DIRECTOR'S REPORT FOR THE FINANCIAL YEAR 2014-2015 Dear Members, Your Directors have pleasure in presenting the 30th Annual Report together with the audited financial statements for the financial year ended March 31, 2015 DIVIDEND In view of current year's losses, your Directors regret their inability to recommend any dividend for the year under review. REVIEW OF OPERATIONS Your Company produces Single Super Phosphate (SSP) fertilizer along with Mixed NPK fertilizer under the brands of "Girnar" and Suryaphool" from Indore, Udaipur and Pune units. The company recently launched value-added fertilizer, Boronated Single Super Phosphate from Udaipur unit in the month of January, 2015 and produced about 4000 MT within three months period. The company's another division Soya seed crushing and refining unit is operated from Indore. The Chemicals division of the company involved in manufacture of Sulphuric Acid and Oleum is based at Indore and Pune. Fertilizer Division The overall production of SSP increased in the country significantly after changes in SSP policy during 2008-09 and implementation of NBS policy from 2010-11. During 2009-10, 2010-11 and 2011-12 the production of SSP recorded high growth rate of 22%, 20%, 17%, respectively over the previous years. Subsequently, the momentum of growth in production slowed down in 2012-13 at 2.60% and turned negative in 2013-14 and 2014-15. The industry average capacity utilization during the current year stands @ 45.20% and produced 42.00 lac MT as against 48.5% with production of 41.74 lac MT achieved during the last year. Whilst there is no change in subsidy amount payable to SSP industry during the year, at the same time the industry witnessed capacity expansion by 7.29 Lac MT to reach 102.52 Lac MT of installed capacity. Hence, all out efforts should be made by the Govt., for promoting SSP consumption in the country in line with "Make in India" campaign and also reduce outflow of foreign currency. As per the ICRA report, aggregate revenue growth of 11 listed fertilizer companies slowed from an average of 22% in six years 2011-12 to 2-4% in the last three fiscal years. Unless the weather situation worsens, sales will likely to grow in low single digits in the current fiscal year too. In spite of such grim situation, your company achieved an overall 70% capacity utilization and produced 3,35,081 MT during the current year under review as against 80% (3,80,328 MT production) achieved during the previous year. As per the FAI Annual Report, only 2 plants in the country including your Pune unit have achieved more than 90% capacity utilization out of 85 operating industries during this year. The excess availability of material in the channel subsequent to drought-like situation in Western Maharashtra and other major parts of Madhya Pradesh due to paucity of rain restricted the Management to optimize its production capacities. Company could marginally improve its Mixed fertilizer NPK capacity utilization to 22% during the current year against 17% in the previous year. During the year, the Chemicals division of Sulphuric Acid & Oleum at Pune was operated at full capacity due to better market demand. Your company achieved market share of 8.43% against all-India sale of 42.27 lacs MT during the current year against 11.46% on 39.70 lac MT in the previous year. The Fertilizer division reported improved turnover by Rs. 236.73 lacs at Rs. 35,013.10 lacs in 2014-15 as against Rs. 34,776.37 lacs achieved in 2013-14. This could be made possible due to increase in sales quantity by keeping a strict monitoring on selling and distribution expenses and also selling in economic zone coupled with reduction in outward freight. Oil division : There was steep drastic reduction in crushing activity at our Indore unit and that we could crush 12686 MT of Soya seed during this year against 47219 MT crushed in the previous year. There was huge disparity in seed prices and thus Management took conscientious decision to restrict seed crush and reduce subsequent losses. Overall Financial Performance : EBITDA of the company has been reduced to Rs. 35.05 lacs during the year as against Rs. 1,046.67 achieved in the previous year. Due to this, net loss has also been increased to Rs. 976.87 lacs during this year. This is due to lesser capacity utilization in fertilizer division at 70% coupled with reduction in sales realization due to availability of huge quantity of unsold stock in the channel. Besides, there was huge disparity in oil division and thus, company operated the plant without disturbing the economics further. Moreover, Working capital limit has not been disbursed in spite of in-principle approval by Working Capital lenders. The financial cost has been increased from Rs. 962.85 to Rs. 1,024.65 lacs marginally subsequent to availing more of non-fund based limit in oil division. Employee cost has been increased marginally from Rs. 1,579.21 lacs to Rs. 1,636.48 lacs -overall by 3.62% which is due to normal annual increment. Selling and distribution expenses have been reduced to Rs. 4,018.52 lacs in the current year as against Rs. 4,198.22 lacs incurred in the previous year. The term loan liability has been reduced from Rs. 430.07 lacs to Rs. 167.84 lacs due to repayment of Term Loan of Bank of India and others. However, trade payable has been increased from Rs. 7,852.01 lacs to Rs. 8,531.44 lacs due to increase in market credit. Subsidy receivable has been increased from Rs. 5,033.40 lacs to Rs. 7,537.81 lacs due to delay in release of subsidy. The Company has considered deferred tax income of Rs. 409.28 lacs in accounts due to set-off of losses of current year in line with reasonability of expectant achievement of profit in further period. Since the overall fertilizer business environment is quite competitive, your Directors are quite hopeful to improve performance and take suitable measures to