BOARD'S REPORT AND MANAG To The Members Your Directors present the 43rd Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2016. During the Financial Year, the Plants performed for same number of days like last year. The capacity utilisation was low for most part of the year due to restricted availability of the raw material Carbon-di- Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) and Custodian are required to log on to www. evotingindia.com and register themselves as Corporates. • A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to helpdesk. evoting@ cdslindia.com. • After receiving the login details a Compliance User should be created using the admin login and password. 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The loss for the year, on the same basis as the previous year, without considering the adjustments due to the Settlement availed by the Company from the Financial Institutions is Rs. 22.31 crores. Hence, in view of the lower capacity utilisation, the working results are not substantially different in comparison to the previous year and the production and sales are only marginally better compared to last year. During the year 51,254 MTs of total Soda Ash and 45,630 MT of Ammonium Chloride were produced. DIVIDEND Your Directors were not able to recommend any dividend in view of the accumulated losses. MARKET SCENARIO In view of the down trend in the international market and since the Company's capacity utilisation was lower, your Company has to face severe competition from imported products and also with indigenous products from other manufacturers. These brought the prices down for the Financial Year. However, the market seems to be good and with higher capacity utilisation and continuous production, it should be possible for the Company to regain the market. Price of Ammonium Chloride also has gone down due to lower priced imports from China. Your Company is continuously maintaining the sales by readjusting the selling price. The product should do well in the ensuing financial year. FUTURE OUTLOOK In order to limit the transportation cost, your Company markets the Soda Ash primarily in the Southern States of India. Since the market continues to improve, it is felt that with better production management, the selling of the Soda Ash, both Light and Dense, should not pose a big issue. OPPORTUNITIES AND THREATS The Company has an excellent opportunity to market its products in the Southern and Eastern States of India. However, it also has to encounter threat of competition from Europe, China and also Indian producers which market through southern ports both with indigenous and international products. The principal threat has long been the single source of availability of CO2 from the SPIC Fertilizer Plant. Hence your Company could operate only when SPIC's Ammonia Plant was operating. The Company also utilised only excess CO2 gas that is available from SPIC after meeting their internal requirements. Your Company has now implemented a CO2 Recovery Plant to recover CO2 gas from the boiler exhaust gases. The Plant is under construction and is expected to be fully operational by July/August 2016. This will position the Company better to operate either with our own CO2 gas or from that of SPIC or both. The Company can operate the Soda Ash Plant at maximum capacity utilisation that would be possible for the Plant and the CO2 Plant has been sized accordingly. With this, one of the major threats on the production front has been addressed. ENVIRONMENT AND SAFETY The periodic audits as required under ISO 9001 have been carried out. WIND MILL During the year 2.28 lakh units were generated from 5 Nos. of 250 KW Wind Turbine Power Generators at Gudimangalam, Tirupur District, as against 1.34 lakh units generated in the previous year. POWER PURCHASE Your Company is contemplating to draw power from private power producing companies under the 'Group Captive Scheme'. Your Company will make nominal investment to qualify under the 'Group Captive Scheme'. The cost of operation is likely to come down due to this. CAPTIVE SALT WORKS During the financial year, only 7,458 MT of salt could be produced due to the inclement whether and heavy rains prevailed in Tuticorin, as against 9,700 MT produced last year. We expect to do well in the ensuing year due to the early production achieved and also due to change of the pumps and repair of the salt pans wherever necessary. BIFR The Company filed the Draft Rehabilitation Scheme in August 2015. However, further hearings at BIFR did not take place. We have resubmitted an updated DRS with the provisional accounts for the year 2015-16, which is awaiting their consideration. The Company hopes to hear from them soon. FIXED DEPOSIT There was no outstanding deposit as at 31st March, 2016. However an amount of Rs. 0.08 lakhs remains unclaimed (representing). This amount will be transferred to "Investor Education and Protection Fund" shortly. The Company has neither accepted nor renewed any deposits during the year under review. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statement relates on the date of this report. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY The Statement showing the details regarding the development and implementation of Risk Management Policy of the Company is furnished in Annexure 1 and attached to this report. The risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting. Your Company is dependent primarily on SPIC for the supply of CO2 and also for receiving the imported Ammonia through their storage system. Your Company is now implementing an independent CO2 Recovery facility which is likely to be operational by July/August 2016. This may reduce the risk considerably. The Board does not envisage any other major risks. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable as on date in view of the accumulated losses the Company has incurred. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES The Company does not fall under the related party with any company. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure 2and is attached to this report NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW The Company had four Board meetings during the financial year under review. Full details are given in the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:- 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 this Act 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; and 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. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, 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 information. 