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Poddar Pigments

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Directors Report Year End : Mar '16    Mar 15

Dear Members,

The Directors are pleased to present the Twenty Fifth Annual Report and the Audited Financial Statements for the year ended 31st March, 2016.

FINANCIAL RESULTS (Summary of key data)

[Rs. In Lacs]

Particulars 2015-2016

2014-2015

Revenue Receipts

35528

34580

Other Income

453

294

Total Revenue Receipts including

35981

34874

other income

Profit before Finance Cost,

Depreciation & Tax

2815

2537

Less: Finance Cost

43

59

Depreciation

262

285

Profit before tax

2510

2193

Less: Current Tax

656

550

Deferred Tax

20

12

Profit after tax

1834

1631

Balance brought forward from previous year 377

583

Profit available for appropriations

2211

2214

APPROPRIATIONS

Adjusted for depreciation on assets where

remaining life was Nil, recognized in retained

earnings

-

32

Interim Dividend on Equity Shares

265

-

Proposed Final Dividend on Equity Shares

-

265

Tax on Dividend

54

54

General Reserve

1379

1486

Balance Carried to Balance Sheet

513

377

RESULTS OF OPERATIONS AND THE STATE OF COMPANY’S AFFAIRS

The highlights of the Company’s performance as compared to previous year are as under

- Revenue from operations increased to Rs. 35,528 lacs as against Rs. 34,580 lacs

- PBIDT increased by 10.96% to Rs. 2815 lacs as against Rs. 2537 lacs.

- Profit before Tax increased by 14.45% to Rs. 2510 lacs as against Rs. 2193 lacs

- Earnings per share increased by 12.42% to Rs. 17.29 as against Rs 15.38

- Cash Profit increased by Rs. 294 lacs to Rs. 2772 lacs as against Rs. 2478 lacs

- Net Profit after tax increased by 12.45% to Rs. 1834 lacs as against Rs. 1631 lacs

REVIEW OF OPERATIONS

During the year under review, your Company performed well in all areas of its operations, with top line growth and consistent earnings, reflecting the effective corporate strategy of creating multiple drivers of growth. Your Company has maintained its leadership, mainly due to continuous focus on Research, Development and Technology up-gradation of innovative products and is reasonably confident to further improve its performance in forthcoming years.

During the year, your Company has achieved a turnover of Rs. 35528 lacs as against Rs. 34580 lacs in the previous year, registering an increase of 2.74% over the previous year. The growth in sales volume, despite a subdued economic scenario, was made possible due to focus on value added products and development of new products through R&D and better product mix.

EXPORT

Your Company achieved a direct export turnover of Rs. 9115 lacs. International buyers show preference to your company''s product mainly because of its quality, technical support, R&D service. The international market is expected to grow further, which will enable the company to achieve higher export turnover in the years to come.

DIVIDEND

The Company has declared and distributed an interim dividend of Rs. 2.50 per equity share of Rs. 10 each in March, 2016. This may be treated as final dividend for the year ended 31st March, 2016.

MARKETING

Through consistent efforts in maintaining and improving the international quality standards, your Company has created good demand for its products. This has helped in facing price competition in both domestic and international markets and also achieved increased volume. With sustained efforts, we expect further improvements in our performance in the current year. Your Company will continue to seek new markets while consolidating its hold over the existing customers.

RESEARCH AND DEVELOPMENT

Your Company considers R&D as an essential tool to maintain its technical advantage over competitors and to develop innovative products. R & D is central to achieving excellence in product quality with improved processes and optimization of available resources.

It makes continuous efforts to adopt and implement new technologies and to improve the product-mix/process, so as to create higher value items at lower costs, to widen its range of new generation master batches and to facilitate the production of customized products. It strives to leverage modern advances in science and technology and blend the same with classical concepts of product development.

Your Company has, over the years, invested significantly in its Research & Development (R&D) facility, as a key source of sustainable competitive advantage. The in-house R&D division of your Company, located at its plant, is recognized by the Department of Science and Industrial Research (DSIR), Government of India. Details appended in Annexure-I to this Report.

QUALITY INITIATIVES

Your Company has established various quality initiatives to meet or exceed the expectations of its customers. It has invested in various pilot plants and state-of-the-art testing equipments in order to carry out all relevant tests for master batches, which support the smooth running of its customers'' production processes.

Through close interaction with your Company''s customers and independent laboratories, your company receives continuous feedback, which it takes on board for the continued optimization of its products and processes.

STAR EXPORT HOUSE STATUS AND CRISIL RATING

Sustained exports has enabled your Company to maintain its Two Star Export House Status under the Foreign Trade Policy 2015-2020, being eligible for the same.

