Your Directors have pleasure in presenting the Thirty Second Annual Report of theCompany together with the Audited Accounts for the year ended 31stMarch 2016.
Your Company is the sole manufacturer of Oxo-Alcohols in India. The Oxo-Alcoholsconsist of the products viz. 2 Ethyl Hexanol Normal Butanol and Iso Butanol. YourCompany is an associate of The Andhra Sugars Ltd. and has its Regd. Office at Tanuku.
Performance of the Company for the Financial Year ended 31st March 2016 is summarisedbelow:
| ||(Rs. in Lakhs) |
| ||2015-16 ||2014-15 |
|Net Sales (excl. Excise Duty) ||33565.83 ||14026.17 |
|Profit / (Loss) before Interest & Depreciation ||(1039.48) ||(2879.45) |
|Less : Interest ||1365.73 ||969.65 |
|Depreciation ||982.91 ||899.95 |
|Profit / (Loss) after Interest and Depreciation before Extra-ordinary item ||(3388.12) ||(4749.05) |
|Extra-ordinary items - Insurance Claim received ||694.75 || |
|Profit / (Loss) before Tax ||(2693.37) ||(4749.05) |
|Provision for: || || |
|Current Tax for earlier years ||2.15 || |
|Deferred Tax ||(287.67) ||(297.14) |
|Profit / (Loss) after Taxation ||(2407.85) ||(4451.91) |
|Balance brought forward from previous year ||2919.46 ||7582.76 |
|Adjustment of carrying amount of the assets whose remaining use- ful life is nil as per Schedule II to the Companies Act 2013 (net of deferred tax of Rs.101.53 lakhs) || ||(211.39) |
|Profit carried forward to next year ||511.61 ||2919.46 |
OPERATIONAL AND FINANCIAL PERFORMANCE :
During the Financial Year 2015-16 the Plant produced 57348 MTs (previous year 18766MTs) total Alcohols which works out to 79% (approx.) capacity utilization. Sales duringthe year were 57245 MTs ( previous year 19101 MTs). Company had incurred a Net Loss ofRs.24.08 crores during the current Financial Year 2015-16 as compared to Rs.44.52 croresNet Loss incurred during the previous year. Details are given in Audited unqualifiedFinancial Statements forming part of this Report.
Due to loss incurred during the year under report your Directors are unable torecommend any dividend for the Financial Year 2015-16.
CAPITAL & RESERVES: Authorised and Paid-up Capital:
The Authorised Capital of the Company is Rs.85 crores and the Paid-up Capital isRs.84.97 crores.
The total Reserves position as on 31.3.2016 stood at Rs.34.48 crores against Rs. 58.55crores in the previous year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Particulars prescribed under Section 134 (3) (m) of the Companies Act 2013 read withthe Rule 8 (3) of Companies (Accounts) Rules 2014 are given below:
I) CONSERVATION OF ENERGY
1. Steps taken or impact on conservation of energy: a) Provision of UPScontrol supply for certain critical motors to prevent spurious trips due to power dips b)Interconnection of Naphtha pre-heater and start-up heater of the two reforming units.Earlier production had to be stopped for decoking of the Naphtha preheater. Nowproduction continues at 40% level and quick come-back is achieved thus saving considerableamount of Naphtha. The cost of the modification is recovered in two decoking operationsand has prevented loss of production.
2. Steps taken by the Company for utilisting alternative sources of energy:Company could not take-up any steps in this regard due to poor financial position.
3. Capital Investment on energy conservation equipments: Rs.15.3 lakhs
II) TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION: a) Efforts made & Benefits:Technology has been fully absorbed and various innovative ideas enable the Company tooperate the Plant even above 100% load. b) Imported Technology: NIL c)Expenditure incurred on R & D: NIL
III) Foreign Exchange earning and outgo : (On cash basis)
| ||(Rs. in lakhs) |
| ||For the year ended 31.3.2016 ||For the year ended 31.3.2015 |
|i. Earnings ||- ||- |
|ii. Outgo ||541.02 ||225.85 |
PARTICULARS OF EMPLOYEES:
Statement of particulars of employees of the Company as required under Section 197 (12)of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forming part of this report is annexed hereto (Annexure-"D").
