DIRECTORS' REPORT DEAR MEMBERS, We present our report together with the audited accounts of the Company for the financial year ended on 31st March 2015: Performance The Company made a loss of Rs. 2,050 lacs as against a loss of Rs. 677 lacs during the previous period. Current year's loss can be mainly contributed by increase in Employee benefits expenses, Finance Cost, cost of implementation of SAP and restructuring of Business support Services. 2. DIVIDEND In view of losses, the Board of Directors does not recommend any dividend for the year ended 31st March 2015. 3.SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2015 was Rs. 3.37 Crore. During the year under review, the Company has not issued new shares. 4.MANAGEMENT'S DISCUSSION AND ANALYSIS : F.Y. 2014-2015 i) Industry structure and developments The Company operates in the business segment of consumer chemicals. The Company manufactures specialized formulations to serve its customers who in turn further manufacture consumer goods for Home and Personal Care, Decorative Paints, Agrochemicals and various industrial formulations. The Company is in the process of changing the product mix at plant by implementing changes in the plant. The new product mix would substitute imports and is aimed at achieving higher market share in Indian market. The Company is also planning to import and trade specialty formulations in the Indian market to differentiate its product offerings from the commodity market. ii) Operating and Financial Performance of the Company During the current year of April 2014 to March 2015, the sales amounted to Rs. 27,218 lacs. The Company is making efforts to increase the number of products whereby the Company will be in a position to increase the margin on sales. iii) Internal control systems and their adequacy During the year, no significant internal control issue was identified. Internal checks and controls appropriate to the growing size of the Company's business are being introduced. An independent firm of Chartered Accountant is entrusted with the Internal Audit of the Company. iv)Risks and concerns Slowdown in world economies may result in reduction in demand. v)Future Outlook The Company continues its efforts to increase the utilization of its installed capacities, which will be crucial to achieve an improvement in the operational results. Priority is given to capitalize on the quality of its products and services as well as to optimise its industrial operations and to assure a competitive supply of raw materials. The Company is also taking efforts to increase the product line whereby the Company will be in a position to increase the margin on sales. (The statement in this report including Management's Discussions & Analysis Report reflects Company's projections, estimates, expectations or predictions. These may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, since your Company's operations are influenced by many external and internal factors beyond the control of the Company.) 5.BOARD MEETINGS The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board met four times in the financial year 2014-15 i.e on 23rd May 2014, 19th September 2014, 14th November 2014 and 13th February 2015. 6.BOARD COMMITTEES During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees and also formed Corporate Social Responsibility Committee and Committee for issue of Duplicate Share Certificates. There are currently five Committees of the Board, as follows: •Audit Committee •Nomination and Remuneration Committee •Stakeholders' Relationship Committee •Corporate Social Responsibility Committee •Committee for Issue of Duplicate Share Certificates 7.DIRECTORS' RESPONSIBILITY STATEMENT In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm 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)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 and loss of the company for that period; (c)the directors 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)the directors had prepared the annual accounts on a going concern basis; and (e)the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 8.FRAUD REPORTING BY AUDITORS As required under Section 134(3) (ca) of the Companies Act, 2013, there are no instances of Fraud being reported by the Auditors. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6). 10.DIRECTORS In accordance with the provision of the Companies Act, 2013 Mr. Pierre Franck Valentin, Director of the Company, retire by rotation and being eligible, offer themselves, for re-appointment. The profiles of the Director seeking re-appointment form part of the Annexure to the Notice. Mr. Michel Ybert, Mr. Suresh Talwar, Mr. Prakash Raman and Mr. Ranjit Pandit resigned as Directors with effect from 13th February 2015, 16th February 2015, 31st March 2015 and 23rd April 2015 respectively. Your Directors place on record their sincere appreciation of the valuable contribution made by them during their tenure as Directors of the Company. The Board of Directors appointed Mr. Martin Laudenbach and Mr. Mukesh Malhotra as Additional Directors with effect from 13th February 2015 and 1st April 2015 respectively. Mr. Laudenbach and Mr. Malhotra hold office