Chambal Fertilisers & Chemicals Ltd.
|BSE: 500085||Sector: Agri and agri inputs|
|NSE: CHAMBLFERT||ISIN Code: INE085A01013|
|BSE LIVE 15:53 | 24 Nov||144.95||
|NSE 15:52 | 24 Nov||144.90||
|Mkt Cap.(Rs cr)||6,033|
|Mkt Cap.(Rs cr)||6032.96|
Chambal Fertilisers & Chemicals Ltd. (CHAMBLFERT) - Director Report
Company director report
Your Board of Directors have pleasure in presenting the 32ndAnnual Report on the business and operations of the Company together with auditedfinancial statements for the financial year ended March 31 2017.
1. Financial Results
(Rs. in Crore)
In pursuance of the noti3cation dated February 16 2015 issued by theMinistry of Corporate A3airs Government of India relating to the Companies (IndianAccounting Standard) Rules 2015 the Company has adopted Indian Accounting Standards("Ind AS") beginning April 01 2016 with the comparatives for the financial yearended March 31 2016. Further information regarding transition to Ind AS has been providedin the notes forming part of the Financial Statements.
The Company has two business segments viz. Fertilisers and otherAgri-inputs and Shipping. The Company is engaged in manufacture of Urea and Single SuperPhosphate (SSP) and markets other Agri-inputs such as Di-Ammonium Phosphate (DAP) Muriateof Potash (MOP) insecticides seeds micronutrients etc. The Fertiliser and otherAgri-inputs Division registered robust performance during the year under review. The salesvolumes of DAP and MOP were higher in comparison to the last year though there was somedecrease in the sales volumes of Urea. The Shipping Division operates ships (Aframaxtankers) for transportation of petroleum products. The performance of Shipping Divisionremained under pressure due to adverse market conditions. The Company has executed anagreement for sale of ship - Ratna Shalini on May 2 2017. Further the Company hasexecuted agreements for sale of remaining 3 ships - Ratna Shruti Ratna Shradha and RatnaNamrata on May 20 2017. The transactions are expected to be completed by September 152017. After delivery of all the vessels the Company intends to close the shippingbusiness in due course of time which is expected to be completed by December 31 2017. TheCompany has decided to close the shipping business considering the long term businessoutlook of shipping business and to focus on its core business of Fertilisers and OtherAgri-inputs. In view of the above the Shipping Division has been re-classi3ed as held forsale/ discontinued operation as per Ind AS 105. The detailed information on the businesssegments of the Company and the respective industries are given in the ManagementDiscussion and Analysis Report attached as Annexure "A" to this report.
3. New Urea Project
During the Financial Year 2015-16 your Company had started theimplementation of new Urea plant at Gadepan for production of 1.34 Million MT of Urea perannum at a cost of approximately USD 900 Million ("Gadepan III Project").The commercial production of Urea from Gadepan III Project is scheduled to start inJanuary 2019. Safety and quality with timely implementation of the project are focus areasduring the construction phase. The construction of Gadepan- III Project is in full swingand progressing as per schedule. The Company's team of experienced and dedicatedprofessionals is continuously monitoring the progress. Gadepan III Project is beingfunded through a mix of debt and internal accruals. Till March 31 2017 the Company hasspent Rs. 1624.63 Crore on Gadepan III Project. The major capital expenditure inGadepan III Project shall take place during the Financial Year 2017-18. Thisproject will give a major thrust to the operations of the Company by adding about 63% inthe present Urea production capacity of the Company.
The Board recommends dividend @ Rs. 1.90 per equity share of Rs. 10each (Previous Year Rs. 1.90 per equity share) for the financial year ended March31 2017. The total outgo on this account will be Rs. 95.18 Crore including dividenddistribution tax. The Dividend Distribution Policy of the Company is attached as Annexure"B" to this report. This policy is also available on the website of theCompany and can be accessed at the weblink -http://www.chambalfertilisers.com/pdf/Final-Dividend-Distribution-Policy.pdf.
5. Consolidated Financial Statements
In pursuance of the provisions of the Companies Act 2013 Rulesthereunder Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") and the applicableAccounting Standards the Company has prepared Consolidated Financial Statements. TheAudited Consolidated Financial Statements alongwith Auditors' Report and theStatement containing salient features of financial statements of subsidiaries and jointventure (Form AOC 1) forms part of the Annual Report.
