BOARD'S REPORT Dear Shareholders, Your Directors have pleasure in presenting the 27th Annual Report on your business and operation together with the Audited Accounts for the year ended March 31, 2015. SCHEME OF ARRANGEMENT (DEMERGER) BETWEEN POCL ENTERPRISES LIMITED AND PONDY OXIDES AND CHEMICALS LIMITED 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 Company 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, POCL Enterprises Limited ("POEL") was a wholly owned subsidiary of M/s. Pondy Oxides and Chemicals Limited ("POCL"). Pursuant to Scheme of Demerger, the entire 7,81,465 equity shares of Rs. 10/- each held by M/s. Pondy Oxides and Chemicals Limited in the Company were reduced POEL Annual Report 2014-15 and cancelled. Consequently the Company also ceases to be a subsidiary of POCL. A Demerger Reserve has been created to extent of Rs. 78.15 Lakhs on account of such cancellation of shares. In consideration to the Demerger of four divisions of POCL into the Company, each member of M/s. Pondy Oxides and Chemicals Limited, whose name stood recorded in the Register of Members as on January 9, 2015 (Record Date) have been allotted 1 (One) Equity Share of Rs. 10/- each in the Company for every 2 (Two) Equity Shares of Rs. 10/- each held by the shareholders in M/s. Pondy Oxides and Chemicals Limited. Consequently the Share Capital of the Company increased to Rs. 557.60 Lakhs. RESERVES On account of Demerger, the following reserves relating to four Demerged Undertakings have been transferred from M/s. Pondy Oxides and Chemicals Limited into the Company: 1. Securities Premium Account - Rs. 85.21 Lakhs 2. General Reserve - Rs. 14.08 Lakhs 3. Surplus (Deficit) in Profit & Loss Account - Rs. 505.88 Lakhs The Company did not transfer any amount to General Reserve during the year. LISTING OF EQUITY SHARES ON BSE LIMITED Financial year 2014-15 is a notable year for the Company. The Company could successfully complete the Demerger. Post the Demerger, the Company applied for listing of shares on BSE Limited. The Company received Listing Approval from BSE on April 22, 2015. Followed by BSE listing approval, the Company also obtained approval from SEBI pursuant to Rule 19(2)(b) of SCRR, 1957 on May 20, 2015. The Directors are pleased to inform the shareholders that the Company received the trading approval from BSE on June 23, 2015. The equity shares of the Company are traded on BSE effective from June 25, 2015. The share price of the Company opened at Rs. 38/- PERFORMANCE REVIEW Prior to the Demerger, the Company was predominantly engaged in trading of various metals and chemicals. Post Demerger, the Company had manufacturing processes included in it. The Company reported an overall turnover of Rs. 16221.76 Lakhs from Metallic Oxides and Plastic Additives Segment. The EBIDAT margin stood at 4.36% and the Cash Profit of the Company stood at 1.52%. In view of the Demerger, the current year performance is not comparable with the previous year's performance. DIVIDEND Your Directors have recommended a dividend of Re. 1 [i.e. 10%] 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. 67.11 Lakhs. EXTRACT OF ANNUAL RETURN An extract of Annual Return as on March 31, 2015 in Form MGT-9 is annexed herewith as Annexure I to this Report. 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 During the year under review, the Board of Directors has appointed Mr. Devakar Bansal as Managing Director, Mr. Sunil Kumar Bansal as Joint Managing Director and Mr. Y V Raman as Whole Time Director. The tenure and the terms and conditions of the Directors were identical to their respective terms and conditions in M/s. Pondy Oxides and Chemicals Limited. On expiration of tenure of above Directors, the Board of Directors in their meeting held on March 30, 2015 has re-appointed them for a further period of three years with effect from April 1, 2015. Since the profits of the Company are inadequate for payment of remuneration, the Board recommends the appointment of and remuneration to the above Directors by passing of a Special Resolution as mentioned in the Notice. The Board also appointed Mr. D P Venkataraman and Mr. Harish Kumar Lohia as Independent Director of the Company with effect from December 24, 2014. Further in compliance with the provisions of the Companies Act, 2013 and Listing Agreement, the Board of Directors appointed Mrs. Indra Somani as Independent Director on the Board of the Company with effect from April 1, 2015. The Board recommends for the appointment of the above Independent Directors. Dr. Padam C Bansal was appointed as additional director on the Board of the Company with effect from January 12, 2015. The Board recommends for the appointment of Dr. Padam C Bansal. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement. During the year under review, Mr. Anil Kumar Bansal, Mr. R P Bansal, Mr. Ashish Bansal, Mr. Anil Kumar Sachdev and Mr. K Kumaravel have tendered their resignation from the Directorship. The Board places on record the valuable contribution made by the above Directors during their tenure as Directors of the Company. Key Managerial Personnel Mr. Aashish Kumar K Jain was appointed as Company Secretary and Compliance Officer with effect from December 24, 2014. The Board of Directors also appointed Mr. N Ravichandran as Chief Financial Officer of the Company with effect from April 1, 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.poel.in/> pdf/policyonfamiliarisationprogramme.pdf AUDITORS Statutory Auditor Due to the non-applicability of the provisions of Section 139(2) 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 five years. Post the Demerger and listing of Company, the provisions of Section 139(2) of the Companies Act, 2013 are