of Director upto the date of the forthcoming Annual general meeting of the Company. The Company has received a notice in writing from a member along with the deposit of requisite amount under Section 160 of the Act proposing the candidature each of Mr. Laudenbach and Mr. Malhotra for the office of Director of the Company. During the year, Mr. Guo Lin ceased to be Alternate Director to Mr. Michel Ybert with effect from 13 th February 2015. He was appointed as an Alternate Director to Mr. Martin Laudenbach under the Companies Act, 2013 with effect from the same date. The Board of Directors of the Company on the recommendation of Nomination and Remuneration Committee at their meeting held on 26th August 2015 have, sought to re-appoint Mr. Manoj Khullar as Managing Director, for a period of 3 (Three) years, effective from 1st January 2016. The Board seeks members' approval for appointment of Mr. Manoj Khullar as Managing Director of the Company. Details of the proposal for appointment of Mr. Martin Laudenbach and Mr. Mukesh Malhotra are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 49th Annual General Meeting. None of the Directors is disqualified from being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013. The provisions of Section 203 of the Companies Act 2013 and rules made thereunder relating to appointment of Key Managerial Personnel are not applicable to the Company. 11.COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION In accordance with Section 178 of the Companies Act, 2013 the Nomination and Remuneration Committee has formulated Remuneration Policy ("the policy"). The objective of the policy is to ensure that Executive Directors and other employees are sufficiently compensated for their performance. The Policy seeks to provide criteria for determining qualifications, positive attributes and independence of a director. Remuneration Policy Objective The objective of the policy is to ensure that Executive Directors and other employees are sufficiently compensated for their performance. The Policy seeks to provide criteria for determining qualifications, positive attributes and independence of a director. a)Directors Nomination and Remuneration Committee shall recommend the remuneration, including the commission based on the net profits of the Company for the Non-Executive Directors and Managing Director and other Executive Directors. This will be then approved by the Board and shareholders. Prior approval of shareholders will be obtained wherever applicable in case of remuneration to non-executive directors. The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and variable pay to Managing Director. Salary is paid within the range approved by the Shareholders. Annual increments effective 1st January each year, as recommended by the Nomination and Remuneration Committee, and is approved by the Board. Within the prescribed ceiling, the perquisites package is approved by the Remuneration Committee. The remuneration paid to Executive Directors is determined keeping in view the industry benchmark and the relative performance of the Company to the industry performance. Perquisites and retirement benefits are paid according to the Company policy as applicable to all employees. Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as independent professionals / Business Executives. Independent NonExecutive Directors receive sitting fees for attending the meeting of the Board and Board Committees and commission as approved by the Board and shareholders. The remuneration by way of commission paid to the Independent Non-Executive directors is determined periodically & reviewed based on the industry benchmarks. b)Other Employees The remuneration of employees largely consists of basic salary, perquisites, allowances and performance incentives. Perquisites and retirement benefits are paid according to the Company policy, subject to prescribed statutory ceiling. The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification & experience / merits, performance of each employee. The Company while deciding the remuneration package takes into consideration current employment scenario and remuneration package of the industry. The annual variable pay of managers is linked to the performance of the Company in general and their individual performance for the relevant year measured against Company's objectives fixed in the beginning of the year. Criteria for Board Membership Director The Company shall take into account following points: •Director must have relevant experience in Finance/ Law/ Management/ Sales/ Marketing/ Administration/ Research/ Corporate Governance/ Technical Operations or the other disciplines related to company's business. •Director should possess the highest personal and professional ethics, integrity and values. •Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities. Independent Director Independent Director is a director who has no direct or indirect material relationship with the Company or any of its officers, other than as a director or shareholder of the Company. Independent Director shall meet all criteria specified in Section 149(6) of the Companies Act, 2013 and rules made thereunder. 