DIRECTORS' REPORT Dear Share holders. The Directors take pleasure in presenting the Thirtieth Annual Report together with the audited financial statements for the year ended March 31,2015. Revenue from operations and other income for the year under review was Rs. 39,272.70 lacs and for previous year Rs. 50,097.70 lacs and the loss before tax was Rs. (5,434.05) and for previous year (3,526.48) lacs. The loss after tax including loss carried over to the Balance Sheet stands at Rs. (11,345.63) and for previous year (5,969.71) lacs. BUSINESS REVIEW Indian Metallurgical Coke Industry is in developing stage and demand and supply gap met by imported coke and merchant coke plants. The Indian steel industry needs about 35 million tonnes of coke per year, out of which about 20 to 25 million tonnes are me1 from captive capacities leaving a balance of 10 million tonnes. The installed capacity of merchant met coke is said to be 10 million tonnes per annum but the actual plant utilisation is said to be only 30%-35%, due mostly to cheaper imports from China. India lacks locally available coke displacement options that exisl in other countries. It is likely to remain the world's single largesl import market for coke. The government is pushing towards phased de-regulation of the coal sector to tap its full potential and it also provide incentive for new technologies in underground mining. The global economy is exhibiting strong signals of recovery and the Indian economy with a GDP forecast of over 7% suggests thai the worst is behind us and we are seeing a revival all around. Indian steel consumption is growing at the rate of 6%. Met coke, the demand of which is directly linked to steel production, is obviously going to share the same fortune. India has a severe shortfall of good quality hard coking coal, which is being primarily met by imports. This demand supply gap is further going to increase in days to come with India trying to meet its target of 300 million tonnes by 2020 from current levels of around 53 million tonnes perannum. It is estimated that by 2018 as per the current projections, India would need more than 75 million tonnes of coking coal. With China closing some of its coal mines and becoming a net importer of coking coal, it has become a commodity in global short supply and hence there is an increased demand for coke in the market. All these spell a wonderful future for your company. OPERATIONS & FUTURE PROSPECTS • The present aggregate manufacturing capacity of your Company is 130,000 TPA and expansion plans are in place to increase the capacity to 500,000 TPA by 2018 and by 1 Million TPA by 2020. Your Company has shifted the strategy of Product Sales from Whole Sale to Retail in orderto achieve maximum realisation. YourCompany is focused on manufacturing highest quality metallurgical coke from the existing/ upcoming plants by sourcing finest grade of coking coal across the world and introduce Best Operating Practices across all functions in delivering consistent quality products and services offerings to the markel • To improve the sale and maximize the realisation, your Company's key strategies is i) focusing on continue improvement on capacity utilization and product quality/services from the existing plants. ii) Install Power Co-Generation Unit in all Coking Plants. Maximize availability and utilization of power plant and re-negotiate power tariffs. iii) Increase the coke manufacturing capacity in terms of Brownfield and Greenfield expansion to economise the cost of products. De-risking of product profile by expanding into the fragmented dealer markets. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A detailed review of the operations, performance and outlook of the company and its business is given in the Management Discussion and Analysis Report, which forms a part of this report. DEPOSITORY SYSTEM Your Company's Equity Shares are available in dematerialized form through National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL). As at 31s' March 2015, 99.91% of the Equity Shares of the Company were held in demat form. DIVIDEND Your Directors have not recommended dividend in view of the losses incurred by the company during the year. DEPOSITS The Company has not accepted any deposits either from the shareholders or public within the meaning of The Companies (Acceptance of Deposits) Rules, 2014 as amended. DISCLOSURES UNDER THE COMPANIES ACT 2013 i) Extract of Annual Return:- The extract of the Annual Return in the form MGT - 9 as required under Section 92 (3) and 134 (3) of the Act is attached to this Report as Annexure -1. ii) Number of Board Meetings The Board of Directors met 8 (Eight) times in the year 2014-15. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report iii) Change in Share Capital During the year under review, there is no change in the Share Capital of the Company. iv) Composition of Audit Committee The Board has constituted the Audit Committee which comprises of Mr.R. Ramakrishnan as the Chairman and Mr. K.U. Sivadas and Mr. Aravind Subramaniam as the members. More details on the committee are given in the Corporate Governance Report. v) Related Party Transactions All the related party transactions are entered on arm's length basis and are in compliance with the applicable provisions of the Act and the Listing Agreement. There are no materially significant Related Party transactions made by the Company with Promoters, Directors or Key Management Personnel etc. which may have potential conflict with the interest of the company at large All Related Party Transactions are presented to the Audil Committee and the Board. A statement of all related party transactions is presented before the Audil Committee specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at the Web Link:<http://www.ennorecoke.com/> investors/Policy on Related Party transactions Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 is enclosed as Annexure - D in Form AOC-2. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31, 2015 AND MAY 22, 2015 (DATE OF THE REPORT) There were no material changes and commitments affecting the financial position of the Company between the end of the financial year (March 31,2015) and the date of the Report (May 22,2015). INTERNAL CONTROL SYSTEM The Company has in place an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed, keeping in view the nature of activities carried out at each location and the various business operations. The company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. The formalised systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement. The Company also has well documented Standard Operating Procedures (SOPs) for various processes which is periodically reviewed for changes warranted due to business needs. