Your Board of Directors have pleasure in presenting the 54th Annual Reporttogether with the Audited Financial Statements for the financial year ended March 312016.
Summary of Financial Results
| || ||` In crore |
| ||2015-16 ||2014-15 |
|Revenue: || || |
|From Operations ||11500 ||11285 |
|Other ||64 ||56 |
|Total Revenue ||11564 ||11341 |
|Profit: || || |
|Profit before Interest Depreciation and Taxation ||836 ||908 |
|Less: Interest ||220 ||209 |
|Depreciation ||106 ||103 |
|Profit Before Exceptional Items & Tax ||510 ||596 |
|Exceptional Item ||25 ||(4) |
|Profit Before Tax ||535 ||592 |
|Less: Provision for Tax ||174 ||189 |
|(including deferred tax credit) || || |
|Profit After Tax ||361 ||403 |
Transfer to Reserves
The Company proposes to transfer Rs. 300 crore to the General Reserves of the Companyand retain Rs. 532.11 crore in the Statement of Profit and Loss.
Your Directors are pleased to recommend a Dividend of Rs. 4/- per equity share of Rs.1/- each. The total outgo for the year would be Rs. 140.25 crore including dividenddistribution tax of Rs. 23.72 crore.
It was a challenging year for Indian agriculture where second consecutive El Ninooccurrence (17 per cent rain deficit over normal levels) affected crop sowings and likelyto result in a flat food grain output. Reservoir levels in the Company's primarymarkets of Andhra Pradesh Telangana Karnataka and Maharashtra remained low impactingnutrient applications. Coupled with softening commodity environment and low rural wagegrowth the agrarian landscape was subdued during the year.
Inspite of these tough market conditions the fertiliser industry improved its volumesby 18 per cent. However with consumption falling due to lower rains the channel isexpected to carry higher inventory compared to previous year. Globally also the nutrientand agro chemical segments declined as falling crop prices depreciating currency and ElNino phenomenon impacted the demand for agri inputs.
Amidst the global and seasonal headwinds your company displayed resilience to improveits performance during the year. With topline growth of 2 per cent your Companyconsolidated its position as a leading agri solutions provider. Your Company strengthenedits brand presence across major markets by offering its bouquet of agri inputs comprisingof fertilisers and organic manure specialty nutrients and crop protection products. TheRetail SBU improved its operational performance and strengthened its value proposition oftrust quality and farm advice across Andhra Pradesh Telangana and Karnataka.
During the year the phosphatic fertiliser business increased its sales volumes by 5percent though market share witnessed a drop on account of higher industry sales innon-operating markets. In its primary markets of Andhra Pradesh Telangana and Tamil Naduthe Company improved its market share and secondary markets of West Bengal Madhya Pradeshand Chhattisgarh also witnessed a turnaround. Company's unique product offerings havebeen well received by the customers which resulted in significant improvement in brandequity score and higher acceptance by the farming community. The unique grades whichcurrently constitute a third of the portfolio sales have helped in strengthening thebrand and offered differentiated nutrient solutions. With new grades like 17:17:17 and20:20:0 (with 13 percent elemental Sulphur) launched during the year your Company haspositioned itself towards offering unique value proposition to its customers. On theoperations front the Company continued its focus towards employee safety which resultedin Total Reportable Injuries Rate (TRIR) per million man hours at less than 1 level.Process Safety Management System (PSMS) was implemented across all the fertiliser unitsthat has improved operational environment. Vishakhapatnam unit completed its restorationduring 1st half of 2015-16 post the damages caused by Hud hud cyclone in 2014and investment on structural integrity continued across the fertiliser units. Thephosphoric acid constraints were effectively managed by altering the product mix anddeveloping operational flexibility to manufacture grades at multiple sites. Cost reductioninitiatives through cross functional teams rolled out during the year improved theoperational efficiencies and reduced manufacturing costs across the plants.
