DIRECTORS' REPORT Dear Members, (Equity & CRP Shareholders) Your Directors' have pleasure in presenting the Annual Report and the Audited statements of Accounts of the Company for the year ended 31st March, 2015. Operations : The turnover for the year under review is Rs. 83784 lakhs as compared to Rs. 85095 lakhs in the previous year. The 1.5% marginal decrease is on account of the following changes in respective Divisions performance. Division / Segment Wise Operations : The Caustic unit has produced 141336 MTs of Caustic Soda as against 136882 MTs for the previous year representing a marginal increase of 3%. As against net sales of Rs.42635 lakhs for previous year, the current year sales comes to Rs. 42627 lakhs, which is almost all stable. The Potassium plant has produced 11508 MTs of Potassium Hydroxide as against 12483 MTs for the previous year representing a decrease of 5%. As against net sales of Rs. 9297 lakhs for previous year, the current sales comes to Rs. 8877 lakhs representing decrease of 5% attributed to stressed market. The Castor Oil Plant has processed 11709 MTs of oil as against 12526 MTs for the previous year representing a decrease of 6%. As against net sales of Rs.12490 lacs for the previous year, the current year sales stood at Rs.11200 lakhs representing decrease of 10 %, which is mainly attributed to adverse market. The Fatty Acid Plant has processed 18852 MTs for the current year as against 13711 MTs for the previous year representing an increase of 37%. The net sales of this division has increased from Rs. 10245 lakhs to Rs. 11102 lakhs representing an increase of 8%, which is mainly attributed to favourable market. There are no commercial operations at Bellary Power Plant due to expiry of Power Purchase Agreement (PPA) by KPTCL. The Company is looking out for other options including its sale or relocation of the Plant. The Wind Farm at Ramagiri has generated 25.91 lakh/KWH power in the current year as against previous year generated of 29.41 lakh/KWH representing a decrease of 12% when compared to previous year. The power generated is wheeled through State Grid to the Company for captive use. The generation of Power depends upon Wind velocity. Outlook For The Current Year : Segment-wise discussion is furnished in Management Discussion and Analysis annexed to this report in "ANNEXURE - Dividend : In view of the need for strengthening the financial base of the company, your Directors have decided not to declare any dividend for the year 2014-15. Capital Expenditure : During the year the Company has incurred an amount of Rs.5,393 lakhs on Capital Expenditure which is mainly towards Chloromethanes Project and other normal capital expenditure. The funds required for the above is met from Term loans and internal accruals. Safety and Environment Protection : Your Company gives utmost importance to safety as well as development of green environment. All out efforts are made to ensure safety in all activities of the company. The steps taken by the management to develop green environs around the factory has given desired results. A separate cell has been entrusted with the responsibility of ensuring safety with a team of officials working with the motto of continuous "SAFETY FOR MEN, MACHINE AND MATERIAL". The Company is conducting mock drills and proper training to staff at regular intervals in the safety aspects. Listing Fees : The Company has paid Listing Fee for the year 2015-16 to Bombay Stock Exchange vide its letter dated 17.04.2015. Insurance : Assets of the Company are adequately insured. Fixed Deposits : The Company has not accepted any fixed deposits during the year and there are no fixed deposits outstanding as on 31.3.2015. Directors and Key Managerial Personnel : Sri K. Karunakar Rao and Sri N. Jesvanth Reddy are retiring by rotation at the ensuing Annual General Meeting (AGM) being eligible for re-election, they have given their consent. Sri Gopal Krishan was appointed as Additional Director by the Board in its meeting held on 07.11.2014, whose term will expire on the date of this AGM. The Company has received necessary deposits from a Shareholder proposing Sri Gopal Krishan candidature as Director, whose position is subject to retire by rotation. Necessary Resolutions alongwith Explanatory statement is placed in the Notice of AGM for your approval. Besides Sri Gopal Krishan has been appointed as Executive Director (Technical) by the Board in its meeting held on 07.11.2014. Sri. J Nagabhushanam was co-opted as Additional Director by the Board in its meeting hled on 10.07.2015 and whose term will expire on the date of this Annual General Meeting. The Company has received necessary deposit from a shareholder proposing Sri. J Nagabhushanam as INDEPENDENT DIRECTOR for a term of 3 consecutive years. Appropriate resolution is placed in the notice of Annual General Meeting for members approval. (a) M/s. IDBI Bank Ltd. vide their letter Ref. No. CBG-SSCB.53/ 212/Nom.8, dated 18.10.2014 has appointed Sri Badri Srinivasa Rao as their nominee in place of Sri K. Davidson. M/s. IFCI Limited vide their letter Ref. No. IFCI/NDC/2014-140718311, dated 