To the Members
Your Directors have pleasure in presenting the Thirty Seventh Annual Report togetherwith Audited Accounts of the Company for the Financial Year ended 31st March2017.
The summarized financial results for the year are as under:
(Rs. in Lacs)
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-161 |
|Total Revenue (including Other Operating Revenues) ||425725. 39 ||446851.61 ||437812.72 ||453882.14 |
|Profit Before Tax (PBT) ||22329.13 ||16750.71 ||23134.81 ||17711.33 |
|Less: a) Current Tax (Net) ||6513.14 ||4920.00 ||5549.80 ||6134.76 |
|b) Deferred Tax ||(199.43) ||(152.19) ||(216.93) ||(146.29) |
|Profit for the year before Minority Interest ||16015.41 ||11982.80 ||17570.88 ||11565.80 |
|Minority Interest ||NA ||NA ||40.13 ||(61.26) |
|Net Profit / (Loss) for the period ||16015.41 ||11982.80 ||17530.75 ||11627.06 |
|Total Comprehensive Income ||15806.48 ||12071.30 ||17321.82 ||11712.90 |
|Add: Surplus brought forward ||114687.82 ||108195.82 ||108188.36 ||102929.22 |
|Amount available for Appropriations ||130494.30 ||120267.12 ||125510.18 ||114642.12 |
|Appropriations: || || || || |
|a) Transferred to Debenture Redemption Reserve ||1250.00 ||(3104.13) ||1250.00 ||(3104.13) |
|b) Transferred to General Reserve || ||- || ||- |
|c) Dividend on Equity Shares (Net) ||- ||8511.33 ||- ||8611.34 |
|d) Tax on Proposed Dividend (Net) ||- ||172.09 ||5.23 ||946.30 |
|Surplus carried to Balance Sheet ||129244.32 ||114687.82 ||124255.19 ||108188.36 |
STATE OF AFFAIRS OF THE COMPANY
Your Company has achieved the top line of ' 4257.25 Crore (including '1726.21 Crore from trading operations) during the year under review as against previousyear's level of ' 4468.52 Crore (including ' 1957.63 Crore from tradingoperations). Profit before Tax (PBT) for the year under review was ' 223.29 Croreas against ' 167.51 Crore in the previous year. Net Profit for the current year wasrecorded at ' 160.15 Crore as against ' 119.83 Crore in the previous year. Adetailed analysis of the performance is available in the Management Discussion andAnalysis (MDA) which forms part of this Report inter-alia deals adequately with theoperations and also current and future outlook of the Company.
SCHEME OF ARRANGEMENT WITH SCM FERTICHEM LIMITED AND SMARTCHEM TECHNOLOGIESLIMITED (BOTH WHOLLY OWNED SUBSIDIARIES OF THE COMPANY)
Further to an update provided in the Directors' Report for the previous year theMumbai Bench of the National Company Law Tribunal (NCLT) vide its Order dated 30thMarch 2017 (a certified copy has been received on 13th April 2017) hasapproved the Scheme of Arrangement amongst the Company SCM Fertichem Limited (SCMFertichem) and Smartchem Technologies Limited (Smartchem) and their respectiveshareholders and creditors involving:
The slump exchange of (a) the Technical Ammonium Nitrate ("TAN")undertaking of the Company together with its business and operations including itsmanufacturing and related facilities located at (i) Taloja & Pune Maharashtra
(ii) Jawaharlal Nehru Port Maharashtra and
(iii) Paradeep and its marketing & corporate office(s) ("TANUndertaking") and (b) the Fertiliser undertaking of the Company together with itsbusiness and operations including its manufacturing and related facilities located at (i)Taloja and Pune Maharashtra (ii) Jawaharlal Nehru Port Maharashtra and (iii) PanipatHaryana and its marketing & corporate office(s) ("Fertiliser Undertaking")(and collectively (a) and (b) are hereinafter referred to as the "TransferredUndertakings") of the Company to SCM Fertichem on a going concern basis ("SlumpExchange"); and
Thereafter the subsequent demerger of the Transferred Undertakings and vestingof the same from SCM Fertichem in Smartchem on a going concern basis in accordance withSection 2(19AA) of the Income Tax Act 1961 ("Demerger") with effect from theAppointed Date 01st January 2015.
