DIRECTORS' REPORT Dear Shareholders, 1. Your Directors have pleasure in presenting the 19th Annual Report of your Company together with the Audited Statements of Accounts for the year ended 31st March, 2015. 2. DIVIDEND: Your Directors have recommended a Final Dividend of Rs.0.225 (i.e. 22.5%) per equity share for the financial year ended 31st March, 2015 subject to approval of members in the ensuing Annual General Meeting. During the year under review, Interim Dividend of Rs.0.15 per equity share was declared and paid. The final dividend and interim dividend will absorb Rs.434.89 Lacs during the year under review compared to Rs.365.24 Lacs absorbed in the previous year. 3. CONSOLIDATED FINANCIAL AND OPERATIONAL REVIEW: • Consolidated Net Sales has increased by 32% from Rs.1,07,963.92 Lacs to Rs.1,42,937.68 Lacs. • Consolidated EBDITA has increased by 5% from Rs.16,014.38 Lacs to Rs.16,829.35 Lacs. • Consolidated Net Profit has marginally decreased from Rs.7,891.46 Lacs to Rs.7,589.40 Lacs. No material changes and commitments have occurred after the close of the year till the date of this report, which affect the financial position of your Company. 4. PROJECT IMPLEMENTATION AND PERFORMANCE REVIEW: • During the year under review, your Company has increased its installed capacity by 5% from 97,164 M.T. to 102,371 M.T. Your Company has utilized its capacity to the tune of 69,925 M.T. as against the last year's figure of 60,400 M.T. which shows a growth of 16%. • During the year under review, your Company has incurred a Capital Expenditure to the tune of Rs.354.17 Lacs towards the purchase of Land and balance Rs.3861.46 Lacs towards the Plant & Machinery, Factory Building and Other Capital Expenditure. • Your Company has already completed construction of new plant at Dholka, Gujarat adjacent to the existing plant. The installation of machineries will start from financial year 2015-16. 5. NEW ACQUISITIONS: Your Directors are pleased to inform that during the year under review, your Company has acquired controlling stake in following companies. Seal IT Services Limited, UK (Seal IT) : In August, 2014, your Company acquired 80% equity stake in Seal IT at a consideration of Rs.4,505.02 Lacs. Seal IT is in the business of manufacturing of comprehensive range of sealants, adhesives, building chemicals and allied products under the brand name "Bond-it". Manufacturing facility of Seal IT is situated at Elland, UK. Operating from a modern 40,000 sq. feet site, Seal IT has R & D facilities at plant and strictly adheres to ISO 9001 protocol. The main customers are Builders, Merchants, DIY, Sealant Applicators, Roofing Contractors, Roofing Distributors, Industrial Bitumen Manufacturers / Flooring Contractors, Flooring Distributors, Carpet Shops, Architects/Council Export/Wholesalers and Cash & Carry. Seal IT has been awarded ISO 14001 for environment policy compliance. Presently, Seal IT is exporting its products throughout Europe, Africa and Middle East. Details of financials of Seal IT are mentioned in Annexure - A annexed to this report. Resinova Chemie Limited (Resinova) : In November, 2014, your Company acquired 76% equity stake in Resinova at a consideration of Rs.21,464.62 Lacs. Resinova is in the business of manufacturing and marketing of a highly diversified range of adhesives and sealants and allied products under the different brand name viz. "Bondtite", "Resibond", "Bondset", "Solvobond", "Vetra", "Brush bond" and "Zesta" etc. Manufacturing facility of Resinova is situated near Kanpur, Uttar Pradesh. Resinova's supply chain network consists of 11 branch offices and more than 1,700 channel partners reaching out to around 4,00,000 retail outlets across India. Resinova is amongst the leading players in epoxy adhesives sector in India. Details of financials of the Resinova are mentioned in Annexure - A annexed to this report. Both the above acquisitions will synergize with your Company's existing businesses by deepening and widening its product offering and shall further consolidate its adhesives and sealants business which is already carried out by subsidiary of your Company viz. Advanced Adhesives Limited. 6. QUALIFIED INSTITUTIONAL PLACEMENT: Your Company has successfully completed a Qualified Institutional Placement (QIP) of its Equity shares in December 2014. In terms of SEBI Regulations, the issue price was fixed at Rs.402.52 (including a premium of Rs.401.52) per Equity share. 59,84,519 equity shares were allotted to the investors and an amount of Rs.24,088.89 Lacs was raised through the QIP. Entire proceeds has been utilised for the purposes mentioned in the offer document, there is no unutilised fund as on 31st March, 2015. 7. SUBDIVISION OF EQUITY SHARES: During the year under review, your Company has sub-divided its equity shares bearing the face value of Rs.2/- (Rupees Two only) each into fully paid up equity shares bearing the face value of Rs.!