DIRECTORS' REPORT To The Members of BOROSIL GLASS WORKS LIMITED Your Directors present their Fifty Second Annual Report and the Audited Financial Statements for the year ended March 31, 2015. DIVIDEND The Board of Directors recommends a dividend of Rs. 25 /- per equity share for the year ended March 31, 2015. PERFORMANCE Your Company has generated a business profit of Rs. 67.75 crores, (including profit of Rs. 26.91 crores from sale of fixed assets - net of expenses) (before tax and exceptional items) during the year under review. Hence, its business profit for the year is Rs. 40.84 crores as compared to Rs. 46.01 crores (before tax and exceptional items) in the previous year. During the course of the year, the Company's operating profit grew from Rs. 13.43 crores to Rs. 17.80 crores. The Company's efforts for organic as well as inorganic expansion both in India and abroad continues. The Company has invested its investible funds of around Rs. 454 crores as on March 31, 2015 as compared to Rs. 409 crores in the previous year in a mixture of Debt markets, Equity/Equity Linked Instruments, Bonds/Debentures, Convertible Preference Shares, Non-Convertible Redeemable Preference Shares, Real Estate, Opportunity based Funds, Real Estate Funds and Mutual Funds. Scientific & Industrial Products Division (SIP) The Financial Year 2014-15 has been a challenging year for SIP Division. The first six months of the year were relatively slow as far as business is concerned due to constraints in institutional funding basically consequent to formation of new Government. However, the demand from the industry especially pharmaceuticals was successfully converted to sales by the team which was able to register an overall growth of 17% during the year. New products groups have been received well by the Pharma Customers. The Export team gained confidence in dealing with International clients which resulted in 44% growth over last year i.e. from Rs. 4.29 crores to Rs. 6.19 crores. The Company has been able to export to many new geographies. An international dealers meet was arranged in the month of November, 2014 which improved the perception of the International business houses towards the Company. Consumer Products Division The consumer products division has seen a growth of 10 °% over the last financial year. The Company's new range of products has been performing well. However, general market sentiment in the consumer sector has been depressed with the decline in footfalls in modern trade. Apart from the product categories introduced by the Company in the previous years namely, Melamine dinnerware, Appliances and Home Decor, the Company also introduced more items namely, Glass container with lid under the sub brand Klip-n-store, Electric rice cooker as Digikook and Electric Kettles. Exports of consumerware division during the year showed a marginal increase to Rs. 3.44 crores as compared to Rs. 3.20 crores in the previous year. The Company has made foray in the Middle East market through its subsidiary mentioned below. This apart, the Company, during the year explored new markets in U.S.A., Nepal and Singapore for its consumerware products as also looking for new export markets in Australia, Canada and Latin American countries, amongst others. Exports The overall exports of the Company during the year were Rs. 9.81 crores as compared to Rs. 7.49 crores during the previous year. Investments The Company has investments in various debt, equity and real estate instruments as per the Investment policy mandate approved by the Board. With the spurt in the equity market, the market value of equity components of the investment have gone up substantially during the year, although major portion of it remains unrealized and unbooked. SHARE CAPITAL The Paid up Capital of the Company is Rs. 3,00,60,000/- and Authorised Capital of the Company is Rs. 12,00,00,000/-. SUBSIDIARY & ASSOCIATES The Company has a wholly owned subsidiary namely Borosil Afrasia FZE (Free Zone Establishment) in Jebel Ali Free Zone situated in Dubai in United Arab Emirates (UAE).The said FZE is engaged in the business of marketing the Company's products in the Middle East and African markets. The Company has formulated a Policy on material subsidiaries of the Company. The said policy is available on the website of the Company at <http://www.borosil.com/doc_files/Policy%20for%20Determining%20Material%20Subsidiaries.pdf> The Company has two associate companies namely Gujarat Borosil Limited and Fennel Investment and Finance Private Limited by virtue of its holding of more than 20% of the respective equity share capital of those companies. CONSOLIDATED FINANCIAL STATEMENTS As per Section 129(3) of Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company, along with Borosil Afrasia FZE (subsidiary), Gujarat Borosil Limited (in which the Company exercises more than 50% of the voting rights as per Accounting Standard 21) and Fennel Investment and Finance Private Limited (associate company). Apart from standalone annual accounts, consolidated accounts, Statement containing salient features on financial statements of subsidiary in form AOC 1, the individual standalone of all subsidiary/associate as mentioned above will be uploaded on the website of the Company as per Section 136 of the Companies Act, 2013. The Company will provide a copy of separate audited financial statements in respect of its subsidiaries to any shareholder of the Company who asks for it and the said annual accounts will also be kept open for inspection at the Registered Office of the Company and that of the subsidiary company. The Consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23, AS 27 issued by the