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal controls system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit, process owners undertake corrective action in their respective areas and thereby strengthen the controls. During the year, the Audit Committee met regularly to review reports submitted by the Internal Audit. All significant audil observations and follow-up actions thereon were reported to the Audit Committee. The Audit Committee also met the Company's Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the Company. VIGIL MECHANISM/WHISTLE BLOWER POLICY Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rule 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Policy on Vigil Mechanism/Whistle Blower and the same was hosted on the website of the Company. The Policy inter-alia provides Whistle Blower, a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director/employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year The Whistle Blower Policy as approved by the Board is uploaded on the Company's website at the Web Link: <http://www.ennorecoke.com/lnvestors/Corporate> Governance/Whistle Blower Policy, CORPORATE SOCIAL RESPONSIBILITY (CSR): In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee. The Committee comprises of all Independent Directors. Since the average net profits of the company made during the three immediately preceding financial years was negative, the Company was not required to spend any money on CSR activities during the previous year. DIRECTORS AND KEY MANAGERIAL PERSON 1. CESSATION Mr. G. Natarajan has resigned from the Board with effectfrom 318,March 2015. The Board placed on records its appreciation forthe valuable services rendered by Mr. G. Natarajan. 2. APPOINTMENT Ms. J. Kotteswari (DIN No. 02155868) has been appointed as an Additional Director under Section 161 of the Companies Act, 2013 with effect from March 31,2015. Ms. J. Kotteswari is a Chartered Accountant and she has over 20 years of experience in Project Cost Management, Banking, Management Information Systems, Internal Audit, Review of Capex and Consolidation of financials, Treasury, and Cost control. She has also handled Manufacturing accounts in factory, Marketing finance and corporate finance and M&A activities. Prior to joining our Group Ms. J. Kotteswari was working as Vice President Finance and Accounts at M AChidambaram Group. Ms. J. Kotteswari is the Chief Financial Officer of M/s. Shriram Industrial Holdings Limited, our Group Company since January 2013 and a key member of the management team. As an Additional Director of the Company shall hold office upto the date of ensuing Annual General Meeting. The Company has received a notice as per the provisions of Section 160(1) of the Companies Act, 2013, from a member proposing her appointment as Director. The Board of Directors recommends herappointment. Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with Annual Report. 3. RETIREMENT BY ROTATION In accordance with the provisions of Section 152(6) and the Articles of Association of the Company Ms. J Kotteswari (DIN No.02155868) will retire by rotation at the ensuing Annual General Meeting of the company and being eligible, offer herself for re-appointment. The Board recommends her re-appointment. 4. APPOINTMENT OF INDEPENDENT DIRECTORS Mr. K.U. Sivadas was appointed as an Independent Director at the Board meeting held on May 20,2015 for a period of five years subject to the approval of Shareholders. He has submitted the declarationsof Independence as required pursuant to Section 149(7) of the Companies Act, 2013, stating that he meet the criteria of Independence as provided in Sub Section (6). The profile of the Independent Director forms part of the Corporate Governance Report. 5. KEY MANAGERIAL PERSON During the year under review, the Board took on record Mr. M Natarajan Chief Executive Officer, Mr. A Ganesh Chief Financial Officer and Mr. M Saravanan - Company Secretary as the Whole-time Key Managerial Personnel of the Company under Section 203 of the Companies Act, 2013. EVALUATION OF THE BOARD'S PERFORMANCE In compliance with the Companies Act, 2013 and Clause 49 of the Listing Agreement, the performance evaluation of the Board was carried out during the year under review. More details on the same is given in the Corporate Governance Report. REMUNERATION POLICY The Remuneration Policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a director and other related matters has been provided in the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013. i) in the preparation of the annual accounts for the year ended 31st March 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures if any; (ii) 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 as at 31st March 2015 and Profit and Loss and cash flow of the Company for the year ended on that date; (iii) 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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the Directors have prepared the annual accounts of the Company on a 'going concern' basis. (v) 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 (vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and thai such systems were adequate and operating effectively. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has always provided a congenial atmosphere for work to all the employees that is free from discrimination and harassment including sexual harassment. It has provided equal opportunities of employment to all without regard to their caste, religion, colour, marital status and sex. The Company has also framed a policy on "Prevention of Sexual Harassment a1 workplace. There were no cases reported during the financial year under review under the said policy. AUDITORS a) STATUTORY AUDITORS M/s Sreedhar, Suresh & Rajagopalan, (Registration No. 003957S) Chartered Accountants, Chennai, Statutory Auditors of the Company has been appointed as Statutory Auditors of the Company as per Section 139 of the Companies Act, 2013 for a period of 3 years from the conclusion of Twenty Ninth Annual General Meeting till the conclusion of Thirty First Annual General Meeting by the members at the Annual General Meeting held on September 22,2014. As per Section 139(1) of the Companies Act, 2013 the company shall place such appointment of the