DIRECTORS' REPORT DEAR SHAREHOLDERS, Your Directors are pleased to present the 27th Annual Report, together with the Audited Financial Statements and the Auditors' Report of the Company for the financial year ended 31 March 2015. DEBENTURE REDEMPTION RESERVE (DRR) In terms of Section 71(4) of the Companies Act, 2013 the Company has transferred a sum of Rs. 832.32 Lakhs to the credit of Debenture Redemption Reserve out of its profits from the previous years for the purpose of redemption of various kind of debentures issued by the Company. FINANCIAL SUMMARY OR HIGHLIGHTS i) Financial Performance - Standalone Total Revenue of the Company for the year FY2015 marginally increased by 1.10% to Rs. 139,245.78 Lakhs from Rs. 137,736.01 Lakhs during the previous year. EBITDA for the year, excluding the effect of foreign exchange fluctuation loss/gain, provision for doubtful debts/ advances/contingencies and other income was Rs. 12,111.22 Lakhs as compared to Rs. 17,840.09 Lakhs for the previous year. EBITDA for the year is mainly impacted by write down in the inventory valuation. During FY2015, the Company incurred a loss after tax of Rs. 1,440.07 Lakhs as compared to loss after tax of Rs. 3,910.89 Lakhs in previous year. ii) Financial Performance - Consolidated On consolidated basis, the Total Revenue from operations in the year FY2015 increased marginally by 2.99% to Rs. 145,107.50 Lakhs from Rs. 140,896.82 Lakhs in the previous year. EBITDA for the year, excluding the effect of foreign exchange fluctuation loss/gain, provision for doubtful debts/advances/contingencies and other income, was Rs. 12,937.73 as compared to Rs. 17,484.25 Lakhs for the previous year. During FY2015, the Company incurred a loss after tax of Rs. 1,243.01 Lakhs as compared to a loss of Rs. 5,698.21 Lakhs in the previous year These losses were incurred primarily on account of higher material cost, depreciation and write down of inventory valuation. SUBSIDIARIES The Company has following subsidiaries: i) Equal Commodeal Private Limited - India (Wholly Owned Subsidiary) ii) AAT Global Limited - Hong Kong (Step Down -Wholly Owned Subsidiary) iii) Shandong Dawn Himadri Chemical Industry Limited -China (Step Down - Subsidiary) None of the above subsidiary is material in nature as per the Policy of the Company for determining material subsidiaries and the same may be accessed on the Company's website at the link: www.himadri.com/Himadri Policy for determining material subsidiary.pdf A report on the performance and financial position of each of the aforementioned subsidiaries as per provisions of sub section (3) of Section 129 the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014 in Form AOC-1 is annexed to the Annual Report forming the part of consolidated financial statements and hence not repeated here for the sake of brevity. During FY2015, no Company has become or ceased to be subsidiary, joint venture or associate of the Company. MELTING PLANT AT SAMBALPUR, ODISHA During the year, the Company has proposed to set up a Melting Plant (Coal tar Pitch) at Sambalpur in the state of Odisha to cater the demand of the customers located in the surroundings of Sambalpur. The cost of the project will be financed through Internal Accruals. The construction work is in progress and the plant is expected to be operational by the end of FY2016. WINDMILLS During FY2015, the performance of the windmills at Dhule in Maharashtra remained satisfactory and it generated 3,081,708 kwh units of wind energy during the year as compared to 3,568,437 kwh units in the previous year. The revenue generated by the windmills for the year remained at Rs. 143.59 Lakhs as compared to Rs. 160.64 Lakhs in previous year. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Accounting Standards AS-21, AS-23 and AS-27, issued by the Institute of Chartered Accountants of India (ICAI) and in compliance with the Listing Agreement with the stock exchanges, the Company has prepared consolidated financial statements. The Audited Consolidated Financial Statements along with the Auditors' Report thereon forms part of the Annual Report. WORKING CAPITAL The Company continued to enjoy working capital facilities from various banks including State Bank of India, Central Bank of India, ICICI Bank, The Hong Kong and Shanghai Banking Corporation (HSBC), DBS Bank, Citibank, Axis Bank, Yes Bank, IndusInd Bank, Union Bank of India and IDBI Bank Ltd. The Company has been regular in servicing these debts. Himadri would like to thank these financial institutions for their continued trust and support. CREDIT RATING BY CARE The rating of "CARE A+" (Single A Plus) re-affirmed by the Credit Analysis & Research Limited (CARE) for the long term bank facilities including non convertible debentures which is considered to have adequate degree of safety regarding timely servicing of financial obligations. The CARE has re-affirmed the rating of "CARE A1+" (A One Plus) assigned for the short term bank facilities, which is considered to