DIRECTORS' REPORT Dear Members, Your Directors have pleasure in submitting their 36th Annual Report together with the Audited Financial Statements for the year ended 31st March, 2015 COMPANY'S PERFORMANCE AND STATE OF AFFAIRS FOR FINANCIAL YEAR 2014-15 The Company over the last few years has shown consistent double digit growth in gross revenues due to good domestic demand. The Revenue from Sale of Products (net of excise) for the current year ended 31.03.2015 was higher at Rs. 11753.56 Lacs against previous year's sales of Rs. 10437.41 Lacs -an increase of about 12.61 % over the previous year. The exports were marginally higher at Rs. 353.56 Lacs (previous year Rs. 343.25 lacs) in f.o.b. value terms. The Revenue from services for the current year amounted to Rs. 5.25 Lacs (Previous year Rs. 4.03 Lacs). The other Operating Income aggregating Rs. 124.06 Lacs (Previous Year Rs. 58.96 Lacs ), ineralia includes Royalty Income Rs. 65.25 Lacs ( Pr. Yr. Nil) and Export Incentives viz. Duty Drawback & PFSL Rs. 45.02 Lacs ( Previous Year Rs 45.94 Lacs). During the current year ended 31.03.2015 the Company registered Profit before Finance Cost, Depreciation and Tax Rs. 942.09 Lacs (Previous year Rs. 749.25 Lacs) and Net Profit after Tax Rs. 380.85 Lacs (Previous Year Rs. 273.52 lacs). Pursuant to the higher net profits, the financial position of the company has strengthened. The Net Worth of the Company as at 31.03.2015 was Rs. 2201.69 Lacs ( Previous Year Rs. 1853.93 Lacs). The 'Cosco' Brand is well established in the Domestic market. The Management is continuously taking effective steps to enhance its Brand Value. The Company manufactures/source internationally at competitive prices quality products, develop/source new products on regular basis and is expanding its product range and the marketing network to improve top line as well as net margins. Status of Investments made in the erstwhile Subsidiary Company M/s Cosco Polymer Lanka (Private) Limited (CPLPL): As reported in earlier year(s), M/s Cosco Polymer Lanka (Private) Limited, has been scheduled in the Revival of UnderperformingEnterprises or Underutilized Assets Act, No 43 of 2011(of Sri Lanka). The Shares of the WOS are vested in Secretary to the Treasury of Government of Sri Lanka pursuant to acquisition by the Government under ‘Revival of Under Performing Enterprises or Under Utilized Assets Act of Sri Lanka (Act No. 43 of 2011)’. Competent Authority appointed under the Act is controlling, administering and managing such Enterprises/Units/Assets. The Act (of Sri Lanka), provides for payment of compensation to the Shareholders. The Compensation claim filed in Sri Lanka with the Compensation Tribunal constituted under the said Act is yet to be adjudicated. No compensation has been received till date. CPLPL is under Liquidation –Case Ref. No. HC (Civil) 40/2013(CO) under the Jurisdiction of Hon’ble The Commercial High Court of The Western Province (Exercising Civil Jurisdiction) in Colombo (Sri Lanka). Therefore, "Consolidated Financial Statements" as per Accounting Standard 21 issued by the Institute of Chartered Accountants of India, have not been prepared since the company is under liquidation. DIVIDEND Directors have not recommended any Dividend for the financial year ended 31.03.2015. However, based on Company’s consistent good performance in current FY 2015-16, your Directors have declared interim dividend of Rs. 1 per equity share (face value of Rs. 10 each) for the current year 2015-16 (Previous Year Nil). It involves Dividend pay out of Rs. 41.61 lacs (Previous Year Nil) and Dividend Distribution Tax Rs. 8.48 lacs. TRANSFERS TO RESERVES The opening balance of General Reserve has been adjusted by deducting Rs. 32.80 lacs on account of fixed assets whose useful life has already exhausted as on April 1, 2014. No other amount has been transferred to General Reserve. The current year’s net profit of Rs. 380.85 lacs has been retained in Surplus in the Statement of Profit and Loss. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions of Sections 134 (3) (c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and based on the internal controls,compliance systems established and maintained by the Company, make the following statement that: i. in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; 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 31st March, 2015 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. the 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 such internal financial controls are adequate and operating effectively; and vi. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DIRECTORS AND KEY MANAGERIAL PERSONNEL Your Directors inform with deep sorrow the sad demise of Shri Darshan Kumar Jain (DIN:00195789), Whole Time Director of the Company , on 13th November, 2014 and pay their homage to the departed soul. The Board acknowledges the invaluable contribution and guidance provided by him during his life time. Shri Neeraj Jain (DIN: 00190592) and Shri Arun Jain (DIN: 01054316), Directors of the Company retire by rotation at theensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. Board recommends their reappointment. The term of appointment of Shri Devinder Kumar Jain (DIN: 00191539) as Managing Director and also designated as Chief Executive Officer of the Company, and Shri Narinder Kumar Jain (DIN: 00195619) as Managing Director of the Company expires on 15th March, 2016. The Board recommends their reappointment as Managing Director and Chief Executive Officer and as Managing Director respectively of the Company