Employee mentioned in the said Annexure is not a relative of any Director of theCompany. None of the employees holds (by himself or along with his spouse and dependentchildren) more than 2% of the Equity Shares of the Company.
DEMATERIALISATION OF SHARES:
As on 31st March 2016 out of the total number of 84971600 EquityShares 77038241 Equity Shares constituting 90.66% stand dematerialised.
RELATED PARTY TRANSACTIONS:
As per the provisions of Regulation 23 of Securities & Exchange of India (ListingObligations and Disclosure Requirements) Regulations 2015 your Company has established aPolicy on materiality of Related Party Transactions and on dealing with Related PartyTransactions.
The Policy on Related Party Transactions as approved by the Board of Directors isavailable on the website of the Company. The weblink of the same is http://www.andhrapetrochemicals.com/POLICY ON RELATED PARTY TRANSACTIONS.pdf.
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business.
All Related Party Transactions are placed before the Audit Committee and the Board forapproval. Omnibus approval was granted by the Audit Committee on yearly basis fortransactions which are repetitive in nature. A statement giving details of all RelatedParty Transactions are placed before the Audit Committee and the Board for review andratification on a quarterly basis.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
Your Company has in place a Prevention of Sexual Harassment Policy in line with therequirement of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee (ICC) was setup to redresscomplaints received regarding sexual harassment. During the year 2015-16 there were nocomplaints received by the ICC.
PARTICULARS OF REMUNERATION:
The information required under Section 197 of the Act and the Rules made thereunder inrespect of employees of the Company is as follows:-(a) the ratio of the remuneration ofeach director to the median remuneration of the employees of the company for the FinancialYear: Our Directors draw remuneration only by way of sitting fees. The details of the sameare provided in Corporate Governance which forms an Annexure to this report. No otherremuneration is drawn by them including the Managing Director. Hence the ratio ofremuneration of each Director to the median remuneration is not required to be given.
(b) the percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary or Manager if any in the Financial Year:There is no change in sitting fee during the current Financial Year. Other details are asfollows:
|Name of the Person ||% increase in remuneration |
|Dr. V N Rao Chief Executive&Chief Operating Officer ||10.18 % |
|Sri P Ratna Rao General Manager (Finance) ||10.77% |
|Sri K Raghu Ram Manager (Finance)&Asst. Secretary (upto 2.1.2016) || |
(c) the percentage increase in the median remuneration of employees in the FinancialYear: 3.71% (d) the number of permanent employees on the rolls of Company: 286 (e) theexplanation on the relationship between average increase in remuneration and Companyperformance; On an average employees received an increase of 3.71%. The increase inremuneration is in line with the market trends. The increased percentage in the medianremuneration compared to previous year is decreased due to increase in number of employeesduring the Financial Year 2015-16 at lower level. A direct co-relation of employeeremuneration and Company performance as envisaged in the rules is not feasible consideringthe qualitative factors involved in measuring performance.
(f) comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:
|Particulars ||Rs. in lakhs |
|Remuneration of Key Managerial Personnel (KMP) during Financial Year 2015-16 (aggregated) ||126.51 |
|Revenue from operations ||33699.69 |
|Remuneration (as % of revenue) ||0.38% |
(g) variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current Financial Year and previous Financial Year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer in case of listedcompanies and in case of unlisted companies the variations in the networth of theCompany as at the close of the current Financial Year and previous Financial Year:
|Particulars ||Unit ||As at 31st March 2016 ||As at 31st March 2015 ||Variation |
|Closing rate of share at BSE ||Rs. ||11.05 ||11.64 ||(5.07%) |
|EPS (Consolidated) ||Rs. ||(2.83) ||(5.24) ||(45.99%) |
|Market capitalisation ||Rs./lakh ||9389.36 ||9890.69 ||(5.07%) |
|Price Earnings ratio ||Ratio ||(3.90) ||(2.22) ||75.68% |
Percentage in bracket represents negative percentage. (h) average percentile increasealready made in the salaries of employees other than the managerial personnel in the lastFinancial Year and its comparison with the percentile increase in the managerialremuneration and justification thereof and point out if there are any exceptionalcircumstances for increase in the managerial remuneration The average increase in salariesof employees other than managerial personnel in 2015-16 was 3.71%. Percentage increase inthe managerial remuneration for the year was NIL.
