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Coromandel International Ltd.

BSE: 506395 Sector: Agri and agri inputs
NSE: COROMANDEL ISIN Code: INE169A01031
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OPEN 521.00
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VOLUME 16466
52-Week high 542.90
52-Week low 229.50
P/E 21.93
Mkt Cap.(Rs cr) 14,823
Buy Price 507.30
Buy Qty 56.00
Sell Price 0.00
Sell Qty 0.00
OPEN 521.00
CLOSE 516.30
VOLUME 16466
52-Week high 542.90
52-Week low 229.50
P/E 21.93
Mkt Cap.(Rs cr) 14,823
Buy Price 507.30
Buy Qty 56.00
Sell Price 0.00
Sell Qty 0.00

Coromandel International Ltd. (COROMANDEL) - Director Report

Company director report

Directors' Report

Your Board of Directors have pleasure in presenting the 55th Annual Report togetherwith the Audited Financial Statements for the financial year ended March 31 2017.

Summary of Financial Results
Rs. in Crore
2016-17 2015-16
Revenue:
From Operations 10185 11625
Other 54 65
Total Revenue 10239 11690
Profit:
Profit before Interest Depreciation and Taxation 1036 831
Less: Interest 224 221
Depreciation 100 106
Profit Before Exceptional Items & Tax 712 504
Exceptional Item - 25
Profit Before Tax 712 529
Less: Provision for Tax 235 171
(including deferred tax credit)
Profit After Tax 477 358

Indian Accounting Standards

The Ministry of Corporate Affairs (MCA) vide its notification in the Offical Gazzettedated February 16 2015 notified the Indian Accounting Standards (Ind AS) applicable tocertain classes of companies. Ind AS has replaced the earlier Indian GAAP prescribed underSection 133 of the Companies Act 2013 read with rule 7 of the Companies (Accounts)Rules 2014. For the Company Ind AS is applicable from April 1 2016 with a transitiondate of April 1 2015.

The following are the areas which had an impact on account of transition to Ind AS:

• Fair valuation of certain financial instruments

• Employee costs pertaining to defined benefit obligations

• Discounting of certain long-term liabilities

• Share-based payments

• Accounting for joint ventures

The reconciliations and descriptions of the effect of the transition from Indian GAAPto Ind AS has been provided in Note 48 and 49 in the notes to the standalone andconsolidated financial statements respectively.

Transfer to Reserves

The Company proposes to transfer Rs. 300 Crore to the General Reserves of the Companyand retain Rs. 706.76 Crore in the Statement of Profit and Loss.

Dividend

Your Directors are pleased to recommend a Dividend of Rs. 5/- per equity share of Rs.1/- each for the year 2016-17.

Operations

It has been an eventful year for the Indian Agriculture which benefitted from a normalsouth west monsoon after experiencing two consecutive droughts in previous seasons.Improved residual moisture and higher reservoir levels aided in higher sowings and cropacreage went up by 5.5–6%. Though the North East monsoon which significantly impactsour peninsular Indian States were down by 45% during Rabi overall agriculture scenarioremained positive. As per Reserve Bank of India's Monetary Policy Report agriculturesectorial growth is projected at 4.1% for the year 2016-17 (0.8% last year) driven byrecord food grain output (273 million tons) and improved livestock performance. The yearwas marked by a radical initiative taken by the Government to reform the economy bydemonetizing high denomination currencies. While the informal/cash-intensive sectors wereaffected by the demonetization overall impact has been redistributive. For agriculturekey indicators of area sown cropping pattern and productivity have shown a neutral topositive behaviour over the said period though perishable commodities showed drop inarrivals and market prices.

On the reforms front a slew of measures targeting soil health farm infrastructuremechanization technology interventions for price discovery and damage assessment for cropinsurance were introduced during the year. These are steps in the right direction and willfacilitate farmer's income stability and productivity improvements going forward. On thefertiliser policy front to ensure subsidy reaches the target farmers Direct BenefitTransfer (DBT) in Fertiliser was rolled out on a pilot basis in 16 districts across India.Retail stores of the Company in the district of Ranga Reddy in Telangana and West Godavariand Krishna districts in Andhra Pradesh were part of the said pilot project. Though sometechnology gaps persist in implementation it is a welcome step for the farmers and theindustry. Going forward your Company anticipates the subsidies to be directly passed onto the farmers who can make an informed choice based on the crop needs and health statusof the soil.

