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DIRECTOR'S REPORT

Ishan Dyes & Chemicals Ltd.

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Market Cap. (₹) 40.72 Cr. P/BV 0.98 Book Value (₹) 25.94
52 Week High/Low (₹) 52/20 FV/ML 10/1 P/E(X) 9.41
Bookclosure 10/05/2019 EPS (₹) 2.71 Div Yield (%) 0.00
Year End :2018-03 

DIRECTORS' REPORT

To,

The Members,

ISHAN DYES AND CHEMICALS LIMITED

The Directors have pleasure in presenting 25th Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2018.

1. FINANCIAL RESULTS:

The Company’s financial performance, for the year ended March 31, 2018 is summarized below: _(.Amount in Lacs)

Current

Previous

Year

Year

(2017-18}

(2016-17)

Sales(Net) Other Income

7214.94

159.20

6,674.29

114.24

Total Revenue

7374.14

6,788.53

Earnings before Interest, Depreciation, Exceptional /Extraordinary Items, Tax & Amortizations (EBITDA)

685.98

1219.07

Interest(Net)

Depreciation

64.26

84.37

81.90

154.64

Profit before Exceptional / Extraordinary items & tax

592.34

982.53

Exceptional / Extraordinary expenses

Profit before Tax

592.34

982.53

Tax Adjustments (Net)

256.01

422.43

Profit after Tax

336.33

560.10

2. STATE OF COMPANY'S AFFAIRS AND FINANCIAL PERFORMANCE:

The Company has achieved total revenue of Rs. 7374.14 Lacs and EBITDA (pre-exceptional and extraordinary item) of Rs. 685.98 Lacs as against that of Rs. 6788.53 Lacs and Rs. 1219.07 Lacs respectively for the previous year. During the year the operations has resulted increase in total revenues by 8.63%. However EBITDA has decreased due to increase in prices of key raw materials which the Company was unable to pass in finished product prices due to various market constraints. Besides that other operating overheads has also increased marginally due to inflationary pressure. The overall cost escalation has resulted into lower margins for the year ended and in turn lower EBITDA and Net Profit for the year ended.

3. PROSPECTS & DEVELOPMENTS:

During the year, the Company has undertaken modernization program and already incurred capital expenditure of more than Rs. 8.00 Crores to improve its plant building and also add balancing equipment’s. The same will result into overall efficiency improvements, reduction in operating cost and better quality product with increased output. The undertaken steps will facilitate better yields, reduction in cost of operations and also overall increase in margins for the products of the Company. The Company has developed sound export market and overall customer spread besides introducing new ranges for the products, all these factors will drive the growth during coming years for the benefits of the Company. Barring unforeseen circumstances, the management is confident of delivering improved results during the coming years. The management is also working on various expansion plans and opportunities to diversify for creating value chain of business.

The Company is also planning to raise funds by right issue and the proceeds of same will be utilized to repay debts of the Company.

The Company operates in a competitive business environment and key challenge areas are ecology and allied regulatory compliances, commodity and petro-products price volatility, foreign currency fluctuations, inflationary pressure on operational costs, large working capital need, skilled manpower availability etc. The management of the Company is working with a proactive approach to meet challenges and cater opportunities with an aim to enhance stakeholder’s value. The management of the Company has charted out growth plans for the Company which includes further expanding export business; add new ranges and products to create a basket of products for catering customer needs and also to create value addition in present product portfolio with a view to increase revenues and margin for the Company. Also debt reduction will help to reduce interest burden for the Company and overall profitability of the Company would be improved in due course of time.

Barring unforeseen circumstances the management is confident to further improve its business performance and also position the Company as a preferred quality producer and exporter of Pthalocyanine blue pigments.

4. CHANGE IN NATURE OF BUSINESS. IF ANY:

During the Financial Year 2017-18, the company has not changed its nature of business.

