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Asian Fertilizers Ltd.

BSE: 524695 Sector: Agri and agri inputs
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Asian Fertilizers Ltd. (ASIANFERTILIZER) - Director Report

Company director report

Dear Shareholders.

The Directors have pleasure in presenting the 30th Annual Report together with AuditedAccounts of the company for the financial year ended 31st March 2015.

1. THE FINANCIAL RESULTS:

The summarized financial performance of the Company for the financial year ended March31 2015 as compared to previous year was as under.

(Rs in Lacs)

PARTICULARS Year ended March 312015 Year ended March 312014
Remove from Operation 6137.06 4914.21
Other Income 38.42 38.55
Total Expenditure 5786.36 4716.76
Profit before Interest Depreciation Prior Period Items and Tax (PBIDTA)
Less: Finance Costs 197.24 125.07
Less: Depreciation and Amortization 29.28 32.89
Profit Before Exceptional/Prior Period Items and Tax Items and Tax 165.59 77.81
Less: Exceptional/Prior Period Items (Net) 0 0
Profit Before Taxes (PHT) 162.59 77.81
Less: Tax Expense (Net) 57.55 29.49
Profit for the year (PAT) 105.04 48.32
Add: Balance of Profit brought forward

FINANCIAL HIGHLIGHTS:

During the year 2014-15 Company recorded revenue from operations of Rs. 6137.06 lakhsPBIDT of Rs. 197.24 Lakhs and Net Profit of Rs. 105.04 Lakhs as against revenue fromoperation of Rs. 4914.21 lakhs. PBIDT of Rs. 125.07 lakhs and Net Profit of Rs. 48.32lakhs in year 2013-14.

PLANT OPERATIONS:

The turnover of the company has increased as compared to the previous year due tobetter market conditions. In quantum vise production of SSP has decreased 7.36% whereasproduction of Sulphuric Acid has increased 5.84% Net Profit has also been increased duringthe year 2014-15.

Pursuant to the purchase agreement entered into with Shriram Fertilizers &Chemicals (A division of DCM Shriram consolidated Ltd.) on 22.10.02. Your company is ableto achieve production of 37323 MT of SSP during the year 2014-15 against the targetedproduction of 55000 MT which is 67.86% of the production target and 56.55% of theinstalled capacity and dispatched 36818 MT which is 94.51% of the installed capacity ofthe plant. The sale of Sulphuric Acid was 14940MT and 17051MT of Sulphuric Acid has beenconsumed for production of SSP and Micronutrient. We wish to inform you that your companyhas entered a fresh purchase agreement with Shriram Fertilizers & Chamical (A divisionof Shriram Consolidated Ltd.) from 1.4.11. in which the total production target is fixed65000 MT & Shriram Fertilizers & Chemicals has agreed to purchase total productionof SSP Your company has agreed to pay only commission on sales and interest on deployedadvances or 1%-SBI PLRto Shriram Fertilizers & Chemicals to maintain the productionschedule. Your company has started a new plant in Micro nutrient segment and it’salso a reason of increment in profit in this year in the comparison of last year.

FINANCE:

We are glad to inform that as on date your company has no debts owing to FinancialInstitutions.

INDUSTRIAL RELATIONS

The company has generally maintained cordial relations with the employees.

INDUSTRY STRUCTURE:

Nitrogen phosphors potassium are three major constituents of fertilizers. India hasgood reserves of phosphate rocks which can be processed to give water soluble phosphaticfertilizers. Single Super Phosphate is a cheap fertilizer and also known as Commonfarmer's fertilizer.

DEVELOPMENT IN GOVERNMENT POLICY:

Investment required for setting up a SSP unit is modest compared to Nitrogenousfertilizers. The setup with indigenous technology does not depend in any imported materialbecause of availability of good quality of rock phosphate with Rajasthan State Mines &Minerals Limited a State Govt. Undertaking. The demand of fertilizers is likely toincrease with the emphasis by the Govt on augmenting agriculture produce. The Govt ofIndia has also notified that Imported Rock Phosphate from some countries to use inproduction of SSP for competitive Production cost.

OPPORTUNITIES: '

Since agriculture sector has its own importance in Indian economy it is bound to growand our product SSP has also its own importance in Agriculture sector.

Govt of India has emphasized to promote SSP to fulfill the demand of phosphaticfertilizers.

