member of the Company interested in obtaining the same and shall also be kept for inspection at the Registered Office of the Company and that of the Subsidiary Company concerned. Further, pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial data of the Company's Subsidiaries & Joint Ventures is mentioned in Form AOC-1 as Annexure A of the board's report. 8. EMPLOYEE STOCK OPTION SCHEME, 2011 The Nomination and Remuneration Committee of the Board of Directors of the Company interalia monitors and administers the Employee stock option scheme of the Company. 9. DIRECTORS / KEY MANAGERIAL PERSONNEL (KMPS) During the Year under review, the following changes occurred in the position of Directors/KMPs of the Company The Board has placed on record its sincere appreciation for the invaluable contribution and guidance provided by Mr. Dilip Parikh & Mr. Kaushal Ganeriwal during their tenures. Pursuant to the provisions of Section 149 of The Companies Act, 2013, Mr. Anirudh Sonpal (DIN: 03367049), Mr. Sharat Anand (DIN: 00083237) and Mr. Kevan John Upperdine (DIN: 01214264) were appointed as Independent Directors at the Annual General Meeting of the Company held on 30th September, 2014 for a period of 5 years. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of Independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year. As per the provisions of The Companies Act, 2013 Mr. Saurabh Kalani (DIN: 00699380), Whole Time Director and Mrs Alka Rajesh Sagar (DIN: 07138477), Non Executive Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment. The Board recommends their re-appointment. 10. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, a structured questionnaire was prepared after taking into consideration of the various aspects of the Board & its Committees, execution and performance of specific roles, duties, obligations and governance. The performance evaluation of Committees, Executive Directors, Non-Executive Directors and Independent Directors was completed. The Performance evaluation of the Chairman, Non-Executive Directors & Board as a whole was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process Directors of the Company has carried their own performance evaluation too known as "Self Assessment" 11. POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION The Nomination and Remuneration Committee of Board of Directors of the Company leads the process for appointment of Directors and Key Managerial Personnel and Senior Management personnel in accordance with the requirements of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable laws. Nomination & Remuneration Policy is available on the website of the Company on the below link: (<http://www.flexituff.com/Investor/Policies%20> and%20Programme/Policies%20and%20Programme_ Nomination%20and%20Remuneration%20Policy.pdf) 12. RISK MANAGEMENT In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor & take precautionary measures in respect of the events that may pose risks for the business. The Board & Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis by keeping Risk Management Report before the Board & Audit Committee periodically. 13. RELATED PARTY TRANSACTION Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of the Companies Act, 2013, in the prescribed form AOC - 2, are appended as Annexure B to the Board's Report. A Policy on Related Party Transactions as approved by the Board is available on the Company's website on the below link: <http://www.flexituff.com/Investor/Policies%20and%20> Programme/Policies%20and%20Programme_Related%20 Party%20Transactions%20Policy.pdf 14. 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 and its future operations. 15. AUDITORS STATUTORY AUDITOR M/s. L.K. Maheshwari & Co., Chartered Accountants, Indore were appointed as Statutory Auditors of the Company in the 21st Annual General Meeting (AGM) of the Company held on 30th September, 2014 for a term of three consecutive years, subject to ratification of their appointment by shareholders at every AGM. Further M/s MZSK & Associates, Chartered Accountants, Mumbai were appointed as Joint Statutory Auditor of the Company in the 22nd Annual General Meeting (AGM) of the Company held on 30th September, 2015 to audit the books of accounts for the Financial Year 2015-16. M/s. L.K. Maheshwari & Co., Chartered Accountants, Indore & M/s MZSK & Associates, Chartered Accountants, Mumbai have confirmed that they are eligible for having their ratification & reappointment as Statutory Auditors respectively at this Annual General Meeting. Your Board of Directors is recommending ratification of M/s. L.K. Maheshwari & Co., Chartered Accountants, Indore as Joint Statutory Auditor of the Company and re-appointment M/s MZSK & Associates, Chartered Accountants, Mumbai as Joint Statutory Auditor for the term of one year. The Auditors Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended 31st March, 2016. The Auditor's Report is enclosed with the Financial Statements in this Annual Report. SECRETARIAL AUDITOR M/s. Ritesh Gupta & Company, Practicing Company Secretary were appointed to conduct the secretarial audit of the Company for the Financial Year 2015-16, as required under Section 204 of the Companies Act, 2013 and rules made thereunder. The Secretarial Audit Report for the Financial Year 2015-16 forms part of the Annual Report as Annexure C to the Board's Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Board has appointed M/s. Ritesh Gupta & Company, Practicing Company Secretary as secretarial auditor of the Company for the Financial Year 2016-17. 16. NUMBER OF MEEETINGS OF THE BOARD The details of the number of meetings of the Board held during the financial year 2015-16 forms part of the Corporate Governance Report. 17. AUDIT COMMITTEE The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report. 18. CORPORATE SOCIAL RESPONSILBILITY The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure D of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company (www.flexituff.com ). 19. DEPOSITS FROM PUBLIC The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. 