BOARD'S REPORT TO, THE MEMBERS, VINAYAK POLYCON INTERNATIONAL LIMITED Your Directors have pleasure to present their Sixth Annual Report on the business and operations of the Company along with the Audited Financial Statements for the financial year ended on 31st March, 2015 1. Performance Review Financial information is presented in accordance with the Accounting Standards (AS). Our reporting currency is Indian Rupees (INR). Total revenue including other income The company is engaged in the manufacture of Plastic containers and closures. The net receipts from Operations during the year under review were Rs. 1712.83 Lacs as against Rs. 1942.86 Lacs in the previous year. The products manufactured by the Company are of bulk nature in size and hence, the fall in turnover was due to sharp increase in transportation cost and local availability of cheaper alternatives to the buyer. Net Profit The Company reported record profits of 11.36 Lacs for the year, an increase of 29.38% from the previous year. Credit Rating and Liquidity CRISIL has reaffirmed the Company's long-term rating of SME-3. The Company's strong financial risk profile is driven by its sustained strong liquidity and conservative capital structure as well as its integrated operations and highly competitive cost position 2.Dividend In view of future working and expansion projects of the Company, your Directors do not recommend payment of any dividend for the year ended 31 st March, 2015. 3.Reserves The Board has not proposed transfer of any amount to General Reserve. Whole profit of the Company during the year i.e. Rs. 11.36 Lacs is transferred to the profit & loss a/c for the F.Y. 2014-15, in compliance with the relevant provisions of the Companies Act, 2013. 4.Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report In order to expand business and conquer the northern part of Country, the Company has established a new factory at Kanota, Jaipur with effect from 1st April, 2015. For this purpose Company has taken on rent Land, Building, Plant & Machinery from M/s Jai Sinter Polycon Private Ltd. to take advantage of supplying material to institutional buyers located nearer to Jaipur. 5. Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future 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. 6.Fixed deposits During the Financial Year 2014-15, Your Company has not invited, accepted or renewed any deposits from the public within the meaning of Section 73 and 74 of the Companies Act, 2013 read together with The Companies (Acceptance of Deposit) Rules, 2014. 7. Auditors and Auditors' Report A. Statutory Auditors At the Annual General Meeting held on September 06, 2014, M/s A. Natani & Co., Chartered Accountants, Jaipur (FRN: 007347C) were appointed as statutory auditors of the Company to hold office till the conclusion of the tenth Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of A. Natani & Co., Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained a written certificate from the above mentioned Auditors to the effect that they conform with the limits specified in the said Section and that they are not disqualified for appointment within the meaning of Section 141 of the said Act. There is no reservation, qualification or adverse remark contained in the Statutory Auditors' Report attached to Balance Sheet as at 31st March, 2015. Information referred in Auditors' Report are self-explanatory and do not call for any further comments. As required under clause 41 of Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the peer review Board of ICAI. B .Secretarial Auditor As per the provisions of Section 204 of Companies Act 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to annex with its Board's Report, a Secretarial Audit Report given by a Company Secretary in practice. The Board had appointed M/s V.M. & Associates, Practicing Company Secretary, Jaipur (FRN: P1984RJ039200) to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year 2014-15 is attached herewith as Annexure 1. There is no reservation, qualification or adverse remark contained in the Secretarial Auditor Report. Information referred in Secretarial Auditor Report are self-explanatory and don't call for any further comments. The Board of Directors have re-appointed M/s V. M. & Associates, Company Secretaries, Jaipur (FRN: P1984RJ039200) as Secretarial Auditor of Company for the financial year 2015-16. C. Cost Auditor Pursuant to Cost Record & Audit Rules, 2014 notified on 31st December, 2014, the products manufactured by the Company are not covered in Cost Audit w.e.f financial year 2014-15. Hence, the requirement of cost audit is not applicable to the Company. D. Internal Auditor Pursuant to Section 138 of the Companies Act 2013, every Listed Company is required to appoint an Internal Auditor or a firm of Internal Auditors. In line with this requirement, the Board of Directors has appointed Mr. Vikram Baid as Internal Auditor of the Company for the financial year 2014-15. The Board of Directors have re-appointed Mr. Vikram Baid as Internal Auditor of the Company for the financial year 2015-16. 8.Capital Structure During the F.Y. 2014-15 there is no change in capital structure of the Company and paid up share capital of the Company stands at Rs. 3,08,12,950/- (Three crore eight lacs twelve thousand nine hundred and fifty). 