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Prima Plastics Directors Report, Prima Plastics Reports by Directors
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Prima Plastics

BSE: 530589|ISIN: INE573B01016|SECTOR: Plastics
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Directors Report Year End : Mar '16    Mar 15

Dear Shareholders,

The Directors have great pleasure in presenting the 22nd Annual Report along with the Audited Statement of Accounts of the Company for the year ended March 31, 2016.

(Rs. In Lacs)

FINANCIAL RESULTS

2015-2016

2014-2015

Gross Income

9,784.56

8,873.03

Profit before Depreciation, Finance Cost and Tax

1,406.57

652.12

Less : Depreciation

176.34

113.53

Less : Finance Cost

26.32

106.49

Profit before Taxation

1,203.91

432.10

Less : Current Tax

241.41

87.87

Profit after Tax

962.50

344.23

Add : Balance b/f from previous year

2,004.50

2,063.00

Balance available for appropriation

2,967.00

2,407.23

Appropriation :

Balance c/f

2,967.00

2,407.23

Less : Interim Dividends / Proposed Dividend (p.y.)

220.01

165.01

Less: Dividend Tax

44.79

33.00

Less : General Reserve

50.00

50.00

Less : Adjustment in Fixed Assets

Nil

17.91

Less : Deferred Tax

Nil

136.81

Balance c/f to Balance Sheet

2,652.20

2,004.50

OPERATIONAL PERFORMANCE

Net Sale from operation on standalone basis increased to Rs.9,312.52 Lacs as against Rs.8,507.87 Lacs in the previous year, a growth of 9.46%. The performance includes result of sole plastic business. Cost of goods sold as a percentage to net revenue from operation decreased to 60.73% as against 68.81% in the previous year. The decrease is on account of reduction in key raw material prices on the back of significant drop in crude prices and introduction of premium range of products.

The profit after tax for the current year is Rs.962.50 Lacs as against Rs.344.23 Lacs in the previous year - a growth of 180%. The growth in profit is mainly driven by closure of loss making Aluminium Composite Panel business, softening of Input prices and participation by the Company through a tender biddings under ‘Swachh Bharat Abhiyan''.

On a consolidation basis, your Company achieved net revenue of Rs.12,918.09 Lacs as against Rs.11,816.39 Lacs - a growth of 9.32%. Consolidated Net profit for the current year is Rs.1,227.74 Lacs as against Rs. 669.51 Lacs in the previous year - a growth of 83.38%.

There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the financial year 2015-16 and the date of this report.

No significant or material orders have been passed against the Company by the regulatories, courts or tribunals which impacts the going concern status and Company''s operations in future.

DIVIDEND

Your Company had distributed first Interim dividend @ 10% i.e. Rs.1/- per equity share in Feb-16 & second Interim dividend @ 10% i.e. Rs.1/- per equity share in Mar-16, The total dividend for the year ended 31st March, 2016 is Rs.2/- as compared to Rs.1.50 per equity share for the last year. The total outgo for the year under review amounting to Rs.264.80 Lacs (Inclusive of tax of Rs.44.79 Lacs) as against Rs.198.01 Lacs (inclusive of tax of Rs.33.00 Lacs) for the previous year. This is one of the highest payout in recent past of the Company on popular demand by shareholders.

TRANSFER TO RESERVES

The Company proposes to transfer Rs.50.00 Lacs to the General Reserve out of the amount available for appropriations and an amount of Rs.2,652.20 Lacs is proposed to be retained in the Profit and Loss Account. The Reserve on standalone basis, at the beginning of year were Rs.3,141.86 Lacs. The Reserve at the end of year is Rs. 3,839.56 Lacs.

PERFORMANCE OF JOINT VENTURE

Prima Dee-lite Plastics s.a.r.l., Cameroon is a Joint Venture Company manufacturing Moulded Articles and HDPE Woven Sack Bags. The total turnover of JV Company for the calendar year ended 2015 was INR 7,029.45 Lacs as compared to previous calendar year of INR 6,368.96 Lacs. The profit for the year after depreciation and tax was INR 511.86 Lacs as compared to INR 479.58 Lacs in the previous year. The JV Company is expanding its capacities in both the segment in current calendar year.

A separate statement containing the salient features of financial statement of J V Company in form AOC-1 of consolidated financial statement in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013 is annexed here with as Annexure - A. The financial statement including the consolidated financial statement and all other documents required to be attached to that report have been uploaded on the website of your Company www.primaplastics.com.

CONSOLIDATED ACCOUNTS

The consolidated financial statement of your Company for the financial year 2015-16 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued there under, applicable Accounting Standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the “Listing Regulations”). The consolidated financial statement have been prepared on the basis of audited financial statement as of March 31, 2016 of your Company and J V Company as on December 31, 2015 as approved by the respective Board of Directors.

NEW PROJECTS

Your Company is committed to continuously invest in the infrastructure to add to its growth plans and to cater to customers in more efficient and cost effective manner. As a step in this direction, new state of the art manufacturing unit is being planned at Ongole (Andhra Pradesh) and commercial production will be commenced by end of October 2016.

