Ashok Alco-Chem Limited
Your Directors present their 23 Annual Report together with the Audited FinancialStatements of your Company for the year ended March 31 2015.
The following figures summaries the financial performance of your Company during theyear under review:
(Rs. in Lacs)
|Particulars ||March 31 2015 ||March 31 2014 |
|Turnover (Net of Excise & Sales Tax) and Other Income ||35504.42 ||22260.33 |
|Profit (Loss) before Interest Depreciation and Tax ||2350.29 ||929.51 |
|Less: Interest ||69.52 ||52.30 |
|Depreciation ||84.01 ||110.47 |
|Deferred Tax Surplus/ (Provision) ||20.30 ||(8.88) |
|Current Tax ||780.00 ||248.00 |
|MAT Entitlement Credit ||(54.75) ||- |
|Prior Period Adjustments ||- ||45.76 |
|Net Profit / (Loss) for the year ||1451.21 ||481.86 |
RESULTS OF OPERATIONS ANDTHE STATE OF COMPANY'S AFFAIRS
The rise in the profits is due to huge demand for bauxite in the overseas market forthe trading division and improved efficiency of the manufacturing vertical. Moreover inaddition the chemical division also performed substantially better vis-a-vis compared toprevious year 2013-14. The fall in the crude prices didn't deter the profitability of yourCompany.
Your Company has been very successful and consistent during the financial year 2014-15.Your Company was able to capitalize on the market conditions through its operationalexcellence higher efficiency and well executed strategies around product placement inniche market overseas as well in the domestic sector. The capital expenditure was Rs 151lacs mainly on account of ongoing expansion projects in the chemical division. YourCompany has set up its own R&D centre and has successfully tested new products to belaunched in the near future. Your Company has been consistent in the manufacturing segmentwherein the capacity utilization also increased by 36% mainly on account of hugeexpenditure on automization and recovery processes. Your Company in order to improve theefficiency has envisaged in the installation of a new Boiler with a higher capacity tocater to existing as well as new products. The Capex cost is Rs 250 lacs which has beenarranged through internal accruals.
No material changes and commitments have occurred after the close of the financial yeartill the date of this report which affects the financial position of your Company.
Considering the performance of your Company during the year under review yourDirectors are pleased to recommend a dividend of Re. 1/- (i.e. 10%) per equity share ofRs. 10/- each for the financial year ended March 31 2015. If the proposed dividend isapproved by the Members at the ensuing Annual General Meeting the total dividend payoutwill be Rs. 4600343/-. The tax on dividend payout borne by the Company will be Rs.936519/-.
TRANSFER TO GENERAL RESERVES
Your Company proposes to transfer Rs. 50000000/- to the general reserves of theCompany.
Pursuant to special resolution passed by the shareholders through Postal Ballot onFebruary 17 2014 [in compliance with Companies (passing of the Resolution by PostalBallot) Rules 2011] the Board of Directors of the Company at its Meeting held on March26 2014 had inter alia allotted 450000 convertible Warrants of face value of Rs 30/-to Aura Alkalies and Chemicals Private Limited a Promoter Group Company on apreferential basis. The said issue and allotment was made pursuant to Section 81 (1A) ofthe Companies Act 1956 and SEBI (Issue of Capital and Disclosure Requirements)Regulations 2009 as amended from time to time.
During the year under review Aura Alkalies and Chemicals Private Limited expressed itswillingness to convert warrants into equity shares and submitted Warrant ExerciseApplication Form along with the balance 75% consideration. Accordingly the Board ofDirectors of the Company at its Meeting held on March 25 2015 approved the conversion of450000 Warrants into Equity Shares and allotted 450000 Equity Shares of Rs 10/- eachat a premium of Rs 20/- each.
The balance consideration received from Aura Alkalies and Chemicals Private Limited hadbeen utilized for the purpose for which they have been raised i.e. for augment of workingcapital or enhancement of Net Worth of the Company or enhancement of Company's ability toraise institutional finance in future.