During the year 2016-17 fertiliser industry benefitted from a benign raw materialenvironment that made the domestic manufacturing viable. Overall DAP production was up by13% partially substituting the drop in imports. Industry on its part passed on thegains from soft raw material prices to the farmers - overall Phosphatics prices werebrought down by 15%-20%. This along with favourable South West monsoon aided inliquidation of the channel inventory. Though the Phosphatics sales were down by 8% theoverall liquidation profile for the industry improved considerably.

Buoyed by the positive business sentiments your Company improved its financialperformance during the year. In line with the Company's vision to be a leader in farmsolutions business Coromandel took gentle stride towards developing a differentiatedbusiness model. Towards this business moved closer to the customers by developing anagronomist based integrated nutrient management structure. Fertiliser business improvedits sourcing efficiency and resorted to strategic buying of raw materials. Further astable exchange rate which strengthened towards the end of the year added to the costcompetitiveness of the business. New capacities were added in crop protection spaceproviding Coromandel the scale and advantage of demand situation in the internationalmarkets. The supply chain and process efficiencies were streamlined to improve operationalflexibility in Retail and SSP businesses. Crop specific product introductions were made inSpecialty SBU in line with Business's shift towards crop based approach. During the yearyour Company has prepaid its long term loans thereby making it a zero long term debtcompany. Overall it has been a satisfying year where inspite of moderation in salesvolumes your Company strengthened its processes and stakeholder engagement to improve theBusiness performance.

Phosphatic fertiliser business of the Company though down by 7% in volume terms duringthe year 2016-17 continued to remain the largest manufacturer and marketer of NPKfertilisers in private sector in India maintaining a market share of 14.5%. In the wakeof high channel inventory at the beginning of the year and sub normal North East monsoonyour Company consciously moderated its sales during the 2nd half of the year. Continuousfocus of the Business towards improving liquidation has led to normalization of channelinventory as compared to last year levels. Over the last few years your Company haspositioned itself as a unique solution provider offering technologically superiorproducts- two unique grades introduced in the year 2015-16 demonstrated significant valueproposition to the farmers. Further the branding and marketing initiatives werestrengthened to promote the concept and that has resulted in improving share of uniquegrades to 33% of the Phosphatics sales. Customer centric and channel engagementinitiatives were taken forward during the year by leveraging technology tools and agriextension services. With likelihood of DBT getting implemented pan India in 2017-18Business has initiated steps towards improving the customer connect by strengthening themarketing structure and increasing channel reach.

On the Operations front the Company's continued focus and investments towardsstrengthening plant infrastructure process and behavioural safety has resulted inFertiliser business achieving its best ever safety performance. Overall Total RecordableInjury Rate (TRIR) has been brought down considerably in the fertiliser manufacturinglocations. Process Safety Management System (PSMS) adopted across the units last yearimproved on its performance scores through strengthening safety processes and employeetraining.

On the production front the manufacturing volumes remained at last year levels of 24.1Lakh tons and the Company has not resorted to any imports during the year. Availability ofPhosphoric Acid improved considerably through combination of higher captive productionalternate rock/acid sourcing improved global availability and higher offtake from Foskor.In order to achieve self-sufficiency in captive Phosphoric Acid production at itsVishakhapatnam unit your Company has plans to augment its acid production capacity. Inrelation to this the Company successfully completed the public hearing for the proposedexpansion.