The Company is also setting up a Company in Guatemala (Central America) in Joint Venture with a local partner and a Company viz. Prima Union Plasticos, S.A. is already incorporated and other facilities are being tied up. The same will be operational by end of November 2016.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company''s internal controls and their adequacy, risk management systems and other material developments during the financial year 2015-16.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans or guarantees, investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts or transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. The Company had not entered into any contract or transaction with related parties which could be considered material in accordance with the provision of the Companies Act, 2013.

An omnibus approval has been granted by the Audit Committee of the Board for transactions which are of a foreseen and repetitive nature with other related parties. Such omnibus approvals are subjected to review and monitored by the Audit Committee on a quarterly basis. Statement containing salient features of the related party transactions in form AOC 2 pursuant to Section 189 of the Companies Act, 2013 is annexed herewith as “Annexure - B”.

BUSINESS RISK MANAGEMENT

A risk management policy has been developed and implemented by the Company for identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company. The key elements of the company''s risk management framework have been captured in the risk management policy which details the process for identifying, escalating, prioritizing, mitigating and monitoring key risk events and action plans. The assessment of the risks covers Strategy, Technology, Financial, Operations & Systems, Legal & Regulatory and Human Resources Risks. The effectiveness of the risk management framework and systems is periodically evaluated by the Risk and Audit Committee.

INTERNAL FINANCIAL CONTROLS

The company has in place Internal Financial Control system, commensurate with size & complexity of its operations to ensure proper recording of financial and operational information & compliance of various internal controls & other regulatory & statutory compliances. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

Internal Auditors'' comprising of professional Chartered Accountants monitor & evaluate the efficacy of Internal Financial Control system in the company, its compliance with operating system, accounting procedures & policies at all the locations of the Company. Based on their report of Internal Audit function, corrective actions in the respective area are undertaken & controls are strengthened. Significant audit observations & corrective action suggested are presented to the Audit Committee.

BOARD EVALUATION

Pursuant to the provisions of the Act and the SEBI Regulations, 2015, a structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning composition and its Committees, culture, execution and performance of specific duties, obligations and governance.

The performance evaluation of the Independent Director was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with evaluation process.

DIRECTORS AND KEY MANAGERIAL PERSONS

Shri Dilip M Parekh, Managing Director & CEO, Shri Manoj O. Toshniwal, CFO and Smt. Nidhi Goradia, Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or reenactments) for the time being in force).

DISCLOSURE RELATING TO BOARD, COMMITTEES AND POLICIES

The Company''s Board comprises of six members. Shri Bhaskar M. Parekh, Executive Chairman (DIN-00166520) and Shri Dilip M. Parekh, Managing Director (DIN-00166385) represents the Promoter Group and Executive Directors. Three other Non-Executive Directors - Shri Mulchand S. Chheda (DIN - 00179932), Shri Krishnakant V. Chitalia (DIN - 00443945) and Shri Rasiklal M. Doshi (DIN-00239580) are independent in terms of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. Woman Director Smt. Hina V. Mehta (DIN-07201194) is a Non Executive Director and represent Promoter Group. The Directors are reputed persons with diverse functional expertise and industry experience relevant to fulfilling the Company''s objectives and strategic goals.

None of the Independent Directors are liable to retire at the forthcoming Annual General Meeting. All Independent Directors have submitted declarations that they continue to meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013, provisions of corporate governance and under Regulation 16 (1)(b) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

As per the provisions of the Companies Act, 2013, Shri Bhaskar M. Parekh retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment to the Board. His profile details are contained in the accompanying Notice of the forthcoming Annual General Meeting.

The Board of Directors met 5 times during financial year 2015-16. The details of the meetings and the attendance of the Directors are mentioned in the Corporate Governance Report.

The Board has established Committees as a matter of good corporate governance practice and as per the requirements of the Companies Act, 2013. The Committees are Audit Committee, Nomination and Remuneration Committee, Management Committee, Share Transfer Committee and Stakeholders'' Relationship Committee. The composition, terms of reference, number of meetings held and business transacted by the Committees is given in the Corporate Governance Report.

The appointment and remuneration of Directors is governed by the Remuneration Policy of the Company to serve on the Board for guiding the Management Team to enhanced organizational performance. The detailed Remuneration Policy is contained in the Corporate Governance section of the Annual Report. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors and within the prescribed limits of the Companies Act, 2013.

The Company periodically discloses its promoter group and persons acting in concert in the shareholding pattern and other filings with the Stock Exchanges.

The Provisions of Corporate Social Responsibility pursuant to Section 135 of the Companies Act, 2013 is presently not applicable to the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors acknowledge the responsibility for ensuing compliances with the provisions of Section 134(3)(C) read with Section 134(5) of the Companies Act, 2013 in the preparation of annual accounts for the year ended on March 31, 2016 and state that:

I. In the preparation of the annual accounts the applicable accounting standards have been followed and there has been no material departure;

II. The Directors have 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 as at March 31, 2016 and of the profit of the Company for the year ended on that date;

III. The Directors 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.

IV Directors have prepared the Annual Accounts on a going concern basis.

