DIRECTORS' REPORT Your directors have pleasure in presenting this 26th Annual Report together with the Audited Financial Statements of your Company for the year ended March 31, 2015. ECONOMIC SCENARIO The global economic environment in recent years has been challenging which coupled with slowing growth in some of the leading global economies has impacted currencies all over the world. However, despite unpredictable headwinds, the global economic recovery seems to be gaining momentum. Specifically, the recovery in the United States was stronger than expected, which provided momentum for the global economic recovery. After a tepid start by India's economy in FY 2014-15, there was a shift to positive sentiments led by commitments from the newly elected Government at the Centre. FY 2014-15 was indeed a year of transformation and optimism for the Indian economy. The new government has ushered in an era of hope and development, and a vision to create a robust economy for India. An initiative that has particularly galvanized the entire country is 'Make in India' led by our Hon'ble Prime Minister. This campaign is designed to transform India into a global manufacturing hub. India's economy is in the midst of recovery with lower fiscal and current account deficit and structural reforms to boost investments. The Indian economy is expected to grow @ 7.5% in 2015-16 (as per the World Bank) and is expected to reach around 8% by 2017. While the various steps are being taken to de-clog the growth, it is expected that the government's reform agenda will spur economic growth and increase business sentiment this fiscal year. Initiatives by our dynamic growth oriented prime minister to make in India projected by him across the continents has ushered into the new heights of manufacturing, which in turn will transform India very soon into a powerful manufacturing hub. # Exceptional Items represents provision against pending cases which were earlier classified as contingent liability ,however on conservative basis the same has been duly provided and also includes write off of a credit balance which is not likely to be recovered . However, excluding The Central Investment Subsidy received for Guwahati unit after 31st March 2015 of Rs 130 lac. The top line of our company in this year has been similar to that of last year due to several contingent factors. However, we have been growing at a CAGR of 20 % during the last few years. The market scenario and the general slowdown resulted in a flat top line. However ,it should be carefully noted that in spite of our flat top line the net profit after tax was 3.35 Cr in 201415 viz 1.83 cr in 2013-14. The company was able to achieve this by investing in technology in machines, manpower. Your company with due approval from its board have decided to build the state of world class art manufacturing infrastructure at all the current locations in Baddi, Rudrapur and Guwahati. Your company is investing substantial amount of capital amounting to Rs 25 Crs in building the above. These units once built will confirm to the best manufacturing facility of the world and would have been accredited by international qualifying bodies like SEDEX.......... These facilities once ready would be the best in India and would result in new businesses from the top 30 Companies in FMCG Pharma and food industry. Your company has acquired its competition in Baddi by the name of Jauss Polymers Ltd which had one of the top multinational company in the confectionery businesses as one of its prime customer. Approval for this acquisition has already been approved by its esteemed share holders. The Board of Directors of our company has decided to form a subsidiary company named as innovative container services pvt., ltd to build and operate with a high growth facility of operating the container freight station and the container yard to cater to the needs of Kakinada Sea Port Ltd. This is highly profitable business and way improve the top and bottom line of your company tremendously. The approval from the IMC has been received by the company and the land has been acquired. We are very pleased to inform that your companies rating has been upgraded. The board of directors are very pleased to inform to the shareholders that for the first time we shall be declaring a dividend to our share holders. We hope to continue to do well in spite of all the adverse marketing conditions due to very low prices includes results in low raw material cost. The company 's margin has slightly dipped due to the higher financial cost incurred on capex the effect of which is likely to accrue fully in coming years. Further, the company is taking positive steps towards the cost reduction so as to counter the inflationary pressures such as consistent increase in power prices, labor prices and other manufacturing costs. However, with the expected increase in turnover the company profitability is bound to shoot The new unit will be state of art in terms of aesthetics, infrastructure and automation as will be equipped with automated material handling systems .Moreover, these units will be in a status that they can get international regulatory body clearances. Needless to say that the above development will result into 100% win win-win situation as it will not only enable us to procure business from a highly quality conscious FMCGs/MNCs engaged in food and pharma products but will also result in saving of rent, freight ,power and boost the productivity manifold . Another major development that the company has taken over is the competitor's company in similar business in Baddi , which had a multinational company as one of its customers. Further ,the Company has also set up a subsidiary to carry out port logistics/container services in Andhra Pradesh . Necessary approvals from The Ministry of surface Transportation have been obtained. As per the industry benchmark, this is highly