5. DIVIDEND:

The Board of Directors at their meeting held on 23rd February, 2018 had declared an interim dividend of Rs. 0.75/- per Equity Share i.e. @ 7.5% of face value of Rs. 10/- per share to all the shareholders of the Company whose names appeared on the Register of Members / Register of Beneficial Owners on Friday, 09th March, 2018. The interim dividend was paid to the Shareholders in the month of March, 2018.

The Board has recommended the same to be confirmed as the Final Dividend for FY 2017-2018. Necessary resolution is being proposed for the purpose at the ensuing 25th Annual General Meeting ("AGM”).

6. FINANCE

During the year, your Company has obtained sanction for machinery term loan and other term loan from the Kalupur Commercial Co. Op. Bank Ltd. Also the working capital facilities has been renewed during the year for Rs. 8.00 Crores from the Kalupur Commercial Co. Op. Bank Ltd. All the installments of banking facilities, private loans and vehicle loans which were due during the financial year were repaid as per schedule in due course.

7. TRANSFER TO RESERVES:

During the year under review, no transfer to reserves was carried out.

8. EXPORTS

The Export is the thrust area for the growth of the Company and during the year ended recorded gross export turnover of Rs. 34.29 Crores

9. SHARE CAPITAL:

As on 31st March, 2018, the Share Capital structure of the Company stood as follows:

Particulars

No of Shares

Amount

Authorized Share Capital

Equity Shares of Rs. 10/- each

2,50,00,000

25,00,00,000

Total

2,50,00,000

25,00,00,000

Issued. Subscribed and Paid ud Share

Capital

Equity Shares of Rs. 10/- each

1,12,64,700

11,26,47,000

Total

1,12,64,700

11,26,47,000

Increase in Authorized Share Capital of the Company:

During the year 2017-18, the Authorized Share Capital of the Company has been increased from Rs. 20.00 Crores to Rs. 25.00 Crores by way of Ordinary Resolution passed by the Shareholders at the 24th AGM of the Company held on 28th September, 2017. In this regard, the Company has complied with all the applicable sections, rules, regulations and guidelines of the Companies Act, 2013 and the Securities Exchange Board of India (SEBI).

Rights Issue:

During the year under review, the Board of Directors at their meeting held on 20th March, 2018 has approved to raise funds upto an aggregate amount of Rs. 20.00 Crores by way of Issue of Equity Shares of the Company to its eligible existing Shareholders on rights basis subject to the Shareholders approval.

Further, at the Extra Ordinary General Meeting held on 23rd April, 2018, the Shareholders of the Company has approved to raise funds upto an aggregate amount of Rs. 20.00 Crores by way of Issue of Equity Shares of the Company to its eligible existing Shareholders on a rights basis.

The Company has appointed M/s Vivro Financial Services Private Limited as the Lead Manager to the Issue and M/s Link In time India Private Limited as the Registrar to the Rights Issue.

The Board of Directors at their meeting held on 19th July, 2018 has approved the Draft Letter of Offer dated 19thJuly, 2018 for submission with the Securities Exchange Board of India ("SEBI”) and BSE Limited ("BSE") which has been submitted to SEBI for their comments and observations.

10. SEGMENT WISE PERFORMANCE:

The Company has only one reportable segment of activity i.e. "Chemicals", in accordance with the definition of "Segment" as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India. The performance of the Company is discussed separately in this Report.

11. SUBSIDIARIES. IOINT VENTURES & ASSOCIATES:

Your Company doesn't have any Subsidiaries, Joint Ventures and Associates.

12. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report as required under Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report and provides overview of the business and operations of the Company.

13. PUBLIC DEPOSITS:

The Company has not accepted any public deposits nor any amount of principal or interest thereof was outstanding in terms of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, for the financial year ended.

14. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT:

In terms of Section 134(3] (1] of the Companies Act, 2013, except as disclosed elsewhere in this Report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this Report.

15. 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 the 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.

16. INDUSTRIAL RELATIONS

The relationship with employees at all level remained cordial and harmonious during the year. We appreciate for committed contribution made by employees of the Company at all the levels to achieve present growth of the Company.

17. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS. KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT OF THE COMPANY:

In accordance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, The Board of Directors has formulated the Nomination and Remuneration Policy on the basis of recommendations made by the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy has been outlined in the Corporate Governance Report which forms part of this Report The Policy is also available on the website of the Company www.ishandves.com.

18. BOARD DIVERSITY

The Company recognizes the importance of a diverse Board in its process. We believe that a truly diverse Board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender which will help to provide better directions and supervision to the affairs of the Company. The Board has adopted the Board diversity policy which sets out the approach to diversity of the Board of Directors. The Policy is also available on the website of the Company www.ishandves.com

19. PARTICULARS OF EMPLOYEES:

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 (12] of the Companies Act, 2013 and Rule 5 (1] of the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014 are given in "Annexure [A]" that forms part of this Report.

No employee of the Company was in receipt of remuneration more than the limits specified under Rule 5(2] of the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014, during the financial year ended 31st March 2017.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL: f X

Appointments:

During the year 2017-18, No Director was appointed on the Board of the Company.

Re-appointments:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company, Smt. Anilaben P. Patel, Non-Executive and Non-Independent Director of the Company is liable to retire by rotation at the ensuing AGM and being eligible offered herself for reappointment.

Appropriate resolution for her re-appointment is being placed for your approval at the ensuing AGM. The brief resume of Smt. Anilaben P. Patel together with other related information has been detailed in the Notice of AGM which is forming part of the Annual Report.

Your Directors recommend her re-appointment as Non-Executive and Non-Independent Director of your Company.

Resignations along with facts of resignation:

During the financial year 2017-18, no Director has been resigned from the office of Directorship of the Company.

Key Managerial Personnel:

During the year under review, Ms. Ankita Vivekkumar Shah (ACS: 40326) has been appointed as a Company Secretary & Compliance officer of the Company w.e.f 20th March, 2018.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Shri Piyush N. Patel, Chairman and Managing Director, Shri Chintan Prakash Pancholi, Chief Financial Officer and Ms. Ankita Vivekkumar Shah, Company Secretary and Compliance officer, are the Key Managerial Personnel of your Company.

Annual Evaluation of Board's Performance:

The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the corporate governance report section in this Annual Report.

Declaration of Independence:

Your Company has received declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 confirming that they fulfill the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as under Regulation 16(b) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Familiarization Program for Independent Directors

At the time of the appointment of an Independent Director, the Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities. Further, the Independent Directors are introduced with the corporate affairs, new developments and business of the Company from time to time. The Familiarization program is also available on the website of the Company www.ishandves.com.

21. CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING:

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider Trading policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company as well as consequences of violation. The Policy has been formulated to regulate, monitor and ensure reporting of deals by the employees and to maintain the highest ethical standards of dealing in the Company's Shares. The code is also available on the website of the Company www.ishandves.com.

22. COMMITTEES OF THE BOARD

As on 31st March, 2018, the Board has following committees:

a. Audit committee,

b. Nomination and Remuneration committee,

c. Stakeholder's relationship committee

d. Corporate Social Responsibility Committee

e. Rights Issue Committee.

A detailed note on the Board and its committees is provided under the corporate governance report section in this Annual Report

23. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE MEETINGS:

The details of the number of Board and Committee Meetings of your Company along with the composition and attendance of the Directors and Members at such meetings are set out in the Corporate Governance Report which forms part of this Report. The time gap between the two meetings was in accordance with the requirements. All the information required to be furnished to the Board was made available along with detailed Agenda.

24. DIRECTORS' RESPONSIBILITY STATEMENT:

As required under Section 134(3) (c) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable accounting standards have been followed and there are no material departures from the same;

(b) 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 your Company as at 31st March, 2018 and of the profit and loss statement of the Company for the financial year ended 31st March, 2018;

(c) proper and sufficient care have been taken 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;

(d) the annual accounts have been prepared on a ‘going concern’ basis;

(e) proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and operating effectively; and

(f) Proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

25. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure [B]" and form an integral part to this Report.