for further period of Three (3) years w.e.f. 16th March, 2016 upon the remuneration, terms & conditions as set out in the Notice of the ensuing Annual General Meeting and approved by the Nomination & Remuneration Committee as per the provisions of the Companies Act, 2013 & Schedule V of the Companies Act, 2013 and Rules framed thereunder. The Resolutions seeking approval of the Members for the re-appointment of Shri Devinder Kumar Jain as Managing Director and Chief Executive Officer and Shri Narinder Kumar Jain as Managing Director of the Company have been incorporated in the Notice of the forthcoming Annual General Meeting of the Company along with the details about them. Pursuant to the provisions of Section 196,197 & 203 read with Schedule V and all other applicable provisions of the Companies Act, 2013, Shri Arun Jain (DIN:01054316) , Shri Manish Jain (DIN: 00191593), Shri Pankaj Jain (DIN: 00190414) and Shri Neeraj Jain (DIN: 00190592) have been re-appointed as Whole Time Directors of the Company w.e.f 01st October 2014 for a term of 3 Years in the last Annual General Meeting of the Company held on 30th September, 2014. Pursuant to the provisions of Section 203 of the Companies Act, 2013, which came into effect from April 1, 2014, Shri Devinder Kumar Jain (DIN: 00191539), Managing Director of the Company has been appointed as Chief Executive Officer of the Company w.e.f. 31.01.2015, Shri Pankaj Jain (DIN : 00190414) Whole Time Director of the Company has been appointed as Chief Financial Officer of the Company w.e.f 01.10.2014 and Ms. Neha Sharma (A25128) was appointed as Company Secretary of the Company w.e.f 30th September, 2014. Ms. Neha Sharma (A25128), Company Secretary , resigned from the Company w.e.f. 28th February 2015. Ms Sudha Singh ( A33371) has been appointed as Company Secretary of the Company w.e.f Ist May, 2015. Pursuant to the provisions of Section 149 of the Companies Act, 2013, which came into effect from April 1, 2014, Shri. Mahavir Prasad Gupta (DIN 00190550), Shri. Sunil Jain (DIN 00387451), Shri. Gulshan Rai Jain (DIN 00737177), Shri. Mohan Lal Mangla (DIN 00311895), Shri. Vijender Jain (DIN 06423328), Shri. Vijay Kumar Sood (DIN 01525607) and Smt. Nisha Paul (DIN 00325914) were appointed as Independent Directors of the Company w.e.f 1st October 2014 for term of 3 years at the Annual General Meeting of the Company held on 30th 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 Independent Director as provided in Section 149(6) of the Act, and there has been no change in the circumstances which may affect their status as Independent director during the Year. Shri. Gulshan Rai Jain (DIN 00737177), Independent Director has since resigned w.e.f 31st January, 2015 and Shri Joginder Pal Jain (DIN :00190482),Independent Director resigned earlier w.e.f Ist October, 2014. The Board places on record its appreciation for the contribution and guidance provided by them during their tenure as Independent Directors of the Company. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company. None of the Director is disqualified from being appointed as Director in terms of section 164 of the Companies Act, 2013 and they have given their consent in writing to act as Director(s). MEETINGS OF THE BOARD During the year 2014-2015, Eight (8) Board Meetings and Five (5) Audit Committee Meetings were held. In accordance with requirement, other committee meetings were held from time to time and one separate meeting of Independent Directors was also held. Relevant details of the meetings are given in the Corporate Governance Report, which form part of this report. Board Evaluation The Board of Directors has carried out an annual performance evaluation of its own performance , Board Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing Agreement(s). The performance evaluation of the Board, Committees and Directors was carried out having regard to the functional responsibilities and after seeking inputs from all the directors/committee members in terms of Performance Evaluation Framework and Policy of the Company. In a separate meeting of Independent Directors, performance of non-Independent Directors, the Board as a whole and of the Chairman was evaluated, taking into views of Directors. Policy on Directors' Appointment and Remuneration and other details The Company's Policy on Directors' Appointment and Remuneration and other matters provided in section 178(3) of the Companies Act, 2013 has been disclosed in the Corporate Governance Report, which form part of the Directors' Report. Internal financial control systems and their adequacy The Company has internal control systems inter alia including system of financial controls, commensurate with the size and scale of its business operations. Based on the framework of internal financial controls and compliance systems put in place by the Company, and the reviews performed by management and the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15. Audit Committee The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report. Nomination and Remuneration Committee The details pertaining to composition of Nomination and Remuneration Committee are included in the Corporate Governance Report, which forms part of this report. Policy on determining the criteria for determining qualifications, positives attributes and independence of a director are included in the Corporate Governance Report, which forms part of this report. AUDITORS Pursuant to the provisions of Section 139 of the Act, and rules framed thereunder, M/s Madan & Associates, Chartered