profitable business and will improve performance in the upcoming years Having regards to the Company's performance /plans CRISIL has upgraded company rating from BB-VE IN 2012-13 TO BBB -VE IN 2014-15 WHICH IS QUIET ENCORAGING .The Company has also paid its first dividend so as to ensure that our shareholders are partners in our progress. Last but not the least company's performance is likely to further boost up due to the lower PET prices, which will accelerate the process of converting the Glass into the Plastics in various applications. TRANSFER TO RESERVES Your Company proposes not to transfer any amount to the General Reserve. The Company proposes to retain Rs. 17.315 crores in the Profit and Loss account. DIVIDEND Your directors recommend a final dividend of Rs. 0.10 (Ten paisa only) per equity share of Rs. 1 each for the financial year 2014-15. If approved, the total dividend (interim and final dividend) for the financial year 2014-15 will be Rs. 0.10 (Ten Paisa only) per equity share aggregating to Rs. 26.238 lacs (including Corporate Dividend Tax). MATERIAL CHANGES AND COMMITMENTS There was no change in the nature of the business of the Company. There were no material changes and commitments affecting the financial position of the Company occurring between March 31, 2015 and the date of this Report. OPEN OFFER Your board has a pleasure in informing you that your company has taken over a reputed competitor, i.e. M/s Jauss Polymers Limited, company listed on Bombay Stock Exchange, having ISIN No. INE593O01017, via open offer under the provisions of SEBI(Substantial Acquisition of Shares and Takeover) Regulation, 2011, jointly with our Managing Director, Mr. Ketineni Sayaji Rao. This takeover will have an effect on your company in upcoming years in the form of increase in production capacity substantial increase in competitive market base, and accordingly the sales and profit of the Company. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company has One (1) Subsidiary and One (1) associate company within the meaning of Section 2(87) and 2(6) of the Companies Act, 2013 ("Act") respectively, as on March 31, 2015.Associate Company of the Company is Innovative Datamatics Limited. During the year under review, one company i.e. Innovative Container Services Private Limited has become the Company's subsidiary. CONSOLIDATED ACCOUNTS The Commercial Production of the Innovative Container Services Private Limited has not commenced till 31.03.2014. The expenditure incurred during the year i.e. from 04.06.2013 to 31.03.2014 is considered as an intangible asset and is duly capitalized as on 31.03.2014. The said expenditure will be amortized over a period of five years beginning from the year of Commencement of Commercial Production. Hence, the Profit and Loss Account of Innovative Container Services Private Limited is not prepared and therefore Consolidated Financial Statements of the Company are not prepared in accordance with provisions of the Companies Act, 2013 and relevant Accounting Standards issued by the Institute of Chartered Accountants of India. DIRECTORS Your Board placed on record its appreciation for the contributions made by Mr. Sanjay Dhawan during his tenure as director of the Company, who resigned on October 01, 2014 due to some personal reasons. Ms. Usha Chhaparwal was appointed as an Independent Women Additional Director with effect from November 14, 2014 and holds office upto date of forthcoming Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Companies Act, 2013 along with the requisite deposit from a member proposing the appointment of Ms. Usha Chhaparwal as a Director of the Company. Accordingly, a resolution is included in the Notice of the forthcoming 26th Annual General Meeting of the Company for seeking approval of members for his appointment as a Independent Women Director of the Company to hold office for a term upto five consecutive years commencing from September 30, 2015. The Independent Directors of the Company, that are Mr. Atul Nirpraj Barar, Mr. Anil Kulbhushan Barar and Ms Usha Chapparwal have submitted their Declaration of Independence, as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they continue to meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT As required by Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, your directors state that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had 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; (d) the directors had prepared the annual accounts on a going concern basis; (e) 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; and (f ) 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. KEY MANAGERIAL PERSONNEL The following persons are Whole-Time Key Managerial Personnel ('KMP') of the Company in terms of provisions of Section 203 of the Companies Act, 2013: a. Mr. Ketineni Sayaji Rao - Managing Director b. Mr. Sanjay Saigal - Chief Financial Officer c. Mr. Vishesh Chaturvedi - Company Secretary NUMBER OF BOARD MEETINGS Nine meetings of the Board of Directors of your Company were held during the year under review. EVALUATION OF BOARD PERFORMANCE Pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"), the Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the diversity of the Board, effectiveness of the board processes, information and functioning etc. The performances of the committees were evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees and effectiveness of the committee meetings etc. The performance of the individual directors was reviewed on the basis of the criteria such as contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. The performances of non-independent directors, Board as a whole and of the Chairman were evaluated in a separate meeting of Independent Directors after taking into account the views of executive directors and non-executive directors. INTERNAL FINANCIAL CONTROL The Company has in