have very strong degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. CAPITAL EXPENDITURE During FY2015, there was an addition to capital expenditure aggregating to Rs. 2,098.62 Lakhs (including Capital work in-progress). DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Companies Act, 2013, Mr. Pavninder Singh (DIN: 03048302) and Mr. Bankey Lal Choudhary (DIN: 00173792), the directors of the Company will retire from the office by rotation, and being eligible, offer themselves for re-appointment. The Company was required to appoint a Woman Director pursuant to Section 149(1)(b) of the Companies Act, 2013 and Smt. Rita Bhattacharya (DIN: 03157199) was nominated by Life Insurance Corporation (LIC) of India pursuant to the right of nomination in accordance with terms of Non-Convertible Debentures issued by the Company on private placement and the Board taken on record her appointment at its meeting held on 22 April 2014. During the year Mr. Sushil Kumar Saraf (DIN: 00535726), Independent Director of the Company has resigned from the Board with effect from 15 July 2014, due to his full time involvement in his own business and he expressed his difficulty in attending the meetings of the Board and Committees to be held from time to time. The Board at its meeting held on 27 May 2014 appointed Mr. Santimoy Dey (DIN: 06875452) as Additional Director. Further the Board at its meeting held on 11 August 2014, appointed Mr. Hanuman Mal Choraria (DIN: 00018375) and Mr. Chandra Shekhar Sarda (DIN:00252003), as Additional Directors. These directors were further appointed as Independent Non-Executive, Non-Rotational Director by the shareholders at the last Annual General Meeting held on 24 September 2014 for a period of five years with effect from the date of the Annual General Meeting Further at the last Annual General Meeting of the Company held on 24 September 2014, the Independent directors namely i) Mr. Sakti Kumar Banerjee (DIN: 00631772), ii) Mr. Hardip Singh Mann (DIN: 00104948), iii) Mr. Krishnava Satyaki Dutt (DIN: 02792753), were appointed as Independent Non-Executive, Non-Rotational Directors for a period of five years with effect from 1 April 2014. The Board of Directors at its meeting held on 12 February 2015 upon recommendation of Nomination and Remuneration Committee, has re-appointed Mr. Bankey Lal Choudhary (DIN: 00173792) as Managing Director of the Company for a period of three years w.e.f. 1 April 2016, subject to the approval of Shareholders u/s 196, 197, 203 of the Companies Act, 2013 and upon fulfillment of conditions as laid down in Schedule V appended to the said Act. The necessary resolution along with terms and conditions and explanatory statement is being provided in the Notice convening the 27th Annual General Meeting of the Company The Board of Directors at its meeting held on 12 February 2015 upon recommendation of Nomination and Remuneration Committee, has re-appointed Mr. Shyam Sundar Choudhary (DIN: 00173732) as Whole time Director of the Company for a period of five years w.e.f. 1 April 2015, subject to the approval of Shareholders u/s 196, 197, 203 of the Companies Act, 2013 and upon fulfillment of conditions as laid down in Schedule V appended to the said Act. The necessary resolution along with explanatory statement is being provided in the Notice convening the 27th Annual General Meeting of the Company. The Company in Compliance of the provisions of Section 149 of the Companies Act, 2013 and the provisions of Clause 49 of the Listing Agreement has appointed Six Independent Directors at the Last Annual General Meeting held on 24 September 2014 representing half of the Board as Independent Non - Executive. The brief resume and other details relating to the Directors, who are to be appointed / re-appointed as stipulated under Clause 49(VIII)(E) of the Listing Agreement, are provided in the Notice of Annual General Meeting forming part of the Annual Report The number and dates of meetings held by the Board and its Committees, attendance of Directors and remuneration paid to them is given separately in the attached Corporate Governance Report in terms of Section 134(3)(b) of the Companies Act, 2013. Further the Company in compliance of the provisions of Section 203 of the Companies Act, 2013 designated Mr. Bankey Lal Choudhary, Managing Director, Mr. Shyam Sundar Choudhary, Whole-time director, Mr. Vijay Kumar Choudhary, Whole-time director, Mr. Anurag Choudhary, Chief Executive Officer, Mr. Kamlesh Kumar Agarwal, Chief Financial Officer and Mr. Bajrang Lal Sharma, Company Secretary, as the Key managerial Personnel of the Company with effect from 1 April 2014. DIRECTORS' RESPONSIBILITY STATEMENT As required under Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, and as per Clause 49(III)(D) (4)(a) of the Listing agreement with the Stock Exchanges, your directors confirm that: a. In the preparation of the annual accounts for the year ended 31 March 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. The Directors have selected suitable accounting policies and applied them consistently and made judgments and estimates that were 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 loss of the Company for the year under review; c. 