DIRECTORS' REPORT TO THE MEMBERS OF DE NORA INDIA LIMITED The Directors have pleasure in presenting the 26th Annual Report together with the Audited Accounts of your Company for the year ended 31st December, 2014. As required under the Ministry of Corporate Affairs General Circular 08/2014 No. 1/19/2013-CL-V dated April 4, 2014, the Financial Statements and other reports required to be attached to the Annual Report for Financial Year 2014 are governed by the relevant provisions, schedules, rules of the Companies Act, 1956. DIVIDEND The Directors of the Company recommend a Dividend of 15% of the paid-up capital (i.e. Rs. 1.5/- per share) for the year ended 31st December, 2014 absorbing an amount of Rs. 9.32 Million of distributable profits, inclusive of tax on dividend as against 40% dividend (i.e. Rs. 4/- per share) for the previous year 2013. The Directors feel the need to conserve the cash to efficiently maintain the operating cycle and for future growth prospects. The Final Dividend, subject to the approval of Members at the Annual General Meeting on 29th June, 2015, will be paid on or after 14th July, 2015 to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Monday, 22nd June, 2015 to Monday, 29th June, 2015 (inclusive of both dates). OPERATIONS The Company continues to remain the market leader in the Chlor Alkali and Cathodic Protection Systems business. However, the year under review was very difficult and challenging. Even though, the sales turnover of the Company for the year under review was lower than the previous year, the profitability for the year has been affected drastically and the Company has reported lower profit for the year ended 31st December, 2014, due to weak industrial activity and sluggish market conditions in India. The Company is making all round efforts to overcome these difficulties in this competitive environment and is optimistic that the Company's various initiatives and cost reduction schemes will give positive results in the current year. OUTLOOK The Company is looking forward to maintain its position of market leader in Membrane Recoating Activity and Cathodic Protection Systems. The Directors are hopeful that ongoing efforts made in the field of Chlorate Cells fabrication would pave way for the future growth of the Company. DNIL has successfully developed the new business of supplying of special electrodes for water treatment mainly for treating pharmaceutical waste water. DNIL was able to achieve the expected business in 2014 & looks forward to continue to develop this biz in 2015 as well. DNIL is also continuing to market new products of De Nora Next namely: Solar Mac NGOTM & Giselle. DIRECTORS During the year, Mr. Luca Buonerba, who was a NonExecutive Director, resigned from the directorship of the Company with effect from 13.02.2014 and Mr. Robert Scannell was appointed as the Additional Director with effect from 12.02.2014. Mr. Robert Scannell's appointment as a Non-Executive Director was regularized in the 25th Annual General Meeting of the Company held on 14.05.2014. In compliance with the provisions of the new Companies Act, 2013 and the Amended Clause 49 of the Listing Agreement, the Board of Directors of the Company appointed Mrs. Sarita D'Souza as an Additional Director on the Board to act as the Independent Woman Director w.e.f. 22.08.2014. Further, as per the provisions of the Companies Act, 2013, Independent Directors are required to be appointed for a term of five consecutive years and shall not be liable to retire by rotation. Accordingly, all the three Independent Directors, Mr. M. A. Sundaram, Mr. Ramesh V. N. P. R. Sardessai and Mrs. Sarita D'Souza were reappointed as the Independent Directors of the Company in the Extra-Ordinary General Meeting of the Company held on 29th September 2014 for a period of 5 years in compliance with the above provision. The Company has also received declarations from the said Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement. Mr. Ravi Menezes and Mr. Premal N. Kapadia stepped down as Directors of the Company during the year w.e.f. 27th November 2014 and 12th December 2014 respectively. The Board placed on record its appreciation for the valuable services rendered by Mr. Ravi Menezes and Mr. Premal Kapadia. The Board of Directors also deeply mourn the sad demise of one of the Independent Directors of the Company, Mr. Ramesh V. N. P. R. Sardessai on 18th December 2014 and acknowledges the outstanding contribution made by him as the Independent Director of the Company during his tenure. The Board has appointed Mr. Angelo Ferrari as an Additional Director of the Company with effect from February 19, 2015. In accordance with Section 161 of the Companies Act, 2013 (erstwhile Section 260 of the Companies Act, 1956), Mr. Angelo Ferrari holds office upto the date of the forthcoming Annual General Meeting of the Company and his candidature for appointment as a Director has been included in the notice convening the forthcoming Annual General Meeting of the Company. In accordance with the provisions of the Companies Act, 2013 (erstwhile Companies Act, 1956) and the Articles of Association of the Company, Mr. Krishan Khanna, Director of the Company, retires by rotation at the forthcoming Annual General Meeting and being eligible for re-appointment, offers himself for re-appointment. The Board recommends his re-appointment. A Brief resume of the Directors seeking appointment/ re-appointment, the