Institute of Chartered Accountants of India, forms part of this Annual Report. BOARD OF DIRECTORS, ITS MEETINGS, EVALUATION ETC. Board Meetings: The Board of Directors of the Company met seven times during the year on 29th May, 2014; 30th May, 2014; 13th August, 2014; 3rd November, 2014; 30th January, 2015 ; 5th March, 2015 and 24th March, 2015. Appointment of Independent Directors: The Company had in its last Annual General Meeting appointed four Independent Directors in the Company namely Mr. U.K. Mukhopadhyay, Mr. Naveen Kumar Kshatriya, Mr. S. Bagai and Mrs. Anupa R. Sahney for a period of five years i.e. upto 31st March, 2019 under the Companies Act, 2013. Declaration by Independent Directors: The Company has received declaration of independence in terms of Section 149(7) of Companies Act, 2013 from the above mentioned Independent Directors. Company's Policy on Directors' Appointment and Remuneration etc.: Under Section 178 of the Companies Act, 2013, the Company has prepared a policy on Director's appointment and Remuneration. The Company has also laid down criteria for determining qualifications, positive attributes and independence of a Director. Familiarization Programme for Independent Directors: A Familiarization programme was prepared by the Company about roles, rights and responsibilities of Independent Directors in the Company, nature of industry in which the Company operates business model of the Company, etc., which was presented to Independent Directors on 3rd November, 2014. The details of the above programme are available on website of the Company at <http://www.borosil.com/doc_files/ Familarisation % 20 Programme % 20 for % 20 Independen t% 20 Directors. pdf> Formal Annual Evaluation: The Formal Annual Evaluation has been made as follows: 1. The Company has laid down evaluation criteria separately for Board, Independent Directors, Directors other than Independent Directors and various committees of the Board. The criteria for evaluation of Directors (including the Chairman) included parameters such as willingness and commitment to fulfill duties, high level of professional ethics, contribution during meetings and timely disclosure of all the notice/details required under various provisions of laws. Based on such criteria, the evaluation was done in a structured manner through peer consultation & discussion. 2. Evaluation of the Board was made by a Separate Meeting of Independent Directors held under Chairmanship of Mr. U.K. Mukhopadhyay, Lead Independent director (without attendance of non - Independent Director and members of the management ) on 5th March, 2015. 3. The performance evaluation of all committees namely: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Corporate Social Responsibility Committee 4. Share Transfer Committee were done by the Board of Directors at its meeting held on 5th March, 2015. However, evaluation of Stakeholders Relationship Committee was done by the Board of Directors at their meeting held on 13th May, 2015. 4. Performance evaluation of non - Independent Directors namely Mr. B. L. Kheruka, Mr. P.K. Kheruka, Mr. Shreevar Kheruka and Mr. V. Ramaswami was done by Separate meeting of Independent Directors. 5. Evaluation of Independent Directors namely Mr. U.K. Mukhopadhyay, Mr. Naveen Kumar Kshatriya, Mr. S. Bagai and Mrs. Anupa R. Sahney was done (excluding the Director who was evaluated) by the Board of Directors of the Company at its meeting held on 5th March, 2015. 6. In addition, the Nomination and Remuneration Committee has carried out evaluation of every Director's performance at its meeting held on 5th March, 2015 as required under Section 178 (2) of the Companies Act, 2013. 7. The Directors expressed their satisfaction with the evaluation process. As reported in our last report, Mr. Dhanendra Kumar, who was an Additional Director, resigned w.e.f. 10th May, 2014. Mr. V. Ramaswami retires by rotation and, being eligible, offers himself for re-appointment. KEY MANAGERIAL PERSONNEL During the year, Mr. Rajesh Chaudhary, Chief Financial Officer of the Company was designated as Key Managerial Personnel under Section 203 the Companies Act, 2013. Further, Mr. Shreevar Kheruka who was already Managing Director & CEO of the Company and Ms. Lovelina Faroz who was working as the Company Secretary were designated as Key Managerial Personnel's (KMPs) of the Company under the abovementioned provisions of the Companies Act, 2013 in their respective positions. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A. Industry Structure and Developments The Company has traditionally been engaged in the business of low expansion borosilicate glassware including a wide variety of scientific, industrial and pharmaceutical glass items sourced both from international and domestic markets. The Company in the previous year introduced HPLC vials and Liquid Handling Systems as additional product categories. There is a vast market for the said vials and Liquid Handling Systems and the Company is trying to carve a niche for itself. The Consumer market has been depressed owing to a market disruption caused by the large e-commerce players. High discounts given by these companies have meant that customers are shopping from the comfort of their homes and spending less time in malls. Taking cognizance of this trend, the Company has listed its products in all the major e-tailors sites and has also started its own e-commerce site under www.myborosil.com The long term effects of this disruption in sales channel is yet to be ascertained. The entire Pharmaceutical industry, Research and Development, Education and Health segments of the market are major users of Scientific and Industrial Products, whereas