Your Company's Crop Protection Business had a strong year benefitting from softness inraw materials and utilities cost and improved demand for its key molecule Mancozeb indomestic and international markets. During the year your Company expanded its Mancozebproduction capacities through debottlenecking at Sarigam unit and brownfield expansion atDahej unit. Company's branded formulation business was partially impacted by challengingmarket conditions in its key operating markets. However two new product launches alongwith scaling up of captive generics volumes improved the overall Business performanceduring the year. On the operations front cost reduction initiatives undertaken across theBusiness units improved the production efficiencies and reduced manufacturing costs.R&D product synthesis lab at Hyderabad set up in 2015 has started to deliverresults spanning in the areas of process improvement and product development. SpecialtyNutrients business which comprises of Water Soluble Fertilisers (WSFs) Sulphur productsand Micro nutrient segments showed steady growth over last year as a result of growingWSF market and favourable seasonal conditions. During the year Business introduced newmicronized sulphur variant to expand its product portfolio. Further it continued its cropbased marketing approach launching crop specific products for potato and pulses segmentwhich were well accepted by the farmer community. With the Government's focus shiftingtowards improving water and nutrients use efficiency by making higher budgetary allocationtowards micro irrigation Business foresees significant growth opportunities goingforward. Your Company's Organic manure business responded positively to the call ofGovernment of India to bring focus to soil health through promoting City Compost manureand marketed nearly 20000 tons during the year making it the largest seller of CityCompost in the country. To expand its presence in niche organic product segments Businessintroduced two new grades which have been well received by the market. Organic Businessforayed into new channels through corporate tie ups and institutional participation andis exploring the possibility of getting in to the certified product segment.

Retail Business which operates through a network of around 800 centers spread acrossAndhra Pradesh Telangana and Karnataka had an impressive performance in 2016-17 inspiteof tough conditions in its operating geographies. Business expanded its digital footprintinto areas of marketing communication knowledge dissemination employee productivitycustomer analytics and inventory management to improve business efficiencies. Due to thecash based nature of the Business the operations were partially impacted during thedemonetization period; however it swiftly adapted to the changed scenario by installingPoS machines at all its centers within a short span of time and organizing awarenesscampaigns among the farmers which resulted in cashless sales share moving upconsiderably. SSP business environment remained largely subdued during the year underreview especially in the first half owing to subsidy drop and high channel inventorystocks slowing down the demand prospects. Business took a conscious call to restrict itsSSP sales volumes to effectively manage its cash flows and focused on improving itsoperating efficiencies through a combination of strategic sourcing process improvementsand plant rationalization. Business continued its focus towards creating qualitydifferentiation and towards it set up quick test centers across major operating marketsand carried out 750 quality tests during the year 2016-17. New value added productZincated SSP was introduced during the year and business plans to scale it up in targetedcrop segments.

Overall your Company has recorded a total turnover of Rs. 10239 Crore. Profit for theyear before depreciation interest and taxation was Rs. 1036 Crore and Profit before Taxwas Rs. 712 Crore. Net Profit after Tax was Rs. 477 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 provisions of Section 134(3)(c) and 134(5) of the Companies Act 2013 is appended as Annexure 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 at the Registered Office of the Company.

Subsidiary Companies:

Brief details of the performance of the subsidiaries of the Company are given below: a)CFLMauritius Limited:

CFLMauritius Limited a wholly owned subsidiary incurred loss of $0.04 million(equivalent to Rs. 0.25 Crore) during the year ended December 31 2016. Primary source ofincome for this subsidiary is dividend income from Foskor (Pty) Limited and the subsidiarydid not receive any dividend from Foskor during the year 2016. b) Parry Chemicals Limited(PCL):

PCL a wholly owned subsidiary of the Company earned a total revenue of Rs. 1.11 Crorefor the year ended March 31 2017 and Profit after Tax was

Rs. 0.34 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 2017. d) LibertyPesticides and Fertilisers Limited (LPFL):

LPFL a wholly owned subsidiary of the Company did not have any significant operationsduring the year 2016-17. It earned a profit of

Rs. 0.12 Crore for the year ended March 31 2017. e) Coromandel Brasil Limitada (CBL):

CBL a Limited Liability Partnership owned 100% by the Company and its subsidiaryCFLMauritius Limited is primarily engaged in getting product registrations in Brazil andprocuring orders for supplies from India. It incurred net loss of Brazilian Reals 0.05million (equivalent to

Rs. 0.10 Crore) for the year ended December 31 2016. f) Sabero Organics America SA(SOAL):