attracted and in view of better Corporate Governance practice, M/s. Jeeravla & Co have expressed their unwillingness to continue as Statutory Auditor of the Company. They have further confirmed that they have no representation to make in this regard. In place of retiring auditor, M/s. Jitesh & Ajay, Chartered Accountants have confirmed their willingness to be appointed as the Statutory Auditor of the Company. The Company has also received confirmation from them to the effect that their appointment, if made, would be within the prescribed limits as provided under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for appointment within the meaning of Section 141 of the said Act. The Company has received special notice under Section 140 read with Section 115 of the Companies Act, 2013 recommending the appointment of M/s. Jitesh & Ajay, Chartered Accountants as the Statutory Auditor of the Company. Your Directors recommend the appointment of M/s. Jitesh & Ajay, Chartered Accountants, as the statutory auditors of the Company for the period of five years and request the members to authorise the Board of Directors to fix their remuneration. In respect to the financial statements for the year 2014-15, the Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Auditor Post the Demerger, the Company is into manufacturing of Inorganic Chemicals and Base Metals which are required to be audited by a Cost Accountant. In this regard, the Board of Directors at their Meeting held on January 12, 2015 had 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 approval of remuneration of M/s. Vivekanandan Unni & Associates to the Members of the Company. Secretarial Audit Since POEL was an unlisted Company till the closure of the financial year 2014-15 and also the Company did not exceed the other threshold parameters which call for the conduct of Secretarial Audit, the Company has not conducted Secretarial Audit for the financial year 2014-15. APPOINTMENT OF RELATIVES OF DIRECTORS TO AN OFFICE OR PLACE OF PROFIT During the year under review, the Board appointed Mr. Harsh Bansal, a Management Graduate on the rolls of the Company. The remuneration paid to Mr. Harsh Bansal is within the limits as prescribed under Section 188(1) of the Companies Act, 2013. 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 II 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. Investment in the equity shares of Madras Stock Exchange Limited was transferred to the Company on account of Demerger. 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 III 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.poel.in/pdf/policyonrelatedpartytransactions.pdf> Your Directors draw attention of the members to Note no. 37 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 IV to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO (i) Conservation of Energy Steps taken on conservation of energy: POEL 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 the following steps for conserving the energy: • Auto-shutting down of systems when not in use • Utilisation of lights and stand alone air conditioners only when required • Minimal usage of AC s and lights during weekend • Use of fans, post office hours to reduce the power consumption Steps taken for utilising alternate source of energy and Capital Investment made The Company at its Plastic Additives Division had been using Generator and Low Tension Transformer. During the year, the Company has installed High Tension Transformer and has reduced the use of Generators. As a result the cost per unit of electricity has been reduced from Rs. 15/- per unit to Rs. 5/ - per unit. The HT transformer has been capitalized only on March 31, 2015 at Rs. 29 Lakhs. The saving in the cost will be reflected only during the financial year 2015-16. (ii) Research & 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 & Development. (iii) Foreign Exchange Earnings and Outgo (a) Foreign Exchange Earnings - Rs. 1853.18 Lakhs (b) Foreign Exchange Outgo - Rs. 11723.79 Lakhs 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. This being the first Annual Report after listing of your Company, every endeavor is made to provide all necessary information to the stakeholders. Your Company has complied with the norms of the listing agreement, wherever possible despite being unlisted during the financial year. Auditor's Certificate confirming compliance with the conditions of Corporate Governance is not attached due to non-applicability of the norms of the listing agreement. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT Management's 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 this 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.poel.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 an 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/Committees/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. VIGIL MECHANISM The Company has established a mechanism for Directors and employees to report their concerns relating to 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. Certain deposits were transferred on account of demerger which 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 Metallic Oxides Division, Plastic Additives Division, Zinc Refining Division and Lead Alloying & Refining Divisions of M/s. Pondy Oxides and Chemicals Limited into the Company. 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 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 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 recognise 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. For POCL Enterprises Limited Devakar Bansal Managing Director DIN: 00232565 Sunil Kumar Bansal Joint Managing Director DIN: 00232617 Place : Chennai Date : July 29, 2015 |