Accordingly during the year under review the Issued Subscribed and Paid-Up EquityShare Capital of the
Company has increased from Rs. 41503430/- divided into 4150343 Equity Shares of Rs.10/- each to Rs. 46003430/- divided into 4600343 Equity Shares of Rs. 10/- each.
However the Authorized Share Capital of the Company remain unchanged atRs.70000000/- divided into 5000000 Equity Shares of Rs 10/- each and 2000000 11%Preference Shares of Rs 10/- each.
Consequent to conversion of warrants into Equity Shares Aura Alkalies and ChemicalsPrivate Limited becomes Holding Company of your Company and its shareholding standsincreased to 54.75% at the end of the year.
Subsidiary / Associate Company
Your Company does not have any subsidiary and/or associate company and hence thedetails relating thereto is not applicable.
CHANGE IN PROMOTERS
During the year under review Mr. Sunil Shah and M/s HK Dealers Private Limited hadpurchased shares of your Company and consequently fall under the "Promoter andPromoter Group" of the Company. The present promoters of your Company are:
|Sr. No. ||Name ||No. of Shares held ||% to total paid up capital |
|1. ||Aura Alkalies and Chemicals Private Limited ||2518632 ||54.75 |
|2. ||Mr. Sunil Shah ||1000 ||0.02 |
|3. ||HK Dealers Private Limited ||1000 ||0.02 |
| ||Total Promoters holding ||2520632 ||54.79 |
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 149 of the Act which came into effect from April1 2014 Mr. Manoj Ganatra and Dr. Umesh Kulkarni were appointed as an IndependentDirectors at the Annual General Meeting of the Company held on September 26 2014. Theterms and conditions of appointment of Independent Directors are as per Schedule IV of theAct. The said Independent Directors are not liable to retire by rotation. The Company hasreceived declarations from the said Independent Directors of the Company confirming thatthey meet the criteria of Independence as prescribed under sub-section (6) of Section 149of the Companies Act 2013 and Clause 49 of the Listing Agreement.
Mr. Sridhar Chari retires by rotation and being eligible has offered himself forre-appointment.
During the year under review in compliance with the provisions of second proviso tosection 149(1) of the Companies Act 2013 and the Listing Agreement the Board ofDirectors had at its Meeting held on March 30 2015 appointed Ms. Neeta Shah as anAdditional Director of the Company w.e.f. April 1 2015 who ceases to hold office at theensuing annual general meeting. Your Directors propose appointment of Ms. Neeta Shah asDirector of the Company.
During the year under review pursuant to the provisions of Section 203 of the Actwhich came into effect from April 1 2014 the Company designated Mr. Sridhar Chari WholeTime Director and Mr. V. Shashidharan AGM Finance & Accounts as Key ManagerialPersonnel (KMP) and appointed Ms. Seema Gangawat as Company Secretary Key ManagerialPersonnel w.e.f. April 1 2014.
Subsequent to the year under review Mr. V. Shashidharan was appointed as ChiefFinancial Officer of the Company w.e.f. July 30 2015.
NUMBER OF MEETINGS OFTHE BOARD:
During the year under review six meetings of the Board of Directors were held asdetailed below:
|Date(s) on which meeting(s) were held || |
|May 29 2014 ||February 10 2015 |
|August 13 2014 ||March 25 2015 |
|November 12 2014 ||March 30 2015 |
In terms of the provisions of the Companies Act 2013 read with Rules made there underand Clause 49 of the Listing Agreement the Board of Directors have evaluated theperformance of each independent director for the financial year 2014-15.
The evaluation framework for assessing the performance of Directors inter aliacomprises of the following key areas:
ii. Objectivity and Independence
iii. Guidance and support in context of the Company's operations;
iv. Understanding of the Company's business;
v. Understanding and commitment to duties and responsibilities;
vi. Willingness to devote the time needed for effective contribution to Company;
vii. Participation in discussions in effective and constructive manner at the Meetings;
viii. Responsiveness in approach;
ix. Ability to encourage and motivate the Management for continued performance andsuccess.
In a separate meeting of the Independent Directors performance of non-independentdirectors performance of the board as a whole was evaluated.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed herewith as per "Annexure A".
