BOARD’S REPORT Dear Shareholders, Your Directors have pleasure in presenting the 20th Annual Report on your business and operation together with the Audited Accounts for the year ended March 31, 2015. DEMERGER OF THE COMPANY DURING THE YEAR The Scheme of Arrangement (Demerger) ("the Scheme") between M/s. Pondy Oxides and Chemicals Limited ("Demerged Company") and M/s. POCL Enterprises Limited ("Resulting Company") which inter alia, envisaged for the Demerger of Metallic Oxides Division, Plastic Additives Division, Zinc Refining Division and Lead Alloying & Refining Divisions of M/s. Pondy Oxides and Chemicals Limited into the M/s. POCL Enterprises Ltd., was approved by the Board of Directors in their meeting held on March 20, 2014. The Scheme received the sanction of the Hon'ble High Court of Judicature at Madras vide its Order dated December 4, 2014 which was received by the Company on December 19, 2014 and the Scheme came into effect from December 22, 2014. Subsequent thereto, the transfer of four demerged undertakings of Demerged Company into the Resulting Company with effect from the Appointed Date, April 1, 2013 has been completed. The Board of Directors thank the Management team and Associates for the seamless completion of the Demerger. SHARE CAPITAL AND ALLOTMENT OF SHARES ON ACCOUNT OF DEMERGER Prior to the Demerger, M/s. POCL Enterprises Limited ("PEL") was a wholly owned subsidiary of M/s. Pondy Oxides and Chemicals Limited ("POCL"). Pursuant to Scheme of Demerger, the investments of Rs.78.14 lakhs held by the Company in M/s. POCL Enterprises Ltd., as share capital were reduced and cancelled. Consequently the M/s. POCL Enterprises Ltd., ceases to be a wholly owned subsidiary of the Company. In consideration to the Demerger of four divisions of the Company into M/s. POCL Enterprises Ltd., each member of the Company, whose name stood recorded in the Register of Members as on January 9, 2015 (Record Date) against the original holding of 2 (two) Equity Shares, has received 1 (one) Equity Share of Rs. 10/- each in M/s. POCL Enterprises Ltd., allotted in the ratio of 0.5:1. In consideration of this, 1 (one) equity share held in the Company stands cancelled. Hence, each member holds 1 (one) equity share in the Company and 1 (one) equity share in M/s. POCL Enterprises Ltd., against the original holding of 2 (two) shares. Consequently the Share Capital of the Company reduced from Rs.1,115.20 Lakhs to Rs.557.60 Lakhs. PERFORMANCE OVERVIEW The highlights of the Company's performance are as under: • The Company continued its record of clocking highest ever turnover and profit for Financial Year 2014-15. • The adjusted revenue from Smelter Division of the Company increased from Rs. 29,086 Lakhs to Rs. 36,227 Lakhs showing a growth of 25 % increase in turnover over the previous year. • Profit before tax (PBT) and Profit after tax (PAT) for the year was Rs. 970.55 Lakhs and Rs. 671.03 Lakhs against Rs. 423.06 Lakhs and Rs. 281.35 Lakhs of the previous Financial Year respectively. • Profit after tax has registered an impressive growth of 138% In view of the Demerger, the current year performance is not comparable with the previous year's performance and the above highlights are adjusted equivalent to the units retained. PARTICULARS OF SUBSIDIARY COMPANY, ASSOCIATE COMPANY AND JOINT VENTURE COMPANY The Company is neither a holding company of any other company nor it is a subsidiary of any other company as at March 31, 2015. The Company has no Associate Company nor it has any Joint Venture Company as on March 31, 2015. DIVIDEND Your Directors have recommended a dividend of Rs. 2 [i.e. 20%] per equity share for the financial year 2014-15. The dividend payout is subject to the approval of the shareholders at the ensuing Annual General Meeting. The total cash flow on account of dividend including distribution tax thereon will be Rs. 134.22 Lakhs. BOARD MEETINGS During the year, nine meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors On expiration of tenure, during the year under review, the Board has reappointed Mr. Anil Kumar Bansal as Managing Director, Mr. R. P. Bansal and Mr. Ashish Bansal as Whole Time Directors for a further period of three years with effect from April 1, 2015. Subsequently, Mr. Anil Kumar Bansal was redesignated as Whole Time Director/Chairman of the Company and Mr. Ashish Bansal as Managing Director of the Company with effect from June 1, 2015. Resolutions seeking approval of the shareholders for the said appointments and respective remunerations are being placed before the forthcoming Annual General Meeting for approval of the shareholders in accordance with the