Crop protection business achieved healthy turnover in export markets due to highdemand of its key molecule Mancozeb and better profitability facilitated by highermargins lower raw material and utilities cost and depreciating rupee. The improvedperformance of Technical segment partially cushioned the drop in domestic formulationsbusiness which was impacted by seasonal failure. The capacity augmentation projects wereundertaken at Sarigam unit in Gujarat and the plants have improved on effluent treatmentsystems. R&D product synthesis lab at Hyderabad worked closely in areas of improvingproduct quality process improvement product development (off patent and combinations)and building technical capabilities.
Specialty Nutrients business which comprise of Water Soluble Fertilizers (WSFs)Sulphur products and Micronutrients continued its shift towards crop based approach. Itlaunched crop specific product Speedfol Cotton which was well received by the market. Inaddition prilled variant of Potassium Nitrate and micronized sulphur were introduced toaddress the application related gaps. Brand building initiatives through crop focusedcampaigns received good mileage from the dealers and farmers.
The Organic manure SBU continues to be the market leader in the organized space andbusiness further consolidated its position by introducing value added granulated productofferings. While volumes remained at last year levels the SBU improved its sourcingefficiency and handling operations. With Government's increased focus towards Organicmanure promotion in form of market development assistance and organic farming Business iswell positioned to partner with the farming community to improve soil health and cropoutput.
The Retail SBU put up a creditable performance despite adverse seasonal conditionsimpacting sowings and agri input consumption in its operating areas of Andhra PradeshTelangana and Karnataka. Business improved its performance in non fertiliser segmentincreasing its share over the previous year. Inventory management field forceproductivity activities and cost optimization initiatives were undertaken to improveoperational efficiencies. Retail SBU expanded its digital presence to augment customerconnect product promotion & delivery approach. Business conducted more than 150webinars across the retail outlets that improved farmer reach and knowledge disseminationthrough agri experts. Nutrient recommendations based on soil maps through GromorNutrient Manager tool were extensively used to improve farm productivity. For itsinnovative approach towards plant nutrition the Company won prestigious Flame AsiaAwards 2016organized by Rural Marketing Association of India.
In SSP business post-acquisition of erstwhile Liberty Phosphate Ltd in 2013-14 theCompany has expanded its presence across western central and northern India. During theyear the Company improved its market share to 13.5 percent through its continued focustowards delivering quality solutions to the farming community. Quick test kits developedto demonstrate the `P' content in the product were aggressively promoted acrossthe locations to improve the quality awareness among the farmers. Business was certifiedfor Integrated Management System (ISO 9001 for Quality Management ISO 14001 forEnvironment Management and OSHAS 18001 for Occupational Health and Safety ManagementSystem) by British Standards Institution. Zincated SSP variant `Magik' wasintroduced and has received positive feedback from the market.
Overall your Company has recorded a total revenue of Rs. 11564 Crore. Profit for theyear before depreciation interest and taxation was Rs. 861 crore and Profit before taxwas Rs. 535 crore. Net Profit after tax was Rs. 361 crore.
Management Discussion & Analysis
The Management Discussion and Analysis Report highlighting the industry structure anddevelopments opportunities and threats future outlook risks and concerns etc. isfurnished separately and forms part of this Directors' Report.
Directors' Responsibility Statement
The Directors' Responsibility Statement pursuant to the provisionsof Section134(3)(c) and 134(5) of the Companies Act 2013 (the Act) is appended asAnnexure A to this Report.
Consolidated Financial Results
Consolidated Financial Statements incorporating the operations of the Company itsSubsidiaries Associates and Joint Venture Companies is appended. As required under theprovisions of Companies Act 2013 a statement showing the salient features of thefinancial statements of the subsidiaries associates and joint ventures is enclosed as AnnexureB to this Report.
The financial statements of the subsidiary companies will be made available to themembers of the Company and its subsidiary companies on request and will also be kept forinspection in the Registered Office of the Company.
