DIRECTORS' REPORT To The Members, The Directors of your Company have pleasure in presenting the 28th Annual Report of the Company together with Audited Accounts for the financial year ending 31st March, 2015. The Company has achieved production of 31136 MT and sale of 29838 MT Acrylic Fibre during the year under review as against 36121 MT and 36076 MT respectively during the previous year. The Sale and other incomes during the year were Rs.55117 lacs as against Rs.63113 Lacs. Acrylic Fibre demand was variable, while export demand remained strong, the domestic demand suffered due to substantial increase in dumping of Acrylic Fibre. Due to decline in overall sales, Gross profit before interest, depreciation and tax (GPBIDT) during the current year is also lower. The GPBIDT for the year under review is Rs.679 Lacs as against Rs.4515 Lacs during the previous year. The expenditure on interest and financial charges, are lower at Rs.1587 Lacs as compared to 2387 Lacs in previous year. After providing for depreciation, the Company suffered a loss of Rs.1755 Lacs. After Accounting for an exceptional income of Rs.257 Lacs mainly on account of claim awarded to the Company for the land acquired by the government for national highway, the Company incurred a net loss during the year of Rs.1498 Lacs compared to net profit of Rs.1132 Lacs during the previous year. RESERVES During the year, Company has exited from CDR system. In order to settle the recompense amount paid to the banks, Company has written back a sum of Rs.406.75 lac from Capital Reserves leaving a balance of Rs.1764.44 lacs. There is no change in Securities Premium Reserves and General Reserves during the year, which stand at Rs.39.23 lac and Rs.80.00 lac respectively. RESEARCH AND DEVELOPMENT The Company has an In-House R & D centre registered with the Ministry of Science & Technology, Govt. of India. During the year, the Company has been able to add some more new products such as dyed yarns. This will help in growth of sales in the current year. The Company is also working for energy conservation and reduction in the fuel cost with the help of in-house R&D. During the year under review, we have successfully upgraded our one boiler and work on upgrading another boiler is under process to save fuel cost. The Company had started work on installation of 9500 worsted spindles for spinning of acrylic yarn at an estimated cost of Rs.35.40 crore during the year 2013-14. Out of this, work on 6600 Spindles has since been completed and production started during the year (2014-15). Work on remaining spindles is going on and will be completed in 2015-16. FUTURE OUTLOOK Significant new capacities of Acrylonitrile (main raw material) manufacturing have started commercial production in the Asian Region (China) during the year 2014-15, thereby balancing its availability. On the other hand some capacities of Acrylic fibre have been closed permanently in the Middle East (Egypt) recently. With dollar appreciating and this Acrylic Fibre Capacity closure in Egypt recently, our export to Middle East markets will gain advantage. The shifting of Acrylonitrile manufacturing from USA/European Union region to Asia will be continuing during this year (2015-16) also. These changes will be good for steady growth of Acrylic fibre Industry in this area. Forum of Acrylic Fibre has taken up the issue of continuation of anti dumping duty with the Government on certain countries which are doing large scale dumping of fibre in Indian market and thus causing severe injury to the domestic industry. This is under consideration of the Govt. Authorities and shall help in saving domestic Industry from the adverse impact of dumping Softening of the commodity prices, alongwith above changes in the Industry structure will be good for improving the margins in Acrylic Fibre business. FINANCIAL STATUS There is no change in the issued and subscribed capital of Rs.13532.21 lacs. There are no equity shares with differential rights or sweat equity or ESOP or scheme of purchase of Company shares by employees or their trustrees. DIVIDEND As Company does not have any distributable profits computed under provisions of Companies Act, 2013, no dividend is being recommended. FIXED DEPOSITS The Company has not accepted any fixed deposits during the year under review. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY There are no significant and material changes occurred subsequent to the close of the financial year to which the Financial Statements relate and upto the date of this report that would impact the going concern status of the Company and its future operations. CORPORATE SOCIAL RESPONSIBILITY AND GOVERNANCE COMMITTEE During the year, your Directors have constituted a Corporate Social Responsibility and Governance Committee (CSR&G Committee) comprising Sh. R.K Garg as its Chairman Shri Dheeraj Garg and Shri A. S Chatha as other members. The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken within the framework of the CSR Policy and recommending the amount to be spent on CSR activities. Since the Company does not have net profits in the financial year in accordance with Section 197/ 198 of the Companies Act, 2013, the Company is not required to