The Company''s Credit Rating is A/Stable/A1, assigned by CRISIL for its working capital borrowings, which signifies a strong degree of safety with regard to timely payments. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Act and the Articles of Association of the Company, Ms. Mahima P. Agarwal retires by rotation at the ensuing Annual General and being eligible, has offered herself for re-appointment.

The Company has received declarations from all the Independent Directors of the company confirming that they meet the criteria of independent directorship as prescribed under the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a Remuneration policy for selection and appointment of Directors, Senior Management and their remuneration.

The said policies are displayed on our company''s website.

The details pertaining to remuneration as required under 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 annexed and marked as Annexure-ll to this Report.

The present tenure of appointment of Shri S.S.Poddar, Managing Director & CFO expires on 30.09.2016 and the Nomination and Remuneration Committee of the Board, at its meeting held on 21.05.2016, recommended the payment of revised remuneration for remaining term of appointment i.e. from 01.04.2016 to 30.09.2016 and for re-appointment of Shri S.S. Poddar as Managing Director & CFO for a further period of three Years from 01.10.2016 to 30.09.2019.

Shri Gaurav Goenka has been appointed as an additional director of the company w.e.f. 28.05.2016.

MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. For further details, please refer report on Corporate Governance of this Annual Report.

CORPORATE GOVERNANCE

Your Company has been actively practicing the principles of good corporate governance over the years. It is committed to maintain the highest standards of corporate governance and adhering to the corporate governance requirements set out by SEBI. The Board of Directors supports the broad principles of corporate governance. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity.

The report on Corporate Governance (in accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors'' certificate on compliance by the Company and the Management Discussion & Analysis, have been included in the Annual Report as a part of this Report.

CONTRACTS AND ARRANGMENTS WITH RELATED PARTIES

All contracts/ arrangement/ transactions entered by the company during the financial year with related parties were in the ordinary course of business and at arm''s length basis. There are no materially significant related party transactions made by the company with promoters, key managerial personnel or other designated persons which may have potential conflict with interest of the company at large.

Your Directors draw attention of the members to Note no. 33 to the financial statement, which sets out the details of related party transactions.

COMPLIANCE WITH THE CODE OF CONDUCT

The Directors and Senior Management Personnel have reaffirmed their compliance with the code of conduct.

DEPOSITS

The company has neither accepted any deposits during the year under review, nor does it have any deposits outstanding at the year-end.

EMPLOYEES

The information required under Section 197 (12) of the Companies Act, 2013 read with Rules 5 (2) & 5 (3) of the Company''s (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in the Annexure-lll hereto forming part of the Report.

SUCCESSION PLANNING

Your Company has put in place a policy on succession planning to assess, develop, and retain a talent pool of associates, in order to ensure a continuity of leadership for all critical positions. MECHANISM FOR EVALUATION OF BOARD Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

The criteria covers various aspects for evaluation of Independent Directors and including participation at the Board/Committee meetings, effective use of knowledge and expertise, management of relationship with stakeholders, integrity and maintaining of confidentiality, unbiased behavior and judgment, exercise of objective independent judgment in the best interest of the Company, ability to contribute to and monitor corporate governance practice and adherence to the code of conduct for independent directors.

For evaluation of the Board aspects such as the development of suitable strategies and business plans, implementation of robust policies and procedures, size, structure and expertise of the Board are considered.

For evaluation of the Managing Director and Director & CEO

aspects such as achievement of financial/business targets prescribed by the Board, Development and management/ execution of business plans, operational plans, risk management and financial affairs of the organization and development of policies and strategic plans which harmoniously balance the needs of shareholders, clients, employees and other stakeholders, in alignment with the vision and mission of Company are considered.

For evaluation of Non-Executive Directors'' aspects such as participation in the Board/Committee meetings, effective deployment of knowledge and expertise, Independence of behavior and judgment are considered.

For evaluation of the Committees'' aspects such as discharge of its functions and duties as per its terms of reference, process and procedures followed for discharging its functions & effectiveness of suggestions and recommendations received are considered. For evaluation of the Chairperson of the Board aspects such as managing relationships with the members of the Board and management, providing ease of raising of issues and concerns by the Board members and promoting constructive debate and effective decision making at the board are considered.

The evaluation process has been explained in the Corporate Governance Report section in this Annual Report. The Board has approved the evaluation results as collated by the Nomination and Remuneration Committee.

AUDITORS AND AUDITORS'' REPORT Statutory Auditors

M/s K. N. Gutgutia & Co, Chartered Accountants, the present Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. They have furnished a Certificate to the effect that the re-appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and that they are not disqualified for re-appointment. They have confirmed their eligibility and willingness to accept office, if re-appointed.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments under Section 134 of the Companies Act, 2013. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. Cost Auditors

Complying with the provisions of Section 148 of the Companies Act, 2013 and the MCA General Circular No. 15/2011 dated April 11,2011, (as amended vide General Circular No. 36/2012 dated 6th November, 2012) subject to the approval of the Central Government, the Audit Committee has recommended and the Board of Directors had appointed M/s. K. G. Goyal & Associates, Cost Accountants, Jaipur being eligible and having sought appointment, as Cost Auditors of the Company to carry out the Cost Audit of all the products manufactured by the Company for the year ended March, 2016. Your Company submits its Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period.

