DIRECTORS' REPORT To, The Members, Your Directors are indeed pleased to present the Thirtieth Annual Report and Audited Accounts of the Company for the financial year ended March 31, 2015. OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS : (A) Sales and Profit: The sales and other income of the Company during 2014-15 were flat at Rs. 151.27 crores compared to Rs. 152.38 crores of the previous year mainly because the prices of prime products were lower, partly reflecting lower international prices of crude soya oil. There was, however, 22.88% of volume growth in sales of the Company and that is a positive sign that Company was able to sell a much higher quantity corresponding to higher production during the year. The company has made Profit before tax of Rs.20.55 crores compared to previous year's Rs.28.39 crores. This is mainly due to relatively lesser realization in nutraceutical product which is exclusively exported. The previous financial year 2013-14 was exceptionally good for nutraceutical products due to sudden surge of demand for said products accompanied by fall in Indian Rupee vs. U.S. Dollar. Both these factors regained normalcy subsequently. In fact, market for Tocopherols went into reverse swing and prices remained low throughout the financial year 2014-15. (B) Raw Material: Required quantities of both the Raw materials were available from within India. (C) Export: Company was able to procure the required orders for its export products. Company made export of Rs. 38.57 crores during the year. (D) The Capital expenditure incurred during the year was mainly for ongoing raw material throughput capacity expansion. During the third quarter, the Company successfully commissioned its new High Pressure Fat Splitting plant and in the last fortnight of the financial year, new Fractionation column was commissioned. No material changes and commitments, affecting the financial position of the Company, have occurred between March 31, 2015 and the date of this Report. TRANSFER TO RESERVES: Your Directors recommend appropriation of Rs. 1.00 crore to General Reserve. DIVIDEND: Your Directors are pleased to recommend a dividend of Rs. 2.50 (i.e. 25 % ) per equity share (Previous Year Rs. 1.50/- per equity share) on the increased Equity Share Capital for the financial year ended March 31, 2015, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. MEETINGS OF THE BOARD : During the Financial Year 2014-15, 5 (five) meetings of the Board of Directors took place. For further details, please refer Report on Corporate Governance. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS : The Company has not given any loan, made investment, given any guarantee or provided any security - covered u/s. 186 of The Companies Act, 2013 - to any one. CORPORATE GOVERNANCE/MANAGEMENT DISCUSSION AND ANALYSIS REPORT: A Report on the Corporate Governance Code alongwith a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements as also the Management Discussion and Analysis Report are annexed to this Report. FIXED DEPOSITS: During the year Company has not accepted any Fixed Deposits. CREDIT RATING : CARE has assigned 'CARE A-' (Single A Minus) to Long Term Bank facilities (considered to be good for our size of manufacturing companies) and 'CARE A1' (A One) to Short Term Bank facilities. TECHNICAL ACHIEVEMENT: The Company keeps on exploring the possibility of technical improvement and process optimization for better yields / product mix / energy efficiency. DIRECTORS: Shri Utkarsh B. Shah shall retire at the forthcoming Annual General Meeting of the Company and being eligible, offer himself for reappointment. During the year under review, Ms. Sonal Vimal Ambani was appointed as Additional Independent Director u/s. 161 (1) of The Companies Act, 2013. She will hold the Office of Director upto the date of forthcoming Annual General Meeting. Notice u/s. 160 of The Companies Act is received for her appointment as an Independent Director of the Company. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS : The Company has received declarations from all the Independent Directors of the Company, inter alia, confirming that they meet the criteria of Independence as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR ETC. : Pursuant to the provisions of Section 178 and other applicable provisions, if any, of the Companies Act, 2013 read with the Rules made thereunder and Clause 49 of the Listing Agreement, the Board of Directors at their Meeting held on 11.08.2014 approved the Remuneration and Nomination Policy as recommended by the Nomination and Remuneration Committee. The salient features of the said policy covering the policy on appointment and remuneration and other matters have been explained in the Corporate Governance Report. BOARD EVALUATION : Based on the criteria for evaluation of Independent Directors and the Board as recommended by the Nomination and Remuneration Committee and as adopted by the Board, Board carried out evaluation of its own performance and that of the individual Directors. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirement of Section 134 of the Companies Act, 2013 with respect to Directors' Responsibility Statement, the Directors hereby confirm: (i) that in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III of the Companies Act have been followed and there are no material departures from the same; (ii) that the Directors have 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 viz. March 31, 2015 and of the profit of the Company for that period; (iii) that 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; (iv) that the Directors have prepared the annual accounts on a 'Going Concern' basis; (v) that 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 (vi) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. PERSONNEL: All the employees have worked with zeal and enthusiasm and your Directors wish to express their sincere appreciation to all the employees for their support, co-operation and dedicated services. PARTICULARS OF EMPLOYEES : There was no employee drawing an annual salary of Rs. 60.00 lacs or more where employed for full year or monthly salary of Rs. 5,00,000/- or more where employed for part of the year and therefore, no information pursuant to the provisions of Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is required to be given. LISTING Company's Securities are listed with the Stock Exchanges at Mumbai & Ahmedabad. The Company has already paid the listing fees to these 2 Stock Exchanges. CORPORATE GOVERNANCE : The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Statutory Auditors of the Company confirming the compliance with the conditions of Corporate Governance is attached to the Report on Corporate Governance. BUSINESS RESPONSIBILITY REPORT : The Business Responsibility Reporting, as required under clause 55 of the Listing Agreement is not applicable to the Company. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES : All contracts / arrangements / transactions with related parties entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrange-ment / transaction with related parties which could be considered material in accordance with related party transactions. CORPORATE SOCIAL RESPONSIBILITY : The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility (CSR) Policy which has been approved by the Board. The CSR policy is available at the Company's website viz. www.adifinechem.com The Company proposes to focus in the following core areas. (1) Addressing the needs of people / community with extreme hunger and poverty (2) Organising / sponsoring need based programmes for Health, inter alia, addressing health care concerns of different age groups, particularly of weaker economic strata (3) Providing financial support to non-profit making entities involved in preventive health care (4) Providing direct financial assistance to marginalized / under privileged sections of the society for medical treatment in hospitals / nursing homes. (5) Providing financial support to campaigns meant for creating public awareness in the area of eradication of diseases. (6) Initiatives relating to better hygiene and sanitation (7) Protecting environment through maintenance of soil, air and water. (8) Organising / sponsoring programmes for promotion of education (9) Granting educational scholarships to deserving students, particularly from weaker economic strata. (10) Organising / sponsoring rural development projects (11) Promoting gender equality, empowerment of women, setting up homes and hostels for women and orphans, setting up old age homes and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups. (12) Slum area development (13) Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women During the year, the Company has spent only Rs. 31,991/- on CSR activity. The Company, could not spend full amount of 2% of average net profits of last three financial years as the formation of the Committee itself was delayed. The CSR Committee, however, is now working on few things and will shortly come out with final plan to proceed with CSR activities. The Company is committed to spending upto 2% of average net profits of last three financial years during the current financial year. RISK MANAGEMENT POLICY : The Company has put in place Risk Management Plan. The Company has identified following elements of risk which in the opinion of the Board may threaten the existence of the Company : (1) Severe simultaneous drought in those Soya producing countries of the world on which Indian Crude Soya Oil refining is dependent. (2) Development of new and substantially cheaper manufacturing technologies using altogether new inputs for making various kinds of resins which are required for making paints, printing ink, hardners (3) New research on the benefits of Natural Vitamin E versus Synthetic one. The Company has identified other hard vegetable oils such as Palm to which it can switch over to in the extreme event of non-availability of soya based raw materials throughout the year. AUDITORS: The auditors M/s Jhaveri Shah & Co., Chartered Accountants, Ahmedabad retire at the conclusion of the ensuing Annual General Meeting and they have confirmed their eligibility pursuant to the provision of the Section 139 of The Companies Act, 2013 and willingness to be re- reappointed. The Report of the Statutory Auditors for the financial year 2014-15 does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDIT REPORT As required by Section 204 of The Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. Parikh Dave & Associates, Company Secretaries, Ahmedabad, a firm of Company Secretaries in Practice to conduct Secretarial Audit for the Financial Year 2014-15. The Report of the Secretarial Audit for the financial year ended on March 31, 2015 is annexed as Annexure to this Report. The said report does not contain any qualification, reservation or adverse remark. COST AUDITOR: As per the Companies (Cost Records and Audit) Rules, 2014 as amended by Companies (Cost Records and Audit) Amendment Rules, 2014, issued by the Central Government, the Company is required to get its cost records maintained for the products covered under Chapters 2917 and 3823 of Sr. No. 18 of table mentioned under Rule 3 (B) - Non-regulated Sectors audited by a Cost Auditor. Accordingly, the Board of Directors had, on the recommendation of the Audit Committee, appointed, subject to ratification by the members of the Company at the ensuing Annual General Meeting, M/s. Rajendra Patel & Associates, Cost Accountants as Cost Auditors for the financial year 2014-15.The Company proposes to appoint the said firm as Cost Auditors for financial year 2015-16 also. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUT GO: A. Conservation of Energy (a) Energy Conservation measures taken: Energy Conservation is an ongoing feature at Adi Finechem Ltd..The Company hadcommissioned energy efficient last generation boiler / steam generation / thermic fluid heaters towards the end of second quarter of the financial year. (b) Additional investments and proposals, if any, being implemented for reduction of consumption of Energy. (c) Impact of measures listed in (a) and (b) for reduction of energy consumption and consequent impact on the cost of production of goods: Despite an increase in the production volume and increase in effective electricity tariff rate for the Company, the above mentioned energy saving initiatives have helped / will help the company to contain its Power and Fuel costs. (d) Total energy consumption per unit of production as per prescribed Form 'A' : As per annexure attached. B. Technology Absorption The Company has an ongoing program for up gradation of existing products, improvement in manufacturing processes, reduction in product costs and increase in yield of prime intermediate / finished products. The Company was able to achieve higher yield of its prime intermediate / finished products on commissioning of its Fat Splitting / Fractional Column equipments. This is done through constant interaction with employees, customers and vendors. Company continued its experiment with process routes. C. Foreign Exchange Earnings and outgo Foreign Exchange Earnings Rs. 38,34,78,144/-Foreign Exchange Utilised Rs. 1,68,23,214/- Extract of Annual Return : The details forming part of the extract of Annual Return in Form MGT-9 in accordance with section 92(3) of the Companies Act 2013 read with Companies (Management & Administration) Rules, 2014 is annexed herewith as Annexure to this Report. ACKNOWLEDGMENTS: Your Board of Directors wishes to place on record its appreciation to the contribution made by the employees of the company. The company has achieved impressive growth through the competence, hard work, solidarity cooperation and support of employees at all levels. The Directors also wish to thank the Government authorities, financial institutions and shareholders for their cooperation and assistance extended to the company. For and on behalf of the Board of Directors, Utkarsh B. Shah Chairman Place : Ahmedabad Date : 4th May, 2015 |