Your Directors present the Thirty Fifth Annual Report of the Company together with theAnnual Statements of Accounts (Standalone & Consolidated) for the year ended 31stMarch 2016.
|FINANCIAL RESULTS AND PERFORMANCE: || || || || |
| ||Ashapura Minechem Ltd. ||Consolidated |
| ||( in Lakhs) ||( in Lakhs) |
| ||2015-2016 ||2014-2015 ||2015-2016 ||2014-2015 |
|Net Sales / Income from Operations ||59248.75 ||74923.51 ||177534.81 ||175284.66 |
|Less: Total Expenditure ||52923.57 ||63541.31 ||155796.05 ||150322.64 |
|Profit/(Loss) from Operations before || || || || |
|Dep. Other Income and Exceptional Items ||6325.18 ||11382.20 ||21738.76 ||24962.02 |
|Less: Depreciation ||2041.45 ||1588.02 ||4386.24 ||3485.46 |
|Profit/(Loss) from Operations before || || || || |
|Other Income and Exceptional Items ||4283.73 ||9794.18 ||17352.52 ||21476.56 |
|Add: Other Income ||643.19 ||945.18 ||895.95 ||714.50 |
|Profit/(Loss) before Exceptional and || || || || |
|Extra-ordinary Items and Tax ||4926.92 ||10739.36 ||18248.47 ||22191.06 |
|Exceptional Items ||1542.52 ||(23133.08) ||(957.48) ||(23133.08) |
|Extra-ordinary Items || || || || |
|Profit/(Loss) before Tax ||6469.44 ||(12393.72) ||17290.99 ||(942.01) |
|Tax Expenses || || || || |
|Current Tax || || ||4836.00 ||2938.70 |
|Earlier Years Tax || || ||59.26 ||(1.07) |
|Deferred || || ||(406.36) ||(29.48) |
|Net Profit / (Loss) ||6469.44 ||(12393.72) ||12802.09 ||(3909.12) |
|Minority Interest || || ||1.159 ||(0.20) |
|Share of Profit/(Loss) in Associate Company || || ||972.547 ||262.30 |
|Net Profit / (Loss) of the Group || || ||13775.78 ||(3647.01) |
The year under review was little challenging for the Company considering the marketscenario. The last quarter of the financial Year 2015-2016 witnessed a drop in the sale ofIndustrial Functional Minerals on account of global restocking cycles. This has impactedthe Revenue from Operations which stood at 59248.75 lakhs for FY 2015-2016 on standalonebasis i.e. approx. 21% down as compared to the previous financial year. At Consolidatedlevel there was marginal increase in the Revenue from Operations during the year underreview which stood at 177534.81 lakhs.
Industrial Functional Minerals & Specialty Refined Minerals have done reasonablywell in FY 2015-2016 given the current macro-economic scenario in India and overseas.Revival of demand in the automobile and infrastructure industries in India augurs well forthe business.
Your Company reported 4926.92 lakhs as the Profit before Exceptional &Extra-ordinary Items and Tax for the FY 2015-2016 as against 10739.36 lakhs for theprevious financial year. At consolidated level the Profit before Exceptional &Extraordinary Items and Tax stood at Rs. 18248.47 lakhs as against 22191.06 lakhs forthe previous financial year.
During the year under review the business activities were realigned between yourCompany and its wholly owned subsidiaries with an objective to achieve synergies of scale.As a part of the said process your Company acquired the White Performance Mineralsbusiness from Ashapura International Ltd.; whereas a part of the Hydrocarbon ExplorationSolutions segment along with the nascent Geosynthetic Clay Liner business were let out toAshapura International Ltd. Furthermore the Proppants division which is in its incubationphase was let out to another wholly owned subsidiary viz. Bombay Minerals Ltd. as anatural extension to its Calcined Bauxite business. Your Company believes that the saidrealignment of business operations would help to facilitate operational convenience andefficiency at a Group level.
Considering the state of affairs of the Company your Directors have not recommendedany Dividend for the financial year 2015-2016.
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V Acceptance of Deposits by Companies of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
SUBSIDIARIES AND JOINT VENTURES:
The business performance and overview of the principal subsidiaries and Joint VentureCompanies is given hereinbelow:
Ashapura International Limited (AIL) which mainly caters to the Industrial FunctionalMinerals segment saw a substantial increase in export sales (particularly its containersales segment) as compared to the previous financial year. The revenue for the Companyincreased by 105%.
Bombay Minerals Limited (BML) major revenue emanated from export of ores and sale ofvalue added Calcined products in India during the year under review. There was marginal(approx. 3%) decline in the said Companys revenue from operations as compared to theprevious year due to the subdued global economic environment & restocking cycles.During the year under review Bombay Minerals Ltd. acquired further stake in OrientAbrasives Limited (OAL) thereby gaining a substantial interest in the Advanced RefractoryMaterials segment which is a natural extension to its business. Bombay Minerals Ltd. isnow the single largest shareholder (39.10% stake) and the Promoter of OAL.