A certified copy of the Order passed by the NCLT was filed with the Registrar ofCompanies Pune Maharashtra on 01st May 2017. Thus the Scheme of Arrangementhas become effective with effect from 01st May 2017 in terms of the provisionof the said Scheme of Arrangement.
In terms of the requirements of IND AS 105 the Transferred Undertakings have beendisclosed as Discontinuing Operations' while preparing the stand-alone financialstatements for the year ended 31st March 2017. The Company continues tocontrol the Transferred Undertakings through its Wholly Owned Subsidiary and hence therehas no impact on the consolidated financial statements for the year under review.
SCHEME OF AMALGAMATION WITH THE WHOLLY OWNED SUBSIDIARY
Further to an update provided in the Directors' Report for the previous year theNational Company Law Tribunal vide its Order dated 22nd June 2017 hasapproved the "Scheme of Amalgamation" providing for amalgamation of SCM SoilfertLimited a Wholly Owned Subsidiary of the Company with the Company. The Appointed Datefor the said Scheme is 01st April 2015. A certified copy of the Scheme is yetto be received.
The detailed Scheme is available on the website of the Company www.dfpcl.com
Considering the performance of the Company the Board of Directors of the Companyrecommends a dividend @ 60 % i.e. ' 6 per Equity Share (Previous year ' 5per Equity Share) of '10 each of the Company for the year ended 31st March2017.
The proposed dividend (including tax on proposed dividend) will absorb ' 64Crore and the same is in line with the Dividend Distribution Policy' adopted by theBoard at its meeting held on 30th June 2017.
CHANGES IN THE BOARD OF DIRECTORS
During the year under review Shri Madhumilan Parshuram Shinde was appointed as anAdditional Director in the category of Non-Executive and NonIndependent Director witheffect from 10th February 2017 based on the recommendation of Nomination andRemuneration Committee.
The Company has received a notice in writing under Section 160(1) of the Companies Act2013 from a member of the Company proposing the candidature of Shri Madhumilan ParshuramShinde for the office of Director at the ensuing Annual General Meeting of the Company.
Shri Partha Sarathi Bhattacharyya retires by rotation at the ensuing Annual GeneralMeeting pursuant to provisions of Section 152 of the Companies Act 2013 and beingeligible offers himself for re-appointment.
Shri N. C. Singhal Dr. Rama Iyer and Shri D. Basu NonExecutive Independent Directorsof the Company and whose terms were expiring on 30th July 2017 have sinceresigned from the Board in the first quarter of the Financial year 2017-18 due to familycommitments and failing health. The Board places on record the significant valuablecontribution made by the said Directors over the last two decades.
The current term of Shri U. P. Jhaveri Shri S. R. Wadhwa Shri Anil Sachdev and ShriPranay Vakil Independent Directors is expiring on 30th July 2017.
Shri U. P. Jhaveri Shri Anil Sachdev and Shri S. R. Wadhwa are proposed to bere-appointed as Independent Directors of the Company for a second term of one yearcommencing from 31st July 2017 and ending on 30th July 2018 orupto the conclusion of Annual General Meeting for the Financial Year 2017-18 whicheverdate is later and the term shall not be subject to retirement by rotation.
Shri Pranay Vakil is proposed to be re-appointed as an Independent Director of theCompany for a second term of three years commencing from 31st July 2017 andending on 30th July 2020 or upto the conclusion of Annual General Meeting forthe Financial Year 2019-20 whichever date is later and the term shall not be subject toretirement by rotation.