applicable provisions of the Companies Act, 2013 In compliance with the provisions of the Companies Act, 2013 and Listing Agreement, the Board of Directors appointed Dr. Shoba Ramakrishnan as Independent Woman Director on the Board of the Company with effect from April 1, 2015. The Board recommends for the appointment of Dr. Shoba Ramakrishnan as Independent Director of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement. During the year, Mr. Sunil Kumar Bansal, Mr. Devakar Bansal, Mr. Y.V.Raman resigned from the Board of the Company with effect from December 24, 2014. Subsequently, Mr. Harish Kumar Lohia and Mr.D.P.Venkataraman resigned from the Board of the Company with effect from March 31, 2015. Dr. Padam C Bansal ceased to be on the Board with effect from April 6, 2015. The Board places on record the valuable contribution made by the above Directors during their tenure as Directors of the Company. Key Managerial Personnel Pursuant to provisions of Section 203 of the Act Mr. Anil Kumar Bansal, Mr. R. P. Bansal, Mr. Ashish Bansal Managing Director / Whole Time Directors and Mr. K. Kumaravel, Company Secretary are the Key Managerial Personnel of the Company. Mr. Aashish Kumar K Jain appointed with effect from May 28, 2014 had resigned as Chief Financial Officer of the Company with effect from December 24, 2014 and the Company appointed Mr. L. Krishnamoorthy as Chief Financial Officer of the Company with effect from May 27, 2015. BOARD COMMITTEES In compliance to the provisions of Companies Act, 2013 and the Listing Agreement, the Company has constituted various Committees of the Board. The details on Composition of the Committee, Attendance of the Directors at the Committee Meeting and terms of reference of the Committee has been provided in the Corporate Governance Report. RECOMMENDATION OF AUDIT COMMITTEE During the year under review, all the recommendations made by the Audit Committee were accepted by the Board. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS In compliance with Clause 49 of the Listing Agreement, the Board has adopted a policy on familiarisation programme for Independent Directors of the Company. The policy will enable the Independent Directors to understand their role, rights and responsibility in the Company. The Policy on Familiarisation Programme as approved by the Board may be accessed on the Company's website at the link: <http://www.pocl.in/pdf/> policyonfamiliarisationprogramme.pdf AUDITORS Statutory Auditors As per the provisions of Section 139 of the Companies Act, 2013, the Members of the Company in the previous Annual General Meeting had appointed M/s. Jeeravla & Co., Chartered Accountants as the Statutory Auditors of Company for a period of one year and retire at the conclusion of this ensuing Annual General Meeting. They have expressed their willingness to accept office, if reappointed. Further, the company has received confirmation from them that their re-appointment if made, would be within the prescribed limit as provided under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment within the meaning of Section 141 of the said Act. Your Directors recommended re-appointment of M/s. Jeeravla & Co., Chartered Accountants, Chennai as the Statutory Auditors of the Company for the year 2015-16 and 2016-17, subject to ratification by members at every Annual General Meeting and request the members to authorize the Board of Directors to fix their remuneration. During the period under review, there are no audit qualifications or adverse remark in financial statements. Cost Auditor The Board of Directors at their meeting held on September 12, 2014 has appointed M/s. Vivekanandan Unni & Associates, Cost Accountants (having Firm Registration No: 00085) as Cost Auditor of the Company to audit the cost records for the financial year 2014-15. The Board had approved remuneration of Rs. 30,000/- (Rupees Thirty Thousand Only) in addition to service tax and out of pocket expenses. As per the provisions of Section 148 of the Companies Act, 2013, the remuneration of the Cost Auditor is required to be ratified by the shareholders of the Company. The Board recommends for ratification of remuneration of M/s. Vivekanandan Unni & Associates to the Members of the Company. Secretarial Audit The Board of Directors at their meeting held on May 28, 2014 has appointed M/s. KSM Associates, Practicing Company Secretaries, as the Secretarial Auditors of the Company for conducting the Secretarial Audit for the financial year 2014-15. The report of the Secretarial Audit is annexed to and forms part of this Report (Annexure I) The Secretarial Audit Report dated May 27, 2015 pursuant