Ashapura Perfoclay Limited (APL) (formerly known as Ashapura Volclay Ltd.) produced91675 MT of bleaching earth during the year under review highest ever improving thecapacity utilisation to 95% of installed capacity. The net revenue for the Company grew by13.9% over the previous financial year which was mainly on account of growth in salesvolumes and increased sales realisation of exports sales. The initiative taken to replacefurnace oil and high speed diesel with coal has reflected positively and led to thesignificant reduction in energy prices. The production capacities will be enhanced duringthe financial year 2016-2017 which will enable APL to further increase its global reachand presence. The focus on Export markets majorly in South East Asia Africa and Europewill contribute to drive the sales volumes. APL is also exploring the option ofintroducing mid-priced product specifically for the Palm Oil industry which will enableit to further increase its product portfolio and target new customers and markets.
The Malaysian Joint Venture of the Company that manufactures Bleaching Clay changed itsname from Hudson MPA SDN BHD to Ashapura Fareast SDN BHD on account of a change in the JVpartners; the change has also allowed your Company to deepen its supervision andinvolvement in the Joint Venture. The Companys Joint Ventures in Oman and in Antwerpperformed admirably despite the headwinds in their respective markets of operation.
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 the statement containing salient features of the financialstatements of the Companys Subsidiaries Associates and Joint Ventures (in FormAOC-1) is attached to the financial statements (Please Refer Page No. 122).
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with the Accounting Standard (AS)-21 on Consolidated Financial Statementsread with AS-23 on Accounting for Investments in Associates and AS-27 on FinancialReporting of Interests in Joint Ventures the Audited Consolidated
Financial Statements are provided in the Annual Report.
COMPANYS REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):
Based on the Audited Financial Accounts for the year ended 31st March 2011the Board for Industrial & Financial Reconstruction (BIFR) vide its order dated 20thMarch 2012 declared your Company as Sick Company (BIFR Case no. 34/2011)under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act 1985.
Consequently the BIFR Bench appointed Bank of India as Operating Agency (OA) withdirections to submit Draft Rehabilitation Scheme (DRS). Based on the various meetings withthe Operating Agency and subsequent revisions your Company has recently presented arevised DRS and the same is under discussion amongst various concerned lenders forfinalization.
Pending the finalization of DRS the Company remains committed to arrive at anarrangement with lenders/creditors and accordingly the Company inconsultation/concurrence with BIFR has initiated discussions/negotiations with allfinancial institutions/banks. The Company has also concluded and completed settlementswith a majority of the lenders. Similarly discussions are being conducted with othermajor creditors which are pending settlement.
STATUS OF THE PENDING LITIGATIONS:
1. SHIPPING MATTERS:
The Contract of Affreightment entered into by the Company with Shipping Companies -viz.  I.H.X. (UK) Ltd.  Eitzen Bulk A/s and  Armada Singapore Pte Ltd.
In case of the above shipping companies the Company is facing applications forenforcement of ex-parte Foreign Awards passed in respect of three Contracts ofAffreightment in the Bombay High Court filed for approx. US $ 126.07 million.
Since the award of claims of each of the three shipping companies were heavilyexaggerated the Company had much prior in time filed an application for enforcement ofaward initiated legal proceedings against the alleged arbitration award in the CivilCourt at Jam-Khambhaliya Gujarat on the ground of opposed to the Public Policy of India.The Application filed by the Company challenging the foreign awards stands upheld in theCourt of Law.
Matters are also pending in Bombay High Court Gujarat High Court and Supreme Courtapart from District Court at Khambhaliya.
Both Eitzen and Armada matters were tagged together by the Honble Supreme Courtfor hearing and final disposal and a Common Judgement and Final Order has been passed on13th May 2016.
A Review Petition has been filed against the Common Impugned Judgement and Final Orderdated 13th May 2016 passed by the Honble Supreme Court.
2. FOREX DERIVATIVES:
In case of Forex Derivatives Contracts the Company has taken legal opinion that thesecontracts are void and are not legally enforceable. It has been further advised by thecounsels that the Company can take legal actions for challenging the validity of the saidcontracts.
The Company has approached the Bankers and has successfully settled the claims amicablywith most of the bankers.
Proceedings filed by HDFC Bank Limited and J P Morgan are pending in the DRT/DRAT. Saveand except HDFC Bank Limited and J P Morgan the Company has approached the otherLenders/Bankers and has successfully settled the claims amicably with them.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN 31st MARCH 2016 AND 10th AUGUST 2016 (DATEOF THE REPORT):
During the year under review there are no material changes and commitments affectingthe financial position of the Company between the end of the financial year and the dateof the report save and except as mentioned above.
SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS:
During the year under review no significant material orders were passed by theregulators or courts or tribunals impacting the going concern status and theCompanys operations save and except as mentioned above.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A report on Corporate Governance along with the Certificate from M/s.Sanghavi & Co. Chartered Accountants regarding its compliance and ManagementDiscussion and Analysis Report as stipulated by Regulation 34 of the Securities& Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations) are set out separately which form part of thisAnnual Report.
DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of Section 134(5) of the Companies Act 2013 the Directors hereby confirmthat:
(a) in the preparation of the annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe PROFIT of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 theCompany and that such internal financial controls are adequate and were operatingeffectively and
(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Appointment of Independent Directors:
The Board of Directors of the Company at its meeting held on 9th February2016 on the recommendation of the Nomination & Remuneration Committee co-opted ShriPundarik Sanyal as an Additional Director (Non-Executive Independent Director) of theCompany subject to the approval of shareholders at the ensuing Annual General Meeting inaccordance with the provisions of Sections 149 152 161 read with Schedule IV and anyother applicable provisions if any of the Companies Act 2013 and Rules framedthereunder.