The Board of Directors based on the recommendation of the Nomination and RemunerationCommittee has recommended appointment of Shri Anil Singhvi Shri Mahesh Chhabria ShriAshok Kumar Purwaha and Shri Berjis Minoo Desai as Independent Directors to hold officefor 5 consecutive years commencing from 07th July 2017 and ending on 06thJuly 2022 or upto the conclusion of Annual General Meeting for the Financial Year 2021-22whichever date is earlier.
NUMBER OF MEETINGS OF BOARD OF DIRECTORS
During the year under review five meetings of the Board of Directors were held on 26thMay 2016 12th August 2016 17th November 2016 10thFebruary 2017 and 30th March 2017.
Independent Directors have given declaration that they meet the criteria ofindependence as provided in Section 149(6) of the Companies Act 2013.
CHANGES IN KEY MANAGERIAL PERSONNEL (KMP)
Shri Mandar Velankar Assistant Company Secretary stepped down as CompanySecretary' a Key Managerial Personnel of the Company with effect from 12thAugust
2016 and Shri K. Subharaman Executive Vice President - Legal & Company Secretaryhas been appointed as Company Secretary' a Key Managerial Personnel with effect from12th August 2016.
SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / STATUTORY AUTHORITIES
1. Details about the Order dated 30th March 2017 passed by the Mumbai Benchof National Company Law Tribunal (NCLT) sanctioning the Scheme of Arrangement amongst theCompany and its wholly owned subsidiary companies viz. SCM Fertichem Limited and SmartchemTechnologies Limited are given in the earlier part of this report.
2. As disclosed in the last year's report effective 15th May 2014domestic gas supply to the Company was arbitrarily stopped by the Ministry of Petroleumand Natural Gas. The Company successfully challenged the same before the Hon'ble DelhiHigh Court which by its Orders dated 07th July 2015 and 19thOctober
2015 directed the Government of India (GoI) to restore the supply of gas. Reviewpetition filed by the GoI challenging the said Orders was rejected by the Court. Furtherthe GoI also filed the Special Leave Petition (SLP) before the Hon'ble Supreme Court ofIndia against the Order of Hon'ble Delhi High Court which was disposed of during the yearunder review without granting any relief to the GoI. The GoI has filed an affidavit beforethe Hon'ble Delhi High Court stating that Inter Ministerial Committee (IMC) has decided torecommend supply of pooled gas to the Company subject to approval of the CompetentAuthority.
3. The Department of Fertilisers (DoF) Ministry of Chemicals and Fertilisers hadwithheld subsidy due to the Company in accordance with applicable Nutrient Based Subsidy(NBS) Scheme of the Government of India (GoI) alleging undue gain arising to the Companyon account of supply of cheap domestic gas. The Company had filed a Writ Petition in theHon'ble High Court of Judicature at Bombay challenging the withholding of subsidy. Basedon the directive of the High Court the GoI released the subsidy amounting to ' 463Crore and subsidy amounting to ' 310 Crore was withheld pending final decision. Onthe request of the Company the DoF has agreed to release subsidy amounting to '310 Crore against a Bank Guarantee pending final decision.
INDIAN ACCOUNTING STANDARDS 2015
The financial statements up to year ended 31st March
2016 were prepared in accordance with the Accounting Standards notified under Companies(Accounting Standard) Rules 2006 (as amended) and other relevant provisions of the Act.
The annexed financial statements for the Financial Year 2016-17 comply in all materialaspects with Indian Accounting Standards (Ind AS) notified under section 133 of theCompanies Act 2013 (the Act) [Companies (Indian Accounting Standards) Rules 2015] andother relevant provisions of the Act. These financial statements are the first financialstatements of the Company under Ind AS.
Detailed information on the impact of the transition from previous GAAP to Ind AS isprovided in the annexed financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
The directors also present the audited consolidated financial statements incorporatingthe duly audited financial statements of the subsidiaries and as prepared in compliancewith the Companies Act 2013 applicable Accounting Standards and Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 asprescribed by Standards and Securities and Exchange Board of India.