6. Corporate Governance Report and Code of Conduct
Your Directors are committed for adhering the highest standards ofCorporate Governance. The Corporate Governance Report for the Financial Year 2016-17 isattached as Annexure "C". The declaration of the Managing Directorcon3rming compliance with the Code of Conduct and Ethics' is enclosed as Annexure"D" and Auditors' Certi3cate con3rming compliance with the conditionsof Corporate Governance is enclosed as Annexure "E".
7. Subsidiaries and Joint Venture (a) Subsidiaries
(i) Chambal Infrastructure Ventures Limited
Chambal Infrastructure Ventures Limited ("CIVL") is a whollyowned subsidiary of your Company which was incorporated to pursue the businessopportunities in power sector. CIVL had been pursuing since long for various approvalsincluding renewal of Memorandum of Understanding with the Government of Odisha for settingup a power project. In view of in-ordinate delays CIVL has decided to withdraw theapplication for extension of Memorandum of Understanding and not to pursue the powerproject in Odisha.
(ii) CFCL Ventures Limited Cayman Islands and its subsidiaries
CFCL Ventures Limited Cayman Islands was a wholly owned subsidiary ofCFCL Technologies Limited Cayman Islands a subsidiary of your Company. With a view toachieve administrative and operational cost e3ciencies and simpli3cation of the corporatestructure of the subsidiaries CFCL Technologies Limited merged with CFCL Ventures Limitedwith e3ect from December 20 2016 and CFCL Ventures Limited became a direct subsidiary ofyour Company.
CFCL Ventures Limited operates business through its subsidiariesnamely ISGN Corporation USA and ISG Novasoft Technologies Limited India. Inuva InfoManagement Private Limited India is a subsidiary of ISG Novasoft Technologies Limited.CFCL Ventures Limited and its aforesaid three subsidiaries have changed their respectivefinancial years to align with the financial year of your Company. Accordingly thefinancial year of each of these subsidiaries comprises of 15 months period ended on March31 2017. ISGN Corporation USA had entered into a stock purchase agreement on January 282016 for sale and transfer of its entire shareholding in its wholly owned subsidiarynamely ISGN Solutions Inc. USA to Firstsource Group USA Inc. USA. Further ISGNovasoft Technologies Limited had signed an agreement on January 28 2016 for sale of itsBusiness Process Outsourcing business to Firstsource Process Management Services LimitedIndia on slump sale basis. These transactions were completed on May 18 2016. AccordinglyISGN Solutions Inc. USA and its subsidiaries namely ISGN Ful3llment Agency LLC USA andISGN Ful3llment Services Inc. USA ceased to be the subsidiaries of your Company duringthe year under review. ISGN Corporation USA is engaged in designing developingmarketing and distribution of software products for mortgage lending industry in USA. Thisbusiness is supported by ISG Novasoft Technologies Limited India. After sale and disposalof its subsidiaries as mentioned above ISGN Corporation USA is now a pure-playtechnology product company with concerted focus on sale of software products to existingand new customers. ISGN Corporation USA registered a robust growth in its technologyproduct business during the 15 months period ended March 31 2017. Continuous e3orts havebeen made to reduce the cost of operations and modernize key software products. This hasenabled ISGN Corporation to increase its revenue stream in technology product business.
(iii) India Steamship Pte. Limited Singapore
India Steamship Pte. Ltd Singapore is a wholly owned subsidiary ofyour Company and principal activity of the subsidiary is to carry on the business of shipchartering. There was no business activity in this subsidiary during the year underreview.
(iv) India Steamship International FZE UAE
India Steamship International FZE UAE is a subsidiary of your Companyand it has operated through in-chartered vessels during part of the year.
(v) India Steamship Limited India
India Steamship Limited is a wholly owned subsidiary of your Company.There was no business activity in this subsidiary during the year under review.