18.07.2014 withdrawn the nomination of Ms. Shalini Soni. The Board placed on its records its appreciation for the valuable advises and suggestions provided by Sri K. Davidson and Ms. Shalini Soni during their term on the Board and Audit Committee and authorised the Chairman to convey the message suitably. As regards to Key Managerial Personnel (KMP), Sri C. Rajesh Khanna has been declared as C.F.O. in place of Sri M.V. Kumara Swamy in the Board meeting held on 26.05.2014. Apart from the above, there is no change in K.M.P. Industrial Relations : Your Company's Industrial Relations continue to be harmonious and cordial. Energy Conservation Technology Absorption And Foreign Exchange Earnings And Outgo : Particulars required to be disclosed under Section 134 of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto as Annexure - A to this report. Directors' Responsibility Statement : As required by the provisions of Section 134 of the Companies Act, 2013, Directors' Responsibility Statement is attached as Annexure - B. Corporate Governance - Clause- 49 of Listing Agreement : A separate report on Corporate Governance (Annexure - C) is incorporated as a part of the Annual Report along with a certificate from the Auditors of the Company (Annexure - D) regarding compliance of the conditions of Corporate Governance. The" Annexure C and D" are attached to this report. Management Discussion and Analysis Report : Further to comply with Clause-49 of listing agreement "Management Discussion and Analysis" has been given as "Annexure - E" to the Directors' Report. Auditors : M/s. Brahmayya & Co., Chartered Accountants, Adoni were appointed as Statutory Auditors for a term of 3 years upon the recommendation of Audit Committee in its meeting held on 30.07.2014 by the Board in its meeting held on 30.07.2014 subject to the Members' ratification every year to comply with Section 143 of the Companies Act, 2013. Accordingly, a Resolution for ratification by the Members in this AGM and will be effective upto the next AGM. Cost Audit : Products manufactured by the Company are coming under Central Govt. order Letter Ref. No. 52/26/CAB-2010 dated 06.11.2012. To comply with statutory provisions, Cost Audit Report has been filed in Form-1 in XBRL format vide SRN: S31416605 dt.27.09.2014 with MCA portal for financial year 2013-14 and similarly would be effected for 2014-15 also, soon. Audit Committee: An Audit Committee continues to function to comply with provisions of Clause-49 of Listing Agreement and other statutory provisions. The Audit Committee was reconstituted on 07.11.2014 with the following Members Sri Badri Srinivasa Rao, Sri G. Krishna Murthy and Sri O.D. Reddy as members with Sri P.N. Vedanarayanan as Chairman of the Audit Committee. Material changes and commitment if any affecting the Financial position of the Company occured between the end of the financial year to which this financial statements relate and the date of the Report There are no material changes which are to be affected to the financial position of the company according to the date of Financial year and the date of its Report. Statement concerning development and implementation of Risk Management Policy of the Company A Special Team with Senior Executives has been formed which has been entrusted with the responsibility to assist Chairman and Managing Director in (a) Overseeing and approving the Company's enterprise risk management framework, and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organisational structures, processes, standards, code of conduct and behaviors together form the Management and business of the Company. The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across Company wide Risk Management, Internal Control and Internal Auditor methodologies and processes. Details of Policy developed and implemented by the Company on its Corporate Social Responsibility initiatives The Company has taken various Corporate Social Responsibility (CSR) activities around the Factory site since its inception. The Company has taken appropriate steps to the possible extent to implement CSR activities for the development of areas surrounding the Company in particular and other areas in general. Since its inception, a well documented CSR Policy has been drafted by a Team of Senior Executives of the Company and the same was approved by the Board in its meeting held on 26.05.2014. For the financial year ending 31.03.2015, the Company has to spend Rs. 45.89 lakhs as against this the Company has spent Rs. 49.78 lakhs. The CSR activities implementation will be a continuous process as far as the Company is concerned and the Team of Senior Executives taking all necessary steps for its implementation under the guidance of C.S.R. Committee. A Board sub-committee has been formed by the Board on 26.05.2014 under the name 'Corporate Social Responsibility Committee to monitor the implementation of C.S.R. activities. Details of C.S.R. activities are given as Annexure - G. Particulars of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013 : Not applicable. Particulars of Contracts or Arrangements made with Related Parties During the course of its business, the Company is dealing with the Group Companies which are Related Parties pursuant to the Section 188 of the Companies Act, 2013, Accounting Standard 18 and Clause 49 of Listing Agreement for Sale, Purchase, Lease Rental Transactions, services availed / provided and monetary values of its transactions are mentioned in notes to Accounts point no. 24-11-1 & 24-11-2 to comply with Accounting Standards 18 and other applicable provisions of the Companies Act, 2013. All the Related party transactions were on arm-length. Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Auditors and the Practicing Company Secretary in their Reports Statutory Auditors of the Company and the Practicing Company Secretary, who have conducted statutory audit and Secretarial Audit, have not made any adverse comments on the activities of the Company for the financial year 2014-15. Company's Policy relating to Directors appointment, payment of Remuneration and discharge of their duties The Nomination and Remuneration Committee has been constituted by the Board in its meeting held on 25.09.2014 to ensure the appointment of persons having vide exposure in their fields, having independence as defined in the Act to be available for appointment as Director. (The Committee always keeps a list of eminent persons having independece available for Company's requirement depending upon vacancy on the Board). As regards remuneration payable to whole-time Directors including Chairman and Managing Director, the Board will take collective decision within the parameter of various statutes including Companies Act, 2013 and Listing Agreement. The Committee will follow the Company's policy to discharge its duties whenever necessity arises. It will not be out of place to mention that the set policy being followed since inception of the Company to ensure transparency. Internal Financial Controls The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material wekness in the design or operation were observed. Secretarial Auditor The Board has appointed Sri N. Rama Swamy, Practicing Company Secretary to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Auditor Report for the financial year ended March 31, 2015, is annexed herewith marked as Annexure - I to this Report. The Secretarial Auditor Report does not contain any qualification, reservation or adverse remark. Annual Return in Form MGT-9 format: The details of Annual Return in MGT-9 format is enclosed as Annexure- F . Subsidiaries, Joint Ventures and Associate Companies The Company is not having any Subsidiaries, Joint Ventures and Associated company. Chemicals Declaration of Independent Directors The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Evaluation The Board evaluated the effectiveness of its functioning and that of the Committees and of individual Directors by seeking their inputs on various aspects of Board/Committee Governance. The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfillment of Directors' obligation and fiduciary responsibilities, including but not limited, to, active participation at the Board and Committee meetings. The Chairman of the Board had one-on-one meetings with the Independent Directors and the Chairman of the Nomination and Remuneration Committee had one-on-one meetings with the Executive and non-Executive Directors. These meetings were intended to obtain Directors' inputs on effectiveness of Board/ Committee processes. The Board considered and discussed the inputs received from the Directors. Further, the Independent Directors at their meeting, reviewed the performance of Board, Chairman of the Board and of NonExecutive Directors. Disclosure as per the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Company has no such cases of sexual harassment at workplace. Vigil Mechanism The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics and Compliance Task Force comprising Senior Executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on Vigil Mechanism and whistle blower policy may be accessed on the Company's website at the link: <http://www.tgvgroup.com>. Provision of voting rights to equity and CRP shareholder Pursuant to section 47 of the companies Act, 2013 voting rights have been provided to equity shareholder as well as CRP shareholder to cast their votes on all the Resolutions placed in the notice. Acknowledgement : Your Directors wish to express their sincere thanks to Financial Institutions, Bankers, Distributors and Customers for their continued support to the Company. The Directors also acknowledge with gratitude the continued help and support received from the various departments of the Government of India and the Government of Andhra Pradesh and Government of Telangana. The Directors place on record their appreciation of the sincerity, commitment and contribution made by the Employees at all levels and this was mainly responsible to carry on the business of the Company during the year. On behalf of the Board of Directors Sd/- CA K. KARUNAKAR RAO Executive Director & CEO Place : Hyderabad Date : 17th August, 2015 |