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DIRECTOR'S REPORT

20 Microns Ltd.

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Market Cap. (₹) 127.03 Cr. P/BV 0.76 Book Value (₹) 47.11
52 Week High/Low (₹) 53/32 FV/ML 5/1 P/E(X) 5.10
Bookclosure 13/08/2019 EPS (₹) 7.06 Div Yield (%) 0.00
Year End :2018-03 

Dear Members,

The Directors have pleasure to present their 31st Annual Report and the Audited Annual Accounts for the year ended 31st March, 2018.

Financial Results

The Company’s financial performance for the year ended 31st March, 2018 is summarized below:

[Rs. in Lakhs]

Particulars

2017-18

2016-17

Total Income

39212.98

37416.78

Profit before Depreciation, Interest and Tax (PBDITA)

5579.87

5104.58

Interest for the year

2138.98

2273.88

Depreciation for the year

910.51

897.67

Profit/(Loss) before tax and Exceptional item

2530.38

1933.03

Exceptional items

150.85

-

Profit/(loss) for the year

2379.53

1933.03

Tax liability :-

Current Tax

703.86

401.55

Deferred Tax

87.64

215.54

Prior period Tax

-

-

Net Profit/(Loss) for the year

1588.02

1315.95

Interim Dividend

Your Company has distributed an interim dividend of Re. 0.40 per equity share of face value of INR 05 each to shareholders, who were on the register of members of the Company as on the closing hours of business on 06th December, 2017, being the record date fixed by the Board of Directors for this purpose. Interim dividend was paid on 12th December, 2017.

Final Dividend

In addition to interim dividend, your Directors are pleased to recommend a final dividend of INR 0.35 paise per equity share of face value of INR 5 each for the year ended 31 March, 2018, subject to approval of shareholders at the ensuing annual general meeting of the Company.

Final dividend, if approved by the shareholders, taken together with the interim dividend, will amount to total dividend of INR 0.75 paise per equity share for the financial year 2017-18. State of Company’s Affairs

During the year under consideration, following financial developments have taken place -

- Revenue for the FY18 was Rs. 39212.98 Lakhs as against `7416.78 Lakhs in FY17. The revenues posted registered a gradual growth since the company has been focusing on the organic growth, value added products & robust price-mix effect in all business segments.

- For FY18 EBIDTA was at ‘5579.87 Lakhs with EBIDTA margin of 14.36 % marginally higher due to robust performance driven by healthy volumes and better realization, along with sale of value added products contributing higher margins.

- The PAT for FY18 stood at Rs. 1588.02 Lakhs compare to Rs. 1315.95 Lakhs in FY17.

- Company’s debt-equity ratio came down from 1.24 in 2017 to 0.97 in 2018.

- Net Worth of the Company is increased to Rs. 13278.06 Lakhs as on 31st March, 2018 as compared to Rs. 11731.79 Lakhs as on 31st March, 2017.

Investors Education and Protection Fund

During the year, dividend amounting to Rs. 29,519/- that had not been claimed by the shareholders for the year ended 31st March, 2010, was transferred to the credit of Investor Education and Protection Fund as required under Section 124 and 125 of the Companies Act, 2013. Shareholders are required to lodge their claims with the Registrar, Cameo Corporate Services Ltd., for unclaimed dividend. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31.03.2018 on the website of the Company, www.20microns.com.

Material Changes and commitments affecting financial position between the end of the financial year and the date of report

After end of fiscal year 2018, your company has entered into the settlement agreement with ASCOM Carbonate and Chemicals Manufacturing, Egypt [Supplier], who had filed winding-up petition against the Company, for recovery of USD 8,36,166 at Hon’ble High Court, Gujarat. According to the said settlement agreement, it was agreed to pay USD 4,91,000 and your company has paid the entire amount to ASCOM. Procedure for withdrawal of cases is initiated by both the companies.

Fixed Deposits

The Company has started accepting the deposits only from the shareholders of the company pursuant to the provisions of Companies Act, 2013 and Rules made thereunder. The said Scheme was approved by you at your Extra-ordinary General Meeting held on 24th May, 2014 and amended in Annual General Meeting held on 23rd September, 2016 and 22nd September, 2017.