Brief details of the performance of the subsidiaries of the Company are given below.
a) CFL Mauritius Limited:
CFL Mauritius Limited a wholly owned subsidiary incurred loss of US $ 0.04 million(equivalent to Rs. 0.23 crore) during the year ended December 31 2015. Primary source ofincome for this subsidiary is dividend income from Foskor (Pty) Ltd. and the subsidiarydid not receive any dividend from Foskor during the year 2015.
b) Parry Chemicals Limited (PCL):
PCL a wholly owned subsidiary of the Company earned a total revenue of Rs. 1.21 crorefor the year ended March 31 2016 and Profit after Tax was Rs. 0.49 crore.
c) Dare Investments Limited (DIL):
DIL a wholly owned subsidiary of the Company did not have any significant operationsand incurred a loss of Rs. 0.01 crore for the year ended March 31 2016.
d) Liberty Pesticides and Fertilisers Limited (LPFL):
LPFL a wholly owned subsidiary of the Company did not have any significant operationsduring the year 2015-16. It earned a profit of Rs. 0.11 crore for the year ended March 312016.
e) Coromandel Brasil Limitada (CBL):
CBL a Limited Liability Partnership owned 100% by the Company and its subsidiary CFLMauritius Ltd. is primarily engaged in getting product registrations in Brazil andprocuring orders for supplies from India. It incurred net loss of Brazilian Reals 0.19million (equivalent to Rs. 0.37 crore) for the year ended December 31 2015.
f) Sabero Organics America SA (SOAL)
SOAL is primarily engaged in getting product registrations in Brazil and procuringorders for supplies from India. It made a net profit of Brazilian Reals 0.03 million(equivalent to Rs. 0.06 crore) for the year ended December 31 2015.
g) Sabero Australia Pty Ltd. (SAPL)
SAPL did not have any significant operations during the year 2015-16. It incurred a netloss of AUD 0.03 million (equivalent to Rs. 0.17 crore) for the year ended March 31 2016.
h) Sabero Europe BV (SEBV)
SEBV is primarily engaged in getting product registrations in Europe and procuringorders for supplies from India. It did not have any significant operations during the yearended March 31 2016.
i) Sabero Argentina SA (SA)
SA is primarily engaged in getting product registrations in Argentina and procuringorders for supplies from India. It made a net profit of Peso 0.01 million (equivalent toRs. 0.01 crore) for the year ended December 31 2015.
j) Coromandel Agronegocios De Mexico SA de CV (CAM)
During the financial year name of subsidiary viz. Sabero Organics Mexico SA De CV waschanged to Coromandel Agronegocios De Mexico SA de CV. CAM is primarily engaged in gettingproduct registrations in Mexico and procuring orders for supplies from India. It made anet profit of Peso 3.56 million (equivalent to Rs. 1.44 crore) for the year ended December31 2015.
Joint Venture Companies
Brief details of the performance of the Joint Venture (JV) companies of the Company aregiven below:
a) Coromandel SQM (India) Pvt Ltd. (CSQM)
CSQM manufactures Water Soluble Fertilisers (WSF) at Kakinada Andhra Pradesh andoffers Speciality Nutrition Solutions to institutional clients. During the year the JVlaunched WSF product `Speedfol Cotton SP' and undertook efficacy trials fordeveloping other crop solutions. The JV Company has earned a total income of Rs. 45.84crore for the year ended March 31 2016 and the net Profit was Rs. 1.51 crore.
b) Yanmar Coromandel Agrisolutions Private Limited (YCAPL)
YCAPL a Joint venture company that commenced operations in July 2014 recorded a salesof Rs. 14.47 crore in FY 2015-16 and a net loss of Rs. 6.46 crore. The Company iscurrently in the business of importing and marketing of rice transplanters in the Indianmarket. With rising pressure on resources and significant benefits of mechanicaltransplanting over manual transplanting the sector offers a positive outlook. During theyear the JV Company has started a state of the art service center in West Godavaridistrict of Andhra Pradesh in order to provide efficient and timely after sales service.The JV company is also evaluating other products that are suitable for the Indian market.Coromandel holds 40% equity in the JV Company and the balance is held by Yanmar (40%) andMitsui (20%).
c) Coromandel Getax Phosphates Pte. Ltd (CGPL)
CGPL a Joint Venture Company based in Singapore was formed for leveragingopportunities for rock phosphate mining. It incurred a loss of US $ 0.10 million(equivalent to ` 0.67 crore) for the year ended March 31 2016.