Accountants (ICAI Registration No. 000185N), were appointed as Statutory Auditors of the Company in the last Annual General Meeting (AGM) held on 30th September 2014 from the conclusion of that Annual General Meeting of the Company for a Term of 3 years i.e. till the conclusion of 38th Annual General Meeting to be held in the Year 2017, subject to ratification of their appointment at every AGM. The Board recommends ratification of their Appointment as Statutory Auditors of the Company. INDEPENDENT AUDITORS' REPORT The Auditors' Report do not contain any qualifications, reservations, adverse remarks or disclaimers, which needs any comments/ explanation. Secretarial Auditors' Report Report of the Secretarial Auditor is given as an Annexure-A which forms part of this Report. Secretarial Auditors' Report do not contain any qualifications, reservations, adverse remarks or disclaimers, which needs any comments/ explanation. Risk Management Policy The details pertaining to Risk Management Policy and its implementation has been covered in the Management discussion and analysis, which form part of this report. Particulars of Loans, Guarantees and investments The particulars of loans, guarantees and investments have been disclosed in the financial statements. Trasactions with related parties All transactions entered with related parties for the year under review were in the ordinary course of business and are placed before the Audit Committee on regular basis . omnibus approval was obtained for transactions which are of repetitive nature. All the transactions entered with the related parties do not attract the provisions of Section 188 of the Companies Act, 2013. Information on transactions with related parties pursuant to section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure-B in Form AOC 2 and the same form part of this report. Corporate Social Responsibility The provisions of section 135 of the Companies Act, 2013 are not applicable to our company for the year ended 31.03.2015. Extract of Annual Rerturn As provided under Section 92(3) of the Act, the extract of Annual Return is given in Annexure-C in the prescribed Form MGT-9 , which form part of this report. Disclosure requirements As per Clause 49 of the listing agreements entered into with the stock exchanges, corporate governance report along with 'Certificate by Practicing Company Secretary' thereon and management discussion and analysis are attached, which form part of this report. Details of the familiarization programme of the independent directors are available on the website of the Company (URL: <http://cosco.in/code_of_conduct.htm> ). Policy on dealing with related party transactions is available on the website of the Company (URL: <http://cosco.in/policies.html> ). 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 the Section 177(9) of the Act and the revised Clause 49 of the Listing Agreements with stock exchanges (URL: <http://cosco.in/policies.html> Deposits from public The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO As required by the Companies (Matters to be included in the Report of Board of Directors) Rules 2014 the relevant information and data is given in Annexure-' D' annexed hereto and form part of this Report. COST AUDITORS Pursuant to the provisions of section 148 of the Companies Act, 2013 M/s Ashish Jain & Co., Cost Accountants were appointed Cost Auditors of the Company to conduct audit of Cost Accounting Records of the Company for the Financial Year 2014-15. However, as per the amended Companies (Cost Records and Audit) Rules, 2014, Cost Audit is not applicable to our Company DEMATERIALISATION OF SHARES The Company shares are being dealt in dematerialized form. Shareholding of the Promoters / Promoter Group has been substantially dematerialized. LISTING Your Company is listed with Stock Exchanges at Mumbai and Delhi. Annual Listing fee for the Financial Year 2014-15 and 2015 - 2016 paid to Bombay Stock Exchange Limited. No fees paid to Delhi Stock Exchange Limited since DSE is non functional. CORPORATE GOVERNANCE. Your Company has taken adequate steps to ensure that mandatory provisions of 'Corporate Governance' as provided in the listing agreement of the Stock Exchanges with which the Company's shares are listed, are duly complied with. Report on 'Corporate Governance' along with 'Certificate by Practicing Company Secretary' on compliance with the condition of Corporate Governance under clause 49 of the Listing Agreement and Nomination & Remuneration Policy is annexed hereto as part of this report as Annexures -'E1, E2 & E3' respectively. Report on Management Discussion and Analysis is annexed hereto as Annexure -'F' and form part of this report. INDUSTRIAL RELATIONS The Company lays emphasis on all round development of its human resource. The industrial relations remained cordial during the year. ACKNOWLEDGEMENTS Your Directors wish to place on record their sincere appreciation for the contribution made to the organization by Executives, Staff and Workers of the Company. The Management also place on record their appreciation for the confidence reposed by the Stakeholders. The Directors acknowledge with thanks the continuous support and co-operation received from Bankers, Statutory and Internal Auditors, Customers, Suppliers, Vendors, Government Authorities and Regulators. By order of the Board of Directors Devinder Kumar Jain Managing Director and CEO DIN : 00191539 Narinder Kumar Jain Managing Director DIN : 00195619 Registered Office : 2/8, Roop Nagar, Delhi -110007 Place: Delhi Date: 12th August, 2015 |