(b) Joint Venture : Indo Maroc Phosphore S. A. Morocco (IMACID)
IMACID is a joint venture of your Company with Tata Chemicals Limitedand OCP Morocco with equal stake of each partner. IMACID is engaged in the manufacture ofphosphoric acid in Morocco. During the calendar year 2016 IMACID achieved revenue ofMoroccan Dirham (MAD) 2068.30 million (Rs. 14041.94 million) against revenue of MAD2777.42 million (Rs. 18125.35 million) achieved during the calendar year 2015. The Profitafter tax of IMACID was MAD 8.04 million (Rs. 54.58 million) during the year as againstMAD 194.01 million (Rs. 1266.10 million) in the calendar year 2015. The lower productionand sales of phosphoric acid due to lower demand and breakdown of captive power plant formajor part of the year has adversely a3ected the performance of IMACID. During the quarterended March 31 2017 IMACID achieved operating income of MAD 476.93 million (Rs. 3068.40million).
The performance of the subsidiaries of the Company is summarized inForm AOC - 1 attached to the Financial Statements of the Company in pursuance of Section129 of the Companies Act 2013. The contribution of subsidiaries and joint venture to theoverall performance of the Company is provided in Note No. 56 to the ConsolidatedFinancial Statements forming part of the Annual Report.
The Company shall place the audited financial statements ofsubsidiaries on its website in pursuance of Section 136 of the Companies Act 2013 andshall provide a copy of these statements to any shareholder seeking it. These documentswill also be available for inspection by members during business hours at the registeredo3ce of the Company at Gadepan Dist. Kota Rajasthan.
Save and except M/s. ISGN Solutions Inc. USA ISGN Ful3llment AgencyLLC USA and ISGN Ful3llment Services Inc. USA which ceased to be the subsidiaries ofyour Company and CFCL Technologies Limited which merged with CFCL Ventures Limited noother subsidiary associate or joint venture has been acquired/ included or ceased duringthe year under review.
8. Health Safety Quality and Environmental Protection
Your Company continuously strives to integrate sustainability into itsoperations through e3ective resource management fostering a safe and productive workplace materials stewardship responsible energy use water use optimization positivewaste management and conservation of bio-diversity.
There is a well-de3ned Health Safety Security Environment &Quality ("HSSEQ") policy which demonstrates management's strong commitmenttowards the same. The adherence to HSSEQ policy is continuously monitored by seniormanagement through regular reviews. Your Company has established on a sustainable basisan Integrated Management System based on OHSAS-18001:2007 ISO-14001:2015 andISO-9001:2015. It has also adopted Process Safety Management and guidelines of BritishSafety Council. As a result of relentless and enhanced focus there has been no reportableaccident during last two years. The details of various activities and achievements of theCompany in respect of HSSEQ are as under:
(a) Health & Hygiene
Your Company aims to prevent work-related illness and occupationaldiseases as well as ensure good working environment through periodic medical examinationsand hygiene monitoring at work place. Apart from two full time Doctors and trained nursingsta3 specialist doctors like child specialist eye specialist dental surgeonGynecologist etc. visit the Health Centre at Gadepan regularly. There are threeambulances available on round the clock basis at the plant location of the Company.
The Health Centre at Gadepan provides services round the clock toemployees their families contractor workforce and villagers in the vicinity of theplants. The Company regularly organizes health and hygiene related training and awarenessprograms through external experts.
(b) Safety and Security Management
Your Company is committed to ensure highest level of health and safetyof employees and contractor workforce. During the year the Company had engaged a reputedexternal agency to carry out complete review of security of the plant and township areas.Based on the 3ndings of this exercise the Company is revamping its security set upthrough re-enforcement of physical infrastructure and enhanced technologicalinterventions. The Company has pro-actively taken various initiatives to prevent anymishap or accident in its operations. E3ective implementation of the safety system isensured through hazard identi3cation risk assessment & mitigation procedures safetywork permit system etc. Before executing any maintenance job in the plants a crossfunctional team review the jobs on a daily basis from a safety perspective to ensure thatall recommended actions to prevent hazards are taken.
The continuous training programs and drills are conducted on rescuework at height working inside con3ned space 3re-3ghting emergency handling electricalsafety material handling road safety use of breathing air sets etc. Safety is one ofthe focus area in the construction of the new Urea plant at Gadepan. In addition todedicated team of safety professionals of the Company the contractor and sub-contractorsare available on round the clock basis to monitor safe working at project site.