The Company has pursuant to the provisions of Section 160 of the Companies Act 2013received a notice in writing proposing the candidature of Shri Pundarik Sanyal for theoffice of Independent Director for a period of five (5) consecutive years w.e.f. 9thFebruary 2016 not liable to retire by rotation.
The Company has received a declaration from him confirming that he meets the criteriaof independence as prescribed under Section 149 (6) of the Companies Act 2013.
The relevant details of Shri Pundarik Sanyal as required pursuant the provisions of theAct and the Listing Regulations are furnished in the Notice of the ensuingAnnual General Meeting.
During the year under review Smt. Navita Gaiha was appointed as a Non-ExecutiveIndependent Woman Director on the Board of Directors of your Company at the 34thAnnual General Meeting held on 30th September 2015 to hold office for five (5)consecutive years w.e.f. 5th August 2015.
Retire by Rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 read withthe Companies (Appointment and Qualification of Directors) Rules 2014 and the Articles ofAssociation of your Company Shri Rajnikant Pajwani Whole Time Director & ChiefExecutive Officer retires by rotation at the ensuing Annual General Meeting and beingeligible has offered himself for re-appointment. The relevant details of Shri RajnikantPajwani as required pursuant to the provisions of the Companies Act 2013 and the ListingRegulations are furnished in the Notice of the ensuing Annual General Meeting.
During the year under review the following changes were occurred in theDirectorate/Structure of the Board of Directors of the Company; the same was also reportedin the previous Annual Report of the Company for the year ended 31st March2015:
Vacation of Office of late Shri Navnitlal Shah Promoter and Ex-Chairman in terms ofthe provisions of Section 167(1)(b) of the Companies Act 2013 and his sad demise on 30thJune 2015.
Appointment of Shri Chetan Shah as an Emeritus Chairman (i.e. Non-ExecutiveChairman) of the Company and the Ashapura Group.
Declaration by Independent Directors:
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence in accordance with the provisionsof the Companies Act 2013 and the Listing Regulations.
Appointment of Key Managerial Personnel:
In accordance with the provisions of Sections 2(51) and 203 of the Comapnies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 Shri Rajnikant Pajwani Whole Time Director & Chief Executive Officer and ShriSachin Polke Company Secretary & Vice President are the Key Managerial Personnel ofthe Company.
In addition the following Executives of your Company have been recognized aswhole-time Key Managerial Personnel to perform and be responsible for suchduties/functions as may be assigned to them under their prescribed designation and/orgenerally and specifically assigned to them by the Board of Directors and/or its Committeefrom time to time:
|1. Smt. Surekha Sathe ||Vice President IT |
|2. Shri Ashish Desai ||Sr. General Manager Accounts |
|3. Shri Ajay Phalod ||Sr. General Manager Corporate Finance |
|4. Smt. Harsha Joshi ||General Manager Taxation & Internal Control |
(Note: Shri Vipul Saxena Vice President HR recognised as a Whole Time KeyManagerial Personnel resigned from the services of the Company w.e.f. 13thJune 2016).
The Board of Directors of your Company in consultation with its Nomination &Remuneration Committee has devised the Performance Evaluation Policy forperformance evaluation of each Individual Director including its Independent Directorsits Committees and the entire Board as a whole in accordance with the provisions of theCompanies Act 2013 and the Listing Regulations.
The parameters laid down for evaluating performance of Individual Directors coveraspects like profile contribution in Board and Committee meetings execution andperformance of specific duties obligations regulatory compliances and governance etc.As regard the Board including its Committees the parameters cover aspects likeconstitution and composition matters addressed and processes followed at the meetingsetc.
The Independent Directors had met separately without the presence of Non-IndependentDirectors and the members of Management and discussed inter-alia the performance ofWhole Time Director the Non-Executive Chairman of the Company and the Board as a wholeafter taking into consideration the views of Executive and Non-Executive Directors.
The Nomination and Remuneration Committee has also carried out evaluation of everyDirectors performance.
The Board has carried out an annual evaluation of its own performance respectivecommittees the Directors (including Independent Directors and the Chairman of the Board).The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. On the basis of performance evaluation doneby the Board it shall be determined whether to extend or continue their term ofappointment whenever the respective term expires.
The Directors expressed their satisfaction with the evaluation process.
NOMINATION & REMUNERATION POLICY:
In accordance with the provisions of Section 178 of the Companies Act 2013 read withthe Rules framed thereunder the Board of Directors on the recommendations of theNomination & Remuneration Committee approved and adopted the Nomination &Remuneration Policy of your Company. The Nomination & Remuneration Policy of theCompany lays down the framework in relation to remuneration of Directors KMP SeniorManagement Personnel and other employees of the Company as also it lays down the criteriafor determining qualification positive attributes etc. in relation thereto.