20. DISCLOSURE REQUIREMENTS Corporate Governance Report and Management Discussion and Analysis form part of this Annual Report for the year ended 31st March, 2016. The Company has a whistle blower policy/vigil mechanism to report genuine concerns or grievances. The Whistle Blower Policy/vigil mechanism has been posted on the website of the Company (<http://www.flexituff.com/Investor/Policies%20> and%20Programme/Policies%20and%20Programme_ Vigil%20Mechanism%20Policy.pdf). The Board has laid down a code of conduct for Board members & Senior Management Personnel as per Regulation 17 & 26 (3) of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 & has been posted on the website of the Company (<http://www.flexituff.com/Investor/Policies%20> and%20Programme/Policies%20and%20Programme_ Director%20and%20Senior%20Management.pdf). All the Board members & Senior Management Personnel have affirmed compliance with the said code of conduct for the year ended on 31st March, 2016. A declaration to this effect, signed by the CEO, forms part of this Annual Report. The Board has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015.The Insider trading Policy of the Company covering code of practices and procedures for fair disclosure of Unpublished Price Sensitive Information and Code of Conduct for the prevention of Insider Trading has been posted on the website of the Company. (<http://www.flexituff.com/Investor/Policies%20and%20> Programme/Policies%20and%20Programme_Insider%20 Trading-%20Schedule%20B.pdf). All the Board members & KMPs have affirmed compliance with the said code of conduct for the year ended on 31st March, 2016. 21. LISTING AGREEMENT The Securities and Exchange Board of India (SEBI) on September 2, 2015 issued SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective from December 1, 2015. Accordingly all listed entities were required to enter into the Listing Agreement within 6 months from the effective date. The Company has entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited during December, 2015. 22. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY The Company has put in place an adequate system of Internal Financial Control commensurate with the size and nature of business which helps in ensuring the orderly and efficient conduct of its business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention & detection of frauds, accuracy & completeness of accounting records and ensuring compliance with corporate policies. The Company has an Internal Audit Department with a dedicated Internal Audit Team which is commensurate with the size, nature & complexity of operations of the Company. The Internal Audit Report is submitted to the Audit Committee on quarterly basis, the Audit Committee reviews the performance of internal audit function. The Audit Committee, reviews adherence to internal control systems and internal audit reports. 23. PARTICULARS OF EMPLOYEES In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the annexure to this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Board's Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary of the Company. 24. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO In compliance with Section 134 of The Companies Act, 2013 read with The Companies (Disclosure of Particulars in the report of Board of directors) Rules 1988, a statement giving information regarding Energy Conservation, Technology Absorption and Foreign Exchange earnings and out go is given in Annexure E forming part of this Annual Report. 25. DIRECTORS' RESPONSIBILITY STATEMENT The Directors confirm that: 1. In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. 2. 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 of the Company for that period. 3. The Directors had taken proper and sufficient care 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. 4. The Directors had prepared the annual accounts on a going concern basis. 5. The Company has established internal financial controls and the said controls are adequate and are operating effectively. 6. A proper compliance system is established to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 26. DEMATERIALISATION AND ELECTRONIC REGISTRAR The equity shares of your Company are available for dematerialization with both NSDL and CDSL under ISIN INE060J01017. As on 31st March 2016, 95.48% equity shares are in demate form and remaining 4.52% equity shares are in physical form. Our registrar for electronic connectivity with the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) is M/s Link Intime India Private Limited, Mumbai (Formerly M/s Intime Spectrum Registry Limited). 27. HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATION Human Resource plays vital role in your company. If finance is the blood of any organization then Human Resource is not less than pulse which keeps running production by their hard work day and night. Your company has performance management process to motivate people to give their best output and encourages innovation and meritocracy. Board places on record their appreciation and sincere thanks towards their contribution to the Company's performance during the year. The Board is pleased to inform you that Industrial relations have continuously been cordial at all levels throughout the year. 28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ('Act') and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC). There was no compliant received from any employee during the financial year 2015-16 and hence no compliant is outstanding as on 31.03.2016 for redressal. 29. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 as required under Section 92 of the Companies Act, 2013 is included in this report as Annexure F and forms an integral part of this report. 30. MATERIAL CHANGES AND COMMITMENTS Company has entered into a facility agreement with KKR India Financial Services Private Limited for debt fund raising upto Rs. 150 Crores including issue of debentures, if any. APPRECIATION The Board takes this opportunity to express its sincere appreciation for the excellent support and cooperation received from company's bankers, investors, customers, suppliers, statutory authorities for their consistent support to the Company. The Directors also sincerely acknowledge the outstanding support and services of the workers, staff and executives of the Company, which have together contributed to the efficient operations and management of the Company. For and On Behalf of The Board of Directors of Flexituff International Limited Saurabh Kalani Whole-Time Director DIN: 00699380 D.K. Sharma Whole-Time Director DIN: 00028152 Whole-Time Director Place: Pithampur Date: 20/05/2016 |