As on 31.03.2018, Fixed Deposits from Shareholders stood at the total of Rs. 2269.00 Lakhs. Deposits amounting to Rs. 1385.40 Lakhs are due for repayment on or before 31.03.2019.

The company has not made any default in repayment of deposits or interest due thereon.

The Company is liable to comply with the provisions relating to acceptance of deposits under the Companies Act, 2013 and Rules made there-under and any amendments made from time to time.

Consolidated Financial Statements

In accordance with the Companies Act, 2013 (“the Act”) and Accounting Standard (AS - 21) on Consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report.

Subsidiaries, Joint Ventures & Associates

As on 31st March, 2018, we have 05 [five] subsidiaries viz. 20 Microns Nano Minerals Ltd., Silicate Minerals [I] Private Limited, 20 Microns FZE, 20 Microns SDN BHD. & 20 Microns Vietnam Ltd. During the year, the Board of Directors (the Board) reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, statement in the prescribed format AOC-1 is appended as Annexure A to the Board’s Report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries are available on our website www.20microns.com. These documents will also be available for inspection during business hours at our registered office at Waghodia, Vadodara.

Directors’ Responsibility Statement

The Directors report that :

i) In the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards have been followed and there are no material departures from the same.

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, 2018 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 this Act 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, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi) 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.

General Shareholders Information

General Shareholder Information is given in the Report on Corporate Governance forming part of this Annual Report.

Particulars of Employees

The table containing the names and other particulars of employees in accordance with the provisions of 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 appended as Annexure B to the Board’s Report.

In terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, we have to state that since there are no employees falling within the purview of the said requirements, the same has not been annexed herewith.

Corporate Governance

As required by Schedule V(C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance is given as a part of this Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors’ Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

Secretarial Standards

Your company has complied with the provisions of Secretarial Standards issued by Institute of Company Secretaries of India.

Secretarial Audit

Secretarial Audit Report as per the Section 204 of Companies Act 2013 is placed as annexure to this report. No adverse comments have been made in the said report by the Practicing Company Secretary.

Cost Audit Compliances

The Company had appointed M/s YS. Thakar and Co., Cost Accountants, to audit its cost accounting records relating to Mining and Metallurgy of ferrous and non-ferrous metals for the financial year 2017-18. The Cost Audit Report submitted by M/s YS. Thakar and Co. for the financial year 2017-18 is clean and there are no qualifications in their Report. The Cost Audit Report was filed with Ministry of Corporate Affairs on 25th December, 2017.

Related Party Transactions

Particulars of transactions with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2 is annexed in Annexure C hereto.

Extracts of Annual Return and Other Disclosures under Companies [Appointment and Remuneration] Rules, 2014

The Extract of Annual Return in form No. MGT-9 as per Section 134 (3) (a) of the Companies Act, 2013 read with Rule 8 of Companies Act (Accounts) Rules 2014 and Rule 12 of Companies (Management and Administration) Rules, 2014 is annexed in Annexure D hereto and forms part of this report.

Particulars of Loan, Guarantees or Investments

Loans, guarantee and investment covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

Information as per Companies(Disclosure of particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure E forming part of this report.

Risk Management Implementation

The Company operates in a competitive environment and is generally exposed to various risks at different times such as technological risks, business risks, operational risks, financial risks etc. The Board of Directors and Audit Committee of Directors of the Company periodically review the Risk of the Company so that the Management controls the risk through properly defined network. The Company has a system based approach to business risk management backed by strong internal control systems.

A range of responsibilities from strategy to the operations is specified. A strong independent internal audit function at the corporate level carries out risk focused audits across all businesses enabling identification of areas where risk management processes may need to be improved. The Board reviews internal audit findings and provide strategic guidance on internal control, monitors internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented. The combination of policies and procedures adequately addresses the various risks associated with your company’s businesses.

Corporate Social Responsibility

As the part of the CSR activities, many juvenile diabetic camps were organized and distributed free Insulin, Glucometer, testing kit etc. Also to educate them with their diabetes, our company organized ‘Juvenile diabetes week” and a part of it, many juvenile diabetic children were invited to participate in “Daily Bonus Show” which was telecasted on TV - “Colors - Gujarati.”