Consumerware items cater to the need of the household sector. B. Opportunities and Threats - Opportunities: * With its strong distribution channel and brand, the Company has an opportunity to grow beyond glassware in both the SIP and Consumer products division. * With adequate reserves at its disposal, the Company has an opportunity to expand by inorganic expansion in the areas deemed fit. - Threats: * Availability of significant quantities of spurious goods bearing Company's brand name. * Usage of plastics and instruments in laboratories as substitute for glassware. * In view of volatile nature of equity and debt markets, the result of the investment activities of the Company may impact the profit of the Company. * Some of the investment may become sticky. C. Segment wise or Product wise Performance Scientific and Industrial Products Division: As reported above, the SIP division has seen a growth of 17 % over the last financial year inspite of sluggish market condition in the first half of the year. Consumerware Division: As reported above, the consumer products division has seen a growth of 10 % over the last financial year. Market conditions were tough due to low consumer sentiments and macroeconomic conditions. Investments: The Company made a net profit (pre-tax & net of expenses) of Rs.18.82 crores from its various investments during the year ended 31st March, 2015, as compared to net profit of Rs. 28.24 crores during the previous financial year. This dip was mainly owing to non accounting of huge unrealised income on mutual fund investments in this year, which has not been accounted as per General Accepted Accounting Principles and hence the figures are not comparable. The Company has entered into transactions in commodities through National Spot Exchange Limited (NSEL), which defaulted in timely repayment and as a result a sum of Rs. 8.57 crores remained unrealized as on 31st March, 2015. The Company continues to press its claim vigorously in conjunction with various investors' groups. However, without in any way diluting its claim to recover its dues, the Board considered it would be prudent to write off the said amount, which also impacted profitability from investments. D. Outlook Scientific and Industrial products The demand for traditional Scientificware from the industry especially pharmaceutical industry is expected to remain steady. This division will also be laying special emphasis on educational sector targeting top 200 schools in India for product promotions. The vision of SIP Division would be fundamentally based on the following: 1. New product introduction 2. Steady growth in existing product range 3. Tap the world potential for lab glassware The Company has expanded its exports to total 35 countries for the FY 2013-14. It expects to add 10 more countries to its list in the year 2015-16. Consumerware Products: 1. There is a large market in consumerware sector, which the Company would be looking to tap by adopting various products such as Soda Lime Tumblers. 2. In appliances, the Company plans to introduce Oven Toaster Griller (OTG) and other variants in Mixer Grinders. 3. The Company plans to introduce more variants of printed glass tumblers and Soda Lime bowls. 4. The Company is focusing on utility based products like serving tray in steel and glass and glass platters for dining table. 5. In Melamine range of products, the Company plans to introduce more designs and coloured accessories like bowls, trays etc Investments: While the investments in debt based instruments are likely to yield steady returns, the return from equity component is dependent on the stock market scenario. E. Risks and Concerns (a) Rupee depreciation and other inflationary pressures leading to dramatic increase in cost base. (b) Uncertainties in Government policies and delay in further economic reforms. (c) Increased usage of other scientific products e.g. plastics and instruments. (d) Competition from organised sector in trading of scientific and microwave glassware. (e) Spurious activities. (f) Competition from imported goods mostly from the grey market. (g) New product introduction may fail. Investments: a. Equity component of investment always carries some degree of risk in view of volatility in stock market; however the long term outlook remains attractive. b. Likewise investment in real estate and commodity related instruments also carries various types of risks. F. Adequacy of Internal Financial Controls The Company has adequate Internal Control System commensurate with its size and nature of business. Internal Audit is periodically conducted by an external firm of Chartered Accountants who monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, concern person/department undertakes corrective actions and thereby strengthens the controls. These Internal Audit reports are also reviewed by the Audit Committee. G. Discussion on Financial Performance with respect to operational performance Since the Company is debt free, the overall financial performance was in line with the operational performance, except that, the Company has income from its investible fund. H. Material Development in Human Resources, Industrial Relations and number of people employed During the year, the Company has prepared Vision Statement, both for 'Scientific & Industrial Products Division' and 'Consumer Products Division' as well as overall organizational goals to achieve growth aspirations of the organization for next three years, through deliberation by a Steering Committee comprising of Managing Director and Functional heads. Based on the above, the Company has evaluated its staff strength in various divisions. All new recruitments will also