achieve the desired goals in the long run by capacity utilization of fertilizer division and foraying into addition of value-added products viz., Sulphur Dust, Magnesium Sulphate to de-risk the company and also keep a close watch on fixed expenses and other possible ways and means. It is also reported that monsoon is well-set allying fears of drought like situation in continuity and that company forecasts (good Kharif season) to liquidate its entire production. In view of increased acreage of oil seeds cultivation in the country especially in Madhya Pradesh, company intends to run Soya Oil division at optimum capacity and also produce value-added product Lecithin. ISO Accreditation: - The Oil Division of your company has conformed with the requirements under ISO 14001 : 2004 accreditation for the Environmental Management System and the certificate issued in the year June-2007 is periodically renewed. - In pursuit of achieving Quality Standards, our Oil Division has fulfilled requisite conditions and received accreditation with ISO 9001: 2008 during this year. - Similarly, our Fertilizer Division has also obtained accreditation for ISO 9001: 2008 in 2014. This is an additional feather in our cap which will ensure Quality Management System. EXPANSION ACTIVITY Udaipur unit: The Environmental Clearance for the proposed expansion of Single Super Phosphate (1,81,000 to 3,15,000 TPA) and NPK (60,000 TPA), and Boronated SSP (25,000TPA), and LABSA (20,000 TPA) has been received and that company would initiate necessary formalities to obtain CTO from the respective authorities. Indore unit: Similarly, Environment Clearance for expansion of SSP capacity from 1.65 lac MT to 2.50 lac MT has been received. TRANSFER OF AMOUNT TO RESERVES The Company does not propose to transfer any amount to the general reserve for the Financial Year ended March 31, 2015. CHANGE IN NATURE OF BUSINESS There is no change in the nature of business of the Company. SHARE CAPITAL The paid up Equity Share Capital as at March 31, 2015 stood at Rs. 1767.43 Lacs. During the year under review, the Company has neither issued any shares with differential voting rights nor had granted any stock options or sweat equity. CORPORATE GOVERNANCE A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditor's Certificate on its compliance. Your Directors refer to the observations made by the Auditors in their Report on compliance with conditions of Corporate Governance and wish to state that due to appointment of non-independent woman director, the requirement of minimum number of Independent Directors was not complied. However, Company is taking steps to comply with the requirement of minimum number of Independent Directors. EXTRACT OF ANNUAL RETURN The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - A to this Report. DIRECTORS Mr. H.D. Ramsinghani, Director of the Company retires by rotation and being eligible, offer himself for re-appointment. The Board of Directors has appointed Mrs. N.H. Ramsinghani as an Additional Director on the Board w.e.f March 31, 2015. KEY MANAGERIAL PERSONNEL During the year under review, the Company has appointed Mr. Kiran P. Jain as Company Secretary w.e.f. February 13, 2015 and Mr. J. K Parakh as Chief Financial Officer w.e.f. February 13, 2015. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS During the year ended March 31, 2015, four Board Meetings were held. The dates on which the Board meetings were held are May 27, 2014, August 12, 2014, November 14, 2014 and February 13, 2015. PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS BY COMPANY Details of Loan, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements. WHISTLE BLOWER POLICY/VIGIL MECHANISM The Board of Directors has adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy. A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases. The whistle Blower Policy has been uploaded on the website of the company (www.ramaphosphates.com). NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee consists of the following Directors namely Mr. K. Raghuraman - Chairman, Mr. D.N. Singh and Mr. M. Shanmugam RISK MANAGEMENT COMMITTEE Risk Management Committee consists ofthe following persons namely Mr. D.N. Singh - Chairman, Mr. H.D. Ramsinghani and Mr. K. Raghuraman. The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management procedure will be reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE Corporate Social Responsibility (CSR) is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stakeholders and Society. The Board of Directors of the Company have constituted Corporate Social Responsibility Committee consisting of following persons namely Mr. D.N. Singh - Chairman, Mr. H.D. Ramsinghani and Mr. K. Raghuraman and adopted policy for Corporate Social Responsibility. Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee. Report on Corporate Social Responsibility as Per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is prepared and the same is uploaded on website of the Company (www.ramaphosphates.com). During the financial year under review, the Management could not spend the stipulated amount towards CSR as company is facing losses. Our proposal for enhanced working capital is still under process and also huge funds of realization of subsidy amount got stuck under government formalities. These factors posed a great challenge to the company in executing various CSR activities. Moreover, due to severe drought like condition, there was huge pile up of stock and the sale of entire produce could not be materialized. This has resulted in delay in realization of funds from the market. In spite of our willingness, we could not spend adequately under CSR due to aforesaid reasons and reduced cash flow in the system during the year. However, we shall ensure that due care will be taken in the subsequent years. RELATED PARTY TRANSACTIONS All transactions entered with Related Parties for the year under review were on arm's length basis and in ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in form AOC-2 is not required. Further, there are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained for transactions which are of repetitive nature. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the company (www.ramaphosphates.com). SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no Significant and Material Orders passed by the regulators or Courts that would impact the going concern status of the Company and its future operations. DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT, 2013 Persuant to the requirement under section 134 (3)(c) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms that: a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, 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 as at 31st March, 2015 and of the profit /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; 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. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (6) OF SECTION 149 The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6). STATUTORY AUDITORS M/s. Dayal & Lohia, Chartered Accountants, (Firm Registration no:102200W) who are statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts for the financial year 2015-16. As required under the provision of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. Dayal & Lohia that their appointment, if made, would be in conformity with the limits specified in the said section. AUDITORS REPORT M/s. Dayal & Lohia, Chartered Accountants, (Firm Registration no:102200W) have issued Auditors Report for the Financial Year ended March 31, 2015 and there are no qualifications in Auditors Report. COST AUDIT The Board of Directors on recommendation of Audit Committee, has appointed Mr. R.S. Raghavan as the Cost Auditor for carrying out the Audit of Cost Accounting Records relating to the product "Sulphuric Acid" at the Indore and Pune Unit, the product "Oil" at the Indore Unit and the product "Fertilizers" at Pune, Indore and Udaipur Unit of the Company for the Financial Year 2015-16 on remuneration of Rs. 2,00,000/- (Rupees Two Lacs) per annum plus reimbursement of out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in AGM for their ratification. Accordingly, a resolution for seeking Members ratification in included at item no. 4 of the notice convening the AGM. The Cost Audit Report for the financial year 2013-14 was filed with the Ministry of Corporate Affairs on September 17, 2014. The Cost Audit Report for the financial year ended 31st March, 2015 will be filed within stipulated time. SECRETARIAL AUDITOR REPORT As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed Mr. Sanjay Dholakia, Practicing Company Secretary (C.P.No: 1798) as Secretarial Auditor to conduct Secretarial audit of the company for the Financial year ended on March 31, 2015. Secretarial Audit Report issued by Mr. Sanjay Dholakia, Practicing Company Secretary in form MR-3 is enclosed as Annexure - B to this Annual Report. Your Directors refer to the observations made by the Secretarial Auditor in the Secretarial Audit Report and wish to state that due to appointment of non-independent woman director, the requirement of minimum number of Independent Directors was not complied . However, Company is taking steps to comply with the requirement of minimum number of Independent Directors. INTERNAL AUDITORS The Board of Directors of the Company have appointed M/s. Mhalgi Kulkarni & Associates, Chartered Accountants, M/s. Khandelwal Pahadia Agrawal & Co., Chartered Accountants, M/s. K.L. Vyas & Co., Chartered Accountants to conduct Internal Audit of the Company. AUDIT COMMITTEE In accordance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee comprising of the following Directors viz. Mr. K. Raghuraman (Chairman), Mr. D. N. Singh, Mr. A.K Thakur and Mr. H. D. Ramsinghani. Audit Committee acts in accordance with the terms of reference specified from time to time by the Board. There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review. DEPOSITS The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013. MATERIAL CHANGES AND COMMITMENTS There are no material changes and commitments in the business operations of the Company from the Financial year ended March 31, 2015 to the date of signing of the Directors Report. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information required under section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is enclosed as Annexure - C and forms part of the report. STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS The Company has appointed Internal Auditors to observe the Internal Controls, whether the work flows of organization is being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Risk Management Policy and such other procedures for ensuring the orderly and efficient conduct of its business for 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. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is enclosed as Annexure - D and forms part of the report. In terms of Section 136 of the Act, the report and accounts are being sent to the Members and others entitled thereto, which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. If any Member is interested in inspecting the same, such member may write to the Company Secretary in advance. ACKNOWLEDGEMENT Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies and Creditors. The Directors place on record their appreciation for continued support of shareholders of the company. The Directors also wish to place on record the appreciation to the team of executives, staff and workers, who have shown devotion and efficiency in performing their jobs. For and on behalf of the Board D. J. RAMSINGHANI (CHAIRMAN & MANAGING DIRECTOR) DIN: 00013633 Place: Mumbai Date: July 24, 2015 |