BOARD REPORT Dear Member(s), Your Directors are pleased to present the Thirty First Annual Report of the Company together with its Audited Financial Statements for the year ended 31st March, 2015. c. OPERATIONS AND FUTURE PLAN: As was brought out in the text of Board Report for the fiscal 2013-14, the momentum of growth continued with accelerated pace. This is well reflected from the growth of sales revenue which jumped to Rs. 671.48 Crores from previous Rs. 568.84 Crores witnessing a growth of 18.04%. Notwithstanding the ABS market buoyancy and better per KG contribution (sales-cost of input materials) company's focus on cost reduction with respect to energy consumption, manpower productivity and finance cost control remained undiluted. This is well evinced in the quantum jump of 264.61 % in profit after tax achieved by the company in current fiscal when compared with the previous fiscal i.e. Rs. 5.40 Crores in F.Y. 2014-15 as against Rs. 1.48 Crores in F.Y. 2013-14. Company's ongoing efforts to deeply penetrate into automotive ABS market segment and capture fair share of this highest growing segment has started paying dividend. This is well crystallized in terms of acceptance of company's products by MNC automotive companies who have started changing their procurement programme from overseas market to outsourcing from India. This is noteworthy that company's endeavor is contributing towards import substitution programme and also strengthening "Make in India"- an initiative launched by our Hon'ble Prime Minister. ABS consumption is well pronounced in two wheelers automotive industry which is in high growth trajectory as like domestic entrepreneurs, MNCs are also setting up shops to make India as their Global Hub for two wheeler manufacturing. This is creating a spurt in ABS market in India and the demand has outgrown the indigenous supply. Therefore it is deemed most expedient for your company to expand its capacity as quickly as feasible. Expansion of capacity without revamping technology is not prudent and therefore the ongoing capacity expansion programme to 67 KTPA from the existing 51 KTPA is being implemented by modernizing the manufacturing facility. In this context bold decisions were taken to replace old compounding equipments by ultra modern High-Tech equipments. Moreover the degree of automation which was confined to basic polymer manufacturing i.e. HRG and SAN has now been extended to compounding section as well which will have the benefit of fully automated pneumatic conveying system, ultra modern extruders and PLC operated high speed mixers. In this connection, globally lead equipment manufacturers viz. Coperion-Germany and JSW-Japan are involved. Furthermore the company is establishing state of the art research and development center at its Abu Road Plant situated at Plot No. SP-138-143, Ambaji Industrial Area, Abu Road, Dist. Sirohi (Rajasthan) - 307 026 replicating the R&D Center of Nippon A&L, INC, Japan with whom the company has established its Joint Venture- a separate entity under the name and style of 'Bhansali Nippon A&L Private Limited'. In the ambit of the expansion programme, the warehousing facility for the finished goods is being not only expanded but also getting modernized by deploying select pellet tracking system and appropriate material handling equipments being procured from Godrej and Boyce. This will contribute towards improving inventory management and control system and equip the company to serve its customers in a more efficient way. While by December 2015, the aforesaid expansion programme will be completed, concurrently company will commence activities pertaining to next two level of expansions viz. second phase of expansion from 67 KTPA to 85 KTPA and third phase of expansion from 85 KTPA to 150 KTPA, which is likely to be completed by 2017 and 2019 respectively. d. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES: Pursuant to Section 129(3) of Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, your Company does not have any subsidiary Company during F.Y. 2014-15; however it has one Joint Venture/ Associate Company viz. Bhansali Nippon A&L Private Limited having its Registered Office at Unit No. 302, 3rd Floor, Palm Court Commercial Complex, 20/4, Sukhrali Chowk, Sec-14, Opp. Huda Park, Gurgaon, Haryana - 122 001. The Report on the performance of aforesaid Joint Venture Company is separately attached with this Annual Report in Form No. AOC-1 at its Page No 78 forming part of the Audited Financial Statement of Company for 2014-15. e. DIVIDEND: Your Directors are pleased to recommend final dividend @ 10% on the nominal value of the total paid-up equity share capital of Company consisting of 16,59,05,640 Equity Shares of Rs. 1/- each for the financial year ended 31st March, 2015 (viz. dividend of ten paise per equity share). Your Company earned Profit After Tax of Rs. 5.40 Crores during the Financial Year 2014-15 as against Rs. 1.48 Crores during last Financial Year 2013-14. However since the Company has undertaken first phase of expansion programme to enhance its production capacity from existing 51 KTPA to 67 KTPA and requires to make substantial capital expenditures for same, the Company is constrained to conserve its resources to carry ahead the said expansion programme smoothly, hence only 10% dividend has been recommended by the Board. The aforesaid dividend, if approved by members, will be distributed out of the Net Profit of Company. 