Statutory Auditors for ratification by members at ensuing annual general meeting. Members' attention is invited to the observation made by the Auditors under "Emphasis of Matter" appearing in the Auditors Reports. b) INTERNAL AUDIT Internal Audit of the company is handled by M/s. Ravindran & Associates, Chartered Accountants, Chennai for evaluating the adequacy of internal controls and concurrently reviews majority of the transactions in value terms. Independence of the firm and compliance is ensured by the dired reporting of the firm to the Audit Committee of the Board. c) SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed Ms. B. Chandra, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure - E" CORPORATE GOVERNANCE Corporate Governance is based on some fundamental and basic principles such as conducting the business with integrity and fairness, ensuring transparency in all the transactions, making all relevant disclosures as per the various Regulations in force and complying with all the laws of the land, ensuring accountability and responsibility in all dealings with the various stakeholders and commitment for conducting the business in an ethical and transparent manner. Your Company is committed to achieving and maintaining these high standards of Corporate Governance and places high emphasis on business ethics. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Company has laid down a well- defined Code of Conduct, which fairly addresses the issues of integrity, conflict of interest and confidentiality and stresses the need of ethical conduct, which is the basis of good governance. This Code of Conduct is applicable to all the members of the Board and the Senior Management Personnel. The declaration regarding compliance with Ennore Coke Limited Code of Conduct and Ethics for all Board Members and Senior Management Personnel of the Company forms part of the Report on Corporate Governance. The Company is complying with all the norms laid down by the Regulatory Authorities in all its functional areas. The Company Secretary is also the Compliance Officer under Clause 47 of the Listing Agreement entered into with the Stock Exchanges, to comply with various guidelines of Securities and Exchange Board of India and Stock Exchanges. The Company is promptly submitting a "Quarterly Compliance Report on Corporate Governance" as per Clause 49 of the Listing Agreements with the Stock Exchanges. As part of the good Corporate Governance, the Company ensures that all Investor Grievances are attended to and resolved in a timely manner as per the records maintained by our Registrar and Transfer Agent. The certificate from the Statutory Auditors, M/s Sreedhar, Suresh & Rajagopalan, confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is reproduced in a separate section elsewhere in the Annual Report. INSIDER TRADING In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, your Company has instituted a comprehensive Code titled as "Ennore Coke Limited - Code of Conduct" which lays down guide lines and advises the Directors and Employees of the Company on procedures to be followed and disclosures to be made while dealing in securities of the Company. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rule 2014, is annexed herewith as "Annexure A". PARTICULARS OF EMPLOYEES None of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under the 2013 Act and the rules framed there under. The information required pursuant to Section 197of the 2013Actreadwith Rule5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is provided in Annexure B forming part of this Report. AUDIT REPORT AND EXPLANATION UNDER SECTION 134 OF THE COMPANIES ACT, 2013 The Auditors' Report is self-explanatory and does not require any further comments except that: Point (a) of "Emphasis of Matter" in Auditors' Report: The Company has initiated steps for transferring the Title in the name of the Company Point (b) of "Emphasis of Matter" in Auditors' Report: The Management is of the opinion that the company is optimistic of earning profits in the ensuing financial years and hence no adjustment for reversal of Deferred Tax Asset is considered necessary. Point (c) of "Emphasis of Matter" in Auditors' Report: The Management is of the opinion that the balances due to the Company are good and fully realisable and dues by the Company are fully payable and will be settled in due course. Point (d) of "Emphasis of Matter" in Auditors' Report: The Management is confident that there is a fair chance of succeeding in the appeal and the amount is fully recoverable and hence no provision is warranted. Point (e) of "Emphasis of Matter" in Auditors' Report: The change in the accounting policy on accounting the inventory of Stores consumables resulting in the understatement of loss by Rs. 20,31,788/-, the management has decided to account for inventory of stores consumables for better control. Point (f) of "Emphasis of Matter" in Auditors' Report: The change in the accounting policy on accounting the finance charges on pro rata basis resulting in understatement of losses by Rs. 5,30,991./-, the management has decided to adopt the matching concept principle. Point (g) of "Emphasis of Matter" in Auditors' Report: The Company has not recognised, interest on loans advanced to/ loans availed from a fellow subsidiary taking a prudent and conservative view. Point (vi) of the Annexure to the Auditors' Report: The Company has since appointed Cost Auditor for the financial year 2014-15 and maintained the Cost Records under subsection (1) of Section 148 of the Companies Act, 2013. Point (vii) (a) and (b) of the Annexure to the Auditors' Report: The Company is in the process of regularising all statutory remittances to the concerned department. A substantial level of taxes has been paid subsequently as on the date of this report. Point (xi) of the Annexure to the Auditors' Report: The company had initiated the process of regularizing the bank dues and as on the date of this report all dues have been updated. ACKNOWLEDGEMENTS Your Directors wish to express their appreciation for the assistance, support and cooperation extended by the Banks, Financial Institutions, Government Authorities, Customers, Suppliers and all Members during the year under review. Your Directors also wish to place on record their appreciation for the committed services by all employees of the Company. For and on behalf of the Board Ennore Coke Limited R. Ramakrishnan Director DIN00809342 K.U. Sivadas Director DIN 00498594 Date:22.05.2015 Place: Chennai |