26. RELATED PARTY TRANSACTIONS

During the financial year 2017-18, all transactions with the Related Parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014 and Regulation 23 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 were entered in the ordinary course of business and on an arm’s length basis.

27. LOANS AND INVESTMENTS:

Loans, guarantees/securities and investments, if any and as covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements.

28. RISK MANAGEMENT:

At present the company has not identified any element of risk which may threaten the existence of the Company.

All the properties and insurable interest of the Company are adequately insured.

29. VIGIL MECHANISM AND WHISTLE BLOWER POLICY:

The Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. The policy is also available on the website of the Company www.ishandves.com.

30. CORPORATE SOCIAL RESPONSIBILITY:

Your Company has constituted the Corporate Social Responsibility (CSR) Committee as per the requirement of the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time. Shri Piyush N. Patel is the Chairman of the Committee and two other members namely Shri Roopin A. Patel and Shri Mayankkumar H. Patel are the members of said Committee. The Committee has framed the Corporate Social Responsibility Policy for the Company. The philosophy for CSR activity of the Company is mainly focused in the various areas of rural infrastructure development, social upliftment, education, promotion of healthcare and sanitation, ensuring environmental sustainability and promoting rural sports.

During the year under review the Company has not spent any amount on CSR activities due to lack of availability of proper and satisfactory opportunity for such spending in line with policy and philosophy framed by the Committee. However, the Committee in consultation with the Management of the Company is working out long term basis plan for CSR spending in a phased manner over a period of time.

31. AUDITORS AND AUDITORS’ REPORT: -t--%-

Statutory Auditors:

At the 21st Annual General Meeting held on 23rd September, 2014, M/s. G. S. Mathur & Co. Chartered Accountants were appointed as statutory auditors of the Company to hold office till the conclusion of the 26thAnnual General Meeting to be held in the calendar year 2019.

Further, in terms of Clause 40 of the Companies (Amendment) Act, 2017 which was notified vide Notification dated S. 0.1833 (E) dated 07th May, 2018 and effective from that date, the Proviso of Section 139 (1) relating to ratification of Appointment of Auditors at every Annual General Meeting of the Company has been omitted and the requirement of Ratification of Auditors Appointment is no longer required as per the Companies Act, 2013.

Therefore, the resolution for ratification of Appointment of Statutory Auditors, M/s G. S. Mathur & Co, Chartered Accountants has not been provided for the approval of the Shareholders and not formed as a part of Notice of the 25th AGM of the Company

Cost Auditor:

The appointment of Cost Auditor for the Company is not applicable to the Company.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Kunal Sharma, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as “Annexure - [C]’’ to this Report.

32. EXPLANATION ON AUDITORS REPORT:

Statutory Auditor

The notes to the accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any separate or further comments or explanations.

Secretarial Auditor

The Secretarial Audit report does not contain any remarks and qualifications and are self-explanatory therefore do not call for any separate or further comments or explanations.

33. FRAUDS REPORTED BY AUDITORS:

No frauds are reported by Auditors which falls under the purview of sub section (12) of Section 143 of the Companies Act, 2013.

34. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 with respect to the information on conservation of energy, technology absorption and foreign exchange earnings and outgo is given in “Annexure - [D]"appended hereto and forms part of this Report

35. INTERNAL FINANCIAL CONTROLS:

The Company has adequate internal controls and checks in commensurate with its size and activities. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

36. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE PREVENTION. PROHIBITION AND REDRESSAL1 ACT. 2013:

Your Company is committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. During the year under review, there was no case filed pursuant to the sexual harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.

37. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS:

There are no significant/material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of your Company and its future operations.

38. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the continued support received from stakeholders, employees at all levels, vendors, customers, bankers, consultants and all associates of the Company.

By order of the Board of Directors

For ISHAN DYES & CHEMICALS LIMITED

14th August, 2018 Piyush N. Patel

Ahmedabad Chairman & Managing Director

DIN: 00450807

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