2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion and Analysis Report for the year under review, as required pursuant to the provisions of Clause 49 of the Listing Agreement, is annexed herewith vide Annexure I and forms an integral part of this Board Report. 3. INTERNAL FINANCIAL CONTROL SYSTEM OF COMPANY: Adequate Internal Financial Control system commensurating with the nature of the Company's business, size and complexity of its operations are in place and has been operating satisfactorily and effectively. During the year, no material weaknesses in the design or operation of Internal Financial Control system were reported. 4. PARTICULARS OF CONTRACT(S)/ARRANGEMENT(S) WITH RELATED PARTIES: All Related Party Contract(s)/Transaction(s) entered by Company during fiscal 2014-15 were in its ordinary course of business and on arm's length basis. There were no materially significant related party contract(s)/ transaction(s)/arrangements entered by the company with the Related Parties which may have a potential conflict with the interest of company. All related party transaction(s) are placed before Audit Committee for approval and thereafter such transactions are also placed before the Board for seeking their approval, whenever required. Since all the Related Party Transactions (RPTs) entered into by the Company were in ordinary course of business and were on arm's length basis, so Form AOC -2 is not applicable. However the details of RPTs, as required pursuant to respective Accounting Standards, are stated at Note no. 26 of the audited Financial Statements of Company forming part of this Annual Report. 5. PARTICULARS OF LOANS, ADVANCES & GUARANTEES GIVEN, INVESTMENTS MADE OR SECURITIES PROVIDED: Particulars of loans & advances and investments made by company during the F.Y. 2014-15 are stated in the Notes to Audited Financial Statement of Company as annexed to this Annual Report (Please refer to Note No. 12 and 14 thereof). Company has neither given any guarantee nor provided any Security during the said fiscal. 6. MATTERS RELATED TO CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL AND DECLARATION BY INDEPENDENT DIRECTORS: a. DIRECTORS (INCLUDING WOMAN DIRECTOR) AND KEY MANAGERIAL PERSONNEL: During the Financial Year 2014-15, Mr. P. R. Bhansali (DIN: 01391893) resigned from the Company's Board and its Committees w.e.f. 29th May, 2014 due to his other pre-occupations. Further, during the year, the members of the Company in their AGM held on 27th September, 2014, approved the appointment of Mr. M. C. Gupta (DIN: 01362556), Dr. B. S. Bhesania (DIN: 00026222) and Mr. Dilip Kumar (DIN: 06882358) as Independent Directors of Company for a period upto 31st March, 2019. In terms of provisions of Section 149 of the Companies Act, 2013, Ms. Jasmine F. Batliwalla (DIN: 00340273) was inducted by the Board as a woman Director of company viz. as an Additional Director (Non Executive-Independent Category) w.e.f. 30th March, 2015. She will hold office upto the date of ensuing Annual General Meeting of Company subject to her proposed appointment as an Independent Director in ensuing Annual General Meeting. Mr. Jayesh B. Bhansali (DIN: 01062853), Director of Company shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Mr. Jayesh B. Bhansali was also appointed as the Chief Financial Officer (CFO) of the Company w.e.f. 29th May, 2014 by the Board in accordance with the provisions of Section 203 of the Companies Act, 2013. Also, the term of appointment of Mr. Jayesh B. Bhansali as a Whole-time Director of the Company is due to expire on 22nd June, 2015. The Nomination and Remuneration Committee at its meeting convened on 30th May, 2015 recommended for his re-appointment and subsequently the Board at its meeting convened on 30th May, 2015 also approved the re-appointment of Mr. Jayesh B. Bhansali as a Whole-time Director designated as Executive Director & Chief Financial Officer (CFO) of Company for a further period of 3 years commencing from 1st April, 2015 i.e. up to 31st March, 2018 subject to approval of members in ensuing AGM. b. DECLARATION BY INDEPENDENT DIRECTORS: ^^^^ The Company has received declaration from all the Independent Directors of Company confirming that they meet the criteria of Independence as prescribed pursuant to the provisions of Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges viz. BSE Limited and National Stock Exchange of India Limited (NSE). 