RISK AND CONCERN:

(a) Government Policy:

The Govt has opened the MRP of SSP from 01/04/11 and manufacturers are free to decidetheir rates.

(b) Availability of Raw Material:

Rajasthan State Mines & Mineral Ltd. a Govt undertaking is the sole supplier ofour basic raw material i.e. Rock Phosphate. After notifying imported Rock Phosphate fromsome countries by Govt of India there is no problem in availability of Raw Material.

(c) Subsidy on SSP

The Govt of India has introduced nutrient base subsidy policy for all type offertilizers including SSP. The Govt of India fixed subsidy for whole year.

(d) The Total product of the company (except Sulphuric Acid) has dependent on rainfalls and weather conditions. '

TRANSFER TO RESERVES

During the year under review the board propose not to transfer any amount to anyreserves..

COMPANIES POLICY ON DIRECTORS APPOINTMENT AND REMUNEARTION:

The company has made its own selection process viz a viz for executive and nonexecutive diretors. Nomination and Remuneration Committe has checked out all the norms asprovide in section 149 (6) of Companies Act. 2013 for selection and appointment ofIndependent Directors in company to asure that the thoughts of such director are notbaised at all. All the directors who have been appointed as independent directorin companyare well completed since they are working in the company for a very long period furtherthe company his followed paper mechanism for appointment of the KMPs. The company followsproper mecheanism for the remmuneration paid to the directors and KMPs as per therecommendation made by the Nomination and Remuneration committer after observing theircomments.

DIVIDEND:

In order to conserve the resources of the company the Board of directors has decidednot in declare any dividend for the year.

FIXED DEPOSITS:

The Company has not accepted any deposit from public/shareholder in accordance withsection 73 of the Companies Act 2013 and as such no ammount on account of principal aninterest on public deposit was outstanding on the date of the Balance Sheet

DETAILS OF DIRECTORS AND KMP’S APPOINTED AND RESIGNED DURING THE YEAR:

Appointment /Resignation of Directors:

The Shareholders in 29th Annual General Meeting held on 26th September 2014 hisappointed Mr. G.N. Gupta Mr. K.C. Madam & Mr. Anurag Tulsyan as the independentdirectors of the Company..

All Independent Directors have given declaration that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement.

Further No director has designed from the Company during the year 2014-15.

Further Mr. Shobhit Matanhelia has been appointed as additional Director of theCompany w.e.f. 14/02/15 for which a notice has been received from a member proposing hiscandidature along with deposite rupees 100000u/s 160.

Key Managerial Personnel:

Mr. Ashok Matanhelia as Managing Direcotors Mr.. Somil Matanhelia as whole-Timedirector & Mr. S.S. Pandey. Chief Financial Officer w.e.f. 14/02/2015 of the Companyare the his Managerial Personnel as per the provisions of Companies Act 2013 and werealready in office before the commencement of Companies Act 2013.

Mr. Lalit Sharma has been registration from the position of Chief Financial Office fromthe date of 28th July 2014.

No other director/s of KMP/s have been appointed or retired or resigned during thefinancial year 20142015.

Retirement by Rotation:

Mrs. Usha Matanhelia is director liable to retire by rotation and being eligible ofterherself for reappointment.

The brief resume of director retiring by rotation but seeking reappointment at theensuing Annual General Meeting her experience in specific functional areas and thecompanies on which she hold directorship and / or membership / chairmanship of thecommittees of the Board her shareholding etc. as slipulated under clause 49 of the listingagreement with the Stock Exchanges are given in section report on Corporate Governance ofthe Annual Report.

ANNUAL EVALUATION OF BOARD OF ITS OWN PERFORMANCE OF ITS COMMITTEES AND INDIVIDUALDIRECTORS: -

The Companies Act 2013 and revised Clause 49 of the Listing Agreement entered with theStock Exchanges stipulaies the performance evaluation of the Directors including Chairman.

Board and its Commons Considering the said provisions the Company has revised theprocess and the criterinanl the performance evaluatin.

The independent Directors reviwed the performanc of non-independent Directors theChairman and Board effectiveness as the whole. The Nomination & Remuneration Committeeevaluation be performance of the Independent Directors. Non- Independent Directors and theChairman of the Company. Structured questionnaires to evaluate and assess the qualityquantity and timeliness of the flow of information between the Company management and theBoard to see the (i) Board Effectiveness (ii) Evaluation of Non independent Directors(iii) Evaluation of Independent Directors (iv) Evaluation of Committees (Audit NRCStakeholder Relationship Committee & Corporate Social Responsibility and (v)Evaluation of Chairperson

The Board would use the results of evaluation process constructively to improve itseffectiveness maximize strenghths of individual directors and deliver performance &overall growth for the company.

