DIRECTORS' REPORT Your Directors hereby present their Twelfth Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March 2015 3. DIVIDEND Your Directors have recommended a dividend of Rs 0.50 per equity share ( Last year Rs. 0.50 per share) for the year ended 31st March, 2015. The dividend of Rs.0.50 per share will be paid on the increased number of shares after the allotment of bonus shares. The dividend will be paid to the members, whose names appear in the register of members as on 28th September, 2015. In case of shares held in dematerialised form the same will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date. The dividend is free from Income Tax in the hands of the shareholders. An amount of Rs. 123.69 Lakhs ( Previous Year Rs. 47.27 lakhs) have been appropriated from the Profit towards Dividend and Dividend Distribution Tax. 4. SHARE CAPITAL The Authorised Share Capital of the Company was increased from Rs. 1,300 lakhs to Rs. 2,300 lakhs with your approval through the Postal Ballot. The Paid-up Capital was increased from Rs. 1,122.98 lakhs to Rs. 2,245.96 lakhs on account of issue of one fully paid equity share of Rs. 10 each for every equity share held on the record date fixed for this purpose. After the year end the Company has proposed to split each equity share of Rs. 10/- each into 5 equity shares of Rs. 2/- each. The Consent of the Shareholders has been obtained by way of Postal Ballot. The Board in due course would authorise a Corporate Action to give effect to the resolution After giving effect to the said resolution the Paid-up Share Capital of the Company will continue to be Rs. 2,245.96 lakhs but divided into 1,122.98 lakhs equity shares of Rs.2/- each. 5. OPERATIONS & ECONOMIC SCENARIO The Company has exceeded the targets fixed for the year. There was a growth of 10% in volume, 12% in value and 93% in profits - all three parameters of an inclusive growth. The volume growth shows the rising penetration of the company's products even the economic signs of are still not distinctly visible. Value growth above volume is an indication of increase in the qualitative acceptance of the products. The growth in profits is the result of the endorsement of the Company's products and business ethics which has resulted in better margins. This is the result of the adherence of the management to its vision of providing quality product not by chance but dependability. The economic scenario is expected to improve which would benefit the economy as a whole. The Company is geared up to take advantage on the national as well as international level. Its commitment to innovate and provide quality products on which the consumers can depend has been getting an increasing acceptance amongst its growing customers list. This list is expanding geographically and the Company is taking steps to put the necessary steps in place. Barring unforeseen circumstances, the Company, along with its subsidiaries expects to replicate the performance in the coming years. 6. FINANCE The Company continues to meticulously focus on judicious management of its working capital. The stress is on the individual parameters of the working capital as well as in totality. The Company has repaid the loan taken to invest in Malaysian subsidiary in April 2015 and has become almost a zero debt company. 7. SUBSIDIARIES a. Foreign Subsidiaries : Fineotex Malaysia Limited (FML), a Limited Company, was incorporated in Labaun Malaysia in 2011. FML in turn had controlling interest in 3 other companies in Malaysia that have established manufacturing and trading activities. These Companies are BT Biotex Sdn Bhd, BT Chemicals Sdn Bhd and Rovatex Sdn Bhd. Their turnover is higher than the parent company. The synergy of the businesses has helped all the companies. Fineotex Specialities FZE was incorporated in UAE on 25th January 2015. b. Indian Subsidiaries : FCL Landmarc Private Limited and Manya Steels Private Limited are the two fully owned Indian subsidiaries. FCL Landmarc Private Limited was incorporated to pursue Company's activities in the reality sector. Manya Steels Private Limited (Manya) was acquired for diversification The activity level in both the Companies is at a preliminary level and would commence commercial operations in the future. None of the Indian Subsidiaries is a material Subsidiary 8. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company along with its subsidiaries - both foreign and Indian - for the year ended 31st March, 2015 form part of this Annual Report. The same are prepared as per the applicable Accounting Standards prescribed in this regard and as required by the Listing Agreements. 9. PUBLIC DEPOSITS AND LOANS AND ADVANCES. The Company has not accepted any deposits from the public or the shareholders during the year or in the previous year. Security Deposits have been taken from the customers as a security against dues for goods sold to them and are not, in the opinion of the Board, in the nature of Public Deposits. Loans & Advances given to Subsidiaries are disclosed in the financial statements as required under the Accounting Standards and Listing Agreements. 10. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS. The details of Loans given to its subsidiaries and has made investments in Mutual Funds and Equity shares during the year are given in Annexure '1' forming part of this report. 