7. DISCLOSURES RELATED TO BOARD AND CORPORATE GOVERNANCE REPORT ETC: a. DISCLOSURES: The Board met five times during F.Y. 2014-15 viz. 29th May, 2014, 8th August, 2014, 27th September, 2014, 13th November, 2014 and 7th February, 2015. The detailed information with regard to the composition of Board and its Committee(s) and their meetings etc. are stated in the Corporate Governance Report of company, for sake of brevity, which forms part of this Annual Report. b. CORPORATE GOVERNANCE: The Company is committed to maintain the highest standards of Corporate Governance and adheres to its requisites set out by the respective authorities. The report on Corporate Governance as stipulated under the Listing Agreement is annexed herewith vide Annexure II and forms an integral part of this Board Report. Requisite certificate from the Auditors of the Company, M/s B.L. Dasharda & Associates, Statutory Auditors, confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of Listing Agreement is appended herewith vide Annexure II (A) and forms an integral part of this Board Report. Certificate issued by Managing Director and Executive Director & CFO of Company with regard to certification on Audited Financial Statement of the Company for F.Y. 2014-15 is also annexed herewith vide Annexure II (B) and forms an integral part of this Board Report. The Company has suitably laid down the Code of Conduct for all Board Members and Senior Management personnel of the Company. The declaration by CEO i.e. Managing Director of company related to the compliance of aforesaid Code of Conduct is also annexed herewith vide Annexure II (C) and forms an integral part of this Board Report. 8. COMPANY POLICIES: a. CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ITS POLICY: The Corporate Social Responsibility (CSR) regulations were not applicable to company as it did not qualify the criteria/threshold limit(s) as prescribed pursuant to Section 135 of the Companies Act, 2013. However CSR regulations have become applicable to the company from the current fiscal for which the company is vigilant. The CSR Policy of company has been approved by the Board and hosted on the website of company viz. www.bhansaliabs.com in compliance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibilities) Rules, 2014. The company has also constituted a CSR Committee. b. VIGIL MECHANISM/ WHISTLE BLOWER POLICY: Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors approved the Policy on Vigil Mechanism/Whistle Blower on 27th September, 2014, pursuant to which Whistle Blower(s) can raise their concern(s) in relation to reportable matter(s) (as defined in said Policy) and the same is also hosted on the website of the Company viz. www.bhansaliabs.com This Policy inter-alia provides a direct access to the Chairman of the Audit Committee, whenever exceptionally required and no Director(s)/ employee(s) has been denied access to the Chairman of the Audit Committee during the last fiscal. However, the company did not receive any complaint under its Vigil Mechanism/ Whistle Blower Policy during Financial Year 2014-15. Brief details about the policy are provided in the Corporate Governance Report forming pat of this Annual Report. c. RISK MANAGEMENT POLICY: The Board has approved a Risk Management Policy consisting of some risk elements identified with respect to the operations/activities of company; however the Board has not observed any eminent risk on company which can threaten its existence. 9. COMMITTEES OF THE BOARD OF DIRECTORS: The details with respect to the Committees of Board of Directors viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Corporate Social Responsibility Committee of Company have been stated in the Corporate Governance Report of the Company forming part of this Annual Report. 10. PERFORMANCE EVALUATION OF CHAIRMAN, DIRECTOR(S), COMMITTEE(S) AND FAMILIARIZATION PROGRAMME ETC: A statement indicating the manner in which the formal annual evaluation of performance of the Board as a whole, its Chairman, Committee(s) and Directors was carried out as well as the familiarization programme as conducted are annexed herewith vide Annexure III. 11. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: Pursuant to the Provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the requisite details are annexed herewith vide Annexure IV and are also available at the Registered Office of Company for inspection during its working hours and any member interested in obtaining such information may directly write to the Company Secretary of Company and the same shall be provided on such request. In addition to above, other requirements read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are also annexed herewith vide Annexure V. 12. AUDITORS AND THEIR REPORTS: The matters related to Auditors and their Reports are as under: a. STATUTORY AUDITORS: Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s B. L. Dasharda & Associates, Chartered Accountants, Mumbai (Firm Registration No. 112615W), the Statutory Auditors of Company, will hold office upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as they have confirmed their eligibility to the effect that if their re-appointment is made by members in the ensuing Annual General Meeting, it shall be within the prescribed limits and they are not disqualified for such re-appointment. Necessary resolution for re-appointment of the said Auditors is included in the Notice of AGM for seeking approval of members. b. AUDITORS' REPORT: The observations made by the Statutory Auditors in their Audit Report read with the relevant notes thereof as stated in the Notes to the Audited Financial Statement of Company for the Financial Year ended 31st March, 2015 are self explanatory and being devoid of any reservation(s), qualification(s) or adverse remark(s) does not call for any further information/ explanation(s) or comments from the Board under Section 134(3) of the Companies Act, 2013. c. SECRETARIAL AUDITORS: In terms of the provisions of Section 204, M/s Rathi and Associates, Practicing Company Secretaries, Mumbai