(c) Environment Management
Your Company has always followed in letter and spirit theprinciples of prevention of pollution minimization of waste & re-cycle andconservation of natural & other resources. Your Company is sensitive towards theimpacts of its operations on environment including with respect to resource consumptionwaste generation and emissions to the atmosphere.
Your Company has a robust mechanism in place to ensure that all theenvironmental parameters are maintained within the permissible limits. A dedicatedEnvironment Management Cell is in place to monitor the environmental compliances.
The Company's Gadepan complex made a positive change in ecologydue to development of a dense green belt and regular plantation. This has provided asoothing and healthy environment for people to live and work and habitat to many speciesof birds. Only treated waste water is used in maintaining the green belt throughirrigation network spread all over the Gadepan complex. The use of polythene bags isstrictly prohibited in the Gadepan campus.
(d) Quality Management
Your Company is committed to provide products and servicesmaintaining high standards of quality and offering value for money to its customers andconsumers in a responsible manner.
The Company has always followed stringent guidelines on product qualityand rigorous systems and processes are in place to monitor and control the quality of rawmaterials and the products.
`Quality is continually improved by determining and taking care ofinternal and external customer requirements future needs and expectations. Qualityreviews are regularly conducted and feedback from end users (farmers) is accorded highvalue. The Company has a well-equipped advanced quality control lab for monitoring of allcritical parameters of the products manufactured by the Company. In case of the endproducts sourced from third party manufacturers the concept of quality is embedded sinceinception. The products are sourced from reputed national and international suppliers. Inaddition to this the Company ensures the quality of the products through regular checks.
Your Company regularly participates in national and internationalbenchmarking surveys and awards for independent assessment and opportunity for continualimprovement. Your Company has received following prestigious awards during the year underreview:
"Environmental Protection Award 2016" (Winner) in theSSP Fertiliser Plants Category from The Fertiliser Association of India.
"Rajasthan Energy Conservation Award 2016" (1stPrize) by Government of Rajasthan Department of Energy Jaipur.
9. Corporate Social Responsibility
Your Company believes that responsible social behavior is vital for thesuccess of an organization on sustainable basis. The Corporate Social Responsibility("CSR") is deeply engrained in the corporate philosophy of the Company. YourCompany is contributing in the sustainable development of the community through focusedinterventions in the areas of education healthcare livelihood training soil healthinfrastructure development etc. The CSR programmes / projects of the Company areimplemented directly as well as through KK Birla Memorial Society and otherNonGovernmental Organisations (NGO) which are engaged in speci3c areas. The brief outlineof the CSR initiatives of the Company are as under:
(a) School Education
Education is the 3agship programme of the CSR activities of theCompany. The Company is creating positive impact in the lives of the children and youthsby extending support from pre-school education to job oriented courses at IndustrialTraining Institutes.
The Company has adopted 36 Aanganwadi centers in 26 villages ofDistrict Kota and Baran. These Aanganwadi centers play an important role in preparing thechildren for formal education. Further your Company has adopted 16 primary schools 13upper primary schools and 10 secondary and senior secondary schools in the villagessurrounding its plants at Gadepan with the objective of improving the learning levels ofstudents. Pratham Education Foundation a renowned NGO has been engaged to improve thelearning level of students from nursery to 5th standard. Motion EducationDevelopment Society has been engaged for remedial education for students of class 6thto 12th standard. A signi3cant improvement has been observed in the learninglevel of students in these schools post adoption by the Company. The renovation of two newschools was carried out during the year. All the adopted schools are now having separatetoilet blocks for girls and boys. The Company also provided stationery school bags notebooks and winter wear to around 5000 students. Your Company is also imparting basiccomputer courses to rural youths through its four Community Information Technology Centerslocated in villages in the vicinity of its plants at Gadepan. CFDAV School is being run inthe Gadepan complex for Nursery to Class 10 students in collaboration with DAV Trust andManagement Society. Around 65% students in CFDAV School are from adjoining villages.