place an established internal control system to ensure proper recording of financial ^operational information, compliance of various internal controls and other regulatory/statutory compliances. All Internal Audit findings and control systems are periodically reviewed by the Audit Committee of the Board of Directors, which provides strategic guidance on Internal Controls. STATUTORY AUDITORS The term of office of M/s BGJC & Associates, Chartered Accountants, as Statutory Auditors of the Company will expire with the conclusion of forthcoming Annual General Meeting of the Company. As on commencement of the Companies Act, 2013, M/s BGJC & Associates , Chartered Accountants, have completed more than 10 years as Statutory Auditors of the Company. A resolution proposing appointment of M/s KRA & Associates, Chartered Accountants, the Statutory Auditors of the Company in place of M/s M/s BGJC & Associates, Chartered Accountants pursuant to Section 139 of the Companies Act, 2013, forms part of the Notice of the forthcoming 26th Annual General Meeting of the Company. The Board place on record its appreciation for the services rendered by M/s M/s BGJC & Associates, Chartered Accountants, as the Statutory Auditors of the Company. DIRECTORS' VIEW ON AUDITORS' OBSERVATIONS Management response to the observations of the auditors is explained wherever necessary through appropriate notes to the Accounts is reproduced hereunder in compliance with the relevant legal provisions. FIXED DEPOSITS No disclosure or reporting is required in respect of deposits covered under Chapter V of the Companies Act, 2013, as there were no transactions in respect of the same during the year under review. RISK MANAGEMENT There is a continuous process of identifying / managing risks through a Risk Management Process. The measures used in managing the risks are also reviewed. The risks identified by the Company broadly fall in the category of operational risk, regulatory risk, financial & accounting risk & foreign currency related risks. The risk management process consists of risk identification, risk assessment, risk monitoring & risk mitigation. During the year, measures were taken for minimization of risks and the Board was informed from time to time. In the opinion of the Board, none of the said risks which have been identified may threaten the existence of the Company. AUDIT COMMITTEE The Audit Committee of the Company consists of Mr. Atul Nirpraj Barar, Chairman, Ms. Usha Chapparwal, Mr. Ketineni Satish Rao. The Board of Directors of your Company has revised its terms of reference to make it in line with the requirements of Section 177 of the Companies Act, 2013 and clause 49 of the listing agreement. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure - A, and forms part of this Report. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed as Annexure B1 and forms part of this report. A statement showing details pertaining to remuneration and other details 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 enclosed as Annexure - B2 and forms part of this Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186 The Company has made investments in securities of other body corporate(s), the details of which are given in Note 12 to the Financial Statements, which are within the limits prescribed under section 186 of the Companies Act, 2013 CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions are in ordinary course of business and at arm's length, which are not material in nature. All related party transactions are with the approval of the Audit Committee and periodically placed before the Board for review. The prescribed Form AOC-2 is enclosed as Annexure - C, and forms part of this Report. Your directors draw attention of members to Note 33 to the standalone financial statements which sets out related party disclosures. EXTRACT OF ANNUAL RETURN The details forming part of Extract of Annual Return in prescribed formMGT-9 is enclosed as Annexure-D and forms part of this Report. SECRETARIAL AUDIT The Board has appointed M/s B.S. Goyal & Co., Company Secretaries, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year 2014-15 is enclosed herewith as Annexure - E and forms part of this Report. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remark. CORPORATE GOVERNANCE As per Clause 49 of the listing agreements entered into with the stock exchanges, Corporate Governance Report along with Auditors' certificate thereon and Management Discussion and Analysis Report are enclosed, and form part of this report. DISCLOSURE REQUIREMENTS 1. Policy on materiality of related party transactions and dealing with related party transactions is available on the website of the Company. 2. 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, which is avaliable on Company's website www.itplgroup.com The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013 and the revised Clause 49 of the Listing Agreements with stock exchanges. 3. The Company's Remuneration Policy is enclosed as Annexure - F and forms part of this Report. 4. There were no significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 5. During the year under review, there were no cases reported under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT The Directors wish to acknowledge and thank the Central and State Governments and all regulatory bodies for their continued support and guidance. The Directors thank the shareholders, customers, business associates, Financial Institutions and Banks for the faith reposed in the Company and its management. The Directors place on record their deep appreciation of the dedication and commitment of your Company's employees at all levels and look forward to their continued support in the future as well. For and on behalf of the Board Innovative Tech Pack Limited Sd/- Ketineni Sayaji Rao Chairman & Managing Director (DIN.: 01045817 Date : 05.09.2015 Place : New Delhi |