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. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint venture or Associate Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL Thiru G. Ramachandran, Managing Director who got re-elected during last Annual General Meeting held on 31st July, 2015, again retires at the forthcoming Annual General Meeting and being eligible offers himself for re-election. On completion of the tenure of Thiru G Ramachandran, Managing Director he has been reappointed for a term of 3 years commencing from 12th December, 2015. His reappointment and payment of remuneration is subject to the approval of the shareholders. Approval for this will be obtained in this Annual General Meeting. There is no change among the Independent Directors and key managerial personnel during the year under review. DECLARATION OF INDEPENDENT DIRECTORS The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves for the continuance / appointment as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. BOARD EVALUATION Pursuant to the provisions of Section 149 read with Schedule IV of the Companies Act 2013 and conditions of the SEBI (LODR) Regulations 2015, the Indepentent Directors in their seperate meeting held on 4th February, 2016. had reviewed the performance of Non-Indepentent Director and the Board as a whole. STATUTORY AUDITORS M/s CNGSN & Associates LLP, Chartered Accountants, Chennai were appointed as Statutory Auditors for a period of one year in the Annual General Meeting held on31st July, 2015. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. SECRETARIAL AUDITOR Thiru R Kannan has been appointed by the Board of Directors to carry out the Secretarial Audit for the year ended 31st March, 2016. Secretarial Auditor's Report is annexed which forms part of this report. COST AUDIT As per the Government of India's directive, the Company's Cost Reports in respect of Fertilizer - Ammonium Chloride and Chemical - Soda Ash for the year ended 31st March, 2016 are being audited by the Cost Auditor Thiru P R Tantri, who was appointed by the Board with the approval of the Government of India. EXPLANATIONS OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS There was no qualification, reservations or adverse remarks made by the Statutory Auditors, M/s. CNGSN & Associates LLP and Secretarial Auditor, Mr. R. Kannan, Practicing Company Secretary, in their reports. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM/WHISTLE BLOWER POLICY S. Asokan all of whom are Independent Directors. The Company has established a vigil mechanism and oversees through a committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co-employees and the Company. Policy is given in Annexure 3. SHARES The Company has not bought back any of its shares during the year under review. The Company has not issued any "Sweat Equity" Shares during the year under review. No Bonus Shares were issued during the year under review. The Company has not provided any Stock Option Scheme to theemployees. ANNUAL RETURN The extracts of Annual Return in Form MGT pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure 4 and is attached to this Report. PARTICULARS OF EMPLOYEES The Company has no Employees whose salary exceeds Rupees Five lakhs per month. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company. The key parameters for any variable component of remuneration availed by the Directors. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year. AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY Company is adopting remuneration guidelines for fixing the remuneration as per the policies laid down by the Nomination and Remuneration Committee. PARTICULARS AS REQUIRED UNDER RULE 3 OF THE COMPANIES (ACCOUNTS) RULES, 2014 A. Conservation of Energy 1. Steps taken or impact on conservation of energy: Alternatives are being worked out to reduce energy requirement for the crystalisation section. It is likely to significantly reduce the energy consumption. The pure CO2 from your Company's internal plant is likely to reduce the venting of waste gases and reduce the gas circulation rate bringing down the energy requirement. Use of Centrifugal Compressors in place of the Reciprocating Compressors, is being considered to effect energy savings. 2. Steps taken for utilizing alternate sources of energy: A Project, jointly with Group Companies, is being worked out for production and utilisation of solar energy. 3. Capital investment in conservation of energy: During the current financial year, no investment has been made. However, CO2 Plant, when becomes operational in the ensuing financial year, will result in energy saving. The investment on the CO2 Plant is Rs.20 crores. B. Technology Absorption (a) The Company has fully utilised the Imported Technology of Average Managerial Remuneration, other than managerial personnel remains more or less the same as that of previous year. The remuneration to the KMP are considered reasonable taking into account the various parameters including the performance of the Company and the qualification, experience, contribution of the respective KMP. Sitting Fees. The remuneration of an employee not being a Director but in receipt of remuneration in excess of the Director was 1.77 times of the remuneration of the highest paid director - viz- Managing Director Hitachi Zosen, Japan which was imported in the year 1980. (b) Expenditure on Research & Development (i) Capital Nil (ii) Recurring Nil (iii) Total Nil C. Foreign Exchange Earnings and outgo: (a) Foreign Exchange Inflow: Nil (b) Foreign Exchange Outflow: Rs.40.18 lakhs ACKNOWLEDGEMENTS Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Company's activities during the year under review. Your Directors also acknowledge gratefully the shareholders for their support and confidence reposed on your Company. DISCLAIMER Statements in the Management Discussion and Analysis describing the Company's objectives, estimates, projections, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that would make a difference to the Company's operations include economic conditions affecting demand-supply and price conditions in the domestic and overseas markets in which the Company operates, raw material availability and its prices, changes in the Governmental regulations, labour negotiations, tax laws and other statutes and economic development within India For and on behalf of the Board of Directors B. NARENDRAN G. RAMACHANDRAN Director Managing Director Date : 25th May, 2016 Place : Chennai |