(b) Technical Education
The Company had adopted Industrial Training Institute (ITI) of SangodSultanpur Jhalawar and Baran. ITI Sangod has become one of the best institutions ofRajasthan and has received various accolades at state and national level for its qualitytraining and placement record. Department of Technical Education has awarded Best ITI ofthe Region Award to ITI Sangod during the year under review. The first phase ofrenovation work in ITIs at Jhalawar and Baran is complete and 3ve new trades had beenintroduced in ITIs at Sangod Baran and Jhalawar thereby increasing 250 seats in theseITIs. The senior employees of the Company are involved in the management of these ITIs andCompany's employees also take extra classes for students therein.
In addition to the above your Company is running four vocationaltraining centers in the villages near Gadepan. These centers operate in association withDistrict Adult Education Association. During the year around 170 youths were trained invarious skills and linked with various livelihood activities.
(c) Community Health Care
The Company provides free of charge healthcare services inadjoining villages of districts Kota and Baran. The Company has engaged an NGO - SchoolHealth Annual Report Programme to provide health services in the villages of districtsKota and Baran. The healthcare initiatives in the villages near Mussoorie (Uttarakhand)are being implemented in collaboration with Manorama Devi Birla Charitable Trust.
(d) Infrastructure Development
Your Company has continued to contribute towards village ruralinfrastructure development. The Company had leveraged funds from various governmentschemes to develop rural infrastructure in nearby villages to improve quality of life. TheCompany is also contributing towards Swachh Bharat Abhiyan by constructing individualhousehold toilets in adjoining villages.
(e) Soil Health
The Company is running two agriculture development laboratories in Agraand Kota. In addition to this three mobile soil testing vans are operating in Rajasthanand Uttar Pradesh. The composition and terms of reference of Corporate SocialResponsibility Committee are given in the Corporate Governance Report. The Annual Reporton CSR activities (including the details of the development and implementation of theCorporate Social Responsibility Policy) as prescribed under Section 135 of the CompaniesAct 2013 and the Companies (Corporate Social Responsibility Policy) Rules 2014 isattached as Annexure "F" to this report. For the purpose of Section 135of the Companies Act 2013 the amount equivalent to 2% of the average net Profits of theCompany made during the immediately preceding three financial years works out to Rs. 9.38crore. As against this the Company had spent approximately Rs. 9.46 crore on CSR projects/ programmes.
10. Directors and Key Managerial Personnel
The Board consists of eight directors - seven non-executive directorsincluding four independent directors and a Managing Director. Mr. Chandra Shekhar NopanyDirector (DIN: 00014587) is due for retirement at the forthcoming Annual General Meeting("AGM") and has offered himself for re-appointment. The Board of Directors atits meeting held on May 11 2016 had re-appointed Mr. Anil Kapoor (DIN: 00032299) asManaging Director of the Company for a period of 3 years with e3ect from February 162017 which has been approved by the members of the Company at the AGM held on September22 2016. During the year the Managing Director has not received any commission orremuneration from any subsidiary of the Company. The tenures of appointment of Mr. MarcoP.A. Wadia Ms. Radha Singh and Mr. Kashi Nath Memani Independent Directors shall expireon the conclusion of the ensuing AGM scheduled to be held on September 15 2017. Mr. MarcoP.A. Wadia and Ms. Radha Singh being eligible have offered themselves for re-appointmentas Independent Directors. On the recommendations of the Nomination and RemunerationCommittee the Board of Directors recommends to the shareholders of the Company there-appointment of Mr. Marco P.A. Wadia and Ms. Radha Singh as Independent Directors of theCompany to hold o3ce for a further term of 5 (3ve) consecutive years upto September 142022. Mr. Kashi Nath Memani has expressed his unwillingness for re-appointment. Mr. Memanihas been associated as Independent Director with the Company for last 8 years. The Companyhas immensely bene3ted from his vast knowledge and experience. The Board of Directorsexpresses its sincere gratitude and appreciation of the contribution made by Mr. Memani asan Independent Director of the Company. All the Independent Directors have submitteddeclarations that they meet the criteria of independence as provided under Section 149 ofthe Companies Act 2013 and the Listing Regulations.
In pursuance of the provisions of Section 2(51) and 203 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 Mr. Anil Kapoor Managing Director Mr. Abhay Baijal ChiefFinancial Officer and Mr. Rajveer Singh Assistant Vice President Legal &Company Secretary are Key Managerial Personnel of the Company. During the year there wasno change in the Key Managerial Personnel. The Board met 3ve times during the financialyear 2016-17.