The Nomination & Remuneration Committee after identifying and ascertaining theintegrity quotient qualification expertise and experience of the person for appointmentas Director KMP or at Senior Management Level recommends his/her appointment to theBoard of Directors. As regards the payment of remuneration the objective of this Policyis to ensure that level and composition of remuneration is reasonable and sufficientrelationship of remuneration to performance is clear and meets appropriate performancebenchmarks. The remuneration and commission paid to the Whole Time Director is inaccordance with the percentage/slabs/conditions as per the provisions of the CompaniesAct 2013. The KMPs Senior Management Personnel and other employees of the Company arepaid monthly remuneration as per the Companys HR policies and/or as may be approvedby the Committee. If the remuneration of KMPs or any other officer is to be specificallyapproved by the Committee and/or the Board of Directors then such approval will beaccordingly procured.
The Policy on Nomination & Remuneration is available on the website of the Companyviz. www.ashapura.com. The details about the Nomination & Remuneration Committee andpayment of remuneration to the Directors are provided in the Report on CorporateGovernance which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in "Annexure A" to this Report.
MEETINGS OF THE BOARD:
During the year under review four (4) meetings of the Board of Directors were held.The details of the meetings are provided in the Report on Corporate Governance (Pleaserefer Page no. 41).
The Company has an Audit Committee of the Board of Directors in place. The terms ofreference of the Audit Committee are in line with Section 177 of the Companies Act 2013read with the Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 18of the Listing Regulations. Detailed information pertaining to the Audit Committeeincluding its composition has been provided in the Corporate Governance Report whichforms part of this Annual Report.
AUDITORS AND AUDITORS REPORT:
M/s. Sanghavi & Co. Chartered Accountants were appointed as the Statutory Auditorsof the Company to hold office till the conclusion of the 36th Annual GeneralMeeting to be held in the year 2017. In terms of the first proviso to Section 139 of theCompanies Act 2013 the appointment of Auditors shall be placed at every Annual GeneralMeeting for ratification. The Company has received confirmation from them to the effectthat if they are reappointed it would be in accordance with the provisions of Section 141of the Companies Act 2013. As required under Regulation 33 of the Listing Regulationsthe Auditors have also confirmed that they hold a valid certificate issued by the PeerReview Board of the Institute of Chartered Accountants of India.
Accordingly the appointment of M/s. Sanghavi & Co. Chartered Accountants asStatutory Auditors of the Company is placed for ratification by the Shareholders at theensuing Annual General Meeting.
The Auditors Report for the financial year 2015-2016 does not contain anyqualification reservation or adverse remark. The Auditors Report is enclosed withthe financial statements in this Annual Report. Further the Notes to Accounts referred toin the Auditors Report are self-explanatory.
M/s. B. Purushottam & Co. Chartered Accountants Chennai the Branch Auditorsappointed pursuant to Section 143(8) of the Companies Act 2013 hold their office till theconclusion of the ensuing Annual General Meeting.
In view of the provisions of Section 143(8) read with the provisions of Section 139 ofthe Companies Act 2013 and the Rules framed thereunder it is proposed to appoint M/s. B.Purushottam & Co. Chartered Accountants Chennai as Branch Auditors to conduct theaudit of the Companys branches at Chennai and Kodur for the financial year2016-2017.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors hason recommendation of the Audit Committee appointed M/s. S. K. Rajani & Co. CostAccountants as the Cost Auditor of the Company to conduct audit of the Companys CostAccounting Records in respect of the products of the Company viz. Kaolin/China ClayBentonite & Allied Minerals Bauxite and Bleaching Clay (CETA HEADING 2507 25082508 2606 and 3802) for the financial year 2016-2017 at the remuneration of 200000/-(Rupees Two Lakhs only) per annum plus reimbursement of actual travel & out of pocketexpenses.
Your Company has received consent from M/s. S. K. Rajani & Co. Cost Accountantsto act as the Cost Auditors of your Company for the financial year 2016-2017 along with acertificate confirming their independence. As per the provisions of the Companies Act2013 a resolution seeking approval of the Members for the remuneration payable to theCost Auditors forms part of the Notice convening Annual General Meeting.
The Cost Audit Report for the financial year 2014-2015 was filed with the Ministry ofCorporate Affairs on 21st October 2015.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Shri Virendra G. Bhatt Company Secretary in PracticeMumbai to conduct the Secretarial Audit of the Company for the financial year ended 31stMarch 2016.
The Secretarial Audit Report (in Form MR-3) is annexed as "Annexure B" tothis Report.
SECRETARIAL AUDITORS OBSERVATIONS:
Your Directors would like to bring to the notice of the Members that as your Companyhas been declared as a Sick Company by the Board for Industrial &Financial Reconstruction (BIFR) and after resignation of the erstwhile Chief FinancialOfficer the Company has been finding it difficult to induct able and willing candidatesto hold fiduciary positions including that of the Chief Financial Officer i.e. KeyManagerial Personnel as required under the provisions of the Companies Act 2013.
Considering the current scenario the management has recognized Shri Ajay Phalod Sr.General ManagerCorporate Finance and Shri Ashish Desai Sr. General Manager Accounts as a whole time Key Managerial Personnel to perform such duties/ functions as maybe generally performed by the Chief Financial Officer.