(i) Comparison of each remuneration of the Key Managerial Personnel against theperformance of the Company:
|Particulars ||Chief Executive Officer ||Chief Financial Officer ||Company Secretary (Upto 2.1.2016) |
| ||Rs. in lakhs ||Rs. in lakhs ||Rs. in lakhs |
|Remuneration ||84.25 ||31.35 ||10.91 |
|Revenue ||33699.69 ||33699.69 ||33699.69 |
|Remuneration (as % of revenue) ||0.25% ||0.09% ||0.03% |
(j) the key parameters for any variable component of remuneration availed by theDirectors: Not applicable as Directors do not draw any remuneration except by way ofsitting fees.
(k) the ratio of the remuneration of the highest paid Director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid Directorduring the year: Not applicable as Directors' remuneration consists of only sitting fees.
(l) affirmation that the remuneration is as per the remuneration Policy of the Company:The Company's Remuneration Policy is driven by the success and performance of theindividual employees and the Company. Through its compensation package the Companyendeavours to attract retain develop and motivate a high performance staff. The Companyfollows a compensation mix of fixed pay benefits and performance based variable pay.Individual performance pay is determined by business performance and the performance ofthe individuals measured through the annual appraisal process. The Company affirmsremuneration is as per the Remuneration Policy of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section134(3)(c) of the Companies Act 2013: i) that in the preparation of the Annual Accountsfor the year ended 31st March 2016 the applicable Accounting Standardshave been followed along with proper explanation relating to material departures if any;ii) that Accounting Policies have been selected and applied consistently and thatjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2016 and of the loss of theCompany for the year ended on that date; iii) that the Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance withprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; iv) the annual accounts have beenprepared on a going concern basis; v) that the Directors had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and vi) that the Directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
REPORT ON CORPORATE GOVERNANCE:
As required under Regulation 34(3) of Securities & Exchange of India (ListingObligations and Disclosure Requirements) Regulations 2015 the report on CorporateGovernance and the Auditors' Certificate on the compliance of Corporate Governance areannexed and forms part of the Directors' Report
Your Directors acknowledge the co-operation and continued valuable support receivedfrom Central and State Government authorities the Promoters - The Andhra Sugars Limitedand APIDC Financial Institutions Banks Shareholders Customers HPCL GAIL and otherSuppliers. Your Directors also wish to place on record their deep sense of appreciation ofthe valuable contribution made by the employees at all levels.
| ||On behalf of the Board |
|Hyderabad ||M R B Punja |
|11.8.2016 ||Chairman |
ANNEXURE - "B"
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31.03.2016
[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]
THE ANDHRA PETROCHEMICALS LIMITED VENKATARAYAPURAM TANUKU WEST GODAVARI DIST.
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by The Andhra PetrochemicalsLimited (hereinafter called the company). Secretarial Audit was conducted in a manner thatprovided us a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing our opinion thereon.
Based on our verification of the company's books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the company hasduring the audit period covering the financial year ended on March 31 2016 complied withthe statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter: We have examined the books papers minute books formsand returns filed and other records maintained by the Company for the financial year endedon March 31 2016 according to the provisions of: (i) The Companies Act 2013 (the Act)and the rules made there-under;
(ii) The Securities Contracts (Regulation) Act 1956 ('SCRA') and the rules madethereunder; (iii) The Depositories Act 1996 and the Regulations and Bye-laws framedthereunder; (iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment.
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ('SEBI Act'):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992 & 2015
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 (Not applicable to the Company during theperiod of audit);
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 ;(Not applicable to the Company during the period of audit); and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998;(Not applicable to the Company during the period of audit)
(i) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015
(vi) Other laws specifically applicable to the company include:
A. Water (Prevention and control of Pollution) Act 1974
B. Air (Prevention and control of Pollution) Act 1981
C. Boilers Act 1923 D. Explosives Act 1884
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with BSE Limited.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above except the followingobservation: The casual vacancy of Company Secretary is yet to be filled. However as perthe explanations given by the management and its officers appropriate steps have beentaken to fill the vacancy.
We further report that
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
Decisions at the Board Meetings are carried out unanimously as recorded in the Minutes.