9. Extract of the annual return Extract of the Annual Return in Form MGT-9 containing details as on the financial year ended 31 st March, 2015, as required under Section 92 (3) of the Companies Act,2013, read with the Companies (Management and Administration) Rules 2014, is included in the Report as Annexure 2. 10. Conservation of energy, technology absorption and foreign exchange earnings and outgo The information related to conservation of energy, as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is as follows: A. Conservation of energy The operations of the Company are not energy intensive. We regularly evaluate and use new energy efficient technologies and make necessary investment in these equipment to make our infrastructure more energy efficient. The Company has taken significant measures to reduce the energy consumption by the following means: a) The Company has increased the consumption of electricity and reduced the consumption of Fuel as much as possible so that carbon foot-print of your company is reduced. b) The company is aggressively replacing normal and Halogen lamps with LED lights to save electricity. All the lights in factory are now replaced wherever possible. B. Technology Absorption a)The company buys latest technology molds and machine parts from its suppliers to keep itself competitive and updated to latest technology available for its production processes. b) The above results in reduction in down time, cycle time and repair costs. The company is always updated in terms of production process and technologies. C. Foreign Exchange earnings and outgo There was no Foreign Exchange earnings and outgo in the company during the financial year. 11. Corporate Social Responsibility (CSR) Your company does not come under the purview of Corporate Social Responsibility. But being a good Corporate Citizen, your company has carried out repair & maintenance of the village road near its factory so that the villagers can have better access to public transport mechanism. 12 .Directors A. Changes in Directors and Key Managerial Personnel On the recommendation of the Nomination & Remuneration Committee, the Board appointed Ms. Rashmi Agarwal (Membership No.: A39114), member of Institute of Company Secretary of India, Company Secretary of the Company w.e.f. 10th April, 2015. During the period under review, Mr. Bhanwar Lal Baid, Director of the Company liable to retire by rotation and being eligible offers himself for re-appointment in 5th Annual General Meeting held on 06th September, 2014. In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and articles of Association of the Company, all three Independent Directors can not retire by rotation and as per terms of Appointment of Mr. Vikram Baid and Mr. Bharat Kumar Baid, they can not be retire by rotation so only director left is Mr. Bhanwar Lal Baid. Mr. Bhanwar Lal Baid, Director of the Company retire by rotation and being eligible, offer himself for re-appointment. A brief resume of Mr. Bhanwar Lal Baid, proposed to be appointed is included in the Notice of Annual General Meeting. The Board recommends his re-appointment. The Board of Directors designated the following persons as Key Managerial Personnel (KMP) in terms of requirements of Section 203 of the Companies Act, 2013: Mr. Bharat Kumar Baid - Chief Executive Officer & Managing Director Mr. Vikram Baid - Chief Financial Officer Ms. Rashmi Agarwal - Company Secretary B. Declaration by an Independent Director(s) and re- appointment, if any In compliance with the provision of Section 149 &152 and schedule IV and other applicable provision, if any, of the Companies Act, 2013 read with (Appointment and Qualification of Directors) rules 2014, Mrs. Anima Bordia, Mr. Niraj Nahata and Mr. Pawan Nahata were appointed as Independent Directors on 14th July, 2014 for a term of 5 years from 14th July, 2014 to 31st March, 2019. All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. The terms & conditions for the appointment of Independent Directors are available on the website of the Company, <http://vinayakpolycon.com/node/29>. C. Formal Annual Evaluation Schedule IV to the Companies Act, 2013, mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013, states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual Directors. None of the independent directors are due for re-appointment. D. Criteria for performance evaluation of Independent Directors and the Board As per the provisions of Schedule IV to the Companies Act, 2013, the Nomination and Remuneration Committee (the "Committee") has laid down the evaluation criteria for performance evaluation of Independent Directors and the Board. Further, the Board is required to monitor and review Board Evaluation Framework. This Framework shall contain the details of Board's self-evaluation. The Board is committed to assess its own performance in order to identify its strengths and areas in which it may improve its functioning. The Committee shall establish the following processes for evaluation of performance of Independent Director and the Board: 1. Once a year, the Board will conduct a self-evaluation. It is the responsibility of the Chairman of the Board, supported by the Company Secretary of the Company, to organize the evaluation process and act on its outcome; 2. The Committee shall formulate evaluation criteria for the Board and the Independent Directors which shall be broadly based on: ? Knowledge to perform the role; ? Time and level of participation; ? Performance of duties; and level of oversight; and ? Professional conduct and independence. Accordingly, a separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board. The performance evaluation of Independent Directors was also carried out by the entire board. The performance evaluation of the Chairman and Non-Independent Directors was also carried out by the Independent Directors. 