INTERNAL CONTROL SYSTEM & THIER ADEQUACY:
The Company has an adequate Internal Control System commensurate with the size scaleand nature of its operation. The Audit Committee reviews the adequacy and effectiveness ofInternal Control System.
The Company appointed M/s. Atul HMV & Associates Chartered Accountants as itsInternal Auditors for the financial year 2015-2016 to carry out the periodic audit of thefunctions and activities of the Company as per the Scope of Work approved by the AuditCommittee. The Audit Committee periodically reviews the Internal Audit Reports submittedby the Internal Auditors. Internal Audit Observations and Corrective Action taken by theManagement are presented to the Audit Committee. The status of implementation of therecommendations are reviewed by the Audit Committee on a regular basis and concerns ifany are reported to the Board.
The Company is taking due action to ensure that the Internal Control is strengthened inall the areas of operations. A step in this regard is implementation of SAPan advanced IT business solution platform within the organization to achieve standardizingoperations and to have better MIS which in turn shall help the operations and business.This would also ensure ease in working environment and style and shall enable the Companyto be in line with the best Global practices.
CORPORATE SOCIAL RESPONSIBILITY:
The Company has adopted the Corporate Social Responsibility (CSR) Policy in accordancewith the provisions of Section 135 Rules framed thereunder and Schedule VII of theCompanies Act 2013. The CSR Policy lays down the guideline principles for social welfareprograms/projects initiated by the Ashapura Group through its Trusts/Foundation for thebenefit of different segments of the society specifically the deprived underprivilegedand differently abled persons. The Policy is available on the website of the Company viz.www.ashapura.com. The Composition of the CSR Committee is given in the Report on CorporateGovernance (Please refer Pg. No. 47).
Ashapura Group has always focused on its Corporate Social Responsibility obligation andis undertaking various initiatives to touch and improve lives of less fortunate andunderprivileged sections of the Society by conducting various social welfare programs likeEducation Women Empowerment Health Culture & Rural Development etc. Your Companyhowever was not in a position to specifically make provision for CSR activities for theFinancial Year 2015-2016 as required under Section 135 of the Companies Act 2013considering its negative Net Worth its continued reference to the Board for Industrialand Financial Reconstruction and the financial exigencies.
VIGIL MECHANISM- WHISTLE BLOWER POLICY:
The Company has established a vigil mechanism for its directors andemployees to report genuine concerns or grievances and accordingly formulated the WhistleBlower Policy in compliance with the provisions of Section 177 of the Companies Act 2013and the Listing Regulations. The Policy has been formulated with an objective to build andstrengthen a culture of transparency and trust within the Company and to provide aframework to its directors and employees for responsible and secure reporting of improperactivities (whistle blowing); and also to provide for adequate safeguards againstvictimization of directors/employees who avail of the mechanism; and for direct access tothe Chairman of the Audit Committee. The said Policy is available on the website of theCompany viz. www.ashapura.com. During the year under review no compliant has beenreceived under the Whistle Blower Policy (Vigil Mechanism). Further information on theVigil Mechanism and the Whistle Blower Policy of your Company can be referred to in theReport on Corporate Governance.
RISK MANAGMENT POLICY:
The Board of Directors of your Company has laid down a Risk Management Policy for theCompany that identifies elements of risks inherent to the business and have entrusted theAudit Committee with the responsibility of reviewing the said policy.
RELATED PARTY TRANSACTIONS:
All contracts/arrangements/transactions entered by the Company during the financialyear under review with the Related Parties were in the ordinary course of business and onan arms length basis. During the year the Company had not entered into anycontract/arrangement/transaction with the Related Parties which could be considered asmaterial in accordance with the Companys Policy on Related Party Transactions. Inview thereof the disclosure in Form AOC-2 is not required to be provided.
The Company places all Related Party Transactions before the Audit Committee and alsobefore the Board of Directors for approval on quarterly basis. The omnibus approval wasobtained from the Audit Committee in respect of transactions which are repetitive innature in accordance with the Companys Policy on Related Party Transactions. TheAudit Committee also reviewed the details of such Related Party Transactions entered intoby the Company pursuant to each of the omnibus approval given on a quarterly basis.
The Policy on Related Party Transactions as approved by the Board of Directors of theCompany is available on the website of the Company viz. www.ashapura.com.
Your Directors draw attention of the members to Note no. 40 to the financial statementswhich sets out related party disclosures.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED:
Particulars of loans given investments made guarantees given and securities providedin accordance with the provisions of Section 186 of the Companies Act 2013 are given inthe Notes to Financial Statements (Please refer to Note no. 39).
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013 areprovided in "Annexure C" to this Report.
EXTRACT OF ANNUAL RETURN:
The Extract of Annual Return of the Company in Form MGT-9 as provided under Section92(3) of the Companies Act 2013 is annexed herewith as "Annexure D" to thisReport.