COMMITTEES TO THE BOARD:

The Company has several Committees which been established in Compliance with therequirements of the relevant provision of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

• Committee of Independent Directors

The details with respect to the composition powers roles terms of reference policiesetc. of relevant Committee are given in derails in the ‘Report on CorporateGovernance’ of the Company which forms part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION:

The Company would like to inform that no material changes and commitments affecting thefinancial position of the company have occured during the period from the end of financialYear till date of this report.

RELATED PARTY CONTRACT AND ARRANGEMENT OF THE COMPANY:

All related party transactions that were entered during the financial year were in theordinary course of business of the Company and were on arm's lingth basis. There were nomaterially significant related party transactions entered by the Company with PromotersDirectors Key Managerial Personnel or other persons which may have a potential conflictwith the interest of the Company.

All such Related Party Transaction are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval is obtained for the transaction which areforeseen and repetitive in nature. A statement of all related party transactions ispresented before the Audit Committee on a quarterly basis specifiying the nature valueand terms and conditions of the transactions.

The policy on dealing with Related Party Transictions has approved by the AuditCommittee.

Since all related party transactions entered by the Company were in the oridnary courseof business and were on an arm's length basis form AOC-2 is ANNEXURE-I to theDirector’s Report.

The details of the transaction with Related Party are provided in the accompanyingfinancial statements.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the process or operation was observed.

PARTICULARS OF LOANS GUARANTEES & INVESTMENTS:

During the year the company has not made any loan investment and / or gurantee coveredunder section 186 of Companies Act 2013

LEGAL FRAMEWORK AND REPORTING STRUCTURE:

The Company would like to inform that legal compliance tool has been installedvertically within the organization for monitoring and complying all lows applicable to theCompany. This tool is being overseen and supervised by the office of the CompanySecretary. Further the Company secretary has also been cast the reponsibility of providinga compliance certificate at every Board meeting including the key noncompliances duringthe quarter.

RISK MANAGEMENT POLICY AND INDENTIFICATION OF KEY RISKS:

The Company would like to inform that the risks which threaten the existence of theCompany has been identified and accordingly a risk management framwork has been createdand adopted by the company. Further the internal auditors of the Company have been castwith the responsibility of monitoring this framework and report to management the keyrisks affecting the business.

CSR ACTIVITIES:

CSR Activities are not applicable to the company Since the Company does not meet thecriteria as defined under section 135 of Companies Act 2013.

DISCLOSURES:

(i) MEETINGS OF THE BOARD:

Four meeting of the Board of Directors were held during the year. For further detailsplease see report on corporate governance.

(ii) AUDIT COMMITTEES:

The Audit Committee comprises Independent directors namely Mr. K.C. Madan as Chairman.Mr. Anurag Tulsyan as member and Mr. P.K. Matenhelia as member (Non-Executive Director).All the recommedation made by the Audit Committee were accepted by the Board.

(iii) ESTABLISHMENT OF VIGIL/WHISTLE BLOWER MECHANISM

The Company promotes ethical behavior in all its business activities and in line withthe best practices for corporate govenance. It has established a system through whichdirectors & employees may report beach of code of conduct unerthical businesspractices illegality fraudm and corruption etc. at work place without fear of reprisal.The functioning of the Vigil mechanism is reviewed by the Audit Committee from time totime. None of the Whistle Blowers have been denied access to the Audit Committee of theBoard. The details of the Whistle Blower Policy are explained in the Report on CorporateGovernance and also available on the website of the company.

The company has established a whistle blower mechanism for the directors and employeesto report concerns about unethical behavior actual or suspected fraud or violation of thecompany's code of conduct or ethics poloicy.

During the Financial Year 2014-2015 there was no complaint reported by any Director oremployee of the company under this mechanism. .

(iv) EXTRACT OF ANNUAL RETURN: -

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extract of the Annual Return as at March 31 2015 to be set out in ANNEXURE-IIto the Directors’ Report.