The Board at its meeting held on April 27 2016 has decided to close this Joint venture(JV) as the JV could not achieve the objective of identifying opportunities for rockphosphate mining / sourcing even after a lapse of 8 years.
a) Sabero Organics Philippines Asia Inc (SOPA)
SOPA an associate company is based in Philippines and did not have any significantoperations during the year 2015-16.
a) Tunisian Indian Fertilisers S.A. Tunisia (TIFERT)
TIFERT a company based in Tunisia manufactures phosphoric acid which is a key rawmaterial for operating Phosphatic fertiliser plants. Your Company's strategicinvestment in TIFERT (15% equity) is aimed at securing uninterrupted supply of phosphoricacid for the Company's operations at Kakinada and Visakhapatnam. During the yearTIFERT could not operate at desired capacity due to lower supplies of phosphate rock onaccount of social unrest in the region. However the situation is beginning to improve andthe Plant operations remained uninterrupted during the last quarter of 2015-16 whichresulted in improved rock supplies and higher acid production. Coromandel has extendedtechnical assistance to the plant by providing Instrumentation support and undertakingimprovement jobs during the year.
b) Foskor (Pty) Limited South Africa (FOSKOR)
Your Company along with CFL Mauritius Limited holds 14% equity of Foskor (Pty)Limited. During the year Foskor production got impacted due to operational issues in theplant and union strike which disrupted the acid output. However the situation hasstabilized since and the plant is expected to improve its performance in the financialyear 2016-17.
Safety Health and Environment (SHE)
Your Company gives utmost importance to employee health and safety given the sensitivenature of operations that involve handling of chemical products. Company has put in robustprocesses and safety performance indicators to track its SHE performance. During the yearyour Company restricted the Total Recordable Injury Rate (TRIR) per million man hours atless than 1. In order to promote employees' involvement in safety management systemSHE performance indicators were linked with the employee performance management system.All the key manufacturing facilities of the Company are certified for Internationalstandards of Quality Safety and Health & Environment (ISO 9001 / ISO 14001 and OHSAS18001). The Company has voluntarily implemented Process Safety Management System (PSMS) toreduce Process hazardous incidents. Fertiliser sites periodically undergo PSMS audits byexternal experts and during the year achieved an audit score of 4/4 for its Visakhapatnamsite. Your Company continued its efforts to track health indicators of its operating staffworking in critical areas through its own occupational health centers. Your Company hasalso laid special emphasis on contract workmen safety training and encourages safe workculture through safety rewards.
Your Company maintained high standards of environmental performances with allmanufacturing facilities operating well within stipulated norms. Kakinada site and all SSPsites demonstrated Zero discharge during the year. To increase transparency strengthenthe environmental performance and standardise compliance through self-monitoring allmanufacturing sites have installed online effluent and emission monitoring devices thatcontinuously upload the data to Pollution Control Board websites which are available toall stakeholders. All manufacturing sites have also significantly contributed to increasein plantation area within the factory premises. Visakhapatnam site continued itscommitment towards Green Visakha an ambitious plantation project taken up bythe District authorities. During the year across the sites your Company has planted17000 units of tree and converted an approximate 30 acres of land as Green Belt.