The Company is not required to provide statement containing particulars of employees asrequired under Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as no employee covered under the said Rule 5(2) during the yearunder review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of section 134(5) of the Companies Act 2013 with respectto Directors Responsibility Statement it is hereby stated that:
a. in the preparation of the annual accounts for the year ended March 31 2015 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;
b. the directors have 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 as at March 31 2015 and the profit ofthe Company for the year ended on that date;
c. the directors have 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 have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
Operationally the business continued its strong performance during the financial yearended March 31 2015 reflecting a growth of 59% and production reaching record levels at36% and your Company envisages to utilize its production capacity at consistent levels incontinuation. Exports grew at alarming record by 43.90% mainly tapping niche markets onthe global front.
The Chemical industry overall seems to be fairly favorable environment for playersfocusing on broadening customer base in the near future. The chemical industry comprisesof large players as well as small players from unorganized sector resulting stiffcompetition compelling your Company to focus its margins thereon. Overall the fall in thecrude prices and economy downtrend of few Asian countries has resulted stagnant exportsdue to unviability. At the global front and domestic segment the Management continued itsendeavor in increasing its customer base. The strategic efforts of the Management havebeen successful in consistent and repeated order intake for your Company.
Inconsistent pricing of Raw material and the fluctuating exchange rates have become themain challenges in the near future. In order to overcome these challenges your Companyenvisages to achieve the same by strategic sourcing of raw materials and enhanced salesdistribution network.
Your Company expects to continue its strategy of seeking niche markets broad customerbase overseas and domestically yielding better margins with enhanced volume growth. Theglobal metal industry to which your Company's Trading Division caters to has beenexperiencing a reasonable growth rates over the last few quarters in terms of capacityaddition wherein the existing demand there from is expected to be fairly resilient. Thenew R&D setup is endeavoring in addition of new products and has been successful intesting the outcome. Your Company is also in the process of modifying its idle capacity tocater to the new product expansion.
The increased demand for minerals in the overseas market pegged the growth of theTrading Division at 40%. The profits before interest and tax improved as your Company hadfocused only on customers yielding better margins.
Your Company's overall profit after tax for FY 2014-15 was Rs. 1451 Lacs against Rs.482 Lacs in FY 2013-14.
Your Company's Chemicals division has shown sustained increased capacity utilizationthroughout the year because strategic decisions were taken by the Management to improvethe efficiency of the manufacturing facilities despite existence of challenging marketconditions.
OpportunitiesThreats Risks and Concerns:
The optimization of capacity of the Chemical Division expects to cater significantly tobroaden its Customer base overseas by increased volumes and ascertained margins. The majorthreat and risk to reckon with is the highly volatile pricing of raw materials import aswell as domestic. Also the commodity orientation for your Company part of the highlyvolatile Chemical Industry faces certain threats and risks.
Financial performance achieved by your Company during the year under review are shownabove under the head "FINANCIAL RESULTS".
Internal Control Systems and Adequacy
Your Company has in place adequate internal financial controls with reference tofinancial statements. During the year under review such controls were tested and noreportable material weaknesses in the design or operation were observed.
Material Developments in Human Resource / Industrial Relation front including numberof people employed
a. The number of employees for the year under review was 80. b. There were no materialdevelopments as regards human resources / industrial relations front during the periodunder review.
Your Company's financial discipline and prudence is reflected in the strong creditratings ascribed by rating agency ICRA. Your Company has been assigned first timelong-term rating of BBB- and short-term rating of A3. The outlook assigned on thelong-term rating is stable.
AUDITORS AND AUDITORS REPORT
Pursuant to the provisions of Section 139 of the Act and the Rules framed thereunderM/s R.A. Kuvadia & Co. Chartered Accountants were appointed as Statutory Auditors ofthe Company from the conclusion of the twenty second Annual General Meeting (AGM) of theCompany held on September 26 2014 till the conclusion of the twenty fifth AGM to be heldin the year 2017 subject to ratification of their appointment at every AGM. YourDirectors propose ratification of appointment of M/s R. A. Kuvadia & Co. CharteredAccountants as statutory auditor for the year ended March 31 2016.
The Auditors Report does not contain any qualification reservation or adverse remarks.