Secretarial Auditor

Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014, the Board has appointed Shri B. L. Patni, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed and marked as Annexure-IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

ENVIRONMENT, SAFETY, ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company accords high priority to health, safety and environment, particularly in and around its facilities. Safety awareness is provided through regular safety awareness programs, basic fire safety training, mock drills etc. As a part of safety management system, a comprehensive safety manual has been developed for use by the operating and safety personnel. There haven''t been any accidents reported during the year under review.

In addition, energy conservation is a key priority for your Company and it continuously strives to achieve this through process improvements and through the enhancement of equipment capabilities.

Particulars relating to Energy Conservation (Refer Annexure-V), Technology Absorption (Refer Annexure-VI ) and Foreign Exchange Earnings and Outgo (Refer Annexure-VI I ), as required under section 134 of the Companies Act, 2013, are enclosed as a part of this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is a commitment from the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stakeholders and society.

The Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee. Report on Corporate Social Responsibility as Per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure - VIII to this Report.

The Company has spent Rs 42.60 Lacs, which is more than 2% of average net profit of the company for the last three years.

RISK MANAGEMENT

Pursuant to Section 134(3) (n) of the Companies Act, 2013 & under regulations 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. The Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures that are to be adopted by the Board. The company has adequate internal control systems and procedures to combat the risk. The Risk management procedure is reviewed by the Audit Committee and Board of Directors on a quarterly basis at the time of review of Quarterly Financial Results of the Company. This has also been covered in the Management Discussion and Analysis, forming part of this report.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and in terms of the Listing Agreements, a Vigil Mechanism, which is a whistle blower policy for directors and employees to report genuine concerns has been established. The said policy has been uploaded on the website of the Company.

PREVENTION OF INSIDER TRADING

SEBI (Prohibition of Insider Trading) Regulations, 2015 has came into effect from May 15, 2015. Pursuant thereto, the Company has formulated and adopted a new code for the Prevention of Insider Trading. This was done with a view to regulate trading in securities by the Directors and designated employees of the Company during the period when the trading window is closed.

INSURANCE

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

INTERNAL FINANCIAL CONTROLS

Your company has well established systems & rules for ensuring the orderly and efficient conduct of business, including adherence to company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparations of reliable financial statements. The required systems needed, to carry out risk assessment to identify risks along with their possible magnitude to determine risks in each process and to then develop and design internal controls to mitigate each risk, are in existence.

Our company has a well tested ERP system with requisite internal control to ensure financial safety as well as the timely preparation of reliable financial statements.

PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT During the year, the company had given inter-corporate deposit for a short period and the same has been squared off within the same year. The details of the investments made by company are given in Note no. 11 & 14 to the financial statements.

EXTRACT OF THE ANNUAL RETURN As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT-9 is annexed as a part of this Annual Report as Annexure-IX. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013, based upon the certification from SMPs, the Directors confirm:

a) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that the directors have selected such accounting policies and applied them consistently and have 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 as of 31st March, 2016 and of the profit of the Company for the period ended on that date;

c) that the directors have taken proper and sufficient care to ensure 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) that the directors have prepared the Annual Accounts on a ''going concern'' basis;

e) that the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively and

f) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds that were required to be transferred to the Investor Education and Protection Fund (I EPF). Pursuant to the provisions of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e.11,h September, 2015), on the website of the Company (www.poddarpigmentsltd.com) and also on the website of the Ministry of Corporate Affairs.

GENERAL

Your Directors state that no disclosure or reporting is required during the year under review as there were no transaction on the following items:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Employees'' Stock options Scheme (ESOS).

3. Holding or Subsidiary or Associate company.

4. Significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

5. Issue of any sweat equity shares.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act, 2013.

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 the Company.

ACKNOWLEDGEMENT

The Management is grateful to the various government and semi-government authorities, bankers, investors, marketing dealers, suppliers, vendors and customers for their valued support and co-operation.

The Directors also wish to place on record their appreciation for the dedication and excellent contribution of the employees in realizing and achieving the objectives of the Company. The enthusiasm of the executives, staff and workers has enabled the company to remain consistently on growth path.

For and on behalf of the Board of Directors

PLACE: JAIPUR R.K. Sureka S. S. Poddar

DATE : 28lh MAY, 2016 DIRECTOR & CEO MANAGING DIRECTOR & CFO

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