13. Number of meetings of the Board of Directors The Board of Directors met five times during the financial year 2014-15 on 30th May, 2014, 14th July, 2014, 28th July, 2014, 7th November, 2014 and 3rd February, 2015. Frequency and quorum at these meetings were in conformity with the provisions of the Companies Act, 2013 and the Listing Agreement entered into by the company with the Stock Exchanges. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. The draft of the minutes prepared by the Company is circulated among the Directors for their comment / suggestion and finally after incorporating their views, final minutes are recorded in the minute's books. Post meeting, important decisions taken are communicated to the concerned officials and departments for the effective implementation of the same. 14. Committees of the Boa rd Currently, the Board has four committees: the Audit committee, Nomination and Remuneration committee, Stakeholders Relationship committee, and Risk Management committee. All committees, except the Risk Management committee, consist entirely of independent directors. 15. Vigil Mechanism / Whistle Blower Policy The Company has established a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Policy has a systematic mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or policy. Under the said Mechanism, the employees are free to report violations of applicable laws and regulations and the Code of Conduct. It also provides for adequate safeguards against the victimization of persons who use such mechanism. The policy is also available on the Company's website at the link: <http://www.vinayakpolycon.com/sites/default/files/policies/Policy-of-Whistle-Blower-Vigil-Mechanism.pdf> 16. Loans, guarantees or investments During the year under review, the company has not provided any loan to any person or other body corporate; neither it has given any guarantee or provided security in connection with a loan nor it has acquired by way of subscription, purchase or otherwise the securities of any other body corporate. 17. Related Party Transactions The Company has framed the policy on related party transaction and Audit Committee shall review the related party transaction in every meeting. All related party transactions entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no material significant related party transactions made by the Company with Promoters, Directors, KMP or other designated persons and their relatives which may have a potential conflict with the interest of the Company at large. Particulars of contracts or arrangements with related parties referred to Section 188(1) of the Companies Act, 2013 in the form AOC 2 is annexed herewith as Annexure 4. A list of all related party transactions is placed before the Audit Committee as well as the Board of Directors. The Board has also framed a policy on related party transactions and the same is available on Company's website i.e. <http://www.vinayakpolycon.com/sites/default/files/policies/Policy%20on%20Related%20Party%20> Transactions.pdf 18. Particular of Employees The information required pursuant to Section 197(12) of the Companies Act, 2013 read with rules made there under, as amended from time to time, has been given in the Annexure 5. 19. Nomination & Remuneration Policy The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2015, the Board consists of 6 members, one of whom is executive or whole-time director, one is managing director, one is non-executive director or chairman and three are independent directors. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is available on the website of the Company, <http://vinayakpolycon.com/sites/default/files/Nomination%20and%20Remuneration%20Policy.pdf>. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company. 20. Independent Directors' Meeting As per the requirement Schedule IV to the Companies Act, 2013, the Independent Directors of the Company met on 23rd March, 2015, inter alia to discuss: 1. Review the performance of non - Independent Directors and the Board of Directors as a whole; 2. Review the performance of the Chairperson of the Company, taking into account the views of the Executive and Non - Executive Directors; 3. Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. 21.Internal financial control The Company has well defined mechanisms in place to establish and maintain adequate internal controls over all operational and financial functions considering the nature, size and complexity of its business. The Company maintains adequate internal control systems that provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of Company assets. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. Mr. Vikram Baid, Internal Auditor of the Company independently evaluate adequacy of internal controls and audit the majority of the transactions undertaken by the Company. Post audit reviews are carried out to ensure that audit recommendations have been implemented. The Audit Committee of the Board of Directors which comprises of majority of Independent Directors, inter alia, reviews the adequacy and effectiveness of internal Control and monitors implementation of Internal Audit observations. 22. Risk Management Policy The Company has framed and implemented a Risk Management Policy to identify the various business risks. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The risk management policy defines the risk management approach across the enterprise at various levels including documentation and reporting. 23. Trade Relations Vinayak Polycon International Ltd. believes in building teams across the business and functions with the aim to share knowledge and experience. Cross functional teams work with clear objectives to solve the issues and create value for the company. The company fosters open dialogue among the employees with the brief that the people, who communicate continuously and openly, build trust and mutual respect. The Company maintained healthy, cordial and harmonious Industrial relations at all levels. The Directors wish to place on record their appreciation for the valuable contribution by the employees of the Company. 24. Listing of Securities The Equity shares of the company are listed with the Bombay Stock Exchange Limited w.e.f. 28.08.2012 and Listing fees for the year 2014-15 has been duly paid. 25. Depository System The ISIN no. allotted to the Company is INE581M01016. The Company has also established the required connectivity with both the NSDL & CDSL through its registrar and share transfer agent MAS Services Pvt. Ltd., Delhi for both physical and demat segments. The equity shares of the Company can be held in electronic form with any depository participant (DP) with whom the Members/Investors have their depository account. 26. Human Resources Development/Training Human Resources are the important asset of any enterprise. Success of any enterprise mainly depends on its human power. In this regard, your company has made best efforts to employ good professionals, staff members, labourers etc. Vinayak Polycon International Limited is keen to retain best of the human resources by effective training and development programs, by providing reasonable wages and salary by creating good working environment etc. Company's human resources are mobilized in order to strengthen the company internally to face future challenges. Your company is providing a "state of art" working environment to the employees with a view to optimize their performance. 27. Prevention Of Insider Trading In compliance with the provisions of Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Board has adopted a code of conduct and code of practices and procedures for fair disclosure of unpublished price sensitive information on 30th May, 2015 to preserve the confidentiality of price sensitive information, prevent misuse thereof and regulate the trading by Insiders. The code of practice and procedures for fair disclosure of unpublished price sensitive information is also available on the Company's website i.e. www.vinayakpolycon.com 28. Corporate Governance and Management Discussion & Analysis Report Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization's brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders' expectations. At VPIL, it is imperative that our company affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of our stakeholders. Pursuant to SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated 15th September, 2014, compliance with the provisions of Clause 49 is not mandatory for the time being for Companies having paid up equity share capital not exceeding Rs.10 crore and Net Worth not exceeding Rs.25 crore, as on the last day of the previous financial year. Since our Company falls in the ambit of aforesaid exemption; hence compliance with the provisions of Clause 49 of the Listing Agreement is not mandatory for our Company. Consequently our Company is not required to provide separate section on Corporate Governance and Management's Discussion and Analysis Report. However, our Company has complied with all the disclosures and requirements which are applicable under all the rules, regulations for the time being in force. 29. Directors' Responsibility Statement As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that: a)In the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards 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 judgements 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 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 other irregularities. 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 were 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. Acknowledgement Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and area as well as the efficient utilization of the Company's resources for sustainable and profitable growth. We thank the Government of India, Ministry of Corporate Affairs, Custom & Excise Department, Income Tax Department, BSE, NSDL, CDSL, Bankers, State Governments and other Government Agencies for their continuing support and look forward for the same support in the future. FOR AND ON BEHALF OF THE BOARD FOR VINAYAK POLYCON INTERNATIONAL LIMITED BHARAT KUMAR BAID VIKRAM BAID MANAGING DIRECTOR WHOLE TIME DIRECTOR DATE: 14.08.2015 PLACE: JAIPUR |