Corporate Social Responsibility Initiatives
Corporate Social Responsibility (CSR) has been an integral part of your Company'sculture and the Company has been associated in the past directly and through AMMFoundation (an autonomous public charitable trust engaged in philanthropic activities inthe field of Education and Healthcare) for contributing towards society'sdevelopment. During the year your Company has undertaken various CSR projects in theareas of education health and community development targeting inclusive growth and socialcapital improvement. The Company has also created access to opportunities and resourcesthrough its economic development and infrastructure & environment support initiatives.In accordance with the CSR provisions in the Companies Act 2013 (Act) the Company hasformed a CSR Committee and a CSR Policy is in conformity with the provisions of the Act.The CSR Policy can be accessed on the Company's website at http://coromandel.biz/inv_investorsinformation.html. The projects undertaken during the year are in accordancewith Schedule VII of the Act. Details of composition of CSR Committee and CSR Projectsundertaken during the year and reasons for not spending the balance amount are given inthe Annexure C to this Report.
Your Company continues to receive many awards and accolades from industry associations.During the year the Company received the following awards/accolades:
CMO Asia Retail Excellence Awards - Retailer of the year (Rural Impact& CSR) and Retail Marketing Campaign of the Year (Organizational).
Awards from Rural Marketing Association of India - Gold Award for ROIConcept; Silver Award for Gromor Webinars and Bronze Awards for OrganicManure promotion and Customer Satisfaction Study.
National Awards from Public Relations Society of India in the categories ofBest Employee Communication and Best House Journal.
Commendation Award for the Kakinada Plant from Bureau of Energy Efficiency.
Best Performance for operating Phos Acid plant Award for the Vizag Plant fromFAI.
Best Plant Award for Vizag Unit - Energy Efficient Unit Award from CII.
Particulars of Loans Guarantees and Investments
Details of loans and guarantees given and investments made under Section 186 of theCompanies Act 2013 (the Act) are given in the Notes to the FinancialStatements.
The Company has not accepted any deposit from the public under Chapter V of theCompanies Act 2013 or under the corresponding provisions of Section 58A of the CompaniesAct 1956 since 2003 and no amount of principal or interest was outstanding as on theBalance Sheet date.
The paid up equity share capital of the Company as on March 31 2016 was Rs. 29.13crore. During the year the Company had allotted 70108 equity shares of Rs. 1 each underESOP Scheme 2007.
Internal Control Systems
The Company has adequate internal controls consistent with the nature of business andsize of the operations to effectively provide for safety of its assets reliability offinancial transactions with adequate checks and balances adherence to applicable statuesaccounting policies approval procedures and to ensure optimum use of available resources.These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis.
The Company has its own corporate internal audit function to monitor and assess theadequacy and effectiveness of the Internal Controls and System across all key processescovering various locations. Deviations are reviewed periodically and due complianceensured. Summary of Significant Audit Observations along with recommendations and itsimplementations are reviewed by the Audit Committee and concerns if any are reported toBoard.
Vigil Mechanism / Whistle Blower Policy
The Company has a Whistle Blower Policy which provides the employees customersvendors and directors an avenue to raise concerns on ethical and moral standards and legalprovisions in conduct of the business operations of the Company. It also provides fornecessary safeguards for protection against victimization for whistle blowing in goodfaith. The Vigil Mechanism is also placed on the website of the Company.
In accordance with Article 121 of the Company's Articles of Association read withSection 152 of the Act Mr. A Vellayan retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment. Mrs. Ranjana Kumar who wasappointed as an Independent Director by the shareholders at the Annual General Meetingheld on July 23 2014 for a period of two years has expressed her desire not to seekre-appointment. Mr. Uday Chander Khanna resigned from the Board on March 21 2016. TheBoard placed on record its deep appreciation of the valuable contribution made by Mr. UdayChander Khanna during his tenure as an Independent Director as the Chairman of the AuditCommittee and also as Chairman of the Board during July - October 2015. Mr. SameerGoel was appointed as an Additional Director and then as Managing Director of the Companywith effect from October 1 2015 for a period of five years subject to approval ofshareholders at the ensuing Annual General Meeting of the Company.