nature of their expertise in specific functional areas, names of companies in which they hold directorships and the memberships of committees of the Board, their shareholdings, etc. are attached with the Notice of the Annual General Meeting of the Company. CORPORATE GOVERNANCE Pursuant to Amended Clause 49 of the Listing Agreement with the National Stock Exchange of India Ltd., Management Discussion and Analysis Report, Corporate Governance Report and Practicing Company Secretary's Certificate regarding compliance with the Code of Corporate Governance are made part of the Annual Report. CRITERIA FOR PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS As per the requirements of the provisions of the Amended Clause 49 of the Listing Agreement, the Company hereby discloses the criterias for the performance evaluation of Independent Directors of the Company as laid down by the Nomination and Remuneration Committee of the Board. The performance of the Independent Directors would be judged on the following parameters: > Expertise in the matters requiring their knowledge and skills. > Inputs received by the person during Board Meetings/ Committee Meetings > Problem solving skills and strategic decision making abilities > Contribution in the achievement of business targets > Professional knowledge, expertise and experience employed in the interest of the Company FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS The company has conducted familiarization programme for its Independent Directors on 31.10.2014 details of which could be found on the following web link: http://www.denoraindia.com/Downloads/en-US/> FamiliarisationProgrammeDNIL.pdf CEO/CFO CERTIFICATION A certificate from the Manager and the Chief Financial Officer on the financial statements of the Company, as required under Clause 49 of the Listing Agreement with the National Stock Exchange was placed before the Board. INFORMATION AS REQUIRED UNDER THE LISTING AGREEMENT The shares of the Company are presently listed at The National Stock Exchange of India Limited, Mumbai under the Stock Code DENORA EQ and the Company has paid listing fee upto March 31, 2015 in respect of the above stock exchange. ISO CERTIFICATION The Company has maintained its continued endeavor in terms of quality and maintenance of International Standards. The Company has got the prestigious certification for ISO 9001:2008 for Quality Management System from JAS-ANZ on 07.08.2013 valid till 06.08.2016 for the production and trading of Titanium Anodes/ Nickel Cathodes for Chlor-alkali Industry used for NaOH/ KOH/Cl2, Chlorate Cells for production of Sodium Chlorate, Electro Chlorinators for On-site Hypo, Cathodic Protection Systems and Surface Finishing Products. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, the Directors confirm that:- in the preparation of the annual accounts for the financial year ended December 31, 2014 the applicable accounting standards have been followed and that there are no material departures; - they have, in the selection of the accounting policies, consulted the Statutory Auditors and have 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 of the Company for that period; - they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; - they have prepared the annual accounts for the financial year on a going concern basis. AUDITORS M/s B S R & Co. LLP Chartered Accountants, Mumbai (ICAI Firm Registration No.101248W/W-100022), the statutory auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting of the Company. The said Auditors have been holding office as the Statutory Auditors of the Company for a period of 7 (Seven) consecutive financial years. In terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, a listed company cannot appoint or re-appoint an audit firm as an Auditor for more than two terms of five consecutive years. The period for which the firm has held office as Auditor prior to the commencement of the Companies Act, 2013 shall be taken into account for calculating the period of 10 (Ten) consecutive years, as the case may be. Further, Section 139 of the Companies Act, 2013 has also provided a period of 3 (Three) years from the date of commencement of the Act to comply with this requirement. Accordingly, they can be appointed as Auditors for a further period of 3 (three) years only in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. Hence, it was proposed to appoint M/s B S R & Co. LLP Chartered Accountants, Mumbai (ICAI Firm Registration No. 101248W/W-100022) as the statutory auditors of the Company to hold office from the conclusion of the Twenty Sixth Annual General Meeting till the conclusion of the Twenty Ninth Annual General Meeting of the Company, i.e. for a period of 3 (Three) years, subject to ratification of their appointment at every Annual General Meeting. The statutory auditors however, have conveyed their unwillingness to be appointed as the statutory auditors of the Company for the above term due to their internal restructuring. In lieu of the above, the Company proposed to appoint M/s B S R & Associates LLP Chartered Accountants, Mumbai (ICAI Firm Registration No.116231W/W-100024), a LLP firm under the same network of audit firm (M/s. B S R Affiliates) as that of the outgoing auditors, as the statutory auditors of the Company to hold office for the remaining term of 3 years, since, they are associated with B S R & Co. LLP Chartered Accountants, Mumbai, the ex-auditor of