The Securities and Exchange Board of India (SEBI) on 2nd September 2015issued the Listing Regulations with the aim to consolidate and streamline the provisionsof the Listing Agreement for different segments of capital markets to ensure betterenforceability. The said Listing Regulations came into effect from 1st December2015. Accordingly all listed entities were required to enter into the Uniform ListingAgreement within six months from the effective date. The Company entered into the UniformListing Agreement with the Bombay Stock Exchange Limited and the National Stock Exchangeof India Limited during February 2016.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:
As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and Rules framed thereunder your Company has putin place a Policy for prevention of sexual harassment at workplace. This policy has beenformulated to create and maintain a safe working environment where all employees treateach other with courtesy dignity and respect irrespective of their gender race castecreed religion place of origin sexual orientation disability economic status orposition in the hierarchy. Your Company has constituted Internal Complaints Committee(ICC) for redressal of sexual harassment complaint. The said Policy is available on thewbesite of the Company viz. www.ashapura.com
Your Directors wish to express their appreciation for the assistance and co-operationreceived from the financial institutions banks employees investors customersGovernment & Government agencies Members & Shareholders and all other businessassociates for the continuous support given by them to the Company and their confidence inits management during the year under review and look forward for their contributed supportin future.
| ||For and on Behalf of the Board of Directors |
| ||Sd/- ||Sd/- |
| ||CHETAN SHAH ||RAJNIKANT PAJWANI |
| ||CHAIRMAN (NON-EXECUTIVE) ||WHOLE TIME DIRECTOR & CEO |
| ||HARISH MOTIWALLA |
| ||INDEPENDENT DIRECTOR |
| ||(CHAIRMAN - AUDIT COMMITTEE) |
|Place: Mumbai || || |
|Date: 10thAugust 2016 || || |
ANNEXURES TO DIRECTORS REPORT
INFORMATION UNDER SECTION 197 OF THE COMPANIES ACT 2013 READ WITH RULE 5(1) OF THECOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
1. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:- 14.60 times*
2. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:-
Company Secretary:- 11%
3. The percentage increase in the median remuneration of employees in the financialyear:- 10.86%
4. The number of permanent employees on the rolls of the Company:- 978 (Previous Year792)
5. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:-
Average percentage increase in the salaries of Employees other than the ManagerialPersonnel in the FY 2015-2016 was 16.23% whereas the increase in remuneration of theManagerial Personnel for the said FY was 12.54%.
Note : The Managerial Personnel also include the other Whole Time Key ManagerialPersonnel recognised by the Board of Directors of the Company.
6. Affirmation that the remuneration is as per the remuneration policy of the Company:-
It is affirmed that the remuneration paid to the Directors Key Managerial Personnel(KMP) and other employees is as per the remuneration policy of the Company.
* Ratio calculated on the basis of remuneration of Whole-time Director & CEO
Note : The Effective Capital of the Company as on 31st March 2015calculated as per the provisions of Schedule V of the Companies Act 2013 was negative.Thus the Whole Time Director & CEO received remuneration during the Financial Year2015-2016 as prescribed under Schedule V of the Companies Act 2013 and in accordancewith the approval obtained from the Members of the Company by way of a Postal BallotNotice dated 14th October 2014 and the result of which was declared on 1stDecember 2014.
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED MARCH 31 2016
[Pursuant to section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
Ashapura Minechem Limited
I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Ashapura Minechem Limited(Hereinafter called the Company). Secretarial Audit was conducted in a manner thatprovides me a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing my opinion thereon.
Based on my verification of the Ashapura Minechem Limited books papers minute booksforms and returns filed and other records maintained by the Company and also theinformation provided by the Company its officers agents and authorized representativesduring the conduct of secretarial audit I hereby report that in my opinion the Companyduring the audit period covering the financial year ended on March 31 2016 has primafacie complied with the statutory provisions listed hereunder:
I have examined the books papers minute books forms and returns filed and otherrecords maintained by Ashapura Minechem Limited ("the Company") for thefinancial year ended on 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 rulesmade there under;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;
(iv) Foreign Exchange Management Act 1999 & the rules & regulations made thereunder to the extent of Foreign Direct Investment Overseas Direct Investment &External Commercial Borrowings;
(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;
(c) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
Though the following laws are prescribed in the format of Secretarial Audit Report bythe Government the same were not applicable to the Company for the financial year ended31st March 2016:-
(a) The Securities And Exchange Board of India (Issue of Capital & DisclosureRequirements) Regulations2009;
(b) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999;
(c) The Securities & Exchange Board of India (Issue & listing of Debtsecurities) Regulations 2008 (Not applicable during the audit period);
(d) The Securities & Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not applicable during the audit period);
(e) The Securities & Exchange Board of India (Buyback of Securities) Regulations1998;
(vi) For the other applicable laws our audit was limited to:
i. Industrial Disputes Act 1947
ii. The Payment of Wages Act 1936
iii. The Minimum Wages Act 1948
iv. The Employees Provident Fund & Miscellaneous Provisions Act 1952
v. The Payment Of Bonus Act 1965
vi. The Payment of Gratuity Act 1972
vii. The Contract Labour (Regulations & Abolition) Act 1970
I further report that based on the Management Representation Letter the Company has INTER-ALIAcomplied with the following laws: i. Mines Act 1952
ii. Metalliferous Mines Regulations 1961
iii. Water (Prevention & Control) of Pollution Act 1974
iv. Air (Prevention & Control) of Pollution Act 1981
v. Customs Act 1962
vi. Hazardous Wastes (M&H) Rules
vii. Environment Protection Rules 1986
viii. Mineral Conservation & Development Rules 1988
(vii) I have also examined compliance with the applicable clauses of the following:
(a) The Listing agreements entered into by the Company with the stock exchanges withthe Bombay Stock Exchange Limited & the National Stock Exchange Limited.