AUDITORS & AUDITORS’ REPORT:

(a) Statutory Auditors & Audit Report:

Kapoor Tandon & Company Statutory Auditors of the company Kanpur hold office tillthe conclusion of the ensuting Annual General Meeting and are eligible for re-appointment.The have confirmed their eligibility under Section 141 of the Companies Act 2013 andRules framed thereunder for reappointment as Auditors of the Company.

The observations of the auditors are explained wherever neccessary in appropriate notesto the accounts Also there is no adverse comment in the Auditor’s Report.

(b) Secretarial Audit & Secretarial Audit Report;

Pursuant to Section 204 of the Companies Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s AdeshTondon & Associates Practicing Company Secretary as secretarial auditor forconducting Secretarial Audit for all applicable laws for the Financial Year 2015. TheReport of the Secretarial Audit Report to be set out in ANNEXURE- III to theDirector’s Report.

The replies of qualification of secretarial Auditor by Board of Directors are givenbelow:

1. Company will take care in future for the compliance of clause 31 (d) and clause 41of Listing Agreement.

2. Company has send Annual report to the shareholder and other as required in companiesAct 2013 and Listing agreement but dispatch proof are not in our possession.

3. Company has sent emailfor inquiring the process of revocation of suspension oftrading from BSE and payment of listing fees but reply thereof is awaited from BSE.However company is decided to depute our executive to sort-out the matter to insurerevocation of suspension of securities.

4. Company is in process of maintaining the website under clause 54 of the ListingAgreement.

5. The disclosure under SEBI (SAST) Regulation 2011 to stock exchange has given by thecompany but dispatch proof is not traceable due to lack of proper maintenance of dispatchproof.

DIRECTOR’S RESPONSIBILITY STATEMENT

In accordance with the requirement of Section 134 (5) of the Companies Act 2013 it ishereby confirmed that

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 judjments and estimates that are resonable 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 and loss 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 director 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 had devised proper systems to ensure compliance with the provision ofall applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE:

A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreemententered with the Stock Exchanges forms part of the Annual Report. The Company has been incompliance with all the norms of Corporate Governance as stipulated in Clause 49 of theListing Agreement.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report on financial condition and results ofoperations of the Company for the year under reviews required under Clause 49 of theListing Agreement entered with the Stock Exchanges is given as separate Statement formingpart of the Annual Report.

A. EMPLOYEES REMUNERATION

(i) In terms of the provisions of Section 197 (12) of the Companies Act 2013 read withRule 5(2) and (3) of the Companies (Appointment and Remuneration Rules 2013 as amendedthe names and other particulars of the employees are not required to be set out in theDirectors's Report as none of the employee is drawing the remuneration as prescribed underRule 5(2).

In terms of Section 136 of the Companies Act 2013 the Annual Report excluding theaforesaid information is being sent to all the Members of the Company and others entitledthereto. Members who are interested in obtained such particulars may write to the CompanySecretary of the Company at its Registered Office.

(ii) The ratio of the remuneration of each director to the mediam employee’sremuneration and other details in terms of sub-section 12 of Section 197 of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 to be set out in ANNEXURE-IV to Director’s Report.

B. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FORGEIGN EXCHANGE EARNINGS ANDOUTGO

a) Conservation of Energy

Since the operation of the company are not energy intensive therefore does not callfor any steps to be taken Therefore clause (i) & (ii) are not applicable

b) Technology Absorption

The Company has not imported any specific techology for its operations which are notupdate in India.

c) Foreign Exchange Earning and Outgo

During the period under review there was no Foreign Exchange Earnings or out flow inthe company.

ACKNOWLEDGMENTS:

The Directors would like to express their sincere appreciation of the cooperation andassistance received from the Authorities Readers Bankers Credit Rating AgenciesDepositories Stock Exchanges Registrar and Share Transfer Agents Associated as well asour Shareholders at large during the year under review.

The Directors also wish to place on Recod their deep sense of appreciation for thecommitment abilities and hard work of all executives officers and staff who enabledCompany to consistently deliver satisfactory and rewarding performance even in thechallenging economic conditions.

DATE: 29/05/2015 For and on behalf of the Board of Directors
Place: Gorakhpur Asian Fertilizers Limited
Ashok Kumar Matanhelia
Managing Director
Din: 01763776
Address: 789 Ajay Khand
Patrkar Puram Rapti Nagar
Gorakhpur - 273009

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