/- (Rupee One only) each fully paid. 8. SUBSIDIARY/ASSOCIATE COMPANIES: As on 31st March, 2015, your Company has 4 direct subsidiaries, 1 step down subsidiary and 1 associate company. During the year under review, Resinova Chemie Limited and Seal IT Services Limited, UK became subsidiaries of your Company as mentioned above in this report. A statement containing salient features of the financial statement of subsidiary/joint venture (associate) companies in the prescribed format (i.e. Form AOC-1 as per Companies (Accounts) Rules, 2014) is enclosed as Annexure - A to this report. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including consolidated financial statements and audited accounts of each of the subsidiary are available on www.astralpipes.com. These documents will also be available for inspection during working hours at the registered office of your Company at Ahmedabad, Gujarat. Any member interested in obtaining such document may write to the Company Secretary and the same shall be furnished on request. 9. CONSOLIDATED FINANCIAL STATEMENTS: The Consolidated Financial Statements of your Company prepared in accordance with the provisions of the Companies Act, 2013, Listing Agreement and relevant Accounting Standards issued by the Institute of Chartered Accountants of India form part of this Annual Report. 11. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion and Analysis Report which as stipulated under the Listing Agreement forms part this Directors' Report. 12. CORPORATE GOVERNANCE: Corporate Governance Report which as stipulated under the Listing Agreement entered into with the Stock Exchanges forms part of this Directors' Report. 13. INSURANCE: The Fixed Assets and Stocks of your Company are adequately insured. 14. FIXED DEPOSITS: Your Company has not accepted any Fixed Deposits as defined under Section 73 of the Companies Act, 2013 and rules framed thereunder. 16. CORPORATE SOCIAL RESPONSIBILITY: In accordance with the provisions of section 135 of the Companies Act, 2013 and the rules made thereunder, your Company has constituted Corporate Social Responsibility Committee of Directors. The role of the Committee is to review CSR activities of the Company periodically and recommend to the Board amount of expenditure to be spent on CSR annually. Annual Report on CSR activities carried out by the Company during FY 2014-15 is enclosed as Annexure - B to this report. 17. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, your Directors hereby confirm the following: a. In the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed; b. The directors have selected such accounting policies and applied consistently and judgement 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 towards the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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, which are adequate and operating effectively; f. The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. M/s. Deloitte Haskins & Sells, Chartered Accountants were appointed as Statutory Auditors of your Company at the previous Annual General Meeting held on 25th August, 2014 for a period of three years subject to ratification by members at every consequent Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing Annual General Meeting. Your Company has received a confirmation from the said Auditors to the effect that their appointment, if made, at the ensuing Annual General Meeting would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Auditors: Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its plastic & polymers activity is required to be audited. Your Directors has, on the recommendation of the Audit Committee, appointed M/s V. H Savaliya & Associates, Cost Accountants to audit the cost accounts of the Company for the financial year 2015-16 at a remuneration of Rs.1.25 Lacs. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members' ratification for the remuneration payable to M/s V. H Savaliya & Associates is included in the Notice convening the ensuing Annual General Meeting. Secretarial Auditor: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors appointed Ms. Monica Kanuga, Practising Company Secretary to undertake the Secretarial Audit of the Company for FY 2014-15. Secretarial Audit Report for FY 2014-15 is enclosed as Annexure - C to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 19. RISK MANAGEMENT AND INTERNAL FINANCIAL CONTROL: Your Company has an Internal Financial Control System commensurate with the size, scale and complexity of its operations. Your Company has adopted proper system of Internal Control and Risk Management to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that the transactions are authorized, recorded and reported quickly. 20. SIGNIFICANT AND MATERIAL ORDERS: There are no significant and material orders passed by any regulator or court or tribunal impacting the going concern status and your Company's operations in future. 21. BOARD EVALUATION: In compliance of the Companies Act, 2013 and clause 49 of the Listing Agreement, the performance evaluation of the Board / Committees was carried out. The evaluation process has been explained in the Corporate Governance Report. 