(b) Secretarial Standards 1 & 2 Issued by the Institute of Company Secretaries ofIndia.
I report that the casual vacancy caused due to resignation of Chief Financial Officeris yet to be filled by the Company as required under section 203 (1) (iii) of theCompanies Act 2013.
During the period under review the Company has prima facie complied with the provisionsof the Act Rules Regulations Guidelines Standards etc. mentioned above.
I further report that I rely on statutory auditors reports in relation to thefinancial statements and accuracy of financial figures for Sales Tax Wealth Tax ValueAdded Tax Related Party Transactions Provident Fund ESIC etc. as disclosed underfinancial statements Accounting Standard 18 & note on foreign currency transactionsduring our audit period and I have not verified the correctness and appropriateness of thebooks of accounts of the Company.
I further report that the board of directors of the company is duly constituted withproper balance of Executive Directors Non-Executive Directors & IndependentDirectors. The changes in the composition of the Board of Directors that took place duringthe period under review were carried out in compliance with the provisions of the Act.
I further report that as per the information provided prima facie adequate notice isgiven to all directors to schedule the Board
Meetings agenda & detailed notes on agenda were sent at least seven days inadvance & a system exists for seeking & obtaining further information &clarifications on agenda items before the meeting & for meaningful participation atthe meeting.
I further report that as per the information provided majority decision is carriedthrough while the dissenting members views are captured & recorded as part ofthe minutes.
I further report that there are prima facie adequate systems & processes in thecompany commensurate with the size & operations of the company to monitor & ensurecompliance with applicable laws rules regulations & guidelines.
I further report that the management is responsible for compliances of all businesslaws. This responsibility includes maintenance of statutory registers/records required bythe concerned authorities and internal control of the concerned department.
I further report that during the audit period the company has no specific events likePublic/Right/Preferential issue of shares/ debentures/sweat equity etc.
I further report that:-
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. I 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 in theSecretarial records. I believe that the processes and practices I followed provide areasonable basis for my opinion.
3. Where ever required I have obtained the Management representation about thecompliance of Laws Rules and Regulations and happening of events etc.
4. The compliance of the provisions of Corporate and other applicable Laws RulesRegulations Standards is the responsibility of the Management. My examination was limitedto the verification of procedures on test basis.
5. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor the efficacy or effectiveness with which the Management has conducted theaffairs of the company.
| ||SD/- |
| ||Virendra Bhatt |
| ||ACS No 1157 |
| ||COP No 124 |
|Place: Mumbai || |
|Date: 10th August 2016 || |
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A. CONSERVATION OF ENERGY:
a) Energy Conservation measures taken:
1) Installation of VFD
2) Modification of lighting circuits by providing timer
3) Integration of Grinding Section with PLC Automated Control system
4) Transparent sheet provided in the plant roof to optimise use of natural light
5) Converted CFL into LED light
6) Installed HT capacitor in HT motor for improvement of power factor
7) Installed separate screw compressors of smaller capacity for sections with lowerrequirement like Packing Grinding section (to prevent wastage by using a common largecapacity Compressor)
b) Impact of above measures:
The effect of above measure is imminent as inspite of unit power cost going up fromgrid; our power cost is within control.
B. TECHNOLOGY ABSORPTION:
| ||2015-2016 ||2014-2015 |
|1. Efforts made towards technology absorption ||(1) Specialty Mineral Products ||(1) Bauxite |
| ||a. Development of Ceramic Proppants- High & Intermediate Strength for Hydraulic Fracturing Applications. ||a. Beneficiation of Bauxite for suitable applications. |
| ||b. Developed Activated Bauxite for purification of Lubricant Oil and Transformer Oil. ||b. Development of calcined bauxite for refractory and abrasive applications. |
| ||c. Development of Ashlite-60 products. ||c. Development of ceramic proppants for hydraulic fracturing. |
| ||d. Development of Ashlite-70 product at R&D level. ||(2) Refractories |
| ||e. Beneficiation studies of Silica-rich Bauxite i.e. Silica-removal suitable for refractory application. ||a. Development of Mullite-42 for refractory applications. |
| ||f. Development of Yellow colored- Calcined Bauxite for Anti-skid road applications. ||b. Development of Mullite-47 for refractory applications. |
| ||g. Activated bauxite development for purification of Lubricant Oil. ||(3) Bentonite |
| ||(2) Industrial Functional Minerals ||a. Development of surface modified clay for carbon less copy paper. |
| ||a. Development of Bentonite suitable for Pond Sealing. ||(4) Kaolin & Ball Clay |
| ||b. Development of Cement Stability grade Bentonite. ||a. Development of paint grade kaolin from Bhuj Kaolin. |
| ||c. Development of Pharma and soap- grade Attapulgite. ||b. Process improvement studies Hydrocyclone from Bhuj Kaolin. |
| || ||c. Development of plastic clay for sanitary application. |
| || ||d. Development of ball clay blend for ceramic tile application. |
| ||d. Studies of optimization of Bentonite use for Hematite and Magnetite grade Iron Ore. ||(5) Silica sand |