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; d. The Directors have prepared the annual accounts on a going-concern basis; e. The Directors, have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and f. 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; DECLARATION FROM INDEPENDENT DIRECTORS As required in terms of Section 134(3)(d) of the Companies Act, 2013, the Board hereby confirm that all the Independent Directors of the Company have given necessary declaration of their Independence as stipulated in Section 149(6) of the Companies Act, 2013. REMUNERATION POLICY Pursuant to the provisions of Section 178 of the Companies Act, 2013, the Nomination and Remuneration Committee of Directors has formulated a Nomination and Remuneration Policy for Directors, Key Managerial Personnel and other employees, and the said policy is annexed herewith and marked as Annexure I forming part of this report. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There were no material changes and commitments occurred after the close of the year till the date of this Report, which affect the financial position of the Company. LOANS, GUARANTEE AND INVESTMENT U/S 186 OF THE COMPANIES ACT, 2013 The Company has not provided any Loans, Guarantee or made any Investment during FY2015, except certain Loans, Guarantees and Investment made to Subsidiaries of the Company, given for business purpose. There are certain investments made by the Company in past financial years and the same are subsisting as on the date of the closure of the financial year are within the overall limits as provided u/s 186 of the Companies Act, 2013, the details thereof are provided in financial statements of the Company. RELATED PARTY TRANSACTIONS The Company has formulated a Policy on Materiality of and Dealing with Relating Party Transaction in terms of Clause 49 of the Listing Agreement and the said Policy is posted on the Website of the Company and during FY2015 the Company has not entered into any materially significant related party transaction with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. All the Related Party Transactions entered into by the Company during the financial year were in ordinary course of business and on arm's length basis. The Related Party Transactions undertaken by the Company during the year includes periodical payments of remuneration to its directors and their relatives and key managerial personnel. All such transactions were usually undertaken with prior consent of the Audit Committee on quarterly basis. As regards to the payment of remuneration to relatives of Directors, the prior approval of the shareholder has been obtained by means of special resolution at the last Annual General Meeting held on 24 September 2014. There have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or relatives except for those disclosed in the financial statements. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. EXTRACTS OF THE ANNUAL RETURN Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an Extract of Annual Return as on the financial year ended on 31 March 2015, in Form No. MGT-9 is annexed herewith and marked as Annexure II forming part of this report. PARTICULARS OF REMUNERATION OF MANAGERIAL PERSONNEL AND EMPLOYEES AND RELATED DISCLOSURE Disclosures pertaining to remuneration and other details 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 are annexed herewith and marked as Annexure III forming the part of this Report. In terms of the provisions of Section 197(12) of the Act 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 are annexed herewith and marked as Annexure IV forming the part of this Report. JOINT STATUTORY AUDITORS The joint statutory auditors M/s S. Jaykishan, Chartered Accountants and M/s B S R & Co. LLP, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received necessary consent and certificates under Section 139 of the Companies Act, 2013 from them to the effect that their appointment, if made, shall be in accordance with the conditions specified therein and they satisfies the Criteria as prescribed in Section 141 of the Companies Act, 2013. The Auditors' Report and notes on Accounts are self-explanatory and therefore do not call for any further explanation. SECRETARIAL AUDITOR The Board has appointed M/s MKB & Associates, Practising Company Secretaries, to conduct Secretarial Audit for FY2015. The Secretarial Audit Report, pursuant to Section 204(1) of the Companies Act, 2013, for the financial year ended 31 March 2015 is annexed herewith and marked as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has formulated a Vigil Mechanism / Whistle Blower Policy in terms of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock exchanges for employees to report their