Pursuant to the provisions of Section 148 of the Companies Act 2013 read with Rule 14of the Companies (Audit and Auditors) Rules 2014 M/s N. Ritesh & Co. CostAccountants having Registration No. 100675 were appointed as the Cost Auditors of theCompany to conduct the audit of Cost accounting records maintained by the Company relatingto "Chemicals" for the FinancialYear ended March 31 2015.
The Board of Directors at its Meeting held on July 30 2015 has on the recommendationof the Audit Committee appointed M/s V. J. Talati & Co. Cost Accountants havingFirm Registration No. R00213 as the Cost Auditors of the Company to conduct the audit ofCost accounting records maintained by the Company relating to "Chemicals" forthe Financial Year 2015-16 on a remuneration of Rs. 50000/- plus applicable taxes andout-of-pocket expenses payable at actual. The said remuneration is subject to theratification by the Members of the Company in terms of Section 148 of the Companies Act2013 read with the Companies (Cost Records and Audit) Rules 2014 as amended from time totime. The payment of remuneration to M/s V. J. Talati & Co. approved by the Board isaccordingly placed for ratification.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rules madethereunder the Company had appointed M/s. Makarand M. Joshi & Co. Practicing CompanySecretaries to undertake the Secretarial Audit of the Company for the financial year2014-15. The Secretarial Audit Report for financial year 2014-15 has been appended as"Annexure B" to this Report.
The Secretarial Auditors contained following qualification reservation or adverseremarks:
(i) Pursuant to the provisions of Section 149 of the Act Company has not appointedwoman director till March 31 2015 whereas the Board of Directors of the Company hadpassed the resolution at its Meeting held on March 30 2015 for appointment of Womandirector effective from April 1 2015.
(ii) Pursuant to the provisions of Clause 31 of the Listing Agreement six copies ofthe Statutory and Directors' Annual Reports along with 'Form A' Balance Sheets and Profitand Loss Accounts for the financial year ended March 31 2014 was submitted with a delayof one day to the Stock Exchange.
Board's Explanation / Comments on above remarks
With regards to point no (i) mentioned above the directors state that the Board ofDirectors of the Company at its Meeting held on March 30 2015 had considered appointmentof Ms. Neeta Shah as an Additional Director (Category- Non-Executive Director) on theBoard of the Company. However due to her pre occupancy she was appointed as directorw.e.f. April 1 2015. The Company had promptly intimated the Stock Exchange regardingappointment of Ms. Neeta Shah after the conclusion of aforementioned board meeting.
With regards to point no (ii) mentioned above the directors state that due tonon-availability of the signatory on Form A which is required to submit along with sixcopies of the Statutory Report Directors Report and Balance Sheet and Profit and LossAccounts for the financial year ended March 31 2014 there was a delay of one day insubmission of Annual Reports for the FY 2013-14 with Stock Exchange. The Company has paidthe penalty for delayed submission.
The Board of the Directors at their Meeting held on July 30 2015 has appointed M/s.Jay Mehta & Associates Practicing Company Secretaries to undertake the SecretarialAudit of the Company for the financial year 2015-16.
Detailed composition of mandatory Board Committees viz Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee Corporate SocialResponsibility Committee and Risk Management Committee number of meetings held during theyear under review and other related details are set out in the Corporate Governance Reportwhich forms a part of this Report.
The Company has formulated and published a Whistle Blower Policy to provide VigilMechanism for employees including directors of the Company to report genuine concernsabout unethical behavior. The provisions of this policy are in line with the provisions ofSection 177(9) of the Companies Act 2013 and revised Clause 49 of the Listing Agreementwith Stock Exchange.
LOANS AND INVESTMENT
During the year under review the Company has not given any loans made any investmentand provided any guarantee and securities except investment made in liquid funds whichwere redeemed before March 31 2015.
TRANSACTIONS WITH RELATED PARTY
The Company has not entered into any transactions with related party; hence informationon transactions with related parties to be provided in Form AOC-2 pursuant to Section134(3) (h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 is notapplicable to the Company.