SOAL is primarily engaged in getting product registrations in Brazil and procuringorders for supplies from India. It incurred net loss of Brazilian Reals 0.49 million(equivalent to Rs. 0.95 Crore) for the year ended December 31 2016. g) Sabero AustraliaPty Limited (SAPL):

SAPL did not have any significant operations during the year 2016-17. It made a netprofit of AUD 0.01 million (equivalent to Rs. 0.05 Crore) for the year ended March 312017. 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 2017.

i) Sabero Argentina SA (SA):

SA is primarily engaged in getting product registrations in Argentina and procuringorders for supplies from India. It did not have any significant operations during the yearended December 31 2016. j) Coromandel Agronegocios De Mexico SA de CV (CAM):

CAM is primarily engaged in getting product registrations in Mexico and procuringorders for supplies from India. It made a net profit of Peso 1.21 million (equivalent toRs. 0.44 Crore) for the year ended December 31 2016.

Joint Venture Companies

Brief details of the performance of the Joint Ventures (JV) of the Company are givenbelow:

• During the year under review Coromandel Getax Phosphates Pte. Limited a JointVenture based in Singapore was closed as the JV could not achieve the objective ofidentifying opportunities for rock phosphate mining / sourcing even after a lapse of 8years. a) Coromandel SQM (India) Pvt Limited (CSQM):

CSQM a joint venture between Coromandel and SQM manufactures Water SolubleFertilisers (WSF) at Kakinada Andhra Pradesh and offers Specialty Nutrition Solutions toinstitutional clients. During the year the JV launched two new crop specific WSF product‘Speedfol Pulses SP' and ‘Speedfol Potato SP' and undertook field efficacytrials for developing other crop solutions in horticulture space. On the manufacturingfront improved plant throughput and market demand for WSFs led to 46% higher productionduring the year. The JV has earned a total income of Rs. 55.28 Crore for the year endedMarch 31 2017 and the net Profit was Rs. 3.64 Crore. b) Yanmar Coromandel AgrisolutionsPrivate Limited (YCAPL):

YCAPL a joint venture company that commenced operations in July 2014 recorded salesof Rs. 21.27 Crore in FY 2016-17 and a net loss of

Rs. 6.19 Crore. The company is currently in the business of importing and marketing ofagri machinery in the Indian market. During the year the JV introduced combine harvesterand new variant in rice transplanter segment which have received positive response fromthe market. The JV launched its second Agri-Support Centre in Tanjore Tamil Naduinaddition to its facility in Tadepalligudam Andhra Pradesh to strengthen its servicecapability and after sales support. Further plans of expansion are under pipeline forlaunch of new Agri-Support Service Centre in other States. Coromandel holds 40% equity inthe JV and the balance is held by Yanmar (40%) and Mitsui (20%).

Associate Company a) Sabero Organics Philippines Asia Inc (SOPA):

SOPA an associate company is based in Philippines and did not have any significantoperations during the year 2016-17.

Strategic Investment 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 strategic investmentin TIFERT (15% equity) is aimed at securing uninterrupted supply of phosphoric acid forCompany's operations at Kakinada and Visakhapatnam. During the year TIFERT could notoperate at desired capacity due to local disturbances and technical problems at the Plant.The lower capacity utilization impacted the liquidity position of TIFERT resulting indelayed payment of loan installment due in March 2017 to the lenders. As a result thelenders issued an Acceleration Notice followed by a call notice to the shareholders ofTIFERT calling upon them to pay the loan outstanding in proportion of their respectiveshareholding (Coromandel's share: USD 35.25 million). Subsequent to issuance ofAcceleration Notice TIFERT paid the loan instalment on March 30 2017. The shareholders(Tunisian and Indian) are in discussions with the lenders to resolve the situationamicably as TIFERT plans to improve its capacity utilization through ensuring businesscontinuity during 2017-18 and beyond. Towards this the shareholders of TIFERT haveextended support to scale up phosphoric acid production and improve plant throughput. b)Foskor (Pty) Limited South Africa (FOSKOR):

Your Company along with CFLMauritius Limited holds 14% equity of Foskor (Pty)Limited. During the year Foskor's production improved considerably and plant achievedconsistency in production numbers. Coromandel extended continuous support to Foskor interms of providing preventive maintenance ensuring spares availability and recruitment ofkey personnel.