During the year 2017-18, to make the better life of Juvenile diabetes children, 20 Microns Diabetes centre initiated educational camps, lectures and regular check up programs.

Internal Finance Control System Adequacy

The Company has established proper and adequate system of internal control to ensure that all resources are put to optimum use and are well protected against loss and all transactions are authorized, recorded and reported correctly and there is proper adherence to policies and guidelines, processes in terms of efficiencies and effectiveness. The Company’s internal control systems are supplemented by an extensive program of internal audit by an independent firm.

All the transactions are conducted using the IT interface and the business processes are further audited by internal auditors.

The Company’s internal control systems are also periodically tested and certified by the internal auditors. The Audit Committee constituted by the Board constantly reviews the internal control systems.

Directors and Key Managerial Personnel

In accordance with the Articles of association of the Company, Mr. Atil C. Parikh, Managing Director, retires by rotation at this Annual General Meeting and being eligible offers himself for re-appointment.

The Board has appointed Mrs. Sejal R. Parikh as an Additional Director in the category of Non Executive Non Independent Woman Director w.e.f. 4th May, 2017. Mrs. Sejal Parikh was regularized and appointed as Director with approval of shareholders at their annual general meeting held on 22nd September, 2017.

During the year, Mr. Sudhir R. Parikh resigned as the Director in the category of Non - Executive and Non - Independent Director w.e.f. 04.05.2017 due to his non-availibility in the country. Mrs. Darsha Kikani also resigned as an Independent [Woman] Director w.e.f. 04.05.2017 due to her preoccupations as the Practicing Company Secretary. The Board appreciated and taken note of the extensive support and guidance received during their tenure as Directors in the respective categories.

Mr. Chandresh S. Parikh, Mr. Rajesh C. Parikh and Mr. Atil C. Parikh were re-appointed for a period of 3 years effective from 1st April, 2016 as the Executive Chairman, Chief Executive Officer & Managing Director & Managing Director of the Company by the shareholders of the Company by way of passing respective special resolutions at the Annual General Meeting held on 25.09.2015. The term of their respective offices, therefore, would expire on 31st March, 2019. The aforesaid Managerial Personnel are reappointed by Board of Directors of the company at their Meeting held on 24th May, 2018 subject to approval of shareholders. The material terms of their re-appointments are stated in the Explanatory Statement at Items No. 5 to 7 of the Notice of the Annual General Meeting.

The Company has set criteria for performance evaluation of Independent Directors, Board, Committees and other individual Directors. The note on familiarization program to Independent Directors is available on the website of the Company www.20microns.com.

The Company has also prepared a Remuneration Policy for the Directors, Key Managerial Personnel and Senior Management Employees which is also available on the website of the Company www.20microns.com.

None of the Directors of the Company is disqualified under Section 164(2) of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors’ Report.

In accordance with provisions of Section 149 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations, 2015), Mr. Pravinchandra Shah, Mr. Ramkisan Devidayal, Mr. Atul Patel and Dr. Ajay Ranka have given a declaration to the Company that they meet the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013.

The composition of the Board/Committee, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in this Annual Report.

Auditors A. Statutory Auditors

The Company’s Auditors, M/s. J.H. Mehta & Co., Chartered Accountants, have been appointed for a period of 5 [five] years from the 30th AGM till the 35th AGM. Pursuant to the provisions of Companies (Amendment) Act, 2017, requirement of ratification of appointment of auditors to be made by shareholders in each subsequent annual general meetings, has been omitted and the said provisions are came into effect by MCA Notification dated 07th May, 2018. M/s. J.H. Mehta & Co., Chartered Accountants satisfies the criteria for eligibility and qualification of auditor as provided under Section 141 of the Companies Act, 2013.

During the year under review, the Auditors’ have not made any adverse remark.

B. Internal Auditors

The Company has reappointed M/s. N C Vaishanav and Co., M/s. P Mani and Co. and M/s. Deopura and Associates, Chartered Accountants as the Internal Auditors of the Company for the F.Y 2018-19, for the Western & Eastern Region, South Region and North Region, respectively.