Mr. Sumit Bose was appointed as an Additional Director (Non-Executive Independent) ofthe Company with effect from March 21 2016. All the Independent Directors of the Companyhave given declarations under sub-section (6) of Section 149 of the Act and the same havebeen considered and taken on record by the Board.
In accordance with the provisions of Section 134 of the Act and Regulation 17 of theListing Regulations the Board has carried out evaluation of its own performance theperformance of Committees of the Board namely Audit Committee CSR Committee RiskManagement Committee Stakeholders Relationship Committee and Nomination and RemunerationCommittee and also the directors individually. The manner in which the evaluation wascarried out and the process adopted has been mentioned in the Corporate Governance Report.
Familiarisation Programme for Independent Directors
On their appointment Independent Directors are familiarized about the Company'soperations and businesses. Interaction with the Business Heads and key executives of theCompany is also facilitated. Detailed presentations on the business of each of theDivision are also made to the Directors. A manual containing all important Policies of theCompany is also given to the directors. Direct meetings with the Chairman and the ManagingDirector are further facilitated to familiarize him/her about the Company/its businessesand the group practices.
As part of the familiarization programme a handbook is provided to all Directorsincluding Independent Directors at the time of their appointment. The handbook provides asnapshot to the Directors of their duties and responsibilities rights appointmentprocess and evaluation compensation Board procedure and stakeholders' expectations.The handbook also provides the Directors with an insight into the Group's practices.The details of familiarisation programme as above are also disclosed on the Company'swebsite at http://coromandel.biz/Investorsinformation_IDFP
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management Personneland their remuneration. Salient features of the Remuneration Policy is set out in theCorporate Governance Report.
Risk Management Policy
The Company has constituted a Risk Management Committee. Details of constitution of theCommittee are set out in the
Corporate Governance Report. The Company has formulated a Risk Management Policy underwhich various risks associated with the business operations are identified and riskmitigation plans have been put in place details of which are set out in the CorporateGovernance Report / Management Discussion and Analysis Report.
Material Subsidiary Policy
Company has adopted a policy for determining material subsidiary in line with therequirements of the Listing Regulations/Listing Agreement. The Policy on MaterialSubsidiary is available on the website of the Company at http://coromandel.biz/pdf/InvestorsInformation/PolicyOnMaterialSubsidiary.pdf.
A calendar of Board meetings is prepared and circulated in advance to the Directors.During the year 2015-16 six Board Meetings were held the details of which are given inthe Corporate Governance Report.
Related Party Transactions
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. There were nomaterial related party transactions made by the Company with the Promoters Directors KeyManagerial Personnel or the Senior Management Personnel which may have a potentialconflict with the interest of the Company at large.
All related party transactions were placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee was obtained for the transactions which areforeseen and are in repetitive in nature. The related party transactions entered into arereviewed by an independent audit firm to confirm that they were in the ordinary course ofbusiness and at arm's length basis. The Company has formulated a policy for RelatedParty Transactions which has been approved by the Board and is placed on the website ofthe Company.
None of the Directors had any pecuniary relationship or transactions with the Companyexcept the payments made to them in the form of remuneration sitting fee and commission.
The Audit Committee comprises of four directors viz. Mr. Sumit Bose Chairman Dr. BVRMohan Reddy Mr. Prasad Chandran and Mr. M M Venkatachalam. All the recommendations madeby the Audit Committee were accepted by the Board.
M/s Deloitte Haskins & Sells Chartered Accountants were appointed as Auditors ofthe Company for a period of five years from the conclusion of the last Annual GeneralMeeting held on July 23 2014. As required under the provisions of Section 139 of the Acta resolution for the yearly ratification of their appointment is being placed before theshareholders for their approval.