be made on the basis of said evaluation. The Company, as a part of its program for upgrading skills of its employees, arranged various training programs for executives at various levels including functional and soft skills training. During the year, the Company sponsored its three Vice-President level executives for Senior Leadership Development program conducted at the Indian Institute of Management, Ahmedabad. In order to maintain a work life balance, the Company organizes various events on regular basis including awareness programs on executive health and personal safety. The Company has also devised various employee benefit policies which are revised from time to time. The Company has also put in place Code of Business Ethics. The Company had 196 office staff / managerial personnel employed as on 31st March, 2015 in various offices/locations. CORPORATE GOVERNANCE REPORT A Report on Corporate Governance along with the Compliance Certificate from the Auditors is annexed hereto and forms part of this Report. The Board of Directors of the Company has evolved and adopted a Code of Conduct and posted the same on the Company's website, "www.borosil.com The Directors and senior Management personnel have affirmed their compliance with the Code for the year ended 31st March, 2015. FIXED DEPOSITS The Company has stopped accepting fresh fixed deposits since July 2006. DEVELOPMENT AND IMPLENTATION OF RISK MANAGEMENT POLICY The Company faces various risks in form of financial risk, operational risks etc. The Company understands that it needs to survive these risks in the market and hence have made a comprehensive policy on Risk Management. RELATED PARTY TRANSACTIONS The Company entered into various Related Party Transactions during the financial year which were in ordinary course of business. All such Related Party Transactions as also those transactions which were already in force were placed before the Audit Committee as also the Board for approval. The Company also gets approval of the Audit Committee of all transactions which are foreseen and repetitive in nature on quarterly basis. The Company obtained approval of shareholders through Postal Ballot during the year for entering into such Related Party Transactions which exceeded the threshold limits as mentioned under the Companies (Meetings of the Board and its Powers) Rules, 2013 or which were material in nature with Vyline Glass Works Limited and Gujarat Borosil Limited. The Company has formulated a policy on dealing with Related Party Transactions. The same is available on the website of the Company at <http://www.borosil.com/doc_files/Related%20Parties%20Transaction%20Policy.pdf> Particulars of Contracts or Arrangements entered into with Related Parties referred to in Section 188(1) of the Companies Act, 2013, in prescribed form AOC-2 is attached as an 'Annexure A' to this Report. The details of all the transactions with Related Party are provided in the accompanying financial statements. CORPORATE SOCIAL RESPONSIBILITY (CSR) As part of its initiatives under "Corporate Social Responsibility" (CSR), the Company has undertaken projects in the areas of Education, Water and Health which were in accordance with Schedule VII of the Companies Act, 2013. During the year the Company undertook a project through Chinmaya Vibhooti, a branch of Central Chinmaya Mission Trust for construction of a new well for the purpose of creating an Independent Source of water for drinking for ashram and its visitors. Such source of drinking water shall be great asset for them in far flung areas. The Company contributed to a project of IIT, Bombay where a Chair was being created namely 'Prof N.R. Kamath Chair' for Institutional excellence with an initial corpus of Rs. 6 crores. The said corpus will be utilized to typically enable a Research and Teaching appointment for a minimum of one academic semester of a world class academician either on sabbatical from another University or from the permanent faculty of IIT, Bombay. This will enable to raise the bar and make IIT Bombay a truly world class University in years to come. The Company also took part in organizing a General Medical camp through Rotary Club at Bharuch to undertake a 'preventive health care programme' in Bharuch District in Gujarat where the Company has its warehousing activities. Camps of such nature help to reach out to the utmost needy people of the surrounding areas. More than 2700 patients registered and were treated out of which 490 were recommended for surgery and more than 105 doctors rendered their honorary services. The said camp was organized in association with Indian Medical Association. The Company contributed to a project of Friends of Tribal Society for promoting education through 'One Teacher School' called 'Ekal Vidyalaya' for tribal children in rural areas. This project helped in improving the socio-economic condition of the tribal society, spreading literacy and thus contributing to the progress of the entire community. In terms of Section 135 of the Companies Act, 2013 and Rules made thereunder, the Company has constituted CSR committee comprising of the following members: 1. Mr. B.L. Kheruka 2. Mr. Shreevar Kheruka 3. Mr. U.K. Mukhopadhyay 4. Mr. Naveen Kumar Kshatriya out of which Mr. U.K. Mukhopadhyay and Mr. Naveen Kumar Kshatriya are Independent Directors. The CSR Committee of the Board of Directors a. indicates the activities to be undertaken by the Company (within the framework of activities as specified in Schedule VII of the Act) during the particular year. b. recommends to the Board the amount of expenditure to be incurred during the year under some of the activities covered in the Company's CSR