the Company, until the conclusion of the Annual General Meeting of the Company to be held in the year 2018. The Company has received a letter from them providing consent to the above appointment and to the effect that their appointment, if made would meet the requirements of the provisions of the Companies Act, 2013 and rules made thereunder. Accordingly, approval of the members to the appointment of M/s B S R & Associates LLP Chartered Accountants, Mumbai (ICAI Firm Registration No.116231W/W-100024) as the Statutory Auditors of the Company for a period of three years, to hold office from the conclusion of this Annual General Meeting till the conclusion of the Twenty-Ninth Annual General Meeting of the Company to be held in the year 2018 (subject to the ratification of their appointment at every Annual General Meeting) is being sought at the ensuing Annual General Meeting. CORPORATE SOCIAL RESPONSIBILITY (CSR) As per provision 135 of the Companies Act, 2013 and rules made thereunder, every Company having a net profit of Rs. 5 Crore during any financial year would be required to constitute a Corporate Social Responsibility Committee and spend 2% of its average net profits made during the immediately preceding financial years towards CSR activities in pursuance of a policy on CSR to be framed by the CSR Committee. It further requires the Board's report to give a note on such activities and in the event of shortfall from the specified quantum, the reasons for the same to be explained therein. Since the Company has a net profit of Rs. 5 Crore in its preceding financial years, the Company is covered under the provisions of Section 135 of the Companies Act, 2013 and the rules made thereunder. A Committee of the Board has already been constituted with Mr. M. A. Sundaram, an Independent Director as its Chairperson. The Committee has also framed a Policy on Corporate Social Responsibility in compliance with the above provision. During the year, the Company was unable to spend any amount on CSR activities due to paucity of time after forming the Committee till the year end. However, the Company continues to endeavor holding the CSR commitments in the true spirit going forward. CHANGE IN THE FINANCIAL YEAR OF THE COMPANY The provisions of the new Companies Act, 2013 mandates all Companies to adopt a uniform Financial Year (FY) of 1st April to 31st March with limited exception to a Company which is a holding company or subsidiary of a company incorporated outside India which may be required to follow a different FY for consolidation outside India. Hence, in order to fulfill the above requirement of law, the Board of Directors of the Company have decided to change the FY of the Company from 1st January - 31st December to 1st April - 31st March with effect from the close of the FY 2014. Accordingly, the Financial Year of the Company for 2015 would be for a period of 15 months commencing from 1st January 2015 to 31st March 2016. COST AUDITORS Pursuant to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, M/s K. C. Kohli & Co., Delhi, having Firm Registration No. 100541 had been appointed as the Cost Auditors of the Company for auditing the Company's cost accounts relating to the company products for the Financial Year ended 31st December 2014. The due date for fling the Cost Audit Report for the year ended 31st December 2014 is 29th June 2015 and the same will be fled with the Ministry of Corporate Affairs within the due date. PERSONNEL The information required under Section 217(2A) of the Companies Act, 1956, and the Rules framed there under is annexed hereto as Annexure 'A' and forms part of the Report. FIXED DEPOSITS The Company has not invited or accepted any fixed deposits during the financial year and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date. WHISTLE BLOWER POLICY The Company had formulated a policy to provide adequate safeguards against victimization of employee(s) and Director(s) who report any violation of the Code of Conduct or any unethical behaviour, actual or suspected fraud or improper practice to the Top Management and Audit Committee and to prohibit managerial personnel from taking adverse personnel action against employees/Directors as a result of the employees'/Director's good faith disclosure of alleged wrongful conduct to the Audit Committee on a matter of public concern. No personnel/Director has been denied access to the Audit Committee. The details of the establishment of such policy are disclosed on the Company's website www.denoraindia.com . RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year 2014 were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The Company has also framed a policy on dealing with the related parties and has disclosed the same on the Company's website at www.denoraindia.com . CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure 'B' forming part of this report. ACKNOWLEDGEMENT The Directors wish to convey their appreciation to all of the Company's employees for their enormous personal efforts as well as their collective contribution to the Company's performance. The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, Regulatory & Government authorities, Stock Exchanges and all other business associates for the continuous support given by them to the Company and their confidence in its management. For and On behalf of the Board of Directors M. A. SUNDARAM CHAIRMAN Place : Kundaim, Goa Dated: February 19, 2015 |