Pursuant to Section 148 of the Act read with The Companies (Cost Records and Audit)Rules 2014 the cost records of the Company are required to be audited. Based on therecommendations of the Audit Committee your Board has appointed the following practicingCost Accountants Mr. V Kalyanaraman and Ms. Jyothi Satish to audit the cost records ofthe Company as per details given below:
|Name of the Cost Auditor ||Units covered by the Cost Auditor ||Audit fees |
| || ||Rs. in lakhs |
|Mr. V Kalyanaraman ||All units of the Company at Visakhapatnam Kakinada Ennore Ranipet (pesticides) Ankleshwar and Jammu ||7.00 |
|Ms. Jyothi Satish ||All units of the Company manufacturing Single Super Phosphate at Ranipet Udaipur Hospet Nandesari - Baroda Kota Raigad Nimrani Raebareili and the Pesticides Units in Sarigam and Dahej ||3.00 |
The Cost Audit Report for the year 2014-15 has been filed with Ministry of CorporateAffairs within the prescribed time limit as per the Act.
Particulars of Employees
A table containing the particulars in accordance with the provisions of Section 197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended as Annexure D to this Report.
A statement containing the name of every employee employed throughout the financialyear and in receipt of remuneration of ` 60 lakh or more or employed for part of the yearand in receipt of Rs. 5 lakh or more a month under Rule 5 (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed as AnnexureE to this Report.
Extract of the Annual Return
In accordance with Section 134 (3) (a) of the Act an extract of the Annual Return inthe prescribed format is appended as Annexure F to this Report.
The Company is committed to maintain high standards of Corporate Governance. Asstipulated under the requirements of the Listing Regulations a report on CorporateGovernance duly audited is appended as Annexure G for information of the Members.The requisite certificate from the Auditors of the Company confirming compliance with theconditions of Corporate Governance is attached to the Report on Corporate Governance.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board had appointed M/s. R Sridharan& Associates. Practicing Company Secretaries to undertake the secretarial audit ofthe Company for the financial year 2015-16. The report of the Secretarial Auditor isenclosed as Annexure H and forms part of this report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.
Key Managerial Personnel
Mr. Sameer Goel Managing Director Mr. S Sankarasubramanian Chief Financial Officerand Mr. P Varadarajan Company Secretary are the Key Managerial Personnel (KMP) of theCompany. Mr. Sameer Goel joined as Managing Director of the Company on October 01 2015.
Mr. S Govindarajan was appointed as Manager under the provision of Companies Act 2013effective from August 1 2015. He resigned as the Manager with effect from September 302015.
Conservation of energy technology absorption foreign exchange earnings and outgo
The particulars as prescribed under Sub-section (3) (m) of Section134 of the Act readwith Companies (Accounts) Rules 2014 are enclosed as Annexure I to this Report.
Employees Stock Option Scheme
The Company has Employee Stock Option Scheme 2007 and there has been no materialchange in the said Scheme during the year under review. The Scheme is in compliance withthe SEBI (Share Based Employee Benefits) Regulations 2014. The disclosures required to bemade under Regulation 14 of the said Regulations are available on the Company'swebsite.
The Directors acknowledge and would like to place on record the commitment anddedication on the part of the employees of your Company for their continued efforts inachieving good results. The Directors also wish to acknowledge and record theirappreciation of the continued support and assistance received by the Company from StateBank of India and other Banks financial institutions mutual funds as well as fromvarious Government bodies both at the Centre and the State.
| ||On behalf of the Board |
|Place: Secunderabad ||A Vellayan |
|Date: April 27 2016 ||Chairman |
Information under Section 134(3) (m) of the Companies Act 2013 read with Rule 3 of theCompanies (Accounts) Rules 2014 and forming part Report to Directors.
A. CONSERVATION OF ENERGY
With the continued focus on energy conservation the following initiatives wereundertaken by the Company during the year 2015-16 at different plants which led tooperational improvement and yielded considerable energy savings during the year.
During the year a special drive was taken up to improve the operational efficienciesin-terms of reduction of specific energy consumption waste elimination and improvespecific steam/power generation. This has led to various improvement projects and hasyielded in considerable energy savings during the year.