CORPORATE SOCIAL RESPONSIBILITY
Your Company embraces responsibility for impact of its operations and actions on allstakeholders including society and community at large. As per the requirements of theCompanies Act 2013 the Company had duly constituted Corporate Social ResponsibilityCommittee. The brief outline of the Corporate Social Responsibility (CSR) policy of theCompany and the initiative undertaken by the Company on CSR activities during the yearunder review are set out in "Annexure C" of this report in the format prescribedin the Companies (Corporate Social Responsibility Policy) Rules 2014. For further detailsof CSR Committee please refer Corporate Governance Report.
RISK MANAGEMENT POLICY
Risks can be internal and external and are inherent in all administrative and businessactivities. Formal and systematic risks have evolved and they are now regarded as goodmanagement practice also called Risk
Management. During the year your Directors have been entrusted with the responsibilityto assist the Board in overseeing and approving the Company's enterprise wide riskmanagement framework overseeing all the risks that the organization faces and alsoidentify and assess adequacy of risk management infrastructure. The Company's managementsystems organizational structures processes standards code of conduct and behaviorstogether govern and conducts the business of the Company and manages associated risks. TheCompany has introduced several improvements and processes to drive a common integratedview of risks optimal risk mitigation responses and efficient management of internalcontrol and assurance activities. This integration is introduced several improvements andprocesses to drive a common integrated view of risks optimal risk mitigation responsesand efficient management of internal control and assurance activities. This integration isenabled by all three being fully aligned across Group wise Risk Management InternalControl and Internal Audit methodologies and processes.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT- 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as "AnnexureD" to this Report.
As per the Listing Agreement with the Bombay Stock Exchange Limited your Company hascomplied with the requirements of Corporate Governance and Report thereon forms part ofthis Report as "Annexure- E".
During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read together with the Companies(Acceptance of Deposits) Rules 2014.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
The Company has set up an Internal Complaints Committee to redress complaints receivedregarding sexual harassment in line with the requirements of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rule madethereunder.
During the year under review the Company did not receive any complaint.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Rule 8 (3) of the Companies (Accounts) Rules 2014 the required detailsare as below:
Conservation of energy
(i) The steps taken or impact on conservation of energy
Energy Conservation dictates how efficiently a Company can conduct its operations. YourCompany has recognized the importance of energy conservation in decreasing the deleteriouseffects of global warming and climate change. Your Company has undertaken various energyefficient practices and has strengthened your company's commitment towards becoming anenvironment friendly organization. Your Company conducts periodic energy audits to improveenergy performance and benchmark.
(ii) The steps taken by the Company for utilising alternate sources of energy
Major energy conservation initiatives taken for steam saving which has helped us toreduce the Coal consumption that has reduced emission of CO2 in atmosphere which helps inglobal warming. Harmonic Audit is done at the plant to identify the losses in the plantand rectify the same the power factor is maintained as per the rules and we receivesubsidy for the same.
(iii) The capital investment on energy conservation equipment
Your Company has revamped the process for energy conservations by stoppage of wastageof live steam and installation of Proper System for removal of water from the steam. Allthe damage insulation has been replaced to control the heat loss.
Your Company has invested almost Rs. 70 Lacs for the conservation of energy during thefinancial year.
The Company's integrated new research and technology unit helps create superior valueby harnessing internal research and development skills and competencies and by innovatingin emerging technology domains related to various business.
The Company's focuses on new product process modification to support existing businessand create breakthrough technologies for new business support to capital projects andprofit and reliability improvements in manufacturing plant.
Foreign exchange earnings and outgo
Total Foreign Exchange earned and used.
(Amount in Rs.)
| ||Current Year ||Previous Year |
|i. Foreign Exchange used ||327463444 ||101997990 |
|ii. Foreign Exchange earned ||2025784410 ||1083838286 |
The Board acknowledges with thanks the contributions and support received from theGovernment Local Authorities Financial Institutions and Banks Creditors and SuppliersValued Customers Employees and the Shareholders of your Company.
|For and on behalf of the Board || |
|Sridhar Chari ||Manoj Ganatra |
|Whole Time Director ||Director |
Date: July 30 2015