C. Cost Auditors

The Company has reappointed M/s YS. Thakar and Co. as the Cost auditor for the financial year 2018-19 to conduct cost audit of its cost records pertaining to the products falling under the product categories - Mining and Metallurgy of ferrous and non-ferrous metals. M/s YS. Thakar and Co. are appointed on a remuneration of Rs. 75,000 plus service tax and out of pocket expenses. The Company is seeking the ratification of the Shareholders for the remuneration to be paid to M/s YS. Thakar and Co. vide Resolution No. 4 of the Notice of the Annual General Meeting.

D. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company had appointed M/s. J.J. Gandhi and Co., Company Secretaries, as the Secretarial Auditor of the Company for the year 2017-18 to conduct secretarial audit and to ensure compliance by the Company with various Acts applicable to the Company. The Secretarial Audit Report for the financial year 201718 issued by M/s. J.J. Gandhi and Co. is annexed to this Report. There are no qualifications or adverse remarks in their Report.

Significant and Material Orders

There are no significant and material orders passed by the regulator or courts or tribunal impacting the going concern status and Company’s operations in future.

During the year, SEBI vide its letter no. EAD-12/HO/SM/PR/ 4930/4 /2018 dated February 14, 2018 provided the Company, an order passed by an Adjudication Officer, wherein the company needs to pay Rs. 2,00,000/- (‘ Two Lakhs only) for non-adhering the provision of the Listing Agreement.

DISCLOSURES CSR Committee of Directors

The Board has constituted a Corporate Social Responsibility (CSR) Committee of Directors as per the provisions of Section 135 of the Companies Act, 2013. The functions of the CSR Committee are to:

(a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Act;

(b) Recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and

(c) Monitor the CSR policy of the Company from time to time.

The members of the CSR Committee of Directors, upto 24th May, 2017, were Mr. Chandresh S. Parikh, Mr. Pravinchandra M. Shah and Mr. Sudhir R. Parikh. With effect from 25th May, 2017, Mr. Chandresh S. Parikh, Mr. PM. Shah and Mrs. Sejal R. Parikh are the members of the CSR Committee of Directors.

Mr. Chandresh S. Parikh is the Chairman of the CSR Committee. Mr. Pravinchandra M. Shah is the independent Director on the CSR Committee.

The Board has also framed a CSR Policy for the Company, on the recommendations of the CSR Committee. The Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014, including a brief outline of the Company’s CSR Policy, total amount to be spent under CSR for the financial year and details of amount spent on CSR during the year is set out at Annexure - F forming part of this Report.

Audit Committee of Directors

The Company has an Audit Committee in place, constituted as per the provisions of Section 177 of the Companies Act, 2013. The members of the Audit Committee, its terms of reference, the meetings of the Audit Committee and attendance thereat of the members of the Committee is mentioned in the Corporate Governance Report under the appropriate heading.

Vigil Mechanism

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy has been approved and adopted by Board of Directors of the Company in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations.

The Whistle Blower Policy of the Company provides a mechanism for employees / Board Members and others to raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behaviour and to protect the individuals who take such actions from retaliation or any threat of retaliation and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.

The policy of vigil mechanism may be accessed on the Company’s website www.20microns.com

Prevention of Sexual Harassment at Workplace

The Company has adopted a policy with the name “Policy on Prevention of Sexual Harassment at Workplace”. The policy is applicable for all employees of the organization, which includes corporate office, branches, depots and manufacturing locations etc. The said policy is available on company’s website www.20microns.com.

A Complaints Committee has also been set up to redress complaints received on sexual harassment as well as other forms of verbal, physical, written or visual harassment. During the financial year under review, the Company has not received any complaints of sexual harassment.

Meeting of the Board of Directors

05 [Five] meetings of Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed to this Annual Report.

Acknowledgement

Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, vendors, shareholders, banks, regulatory authorities and the society at large.

Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Company’s consistent growth would not have been possible, despite the challenging environment.

For and on behalf of the Board of Directors

Chandresh S. Parikh

Executive Chairman

Place : Waghodia, Vadodara

Date : 24th May, 2018

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