11. RELATED PARTY TRANSACTIONS / CONTARCTS. The Transactions with the related parties entered during the year were in the course of business as followed for several years and in line with those approved in earlier years by the statutory authorities as required by the earlier law and were in force till end of March 2015. The shareholders have also given the approval to these contracts and transactions at the 11th Annual General Meeting of the Company held on 23rd September, 2014. These have been disclosed in the financial statements as well as per the Listing requirements. Approval of shareholders is also sought for certain modification and ratification as in the notice of the meeting. Details of related party transactions are given in Annexure '2' as put in the notice of the meeting.giving the details as per AOC-2 12. DIRECTORS Changes were made to the Board as required under the Companies Act, 2013 and the requirements of the Listing Agreement effective 1st October, 2014. As required by section 149 of the Companies Act, 2013, Mr, Manmohan Mehta and Mr. Alok Dhanuka were appointed as Independent Director and Mrs Ritu Gupta as Lady Director at the 11th Annual General meeting held on 23rd September, 2014. Mr. Navin Mittal is proposed to be appointed as Independent Director as per Section 149 of the Companies Act. The Company has received the necessary declaration from him giving his willingness and consent for appointment. The Board recommends his appointment as Independent Director for a period of five years. Messers Manmohan Mehta, Alok Dhanuka and Navin Mittal are the three Directors on the Board of the Company as per the Listing Agreements with the Stock Exchanges. As per the provisions of Section 149 of the Companies Act, 2013, at least one third of the Board should have independent Directors as defined under the section. Mrs Ritu Gupta was appointed as a Director at the last Annual General Meeting. Her appointment meets the criteria of having at least one Lady Director on the Board of the Company. She is related to the Whole-time Directors of the Company and therefore a Non-Independent Director liable to retire by rotation. As per the norms, Mrs Ritu Gupta is liable to retire by rotation at the ensuing Annual General Meeting and being eligible she offers herself for re-appointment. 13. BOARD MEETINGS The Board of Directors of the Company met seven times during the financial year. The details of various Board Meetings are provided in the Corporate Governance Report. 14. EMPLOYEES Key Managerial Personnel (KMP) The following have been designated as the Key Managerial Personnel of the Company Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: a) Mr. Surendrakumar Tibrewala - Chairman & Managing Director b) Mr. Sanjay Tibrewala - Whole-time Director & Chief Financial Officer c) Mr. A V Nerurkar - Company Secretary None of the KMP has resigned during the year under review. Particulars of Employees and related disclosures None of the employees were in receipt of remuneration of more than Rs. 60,00,000 during the year ended 31st March, 2015 or more than Rs. 5,00,000 per month during any part of the year. Disclosure with respect to the remuneration of Directors, KMPs and employees as required under section 197 of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure '3' to this Report. 15. AUDITORS AND AUDIT REPORT Messrs UKG Associates, the auditors of the Company, bearing ICAI Registration No Firm Registration No. 123393W, were appointed, at the last General Meeting, as Auditors for a period of five years - i.e. till the conclusion of 16th Annual General Meeting to be held in 2019. As per the provisions of Section 139 of the Companies Act, 2013 and Rules made there under, their appointment is to be ratified at each Annual General Meeting. The Audit Committee has recommended their reappointment which the Board has accepted. Board recommends their appointment. Your approval is required to ratify their appointment for 2015-16 and fix their remuneration for the said year. 16. INTERNAL AUDITORS : As per section 138 of the Companies Act, 2013. The Company internal control systems are manned by internal audit staff who work as per the directions of the Audit Committee. The Board and Audit Committee review from time to time the requirements of control and recommend necessary changes to strengthen them. 17. DECLARATION OF INDEPENDENT DIRECTORS: The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(7) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. 18. COST ACCOUNTING RECORDS AND COST AUDIT The Cost Audit Branch (CAB) of the Ministry of Corporate Affairs have issued CAB Order dated 24th January, 2012 making the products of the Company liable to Cost Audit under Section 148 of the Companies Act, 2013. That Order applied to accounting periods commencing on or after 1st April, 2012. The Board has therefore recommended the name of M/s V J Talati & Co. as Cost Auditors of the Company. The Board appointed them for 2014-15 and informed the Government accordingly. The shareholders also gave their approval for remuneration to be paid to them. With the notification of Companies (Cost Records and Audit) Rules, 2014, the Company is advised that it is not liable to Cost Audit since the turnover as per standalone financial statements of the Company is below Rs. 100 crores. 19. SECRETARIAL AUDIT As per Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 it is mandatory for the Listed Company, like yours, to have the secretarial records audited. As informed to you last year, the Board of Directors had appointed HS Associates, Company Secretaries as Secretarial Auditors for 2014-15. They have presented the report which forms part of this Report and is attached as Annexure '4'. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 20. POLICY RELATING TO DIRECTORS, KMP AND OTHER EMPLOYEES In line with the principles of transparency and consistency, your company has adopted the Nomination and Remuneration Policy which, inter alia, include criteria for determining qualifications, positive attributes and independence of a Director. The Remuneration policy is set out in the Annexure '5' to the Director's Report and is also available on the Company's website. 21. BOARD EVALUATION The Board has carried out an annual evaluation of it performance, the performance evaluation of Audit Committee was also carried out. The Evaluation of Board and its findings were shared individually with the Board Members. The Directors expressed their satisfaction with the evaluation process. 22. CORPORATE SOCIAL RESPONSIBILITY The Companies Act 2013, its Section and the Schedule thereto mandates that your Company spends at least 2% of its average last 3 years net after tax profit on Corporate Social Activities and explained therein. This was the first year of compliance for your Company and hence there was lack of clarity about the rules of implementation. The Company has formed a Committee which has gone through the requirements and decided to carry out the same through the Trust who carry out these activities. The Company had to Spend Rs. 14.46 Lakhs in 2014-15. However it has spent only Rs. 5 Lakhs till 31st March, 2015. The shortfall was due to lack of clarity with regard to spending the amount. The shortfall will be made good during the 2015-16. The details are given in a separate Annexure '6' to this Report. 23. RISK MANAGEMENT COMMITTEE As per the requirements of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of the same form part of the Corporate Governance Report. The business of the Company is in a continuous evolving stage with new products, their development, launch and marketing. The Risk Management Committee is developing various aspects so as to be able to minimise the risk in all spheres of the Company's business from finance, human resources to business strategy, growth and stability. 24. WHISTLE BLOWER POLICY/VIGIL MECHANISM: The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. 25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGO Information as required by the provisions of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is annexed and forms part of this report. Refer Annexure A 26. DISCLOSURE UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under the policy. The following is a summary of sexual harassment complaints and disposed off during the year 2014-15 No of Complains received; NIL No of Complaints disposed off: NIL 27. EVENTS AFTER THE YEAR END After the year end the Company has proposed to split each equity share of Rs. 10/- each into 5 equity shares of Rs. 2/- each. The Consent of the Shareholders has been obtained by way of Postal Ballot. The Board in due course would authorise a Corporate Action to give effect to the resolution. After giving effect to the said resolution the Paid-up Share Capital of the Company will continue to be Rs. 2,245.96 lakhs but divided into 1,122.98 lakhs equity shares of Rs.2/- each. If the splitting process is completed before the approval of the shareholders, the dividend of Rs. 0.50 piae per share of Rs. 10 each would be proportionately reduced to Rs. 0.10 piase per share of Rs. 2 each. 28. MANAGEMENT DISCUSSION AND ANALYSIS In accordance with the requirements of the clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd. a report on Management Discussion and Analysis is attached hereto (Annexure 'B') and form part of this Report. 29. CORPORATE GOVERNANCE Your Company would strive to set and achieve appropriate Corporate Governance practices. In accordance with the requirements of clause 49 of the Listing Agreement with the Stock Exchange, a report on the status of compliance of corporate governance norms is also attached. (Annexure 'C'). The Auditors certificate on the same is also attached. 30. EXTRACT OF ANNUAL REPORT Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31st March, 2015 in Form No. MGT.9 is attached herewith as Annexure '7' and forms part of this Report. 31. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and explanation and information obtained by them and as required under Section 134(3)(c ) of the Companies Act, 2013, your Directors confirm that: (i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure, if any; (ii) they have selected such accounting policies as mentioned in Note 2 to the Notes to Financial Statements and applied them consistently and made judgements 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; (iii) they have taken proper and sufficient care for 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; and (iv) they have prepared the annual accounts on a going concern basis (v) that proper internal controls were in place and that the financial controls were adequate and were operating effectively (vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 32. ACKNOWLEDGEMENTS Your Directors wish to thank the Company's stakeholders, Bankers and employees for their support extended to it throughout the year. For and on behalf of the Board Sanjay Tibrewala Alok Dhanuka (Executive Director & CFO) Director 00218525 06491610 Place : Mumbai Dated: 29-May-2015 |