Policy. c. monitors the said Policy. d. ensures that the activities as included in CSR Policy of the Company are undertaken by it in a phased manner depending on the available opportunities. Company's CSR Policy: The Board of Directors of the Company has approved the CSR Policy as recommended by the CSR Committee and the same has been uploaded on the Company's website at <http://www.borosil.com/doc_files/Corporate%20Social%20Responsibility.pdf> Initiatives taken by the Company during the year: The 2% of the net profits of the Company during the immediate three preceding financial years amounts to Rs. 58.15 lacs. The Company has spent a sum of Rs. 33.83 lacs during the year, as such the Company could not spend a sum of Rs. 24.32 lacs of the said 2% amount stipulated above. Reason being that the Company was looking for genuine and socially useful opportunity, where the money can be fruitfully used. The Company will make every endeavor to utilize its CSR expenditure during the current year. An Annual Report on CSR activities in terms of Section 134 (3) (o) of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility) Rules, 2014 is attached herewith as an 'Annexure B' to this Report. EXTRACT OF ANNUAL RETURN Extract of Annual Return in form MGT 9 is attached as an 'Annexure C' to this Report. VIGIL MECHANISM The Company has a vigil mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement. 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. AUDITORS M/s. Chaturvedi & Shah, Chartered Accountants, will retire as Auditors of the Company at the conclusion of the ensuing Annual General Meeting and being eligible have expressed their willingness for re-appointment. A written consent from the auditor has been received along with a certificate that their appointment if made, shall be in accordance with the prescribed conditions and the said Auditors satisfy the criteria provided in Section 141 of the Companies Act, 2013. The Report does not contain any qualification. COST RECORDS AND AUDIT Under the Section 148 of the Companies Act, 2013, the Central Government has prescribed maintenance and audit of cost records vide the Companies (Cost Records and Audit) Rules, 2014 to such class of companies as mentioned in the Table appended to Rule 3 of the said Rules. Although 'Glass' products are covered under the said Table, but the CETA headings under which Company's products are covered are not there. Hence, maintenance of cost records and also cost audit provisions are not applicable to the Company as of now. SECRETARIAL AUDIT Secretarial Audit Report dated 25th May, 2015 by Mr. Virendra Bhatt, Practising Company Secretary (CP no.124) is attached herewith as an 'Annexure D' to this Report. The Report does not contain any qualification. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND The Company has transferred a sum of Rs. 3,92,012 during the financial year 2014-15 to the Investor Education and Protection Fund established by the Central Government in compliance with Section 124 of Companies Act, 2013. The Company has made all the transfers to the said fund in due time. DIRECTORS' RESPONSIBILITY STATEMENT Subject to disclosures in the Annual accounts and also on the basis of the discussion with the Statutory Auditors of the Company from time to time, the Board of Directors state as under: (a) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) that we 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) that we 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) that we had prepared the annual accounts on a going concern basis; (e) and that we, 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) that we had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS A statement on Particulars of Loans, Guarantees and Investments is attached as an 'Annexure E' to this Report read with note no. 11 and 14 to the financial statements. EMPLOYEES' SAFETY The Company is continuously endeavoring to ensure safe working conditions for all its employees. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at work place which is in line with the requirements of the Sexual Harassment of women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. The Company has constituted an Internal Complaint Committee for its Head Office and branch/sales offices under Section 4 of the captioned Act. No complaint has been filled before the said committee till date. The Company has filed an Annual Report with the concerned Authority in the matter. DISCLOSURE UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION), RULES, 2014 The information required pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration), Rules, 2014 in respect of employees of the Company and Directors is attached as an ' Annexure F'. PARTICULARS OF EMPLOYEES Particulars of Employees as required under Rule 5(2) of the Companies (Appointment and Remuneration) Rules, 2014 is attached as an 'Annexure G'. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The Company is engaged in trading activity and it did not carry out any Research & Development activities nor introduced any new technology during the year. Hence, Rule 8 (3) of the Companies (Accounts) Rules, 2014 are not applicable with respect to those details. Particulars with regard to foreign exchange earnings and outgo are furnished under note 34 to 37 of 'Notes to the Standalone Financial Statements'. ACKNOWLEDGMENT Your Directors record their appreciation for the co-operation received from the Employees, Customers and last but not the least the shareholders for their unstinted support, during the year under review. For and on behalf of the Board of Directors B. L. Kheruka Chairman Date : 25th May, 2015 Place : Mumbai |