The Company has reduced the specific power consumption as compared to previousyears' norm at the Visakhapatnam Plant by various initiatives and optimized run ofplant even at lower capacity utilisation. Motor audit was conducted at Kakinada andidentified low efficiency motors for phase wise replacement commencing from 2016-17.Energy Efficient best practices are adopted across all manufacturing units like installingVariable Frequency Drives (VFD) Energy Efficient lighting system and Energy Efficient LTMotors. As part of Hud-Hud restoration work at Visakhapatnam Plant the Company hasinstalled energy efficient lighting in the plant which would cover approx. 40% of totallighting system. Installation of such energy efficient lighting system is also being takenup in phased manner in Ennore and Kakinada Units.
Economisers 1 and 2 were replaced at Vizag to improve the steam generation per ton ofSulphuric acid produced. This would help in additional steam generation of 4 MT per hoursat full load there by increasing the power produced substantially.
Details of Capital Investment made by the Company on Energy Conservation measures atits various plants are as follows:
| || ||Investment amount |
|Location ||Measures undertaken ||in Rs. Lakhs. |
|Vizag ||Economisers I &II replacement ||1000.00 |
|Kakinada ||Energy Efficient LT Motors ||7.23 |
|Ennore ||Energy efficient LT motors ||19.00 |
|Ennore ||Solar lighting ||5.00 |
|Ennore ||Ball mill bypass system for fine rock ||8.50 |
|Ennore ||ACC condenser for CPP ||245.00 |
B. TECHNOLOGY ABSORPTION
a. New product UAP 20:20:0:13S with Shell technology was successfully established atVizag. This is the second product with Shell technology after 24:24:0:8S from Vizag plant.
b. Replacement of PLC system with Distribution Control system was done at Kakinada forTrains A&B for better process control during the year. With this all the 3 trains atKakinada are now operated with Distributed Control system (DCS).
A phosphoric acid plant simulator was installed at Vizag plant to improve the trainingof operating team. With this simulator we have substantially cut down the training timefor operators and make them ready for independently handing operations and emergencies.
RESEARCH AND DEVELOPMENT
The Company continued its thrust on development of new products fortified withsecondary and micronutrients such as sulphur and zinc. SSP fortified zinc was launched in2015-16. The Company expanded the Agronomic Research activities in the States of AndhraPradesh Telangana and Maharashtra with a aim of testing the performance of new productsunder different field conditions. The Company initiated large number of research projectsat State Agricultural Universities and Central Research Institutes. A Quick Test Kitdeveloped by the Company for checking the quality of SSP in the field was rolled outsuccessfully.
During the year 2015-16 the Company strengthened its R&D focus in crop protectionbusiness towards product development and process improvement. Company operated through itsthree in house R&D centers at Ankleshwar Sarigam and Hyderabad for developingnutrient and crop protection solutions. While Hyderabad R&D center focused ondevelopment of new off patent molecules Ankleshwar and Sarigam R&D centers workedtowards process improvement of the existing products. Hyderabad center also plans toconvert its Analytical laboratory into a Good Laboratory Practice (GLP) Center which willhelp the Business to improve its registration capabilities. Our R&D efforts havehelped in introduction of new combination products for crop protection and fertilisergrades and Company plans to leverage these centers to develop competitive advantagethrough cost reduction and unique product addition.
Expenditure on R & D
| || ||Rs. In Lakhs |
| ||2015-16 ||2014-15 |
|Revenue Expenditure ||809 ||631 |
|Capital Expenditure ||112 ||386 |
|Total ||921 ||1017 |
|C. FOREIGN EXCHANGE EARNED AND OUTGO || || |
| || ||Rs. In Lakhs |
| ||2015-16 ||2014-15 |
|Foreign Exchange Earned ||48749 ||57084 |
|Foreign Exchange Outgo ||735797 ||750958 |