22. RELATED PARTY TRANSACTIONS: All the related party transactions are entered into during the financial year under review were in ordinary course of business and on an arm's length basis. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. All Related Party Transactions are placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors for their review and approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and the same can be accessed at http://astralpipes.com/SystemUpload/InvestorRelationPDF/108 L.pdf.The details of the transactions with Related Party are provided in the accompanying financial statements. 23. NUMBERS OF BOARD MEETINGS: The Board of Directors met seven times during the year under review. The details of board meetings and the attendance of the directors are provided in the Corporate Governance Report. 24. DIRECTORS: Mr. Anil Kumar Jani was, on recommendation of Nomination and Remuneration Committee, appointed by the Board of Directors as an additional director (Non-Independent) under section 161 of the Companies Act, 2013 w.e.f 28th January, 2015 who shall hold office upto the date of ensuing Annual General Meeting. The Company has received a notice as per the provisions of Section 160 of the Companies Act, 2013 from a member proposing his appointment as Director. The Board of Directors recommends his appointment. Mr. Narasinh K Balgi was, on recommendation of Nomination and Remuneration Committee, appointed by the Board of Directors as an additional director (Independent) under section 161 of the Companies Act, 2013 w.e.f. 28th January, 2015 who shall hold office upto the date of ensuing Annual General Meeting. The Company has received a notice as per the provisions of Section 160 of the Companies Act, 2013 from a member proposing his appointment as Director. He is proposed to be appointed as an Independent Director for a period of five years i.e. to hold office upto 27th January, 2020. The Board of Directors recommends his appointment. Mr. Sandeep P. Engineer was, on the recommendation of Nomination and Remuneration Committee, re-appointed as a Managing Director of your Company by the Board of Directors for a period of 3 years w.e.f. 1st February, 2015. The said re-appointment is subject to approval of members of the Company in ensuing Annual General Meeting. Pursuant to Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Jagruti S. Engineer is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The requisite particulars in respect of Director seeking re-appointment are given in Corporate Governance Report. The Company has received necessary declaration from each independent director under section 149(7) of the Companies Act, 2013, the he meets the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164 of the Companies Act, 2013. Details of policy of appointment and remuneration of directors has been provided in the Corporate Governance Report. Necessary resolutions (alongwith explanatory statement) for appointment/re-appointment of the aforesaid directors have been included in the notice convening the ensuing Annual General Meeting. During the year under review, Ms. Zankhana Trivedi resigned as Company Secretary w.e.f 1st October, 2014. Mr. Amish Shah was appointed as Company Secretary from the same date. Upon resignation of Mr. Amish Shah w.e.f 31st January, 2015, Mr. Krunal Bhatt was appointed as Company Secretary w.e.f 2nd February, 2015. The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure - D to this report. A statement containing the names and other particulars of employees in accordance with 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 is appended as Annexure - E to this report. No employee has received remuneration in excess of the limits set out in rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during FY 2014-15. The particulars of Section 134(3)(m) with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to the Companies (Accounts) Rules, 2014 are provided in the Annexure - F to the Report. Your Company has maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinted efforts of the employees have enabled your Company to remain at the forefront of the industry. Your directors place on record their sincere appreciation for significant contributions made by the employees through their dedication, hard work and commitment towards the success and growth of your Company. The Directors wish to thank Specialty Process LLC., U.S.A for the technical and financial support extended to your Company throughout the journey of your Company. Your Directors take this opportunity to place on record their sense of gratitude to the Banks, Financial Institutions, Central and State Government Departments, their Local Authorities and other agencies working with the Company for their guidance and support. For, Astral Poly Technik Limited (Sandeep P. Engineer) Managing Director (Jagruti S. Engineer) Whole Time Director Date : 28th May, 2015 Place : Ahmedabad |