Other information on the Directors and the Board Meetings is providedin the Corporate Governance Report attached as Annexure "C" to thisreport.
11. Internal Financial Controls
The Company has policies and procedures in place for ensuring orderlyand e3cient conduct of its business including adherence to the Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information. The details of internal control system are given in the ManagementDiscussion and Analysis Report attached hereto as Annexure "A".
12. Remuneration Policy
The Remuneration Policy of the Company including criterion fordetermining quali3cations positive attributes independence of Directors and othermatters as prescribed under Section 178 of the Companies Act 2013 and Listing Regulationsis annexed to this Report as
13. Disclosures under the Companies Act 2013 and Rules thereunder
(a) Your Company has not issued any shares during the Financial Year2016-17.
(b) No signi3cant and material orders have been passed by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.
(c) All Related Party Transactions entered during the year were onarm's length basis. No material Related Party Transactions (transaction(s) exceedingten percent of the annual consolidated turnover of the Company as per last auditedfinancial statements) were entered during the year by the Company. Accordinglydisclosure of Related Party Transactions as required under section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.
(d) The extract of annual return is attached to this Report as Annexure"H".
(e) The following information is given in the Corporate GovernanceReport attached as Annexure "C" to this report: i) The performanceevaluation of the Board the Committees of the Board Chairperson and the individualDirectors; ii) The Composition of Audit Committee; and iii) The details of establishmentof Vigil Mechanism.
(f) The particulars of loans and guarantees given and investments madeunder Section 186 of the Companies Act 2013 are given in the Notes to the FinancialStatements.
(g) During the year the auditors have not reported any fraud underSection 143(12) of the Companies Act 2013 and the Companies (Audit and Auditors) Rules2014.
14. Directors Responsibility Statement
Your Directors hereby state that:
(a) in the preparation of the annual accounts the applicableaccounting standards have been followed and no material departures have been made from thesame; (b) the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of a3airs of the Company as at March 31 2017 andof the Profit and loss of the Company for the year ended March 31 2017; (c) the Directorshave taken proper and su3cient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; (d) theDirectors have prepared the annual accounts on a going concern basis; (e) the Directorshave laid down internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and are operating e3ectively; and (f) theDirectors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating e3ectively.
The Notes to the Financial Statements read with the Auditors'Reports are self-explanatory and therefore do not call for any further comments orexplanations.
In pursuance of the provisions of Section 139 of the Companies Act2013 read with the Companies (Audit and Auditors) Rules 2014 regarding rotation ofauditors upon completion of the maximum tenure prescribed therein M/s. S. R. Batliboi& Co. LLP Auditors (Registration No. 301003E/ E300005) and M/s. Singhi & Co.Chartered Accountants (Registration No. 302049E) Branch Auditors of Shipping Business ofthe Company will retire at the conclusion of the ensuing AGM of the Company.
The Board places on record its appreciation of the services rendered byM/s. S. R. Batliboi & Co. LLP and M/s. Singhi & Co. during their association withthe Company. On the recommendations of the Audit Committee the Board recommends to theshareholders of the Company the appointment of M/s. Price Waterhouse CharteredAccountants LLP (Firm Registration No. 012754N/N500016) as the Auditors of the Company tohold office from the conclusion of 32nd AGM of the Company till the conclusionof 37th AGM of the Company to be held in the year 2022 subject to rati3cationby members at every AGM. The Board of Directors of the Company appointed M/s. K.G. Goyal& Associates Cost Accountants for conducting audit of cost accounts of the Companyas applicable for the financial year 2017-18. As required under the Companies Act 2013and Rules framed thereunder your Directors are seeking rati3cation of the members for theremuneration payable to M/s K.G. Goyal & Associates Cost Accountants.
16. Secretarial Audit
In pursuance of the provisions of Section 204 of the Companies Act2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the Board of Directors of the Company has appointed M/s. RMG & Associates CompanySecretaries for conducting secretarial audit of the Company for the financial year2016-17. The Secretarial Audit Report issued by the aforesaid Secretarial Auditors isattached as Annexure "I" to this report.
There is no quali3cation reservation observation disclaimer oradverse remark in the Secretarial Audit Report.
17. Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo
The Company continuously strives to make its manufacturing facilitiesenergy e3cient. The energy conservation is of paramount importance for sustainability ofthe operations and it also results into saving of natural and financial resources. TheCompany has four double hull Aframax Tankers and these ships are more energy e3cient ascompared to the old vessels. The Company continuously makes e3orts to make the vesselsmore energy e3cient through energy saving measures and technological upgradations. Therequisite information with regard to conservation of energy technology absorption andforeign exchange earnings and outgo in terms of the Companies (Accounts) Rules 2014 isset out in Annexure "J" attached to this report.
18. Risk Management
Your Company has developed and implemented a Risk Management Policy.The Company has voluntarily constituted Risk Management Committee which periodicallyreviews all risks 3nalise the risk document and monitors various risks of the Companyincluding the risks if any which may threaten the existence of the Company. Thecomposition and terms of reference of the Risk Management Committee are given in theCorporate Governance Report. The risk document containing Key and Non-Key risks includingway forward for mitigation thereof as approved by the Risk Management Committee is alsocirculated to the Audit Committee and the Board of Directors for their reviewperiodically.
During the year the Company has not accepted deposits from the publicunder Chapter V of the Companies Act 2013. There was no public deposit outstanding as atthe beginning and end of the financial year 2016-17.
20. Particulars of employees
The human resource has played vital role in the performance and growthof the Company over the years. Your Company has very healthy work environment whichenables the employees to contribute their best in the working of the Company. Informationrequired to be disclosed in pursuance of Section 197 of the Companies Act 2013 read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isattached as Annexure "K" to this report.
21. Employees Stock Option Scheme
The members of the Company had approved CFCL Employees Stock OptionScheme 2010 as amended and revised from time to time ("ESOS 2010") for issueand allotment of options exercisable into not more than 4162000 equity shares of facevalue of Rs. 10/- each to eligible employees and Managing Director of the Company. Eachoption when exercised would be converted into one fully paid up equity share of Rs. 10/-of the Company.
The Company has not granted any stock options during the year underreview.
ESOS 2010 is in compliance with Securities and Exchange Board of India(Share Based Employee Bene3ts) Regulations 2014 ("ESOP Regulations") andimplemented through CFCL Employees Welfare Trust ("Trust"). For the purpose ofESOS 2010 the Trustee of the Trust was holding 2247902 equity shares of the Company ason March 31 2017 (2253402 equity shares as on March 31 2016) being 0.54% of the paidup share capital of the Company. The ownership of these shares cannot be attributed to anyparticular employee till he / she exercises the stock options granted to him / her. Hencethe concerned employees to whom the stock options were granted under ESOS 2010 cannotexercise voting rights in respect of aforesaid shares held by the Trustee of the Trust assuch employees are not holders of such shares. The Trustee has not exercised the votingrights in respect of the aforesaid shares during the financial year 2016-17.
The disclosures required to be made under ESOP Regulations read withSEBI Circular No. CIR/CFD/Policy Cell/2/2015 dated June 16 2015 are given on the websiteof the Company at the weblink http://www.chambalfertilisers.com/pdf/esop-2017.pdf. Thedisclosures in respect of ESOS 2010 are also given in the notes to the FinancialStatements.
22. Business Responsibility Report
In pursuance of the provisions of the Listing Regulations the BusinessResponsibility Report describing the initiatives taken by the Company from environmentalsocial and governance perspective forms part of the Annual Report.
23. Investor Service Centre
The in-house Investor Service Centre of your Company is located in theCorporate Office of the Company at New Delhi which provides prompt and effcient service tothe investors. The Company takes various initiatives for investor satisfaction such asreminders to investors about undelivered shares unclaimed dividend etc.
The equity shares of your Company are listed at National Stock Exchangeof India Limited and BSE Limited. The Company has paid annual listing fees to these StockExchanges for the financial year 2017-18. The members are requested to refer to generalshareholders' information given in Corporate Governance Report appended hereto.
Your Directors wish to place on record their appreciation of the faithreposed in the Company by all the stakeholders including the Department of FertilisersGovernment of India State Governments Domestic and International Financial Institutions& Banks investors and customers. Your Directors also wish to thank the employees atall levels for their exemplary commitment hard work and dedication which has beencritical for the Company's sustained performance.