Safety Health and Environment (SHE)

Your Company gives utmost importance to employees health and safety given thesensitive nature of operations that involves handling of chemical products. Company hasput in robust processes and safety performance indicators to track its SHE performance.During the year your Company demonstrated its commitment towards ensuring employee safetyand the Total Recordable Injury Rate (TRIR) per million man hours has been restrictedbelow 1 levels (0.73). Process Safety Management System (PSMS) were strengthened acrossthe fertiliser units – HAZOP studies Root Cause Analysis Safety processstandardization and PSM training were carried out- resulting in improvement in scoresacross the locations.

Your Company has demonstrated consistent progress in key environmental performanceindicators including reducing air emissions waste water generation hazardous andnon-hazardous wastes generation and natural resource management by implementing 4Rapproach - Replace Reduce Reuse and Recycle. Your Company has established theEnvironmental Management System (EMS) ISO 14000-certified with defined processes andprocedures for identifying evaluating and reducing the environmental impacts whilemaintaining the operating efficiency and ensuring regulation compliance. All manufacturingsites undergo Environmental Impact assessment to understand the long term impact ofmanufacturing activities. During the year your Company's commitment towards environmentremained firm- Green belt coverage in the key manufacturing sites stood between 25% to 50%levels. Your Company has planted about 8800 saplings across its manufacturing sites incollaboration with local Forest Department authorities and Social Forest Conservationagencies bringing an additional 19 acres under the 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 thefield of Education and Healthcare) for contributing towards society's development. Duringthe year your Company has undertaken various CSR projects in the areas of educationhealth and community development targeting inclusive growth and social capitalimprovement. Coromandel Girl Child Education Scheme which offers economic assistance toIX & X standard students was relaunched and expanded coverage to 2120 girls in 857schools. On the health front Coromandel Medical Centre and Mobile van facilities wereintroduced at Sarigam which catered to the medical needs of nearly 11000 communitymembers. Going forward your Company plans to address the health needs includingdiagnostic facilities and an out-patient facility by seting up a hospital at Kakinada.Coromandel has also created access to opportunities and resources through its economicdevelopment and infrastructure & environment support initiatives. In accordance withthe provisions of Section 135 of the Companies Act 2013 the Company has formed a CSRCommittee and a CSR Policy is in conformity with the provisions of the Act. The CSR Policycan be accessed on the Company's website at http://www.coromandel. biz/csr_policy.html.The projects undertaken during the year are in accordance with Schedule VII of the Act.Details of composition of CSR Committee and CSR Projects undertaken during the year andreasons for not spending the balance amount are given in Annexure C to this Report.

Awards/Recognition

Your Company has won various external recognitions at National and Global level for thepeople practices in the areas of Employee Connect Total Quality Management CSR andLabour management initiatives mentioned as under:

Manufacturing: o Best Management Award from Labour department of Government ofAndhra Pradesh for Vizag and Kakinada Plants May 2016 o Best operating Phosphoric acidfor the Vizag plant for the year 2015-16 by Fertiliser Association of India o‘Sustainable Waste & Resource Management Award' during India SustainabilityLeadership Summit–2016 o CII Energy Efficient Unit Award 2016 for VizagPlant-consecutively for 3 years.

• Employee Involvement in TQM Initiatives: o Strong commitment award for 5SSustenance level at Vizag Unit ABK-AOTS Tamil Nadu Centre o Excellence in SuggestionScheme under Fertilizer Industry 2nd Rank Indian National Suggestion Scheme Associationo Excellence and Gold Awards for Small Group Activity Projects from Quality Circle Forumof Indian Regional and National Chapters

• Corporate o ICAI Award for Excellence in Financial Reporting for Annual Report2015-16 o Award for 'Chronicle' in Best Employee Communication Category from PublicRelations Society of India (PRSI) o Best House Journal Category for ‘Voice' from PRSIas well as from Association of Business Communicators of India (ABCI) o Award for'Corporate Social Responsibility Brochure Design Communication' in Best Brochure DesignCommunication Category from ABCI o Global Award of Distinction (Silver) for in-housemagazine ‘Voice' Distinction for 'Voice' Cover page from Academy of Interactive& Visual Arts New York.