V 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

VI. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF EMPLOYEES

During the year, there was no employee in receipt of remuneration as prescribed in the Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees as required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - E and form part of this Report.

AUDITORS & AUDITORS’ REPORT

At the 20th AGM of your Company, the shareholders had approved the appointment of M/s. G.P Kapadia & Co., Chartered Accountants (Firm Registration No. 104768W) as the Statutory Auditors to hold office till the conclusion of the 23rd AGM.

As required under the Companies Act, 2013, the re-appointment of the Statutory Auditors is required to be placed before the Members at every subsequent Annual General Meeting for their ratification. Hence, the Board, based on the recommendation of the Audit Committee, proposes to ratify the re-appointment of the aforesaid Statutory Auditors of the Company at the ensuing Annual General Meeting.

Your Company has received written consent(s) and certificate(s) of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Companies Act, 2013 and Rules issued there under (including any statutory modification(s) or re-enactment(s) for the time being in force), from M/s. G. P Kapadia & Co. Further, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under the Listing Regulations.

The Auditors'' Report for the financial year ended March 31, 2016 doesn''t contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

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 reappointed Shri Sadashiv V Shet, Practicing Company Secretary to undertake the Secretarial Audit for the financial year 2015-2016. The Secretarial Audit Report is annexed herewith as “Annexure - C”.

The Secretarial Audit Report for the financial year ended 31st March, 2016 is annexed herewith this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as “Annexure - D”.

VIGIL MECHANISM

The Company has formulated Whistle Blower Policy with a view to providing a mechanism for employees to report violations and assure them of the process that will be followed to address the reported violation. The Policy also lays down the procedures to be followed by Senior Management for tracking of complaints, giving feedback, conducting investigations and taking disciplinary actions. It also provides assurances and guidelines on confidentiality of the reporting process and protection from reprisal to complainants.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act'') and Rules made thereunder, your Company has constituted Internal Complaints Committees. In line with the said provisions, during the year the Company has not received any complaints with allegations of sexual harassment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Additional information given as required under the Companies (Disclosures of Particulars in the report of Board of Directors) Rules, 1988.

CONSERVATION OF ENERGY

The Company is continuously putting its efforts to improve Energy Management by way of monitoring energy related parameters on regular basis.

The Company is committed to transform energy conservation into a strategic business goal fully along with the technological sustainable development of Energy Management System. It is putting best endeavour to reduce energy consumption in all its operations and activities.

To achieve above objectives the following steps are being undertaken by the Company:-

1. Continuously monitoring the energy parameters such as maximum demand, power factor, load factor, TOD tariff utilization on regular basis.

2. Continuously replacing the inefficient equipment''s with latest energy efficient technology & up gradation of equipment''s continually.

3. Increasing the awareness of energy saving within the organization to avoid the wastage of energy.

RESEARCH & DEVELOPMENT (R&D)

- Evaluation of the alternative materials or additives to reduce the cost of raw material.

- Improving the output / input ratio to gain maximum finished products from per kg. raw material.

- Modify the mould and dies to improve the cycle time to get higher production from the same machine.

- To modify the process parameters to improve the quality.

- Expenditure on R & D: Not significant.

TECHNICAL ABSORPTION, ADAPTATION & INNOVATION

The Company has not imported any technology or processes know how. The Machines and moulds used for manufacturing products are regularly upgraded to cater variety products in line with the market trend and demand. The new investments are made in new technology upgraded machines & moulds.

As a result, the Company is able to give new & innovative designed product and has created strong demand of its products in export market.

FOREIGN EXCHANGE EARNING AND OUTGO

1) Activities relating to exports, initiative taken to increase exports; development of new exports market for products and services; and export plans:-

The Company''s key markets for international business are Africa, Middle East and Latin America. The export products are well established in the international market and the exports were Rs.1,901.43 lacs as compared to Rs. 1,953.01 lacs in last year. The Company has received repeated orders from its existing clients.

2) Total foreign exchange used and earned.

2015-2016

2014-2015

Foreign Exchange earned (FOB)

176,873,598

173,447,765

Foreign Exchange used

9,470,529

84,765,16

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

CREDIT RATING

The Company''s financial discipline is prudence is reflected in strong credit rating ascribed by CRISIL. The Long term rating is improved from BBB/Stable to BBB/ Positive and short term rating from A3 to A3 .

Total Bank loan facilities rated

Rs. 33.00 Crores

Long Term Rating

CRISIL BBB / Positive

Short Term Rating

CRISIL A3

CORPORATE GOVERNANCE

The Company has taken the requisite steps to comply with the recommendations concerning Corporate Governance.

A separate statement on Corporate Governance together with a certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.

ACKNOWLEDGEMENT

The Directors wish to convey their gratitude and appreciation to all of the Company''s employees at all its locations for their tremendous personal efforts as well as their collective dedication and contribution to the Company''s performance. The Directors would also like to thank the shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company and the Management.

For and on behalf of the Board

Bhaskar M. Parekh (DIN - 00166520)

Chairman

Mumbai,

August 12, 2016

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