| ||e. Development of High-WTS and High- Thermal durability bentonite products. ||a. Development of silica sand for glass grade from clay washing waste silica. |
| ||f. Developed Ceramic grade Bentonite material. ||b. Development of silica sand for foundry grade from clay washing waste silica. |
| ||g. Development of Pharma Cosmetic & Wine Grade Bentonite at R&D level. || |
| ||h. Development of Activated Bauxite/ Attapulgite for Wax refining application. || |
| ||(3) Water & Waste Water Treatment (WWWT) || |
| ||a. Development of MetaCIL - product for heavy metal ions removal from Effluent/Waste-water. || |
| ||b. Material development for removal of Heavy metals/Toxic ions from effluent collected from various industries i.e. Hindalco Unilever Textile etc. || |
| ||c. APL-waste acid treatment studies completed at R&D. || |
| ||(4) White Performance Minerals & Products. || |
| ||a. Kaolin resourcing from different mines located near to Bhuj and optimization study of all process parameters. || |
| ||b. Process and optimized all process parameters for manufacturing of Ground Calcium Carbonate at Plant level. || |
| ||c. Development of Precipitated Calcium Carbonate at R&D stage. || |
| ||(5) Allied Minerals Products || |
| ||a. Development of Building Material Products such as Wall putty Instant Sealing compounds Tile adhesive etc. for Building material applications. || |
| ||b. Utilization of waste Gypsum in making Bricks. || |
|2. Benefits derived like product improvement cost reduction product development import substitution etc. ||a. Ceramic proppant useful for fracturing of shell to extract Oil & Gas from Oil wells. In-house technology development for High & Intermediate strength proppant with low specific gravity value will give better performance at application end. The use of raw materials with low cost reduce the production cost of developed Proppant. ||a. High silica in bauxite limits its usage for certain applications. So the removal silica is required so that it can be used for alumina refractory and abrasive industry. In-house technology demonstrated that the bauxite with high amount of silica could be purified by optimizing and modifying the wet screening process. R&D stage development work done in making ceramic Proppant using bauxite. |
| ||b. High-alumina products i.e. Ashlite 60 & 70 development using Clay Calcined Bauxite and appropriate Binder will enhance the product portfolio. In-house know how of the products technologies save cost for new product development with low apparent porosity and high bulk density property. ||b. Optimization of calcination process viz. temperature and time and close composition control was carried out to achieve the desired quality calcined bauxite. In-house techno- logy know-how of Mullite products for low apparent porosity high bulk density for refractory applications. |
| ||c. In-house technology development for Bentonite based various enhanced properties i.e. High-WTS High thermal durability as well as its development for various applications such as Pond Sealing Pharma& Cosmetic grade IOP-grade Ceramic grade Cement Stability grade etc. give value addition in terms of finding new application areas. Enhancement in the properties for niche product development create profitability by beneficiating high grade minerals. ||c. In-house technology for surface modified bentonite for carbon less copy paper. |
| ||d. High content of silica in bauxite limits its usage for refractory applications. ||d. In-house development of paint grade kaolin process efficiency improvement of hydro-cyclone plastic clay for sanitary application and ball clay for ceramic tile application. |
| ||Beneficiation of bauxite i.e. Silica removal by using screening and washing methods improve the quality of Raw Bauxite for development of high grade products. ||e. In-house development of silica sand for glass grade and foundry grade applications. |
| ||e. In-house testing/mine resource exploration of Ground Calcium Carbonate & Kaolin mineral and its process enhancement create quality in the current range of products. R&D development on Precipitated Calcium Carbonate will be introducing New products range of applications. || |
| ||f. Mineral base solution to Water and Waste-water treatment collected from various industries lead to the development of range of new products. Also in-house working for waste material or effluent treatment will reduce the problem of waste disposal. || |
| ||For the continual growth of the Company and the Nation the Company continued to invest in developing R & D capacity in terms of manpower technical skill development equipment and infrastructure to compete effectively across world market. Our future expansion facility of development of Technology Incubation and Demonstration Center will help to transfer the technology to Plant level and save process development cost in terms of energy consumption raw material and time for product/process development. || |
|3. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year) following infor- mation may be furnished: ||No technology has been imported in the last 3 years. ||No technology has been imported in the last 3 years. |
|a. Details of technology imported || || |
|b. Year of import || || |
|c. Whether the technology been fully absorbed || || |
|d. If not fully absorbed areas where absorption has not taken place and the reasons therefore || || |
4. Expenditure on Research & Development
| ||2015-2016 ||2014-2015 |
|a) Capital ||10968960 ||23469923 |
|b) Recurring ||30222623 ||25187733 |
|c) Total ||41191583 ||48657656 |
|d) Total R&D Expenditure as a || || |
|Percentage of total turnover ||0.69% ||0.64% |
C. FOREIGN EXCHANGE EARNING OUTGO:
| ||2015-2016 ||2014-2015 |
|a. Foreign Exchange earned in terms of actual inflows during the year (F.O.B.) ||3620961121 ||5370094130 |
|b. Foreign Exchange outgo during the year in terms of actual outflows ||1356781221 ||922971997 |