have been re-appointed by the Board as Secretarial Auditors of Company for the financial year 2015-16. d. SECRETARIAL AUDIT REPORT: Secretarial Audit Report issued by M/s Rathi & Associates, Secretarial Auditors, in Form No. MR-3 for the financial year 2014-15 is annexed herewith vide Annexure VI and forms part of this Board Report. The said Secretarial Audit Report being devoid of any reservation(s), adverse remark(s) and qualification(s) etc. does not call for any further explanation(s)/ information or comment(s) from the Board under Section 134(3) of the Companies Act, 2013. e. COST AUDITORS: Pursuant to the provisions of Section 148 of the Companies Act, 2013, the Board has approved the re-appointment of M/s Joshi Apte & Associates, Cost Accountants, Pune, (Firm Registration No. 000240) as Cost Auditors of Company for Financial Year 2015-16 for carrying out the audit of Cost Records of the Company. Necessary resolution for ratification of remuneration of Cost Auditors is included in the Notice of AGM for seeking approval of members. 13. OTHER DISCLOSURES: Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under: a. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of Section 134(3)(a) and 92 (3) of the Companies Act, 2013 (read with Rule 12 of the Companies [Management and Administration] Rules, 2014), the extracts of Annual Return is annexed herewith vide Annexure VII in Form No. MGT-9 and forms an integral part of this Board Report. b. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars as required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are annexed herewith vide Annexure VIII and forms part of this Board Report. 14. GENERAL DISCLOSURES: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions pertaining to these matters during F.Y. 2014-15: a. Details relating to deposits covered under Chapter V of the Companies Act, 2013. b. Issue of equity shares with differential rights as to dividend, voting or otherwise. c. Issue of shares (including sweat equity shares and ESOS) to employees of the Company under any scheme. d. Instances with respect to voting rights not exercised directly by employees of the Company. Your Directors further state that: e. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any other Company. f. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. g. Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position, have occurred between the end of the financial year of the Company and date of this Annual Report. h. There has been no change in the nature of business of company during F.Y. 2014-15. i. Pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, no case pertaining to sexual harassment at workplace has been reported to company during F.Y. 2014-15. j. There was no revision of the financial statements of company related to Financial Year 2014-15. 15. DIRECTORS' RESPONSIBILITY STATEMENT: In terms of Section 134(5) of the Companies Act, 2013 ("the Act"), and in relation to the audited Annual Financial Statement of Company for the year ended 31st March, 2015, the Board of Directors hereby confirms 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. such accounting policies have been selected and 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 Company as at 31st March, 2015 and of the profit of Company for that year; c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of Company and for preventing and detecting fraud and other irregularities; d. the annual accounts of Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by Company and that such internal financial controls are adequate and were operating effectively; and f. proper systems have been devised to ensure compliance with the provisions of laws applicable to the company and that such systems were adequate and operating effectively 16. ACKNOWLEDGEMENT AND APPRECIATION: Your Directors would like to place their heartfelt thanks and sincere appreciation for the assistance, coordination and co-operation received from the Banks, Government, Statutory Authorities, Customers, Vendors and all Stakeholders who extended their constant patronage and support to Company in its growth as ever. Your Directors would like to express their sincere appreciation to Company's employees for their hard work, dedication, allegiance, commitment, sincerity and valuable improvements etc. made in the growth and performance of Company which contributed about 265% growth in the Profit after Tax (PAT) of Company during financial year 2014-15. Your Directors further place on record their deep appreciation for the able stewardship of MD of Company, Mr. B. M. Bhansali, in all sphere of activities of Company including ongoing expansion programmes etc. Your Directors place on record their deep appreciation for Mr. Jayesh B. Bhansali, Executive Director & CFO of Company also for his excellent efforts and contribution in the overall operational/ performance growth of Company and steering ahead towards its outstanding success. For and on Behalf of the Board M. C. Gupta Chairman (DIN:01362556) Place : Mumbai Date : 30th May, 2015 Registered Office Address: Bhansali House, A-5, Off Veera Desai Road, Andheri (West), Mumbai - 400 053 CIN : L27100MH1984PLC032637 Tel No: 022 - 2673 1779 - 85 Fax No : 022 - 2673 1796 Mail : investors@bhansaliabs.com < website : www.bhansaliabs.com |