to the Companies Act, 2013 gives an observation. In this regard, the Board of the Company explains that in view of the on-going restructuring of the Company vide Scheme of Arrangement and the Petition for the same being pending with the Honourable High Court of Madras, there was a delay in making the necessary alteration in the Board of the Company. The Company had immediately made necessary changes in the composition of directors, as soon as the said High Court disposed-off the Petition by passing its Order dated December 4, 2014. The Company hence, is in compliance with the requirements. EXTRACT OF ANNUAL RETURN An extract of Annual Return pursuant to section 134 (3) (a) and section 92 (3) of the Companies Act 2013 in the prescribed Form MGT-9 is annexed herewith as Annexure II to this Report. PARTICULARS OF REMUNERATION OF DIRECTORS AND EMPLOYEES U/S 197(12) OF THE COMPANIES ACT, 2013 Details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been provided as Annexure III to this Report. PARTICULARS OF LOANS, INVESTMENT, GUARANTEE AND SECURITY U/S 186(4) OF THE COMPANIES ACT, 2013 During the year under review, the Company has not made, given or provided any loans/investment/guarantee/ security to any person or body corporate. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. The particulars of transactions entered with related parties as referred to in Section 188(1) of the Companies Act, 2013 are provided in AOC-2 which is given in Annexure IV to this Report. The Policy on related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.pocl.in/pdf/policyonrelatedpartytransactions.pdf> Your Directors draw attention of the members to Note No. 33 to the financial statements which sets out related party disclosures. REMUNERATION POLICY OF THE COMPANY The Remuneration Policy of the Company comprising of appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management Personnel of the Company including the criteria for determining qualifications, positive attributes, independence of Director and other related matters has been provided as Annexure V to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO (i) Conservation of Energy Steps taken on conservation of energy: POCL understands the significance of conservation of energy not only as a method of cost reduction but also because of its global impact. The Company has taken following steps for conserving the energy: • Introduced variable frequency drive for all higher power consuming equipments to reduce initial load and reduced the consumption by 3.2 Lakh units resulting in a saving of Rs. 19.20 Lakhs. • Diesel burner nozzles degree changed to increase the heat efficiency in refining pot resulted in saving of an average of 5 litres of Diesel per day. • Change in Insulation material in furnaces to much advanced specifications resulted in minimizing heat loss thus effectively reduced the process time with direct impact on power, fuel saving and increase in throughput. Steps taken for utilizing alternate source of energy and capital investment made The all existing unit is already having High Tension Transformer in its plants and continuously utilizing the alternate source of energy in all its location. The Capital Investment on Energy Conservation Equipments During the year, the company installed High Tension Transformer in its new plant located at Andhra Pradesh towards additional capital investment for its expansion activity. (ii) Research and Development and Technology absorption During the year under review, the Company continued to improve the quality of products through its normal research and development system. The Company has not acquired any imported or indigenous technology. No expenditure was incurred on Research and Development. (iii) Foreign Exchange Earnings and Outgo (a) Foreign Exchange Earnings - Rs. 12,195.02 Lakhs (b) Foreign Exchange Outgo - Rs. 28,730.32 Lakhs TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND As at March 31, 2015, Dividend amounting to Rs. 10.96 Lakhs has not been claimed by shareholders. The Company has been intimating the shareholders to lodge their claim for dividend from time to time. As per the provisions of Section 205A(5) and 205C of the Companies Act, 1956 dividends which remained unpaid or unclaimed for a period of 7 years from the date of transfer to the unpaid dividend account are required to be credited to IEPF. Accordingly, unclaimed dividend amount of Rs 1.04 Lakhs in respect of the financial year 2006-07 was transferred to IEPF during the year. Further, Unclaimed dividend amounting to Rs. 1.70 Lakhs in respect of the financial year 2007-08 is due for transfer to IEPF on September 24, 2015. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer. Pursuant to the provisions of Investor Education and Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012 the company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on March 31, 2015 on its website (www.pocl.co.in). CORPORATE GOVERNANCE Your Company aims at achieving transparency, accountability, equity and ethics in all facets of its operations without compromising on compliances with laws and regulations framed by SEBI in this regard. The Company is committed to maintain the highest standard of Corporate Governance. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. Your Company has complied with the norms of the Listing Agreement, during the financial year. Auditor's Certificate confirming compliance with the conditions of Corporate Governance is attached and form part of the Corporate Governance Report. CEO/CFO CERTIFICATE The Managing Director and the Chief Financial Officer have submitted a certificate to the Board on the financial statements and other matters as required under Clause 49 (IX) of the Listing Agreement. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, is presented in a separate section forming part of the Annual Report. RISK MANAGEMENT During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in overseeing that all the risks which the organization faces have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy as approved by the Board may be accessed on the Company's website at the link: <http://www.pocl.in/pdf/riskmanagementpolicy.pdf> BOARD EVALUATION As required under the provisions of Section 134(3)(p) of the Companies Act, 2013, the Board has carried out a formal annual evaluation of its own performance, and that of its committees and individual directors. The manner in which such performance evaluation was carried out is as under: The performance evaluation framework is in the form of questionnaires. The questionnaire is set such that it reviews the effectiveness and efficiency of the Board/Committee/Individual Directors. The questionnaires are circulated to all the directors to seek their response on the evaluation. The evaluation framework provides for performance parameters and possible paths for improvements. WHISLE BLOWER POLICY / VIGIL MECHANISM The Company has established a mechanism for Directors and employees to report their concerns relating to the fraud, malpractice or any other activity or event which is against the interest of the Company. The details of the Mechanism and Policy are explained in the Corporate Governance Report. DEPOSITS The Company has not invited/accepted deposits from public during the year under review. However, certain deposits continued by the Company from the previous year has been repaid by the Company and there is no amount outstanding at the end of the year SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS During the year under review, the Hon'ble High Court of Judicature at Madras sanctioned the Scheme of Arrangement (Demerger) vide its Order dated December 4, 2014 for the Demerger of four units of the Company with M/s. POCL Enterprises Ltd. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors state that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; 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 March 31, 2015 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 the 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; 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; and f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, no complaints were received pursuant to the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 ACKNOWLEDGEMENT Your Directors take this opportunity to place on record their sincere appreciation for the continued trust and confidence reposed in the Company by the bankers, business associates, regulatory authorities, customers, dealers, vendors and shareholders. Your Directors recognize and appreciate the services rendered by the officers, staff and employees of the Company at all levels for their dedicated efforts to improve the performance of the Company. CAUTIONARY STATEMENT Certain statements in the Board's Report describing the Company's operations, objectives, projects and expectations regarding future performance may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed/implied, depending on the economic conditions, Government policies and other incidental factors and developments. On behalf of the Board of Directors For Pondy Oxides and Chemicals Limited Ashish Bansal Managing Director DIN:01543967 Anil Kumar Bansal Chairman DIN: 00232223 Place : Chennai Date : July 27, 2015 |