grievances / concerns about instances of unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct by means of Protected Disclosure to the Vigilance Officer or the Chairman of the Audit Committee. The vigil mechanism / whistle blower policy may be accessed on the Company's website at the link: www. himadri.com/Himadri Policy on Vigil Mechanism Amended.pdf CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith and marked as Annexure VI forming the part of this Report. RISK MANAGEMENT (RISK ASSESSMENT AND MINIMIZATION PROCEDURE) The Company has formulated a Policy on Risk Management (Risk Assessment and Minimization Procedure) in consultation with Senior Management to identify various kinds of risk in business of the Company and its process to minimize the same. The details of various risks and its mitigation are provided in the Management Discussion and Analysis Report forming the part of this Report. INTERNAL FINANCIAL CONTROLS The Audit Committee of the Company monitors the adequacy of Internal Control System and procedures in the Company and the Committee has recommended the appointment of internal auditor to monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. The Internal Auditor submits the Internal Audit report periodically before the Audit Committee alongwith their findings, which are usually elaborately discussed at the meetings of the Audit Committee and based on their report, findings and submissions the senior management undertake corrective measures in their respective areas and thereby strengthen the controls. During FY2015, such controls were tested and no reportable material weaknesses in the design or operation were observed. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE The management gives adequate attention to the welfare activities of the village area around the plant and its' surroundings. In line with its objective of corporate social responsibility, a free dispensary service was created for villagers near Mahistikry (West Bengal) plant. The Company has been involved in providing education, medical support, donation for food and clothing, and has also organised blood donation camps, eye check-up camps, etc. The management is also actively engaged in sponsoring educational programs at the school level. The Board in compliance with the provisions of Section 135 of the Companies Act, 2013 and rules made there under has formulated a Committee to be known as CSR Committee with Mr. Santimoy Dey, Independent Non-executive Director, Mr. Sakti Kumar Banerjee, Independent Non-executive Director and Mr. Shyam Sundar Choudhary, Whole time director of the Company as its members. The Committee has formulated and recommended a policy on CSR as well as the projects to be undertaken by the Company for this purpose and recommended a sum of Rs. 23.80 Lakhs to be expended during FY2015 on CSR activities. The Company has expended a sum of Rs. 27.99 Lakhs on CSR activities covered within the scope of the CSR Policy. The Annual Report on CSR activities in terms of Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith and marked as Annexure VII forming part of this report ANNUAL EVALUATION OF THE MEMBERS OF THE BOARD The Board, upon recommendation of the Nomination and remuneration committee and as per the criteria and manner provided for the annual evaluation of each member of the Board and its committee, has evaluated the performance of the entire Board, its committee and individual directors. And on the basis of the performance evaluation all the members of the Board are eligible to continue to act as Directors of the Company. PUBLIC DEPOSIT During FY2015, the Company has not accepted any deposits from public within the meaning of Section 73 of the Companies Act, 2013, therefore the disclosure under rule 8(5)(v) & (vi) of Companies (Auditors), 2014, are not applicable to the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE There were no significant and material orders passed by any regulatory authority or courts or tribunals impacting the going concern status and Company's operation in future. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND The Company sends intimations to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made to co-ordinate with the Registrar to locate the shareholders who have not claimed their dues. During the year, the Company has transferred a sum of Rs. 2,470,690 to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 125 of the Companies Act, 2013. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred. CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the stock exchanges, a separate section on corporate governance practices adopted by the Company, together with a certificate from a Practicing Company Secretary confirming compliance, is annexed herewith and marked as Annexure VIII forming part of this report. MANAGEMENT DISCUSSION AND ANALYSIS A separate report on Management Discussion and Analysis, as required under the Listing Agreements with the stock exchanges is annexed hereto forming part of this report. LISTING ON STOCK EXCHANGES The equity shares of the Company continue to be listed on the Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE). The Company has remitted the listing fee to these stock exchanges, up to date. The Non-Convertible Debentures (NCD) issued by the Company aggregating Rs. 250 Crores continue to be listed at Bombay Stock Exchange Limited and the Company has been regular in the remittance of the listing fee to the exchange for such debentures. DEMATERIALISATION OF SHARES There were 377,398,949 equity shares of the Company held by the shareholders in dematerialized form as on 31 March 2015, representing 97.84% of the total paid-up capital of the Company. The Promoters' shareholding is in dematerialised form in terms of SEBI circular and there is no change in their shareholding. The Company's equity shares are compulsorily required to be traded in dematerialised form, therefore, members are advised to expedite the process of converting the physical shareholding into dematerialised form through their D/P(s). E-VOTING FACILITY AT AGM In terms of Clause 35B of the Listing Agreement with Stock Exchanges and in pursuance of the provisions of Section 108 of the Companies Act, 2013 (the Act) read with Rule 20 of the Companies (Management and Administration) Rules, 2014 (the Rules), the Items of Business given in Notice convening the Annual general Meeting may be transacted through electronic voting system and the Company is providing e-Voting facility to the members who are the members of the Company as on 22 September 2015 being the "Cut-off Date" fixed for the purpose, of exercising their right to vote at the 27th AGM by electronic means through the e-Voting platform provided by National Securities Depository Limited (NSDL). The details process and guidelines for e-voting has been provided in the notice convening the meeting. INTERNAL COMPLIANT COMMITTEE The Company has constituted an Internal Compliant Committee as required to be formed under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made thereunder which were notified on 9 December 2013. During FY2015, the committee submitted Annual Report as prescribed in the said Act and there were no complaints received by the Committee. INDUSTRIAL RELATIONS The Company maintains close and cordial relation with its' workmen and a result there was no incidence of stoppages of work in any plant or any demonstration against the Management. Himadri takes sufficient care for its employees at all levels and provide adequate motivation and friendly work environment. The Company organizes Annual Cultural Program for employees, Annual Family Picnic and Get-Together, Observance of Employees' Birthday and awarding a token Gift to all Employees. The Management also award employees on Exemplary Service. The Management holds periodically, Elementary Health Check up facilities viz. ENT, Neurological, Cardio logical, Orthopedic, Gynecological, Endo-chronological, Urological, Scientific Pain Management, Eye Test, Dietary Counseling and Pathological and Radiological Check Ups like -X-Ray Chest PA View (Digital), Pulmonary Function Test, Complete Hierogram, Fasting Blood Sugar, Blood for Serum Creatinine, Blood for Liver Function Test, Blood for Urea etc. At the plant site the Company also provides Recreation and Welfare facilities like subsidized Breakfast, Lunch and Dinner and also Indoor Game Facilities like -Cricket, Volleyball, Basketball, Chess etc. We also send our employees to participate in Corporate Sports Competition organized by FICCI. The management has adopted various measures for enhancing efficiency, competency and skills of individual employees through training and motivation. The Company has in place a performance-based employee appraisal and reward system and streamlined the feedback module. FORWARD LOOKING STATEMENTS This Report should be read in conjunction with the financial statements included herein and the notes thereto. This report may contain forward-looking statements that involve risks and uncertainties. When used in this Report, the words 'anticipate', 'believe', 'estimate', 'expect', 'intend', 'will' and other similar expressions as they relate to the Company and/or its businesses are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. The Company does not take any responsibility to publicly revise any such statement. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. ACKNOWLEDGEMENT The Directors wish to place on record, their sincere appreciation for the continued support and cooperation extended to the Company by Investors, Debenture holders, various departments of the Central and the State Government, Banks and Financial Institutions, various governmental regulatory authorities, customers, suppliers and employees of all levels. For and on behalf of the Board Bankey Lal Choudhary Managing Director (DIN: 00173792) Shyam Sundar Choudhary Executive Director (DIN: 00173732) Date: 26 May 2015 Place: Kolkata |