We further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.
We further report that during the audit period the company has no specific events /actions having a major bearing on the company's affairs in pursuance of the above referredlaws rules regulations guidelines standards etc. referred to above.
|Place: Hyderabad ||for D. HANUMANTA RAJU & CO |
|Date : 09.08.2016 ||COMPANY SECRETARIES |
| ||CS SHAIK RAZIA |
| ||PARTNER |
| ||FCS: 7122 CP NO: 7824 |
This report is to be read with our letter of even date which is annexed as Annexure Aand forms an integral part of this report.
THE ANDHRA PETROCHEMICALS LIMITED VENKATARAYAPURAM TANUKU WEST GODAVARI DIST.
Our report of even Date is to be read along with this letter
1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.
4. Wherever required we have obtained the Management Representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness and with which the management hasconducted the affairs of the company.
|Place: Hyderabad ||for D. HANUMANTA RAJU & CO |
|Date : 09.08.2016 ||COMPANY SECRETARIES |
| ||CS SHAIK RAZIA |
| ||PARTNER |
| ||FCS: 7122 CP NO: 7824 |
ANNEXURE - "C" CSR Activities:
1. A brief outline of the Company's CSR Policy including over view of the projects orprogrammes proposed to be undertaken and a reference to the web-link to the CSR Policy andprojects or programmes: The CSR Policy was approved by the Board of Directors at itsMeeting held on 20.7.2014 and has been uploaded on the Company's website. The web-link ishttp:// www.andhrapetrochemicals.com/csr policy.pdf
2. The Composition of the CSR Committee:
Presently Corporate Social Responsibility (CSR) Committee comprises the followingDirectors viz. Dr. B B Ramaiah Managing Director as Chairman of the Committee with SriA A Krishnan and Sri P Narendranath Chowdary as its Members.
3. Average Net Profit of the Company for the last three Financial Years: There is noaverage Net Profit for the last 3 years.
4. Prescribed CSR expenditure (2% of the amount as in Item No. 3 above) The Company isnot required to incur CSR expenditure for the Financial Year 2015-16
5. Details of CSR expenditure incurred during the Financial Year a) Total amount to bespent for the Financial Year: NIL b) Amount unspent if any: Not Applicable c) Manner inwhich the amount was spent during the Financial Year: Not Applicable
|Sl No. ||CSR project or activity identified ||Sector in which the project is covered ||Projects or programmes (1) Local area or other 2) Specify the State and district where projects or programs was undertaken ||Amount outlay (budget) project or programs wise ||Amount spent on the projects programs sub-heads: 1) Direct expenditure on projects 2) overheads ||Cumulative expenditure upto to the reporting period ||Amount spent: Direct or through implementing agency |
| || || ||TOTAL ||Not Applicable || || || |
6. Reasons for Unspent: Not Applicable
7. Responsibility Statement: The Responsibility Statement of the CSRCommittee of the Board of Directors of the Company is reproduced below:
| ||Date: 11.8.2016 |
|RESPONSIBILITY STATEMENT || |
|We confirm that the implementation and monitoring of Corporate Social Responsibility (CSR) Policy is in compliance |
|with CSR objectives and Policy of the Company. || |
|Sd/- ||Sd/- |
|(Dr. V N Rao) ||(Dr. B B Ramaiah) |
|Chief Executive & Chief Operating Officer ||Chairman of CSR Committee |
ANNEXURE - "D" to the Directors' Report
Information as per Section 197(12) of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and forming part of theDirectors' Report for the year ended 31st March 2016.
Name of the employee Designation Qualification Experience Date of commencement ofemployment in the Company Nature of employment - whether contractual or otherwise GrossRemuneration Age Particulars of last employment % of Equity Shares held in the CompanyWhether he is relative to Director or Manager of the Company:
Dr. V N Rao Chief Executive & Chief Operating Officer B.Tech.(ChemicalEngineering) M.Tech.(Chemical Engineering) IIT -Chennai: Ph.D.(Chemical Engineering)IIT - Chennai 47 years 4.10.1995 Contractual Rs.8424703* 74 years Consultant NILNo.
*Gross Remuneration includes Salary rent free accommodation reimbursement of medicalexpenses leave encashment car with driver and group personal accident insurance premium.