12.RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. 13.VIGIL MECHANISM The Company has established a vigil mechanism named as Whistle Blower Policy within the Company. The policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guided & proper utilization of the mechanism. The Whistle Blower Policy has been published on the Company's website http://www.solvayindia.in/en/solvay-in/rhodia-specialty-chemicals-india-ltd . There have been no instances of any personnel seeking access to the Audit Committee. 14.AUDITORS Statutory Auditors The Statutory Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, hold office for a term of Five (5) years subject to ratification by members at every Annual General Meeting. Accordingly, a Resolution seeking Member's ratification for the appointment of M/s. Deloitte Haskins & Sells is included at Item No. 3 of the Notice convening the Annual General Meeting. The Auditors have issued necessary certificate as required under Section 141 of the Companies Act, 2013 during the first year of their appointment. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Company has appointed M/s. Kishore Bhatia & Associates, Cost Accountant as the Cost Auditor of the Company for the financial year 2014-15. Cost Audit Report for the year 2013-14 was filed with the Ministry of Corporate Affairs on 25th September 2014 in XBRL format. Cost Audit Report for the financial year 2014-15 shall be filed with the Ministry of Corporate Affairs within 180 days from the closure of the financial year i.e. on or before 27th September 2015. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Alwyn D'Souza & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure A. The Report does not contain any qualification, reservation or adverse remark. Internal Audit M/s. Nikhil Narkar & Associates, Chartered Accountants has been appointed as Internal Auditor of the Company. 15.COMMENTS ON AUDITORS' REPORT There are no qualifications, reservations or adverse remarks or disclaimers made by Deloitte Haskins & Sells, Statutory Auditors, in their report and by Mr. Alwyn D'souza, Company Secretary in Practice, in his secretarial audit report. 16.EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure B. 17.PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 The Company has not provided any loans, Guarantees or made investments under Section 186 of the Companies Act, 2013 18.PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) During the financial year 2014-15, Company has entered into transactions with related parties, which were in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder. During the financial year 2014-15, there were no transactions with related parties which qualify as material transactions under the Companies Act, 2013. The details of the related party transactions as required under Accounting Standard - 18 are set out in Note 38 to the financial statements forming part of this Annual Report. The Form AOC- 2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure C. 19.CORPORATE SOCIAL RESPONSIBILITY In view of Losses for three financial years, the provision under Section 135 of Companies Act, 2013 relating to spending of Corporate Social Responsibility (CSR) is not applicable. 20.FIXED DEPOSITS The Company has not accepted any fixed deposits during the year. 21.MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There have been no 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. 22.EMPLOYEES As at 31st March 2015, the Company had 203 employees. We place on record our high appreciation of the contribution of employees at all levels for their co-operation and for reduction of cost of operations, wherever possible. In terms of the provisions of Section 134 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. The Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. 24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO As required by Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, relevant data pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is annexed herewith as Annexure D to this Report. 25.ENVIRONMENT, HEALTH AND SAFETY Your Company recognizes importance of Health and Safety of its employees and its neighborhood. Regular Safety Audits are being conducted. Your Company has adopted a Health, Safety and Environment (HSE) Policy, which applies to all employees and activities. 26.DELISTING AND CONTINUITATION OF EXIT OFFER The Company's Equity Shares were delisted from BSE Limited on 28th May 2014. As per delisting regulations, minority shareholders who did not tender their shares were given opportunity to tender their shares upto 27th May 2015. The promoters have decided to continue with the exit offer after the above date members are requested to tender their shares. 27.APPRECIATION Your Directors place on record their sincere appreciation of the wholehearted support extended by the Company's bankers, business associates, employees' union, shareholders, auditors and various statutory authorities, both, central and state Government. For and On Behalf of the Board of Directors Manoj Khullar Chairman & Managing Director PLACE : Mumbai, DATE : 26th August 2015 |