undertake any activity under CSR Rules. However, the Company has been voluntarily undertaking CSR activities such as for maintenance of district level library, maintenance of public parks at Distt. Headquarter, running a community kitchen for poor peoples and other social activities. Expenditure incurred on these during the year is Rs.11.18 lacs. SUBSIDIARY COMPANY There is no subsidiary Company reportable under Section 129(3) of the Companies Act, 2013. CORPORATE GOVERNANCE REPORT- DISCLOSURE REQUIREMENTS The Company is continuously taking steps to attain higher levels of transparency, accountability and equity in order to enhance customer satisfaction and stakeholders' value. The Company not only complies with the regulatory requirements but is also responsive to the stakeholders' as well as customers' needs. The Company already has an Audit Committee, a Stakeholder Relationship Committee and Nomination and Remuneration Committee duly constituted by the Board to look after various activities. The Corporate Governance practices followed by the Company are enclosed as Annexure to this report. EXTRACT OF THE ANNUAL RETURN The extract of the annual return as provided under Section 92(3) of the Act, in Form MGT-9, which forms part of the Board's report (Annexure-5) DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that : a. in the preparation of the annual accounts for the year ending 31st March, 2015, 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 laid down internal financial control to be followed by the Company and that such internal financial controls were adequate and were operating effectively. f. 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. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The internal control systems and processes of the Company cover operational efficiency, accuracy and promptness in financial reporting, compliance with laws and regulations and development of mature, disciplined and effective processes. The processes are also designed to meet the goals of cost, schedule, functionality and quality, thus resulting in higher levels of customer satisfaction. DIRECTORS A) Changes in Directors and Key Managerial Personnel Since the last Annual General Meeting, following changes have taken place in the Board of Directors: PSIDC nominated Shri Yogesh Kumar Goel, its Managing Director, as a Director and Chairman of the Company, in place of Shri Vikas Pratap effective from 05/06/2014 PNB nominated Shri Satish Kumar Dua, DGM and Circle Head of the Bank, as a Director in place of Shri Ashok Kumar Gupta effective from 14/08/2014. Smt. Tejinder Kaur, IAS has been appointed as an Independent Director on the Board effective from 30/03/2015. PSIDC, later, withdrew the nomination of Shri Yogesh Kumar Goel, as a Director and Chairman of the Company effective from 28/05/2015. PSIDC nominated Shri S K Singla, its Deputy General Manager, as a Director of the Company, in place of Shri A K Mahajan effective from 28/05/2015 Your Directors place on record appreciation of the valuable guidance rendered by Shri Vikas Pratap, Shri Yogesh Kumar Goel, Shri A K Mahajan and Shri Ashok Kumar Gupta during their association with the Company. Pursuant to the provisions of Section 149 of the Act, Shri M M Chopra, Shri B B Tandon and Shri A S Chatha were appointed as independent directors at the annual general meeting of the Company held on 29th September 2014. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of Independence as provided in Section 149(6) of the Act and there has been no change in the circumstance which could affect their status as Independent Director during the year. As per the provisions of Companies Act, 2013, Shri Satish Kumar Dua, Director, retire by rotation at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment. B) Declaration by an Independent Director(s) and reappointment, if any A declaration by Independent Directors stating that he/ they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 has been taken at the time of their appointment. C) Formal Annual Evaluation of Board The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"). The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issue to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors, The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS During the year under review, 4 Board Meetings were held, one each on 30th May 2014, 14th August 2014, 13th November 2014 and 14th February 2015. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATON AND OTHER DETAILS The Company's policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the Directors' Report. AUDIT COMMITTEE The Audit & Compliance Committee comprises of two nonexecutive Directors viz. Rear Admiral M. M. Chopra, AVSM (Retd.), Prof.(Dr.) B B Tandon and one Executive Director Shri H K Singhal. During the year, the committee held four meetings. Other details of the Audit Committee are included in the Corporate Governance Report which forms part of this report. The Board had accepted all recommendation of the Audit Committee. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM/WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES The Company has formulated and published a Whistle Blower Policy to provide vigil mechanism for employees including Directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of Section 177(9) of the Act and the revised Clause 49 of the Listing Agreement. There are no cases reported during the year. NOMINATION AND REMUNERATION COMMITTEE The committee has been constituted to review and recommend compensation payable to the whole-time directors including Managing Director and senior management of the Company. The committee reviews the overall compensation structure and policies of the Company with a view to attract, retain and motivate employees, reviewing compensation levels of the Company vis-a-vis other Companies and industry in general. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 There were no Loans/ Guarantee given or Investments made by the Company during the year. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: The particulars of every contract or arrangements entered into by the Company with related parties referred to in subsection (1) of section 188 of the Companies Act, 2013 pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) rules 2014, including certain arms length transactions under third proviso thereto have been disclosed in the financial statements and are enclosed in Form No. AOC-2 and the same forms part of this report. (Annexure-2) RISK MANAGEMENT POLICY The Board of the Company has formed a Risk Management Committee to frame, implement and monitor the Risk Management plan for the Company. The impact of various risks on the Company, and the steps taken to mitigate the same has been discussed in the Report on Management Discussion & Analysis annexed with this report. (Annexure 6) AUDITORS As per the Provisions of Section 139 of Companies Act, 2013, M/s S.C. Dewan & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of Annual General Meeting to be held in the calendar year 2017(subject to ratification of their appointment at every AGM). The Company has received a certificate from them pursuant to Companies (Audit & Auditors) Rules 2014 read with Section 139 & 141 of the Companies Act, 2013, confirming their eligibility for reappointment, and that they were not disqualified for reappointment. AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT The Auditors' Report and Secretarial Auditors' Report do not contain any qualifications, reservations or adverse remarks. Report of Secretarial Auditor is attached as an annexure which forms part of this report. (Annexure-3) LISTING OF SHARES Equity shares of the Company are listed on Mumbai and Calcutta Stock Exchanges. Listing fee to the BSE has already been paid in pursuance to clause 38 of the listing agreement. The Company has since filed an application for delisting of its shares from Calcutta Stock Exchange. However, the shares will continue to be traded on Mumbai Stock Exchange. DEMATERIALISATION Effective from 25th September 2000, the equity shares of your Company are being compulsorily traded in dematerialized form. As on 31st March 2015, a total of 1253 lacs equity shares, representing 92.72% of equity share capital have been dematerialized and 28688 shareholders are holding shares in dematerialized form. INSURANCE All the assets of the Company have been adequately insured. PARTICULARS OF EMPLOYEES Relations with the employees during the period under review continued to be peaceful and harmonious. MANAGERIAL REMUNERATION The information required under Section 197 of the Act read with rule 5 of the Companies (Appointment and remuneration of managerial personnel) rules 2014 is enclosed with this report (Annexure-4) The Board expresses deep appreciation of all sections of employees for their support and for making efforts to increase efficiency and growth of the Company. INDUSTRIAL RELATIONS Industrial relations continued to be cordial during the year under review. HEALTH, SAFETY AND ENVIRONMENT PROTECTION Our Company has complied with all the applicable health & Safety standards, environment laws and labour laws and has been taking all necessary measures to protect the environment and provide workers a safe work environment. Our Company is committed for continual improvement in Health & Safety as well as Environmental performance by involving all the employees to provide a Safety & healthy work environment to all its employees. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance for sexual harassment at workplace and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. During the financial year 2014-15, the Company has not received any complaint on sexual harassment and hence no complaints remain pending as of 31st March, 2015. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO A report under the provisions of Section 134(3)(m) of the Companies Act, 2013 with regard to Conservation of Energy and Technology Absorption is attached separately (Annexure-1) ACKNOWLEDGEMENT Your Directors acknowledge with gratitude the assistance, co-operation and support received by the Company from the Govt. of Punjab, PSIDc, Financial Institutions, Banks, other Statutory/ Govt. Bodies, Customers and Shareholders of the Company. On Behalf of the Board of Directors H. K. SINGHAL FINANCE DIRECTOR R .K. GARG MANAGING DIRECTOR Chandigarh 30.05.2015 |