Particulars of Loans Guarantees and Investments

Details of loans and guarantees given and investments made under Section 186 of theCompanies Act 2013 are given in the Notes to the Financial Statements.

Public Deposits

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.

Share Capital

The paid up equity share capital of the Company as on March 31 2017 was

Rs. 29.17 Crore. During the year the Company had allotted 348662 equity shares ofRs. 1 each under ESOP Scheme 2007.

Postal Ballot-2016

During the year under review shareholders have approved following business throughPostal ballot (including e-voting) on January 11 2017 by way of special resolution withrequisite majority: a) Approval for alteration of Articles of Association of the Companyfor adoption of new set of Articles of Association in alignment with the Companies Act2013. b) Approval for Employee Stock Option Plan 2016 (‘ESOP 2016') and grant ofStock Options to the employees of the Company under the ESOP 2016. c) Approval for grantof Stock Options to the Employees of Subsidiary Companies of the Company under EmployeeStock Option Plan 2016.

Internal Control Systems and their adequacy

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.

Policy on prevention of Sexual Harassment

The Company has in place Prevention of Sexual Harassment Policy (POSH) in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Compliance Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees are covered under thisPolicy. During the year 2016-17 there were no complaints received by the ICC.

Directors

In accordance with Article 17.29 of the Company's Articles of Association read withSection 152 of the Act Mr. V Ravichandran retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment. Mrs. Nirupama Raowas appointed as an Additional Director (Non-Executive Independent) of the Company witheffect from September 05 2016. Mrs. Ranjana Kumar ceased to be an Independent Director ofthe Company on completion of her term on July 22 2016.

All the Independent Directors of the Company have given declarations under subsection(6) of Section 149 of the Act and the same have been considered and taken on record by theBoard.

Board Evaluation

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. Pursuant to guidance note of SEBI on BoardEvaluation the forms used for evaluation exercise were reviewed and revised by theNomination and Remuneration Committee and the evaluation process was carried out. Themanner in which the evaluation was carried out and the process adopted has been mentionedin 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 for the new appointee to familiarize him/her about theCompany/its businesses and the group practices. As part of the familiarization programmea handbook is provided to all the Directors including Independent Directors at the time oftheir appointment. The handbook provides a snapshot to the Directors of their duties andresponsibilities rights appointment process and evaluation compensation Boardprocedure and stakeholders' expectations. The handbook also provides the Directors with aninsight into the Group's practices. The details of familiarisation programme as above arealso disclosed on the Company's website.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Salient features of the Remuneration Policy is set out in the CorporateGovernance Report. The Remuneration Policy is available on the Company's website athttp://www.coromandel.biz/csr_policy.html.

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 aRisk Management Policy under which various risks associated with the business operationsare identified and risk mitigation plans have been put in place details of which are setout in the Corporate Governance Report/Management Discussion and Analysis Report.

Material Subsidiary Policy

The Company has adopted a policy for determining material subsidiary in line with therequirements of the Listing Regulations. The Policy on Material Subsidiary is available onthe website of the Company at http://coromandel.biz/pdf/InvestorsInformation/PolicyOnMaterialSubsidiary.pdf.

Dividend Distribution Policy

The Company has adopted Dividend Distribution policy in line with the requirements ofListing Regulations 2015. The Dividend Distribution Policy is available on the website ofthe Company athttp://coromandel.biz/pdf/2016-2017/InvestorsInformation/DividendDistributionPolicy.pdf

Board Meetings

A calendar of Board meetings is prepared and circulated in advance to the Directors.During the year 2016-17 seven 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 in the ordinary course of business. There were no material relatedparty transactions made by the Company with the Promoters Directors Key ManagerialPersonnel or the Senior Management Personnel which may have a potential conflict with theinterest 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 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 Policy on Related Party Transaction is availableon the Company's website at http://www.coromandel.biz/pdf/InvestorsInformation/RPT_Policy.pdf.

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.

Audit Committee

The Audit Committee comprises of Mr. Sumit Bose Chairman Dr. BVR Mohan Reddy Mr.Prasad Chandran and Mr. M M Venkatachalam. All the recommendations made by the AuditCommittee were accepted by the Board.

Auditors

M/s Deloitte Haskins & Sells Chartered Accountants were appointed as Auditors ofthe Company for a period of five years from the conclusion of the Annual General Meetingheld on July 23 2014. As required under the provisions of Section 139 of the Act aresolution for the yearly ratification of their appointment is being placed before theshareholders for their approval.

Cost Auditors

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 to audit the cost records of the Company as per details given below:

Name of the Cost Units covered by Audit Fees
Auditors the Cost Auditors (Rs. in Lakhs)
Mr. V Kalyanaraman All units of the Company at 7.00
Visakhapatnam Kakinada and
Ennore
Mrs. Jyothi Satish All units of the Company 4.00
manufacturing Single Super
Phosphate at Ranipet Udaipur
Hospet Nandesari – Baroda Kota
Raigad Nimrani Raebareili and the
Pesticides Units in Sarigam Dahej
Ranipet Ankleshwar and Jammu

The Cost Audit Report for the year 2015-16 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 employee employed throughout the financial year andin receipt of remuneration aggregating Rs. 10200000 or more and top 10 employees interms of remuneration drawn under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure E tothis Report.

Extract of the Annual Return

In accordance with Section 134(3)(a) of the Act an extract of the Annual Return in theprescribed format is appended as Annexure F to this Report.

Corporate Governance

The Company is committed to maintain the highest 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.

Secretarial Audit

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 2016-17. 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.

Conservation of energy technology absorption foreign exchange earnings and outgo.

The particulars as prescribed under Sub-section (3) (m) of Section 134 of the Act readwith Companies (Accounts) Rules 2014 are enclosed as Annexure I to this Report.

Employee Stock Option Plans

Employee Stock Option Scheme 2007 – ESOP 2007

The Company had in the past approved an Employee Stock Option Scheme 2007 (ESOP Scheme2007) under which employees were granted Options. The Company made grants under the saidScheme during the period 2007 to 2011. Number of Options outstanding as on date under theESOP Scheme 2007 are 661182. It is not proposed to make any further grants under ESOPScheme 2007.

Employee Stock Option Plan - ESOP 2016

The Shareholders have through Postal Ballot on January 11 2017 authorized theBoard/Nomination and Remuneration Committee to issue to the employees such number ofOptions under the ESOP 2016 as would be exercisable into not exceeding 14581000 fullypaid-up equity shares of Rs. 1/- each in the Company.

The Nomination and Remuneration Committee is empowered to formulate detailed terms andconditions of the ESOP Scheme 2016 administer and supervise the same. The specificemployees to whom the Options would be granted and their eligibility criteria would bedetermined by the Nomination and Remuneration Committee at its sole discretion. Furtherthe Nomination and Remuneration Committee is empowered to determine the eligiblesubsidiary companies whether existing or future whose employees will be entitled tostock options under this Scheme. Options granted under this ESOP 2016 would vest on orafter 1 (one) year from the date of grant but not later than 4 (four) years from the dateof grant of such Options or any other terms as decided by the Nomination and RemunerationCommittee. The Company has granted 2174500 options to the employees during the yearunder ESOP 2016.

The disclosure required to be made under Regulation 14 of the said Regulations isavailable on the Company's website at http://www.coromandel.biz/inv_financial.html.

Business Responsibility Report

Pursuant to Regulation 34 of Listing Regulations the Company has prepared the BusinessResponsibility Report in line with business principles as provided in the BusinessResponsibility Policy adopted by the Company. Business Responsibility Report is enclosedas Annexure J to this Report and the same is also available on the website of theCompany at http://coromandel.biz/inv_report.html.

Acknowledgement

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 28 2017 Chairman