A separate statement containing the salient features of its subsidiaries in theprescribed form AOC-1 is annexed separately.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of sub-section (5) of Section 134 of the Companies Act2013 your Directors confirm that:
i) in the preparation of annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;
ii) the accounting policies had been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial Year on 31stMarch 2017 and of the profit and loss of the Company for that period;
iii) proper and sufficient care had been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv) the annual accounts had been prepared on a going concern basis;
v) internal financial controls to be followed by the Company are duly laid down andthese controls are adequate and were operating effectively; and
vi) systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT
The Shareholders of the Company in their Thirty Fourth Annual General Meeting held on31st July 2014 had accorded their approval pursuant to the provisions ofSections 139 141 and other applicable provisions of Companies Act 2013 and Rules madethereunder to appoint M/s. B. K. Khare & Co. Chartered Accountants as the StatutoryAuditors of the Company for the period of three years commencing from the conclusion ofThirty Fourth Annual General Meeting until the conclusion of Thirty Seventh Annual GeneralMeeting.
Therefore the term of M/s. B. K. Khare & Co. Chartered Accountants comes to anend at the ensuing Annual General Meeting.
The Board of Directors of the Company has pursuant to the provisions of Section 139recommended the appointment of M/s. B S R & Associates LLP (Chartered Accountants)(Firm Registration number: 116231W/W- 100024) for the approval of the Shareholders fromthe conclusion of Thirty Seventh Annual General Meeting till the conclusion of FortySecond Annual General Meeting subject to ratification by shareholders at the AnnualGeneral Meeting.
The Auditors' Report to the Shareholders for the year under review does not contain anyqualification reservation or adverse remark or disclaimer.
The Secretarial Auditors M/s. SVD & Associates Company Secretaries has issuedSecretarial Audit Report for the Financial Year 2016-17 pursuant to Section 204 of theCompanies Act 2013 which is annexed to Directors' Report. (Refer Annexure-1)
The Secretarial Audit Report for the year under review does not contain anyqualification reservation or adverse remark or disclaimer.
Your Directors have appointed M/s Y. R. Doshi & Company Cost Accountants as theCost Auditors for the Financial Year 2017-18. M/s Y. R. Doshi & Company CostAccountants will submit the cost audit report alongwith annexure to the Central Government(Ministry of Corporate Affairs) in the prescribed form within specified time and at thesame time forward a copy of such report to your Company.
The Cost Audit Report for the Financial Year ended 31st March 2016 was dulyfiled with the Central Government (Ministry of Corporate Affairs).
Pursuant to the provisions of Section 148 of Companies Act 2013 the Board ofDirectors of the Company has
appointed M/s Y. R. Doshi & Company Cost Accountants for conducting Cost Audit ofthe Company for the Financial Year ending 31st March 2018 at a remunerationof ' 300000/- (Rupees Three lacs only) plus taxes as applicable and reimbursementof travel and out-ofpocket expenses which shall be subject to the approval of theshareholders at the ensuing Annual General Meeting.
PARTICULARS OF LOANS INVESTMENTS AND GUARANTEES
Details of investments made and loans advanced and guarantees given by the Company havebeen given in notes to the Financial Statement.
RELATED PARTY TRANSACTIONS
The Company has entered into contract / arrangements with the related parties in theordinary course of business and on arm's length basis. Thus provisions of Section 188(1)of the Act are not applicable.
Pursuant to provisions of Standards and Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 a separate section titledCorporate Governance' is attached to this Annual Report.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES
Report on the performance and financial position of subsidiaries associates and jointventure companies in specified format is annexed to Directors' Report. (Refer Annexure-2).
AWARDS AND ACCOLADES
Please refer to section "Awards and Accolades" in this Annual Report fordetails of the awards received by the Company during the year under review.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of the Company has constituted Nomination and RemunerationCommittee and also has approved the Nomination and Remuneration (NRC) Policy which interalia contains appointment criteria qualifications positive attributes and independenceof Directors removal retirement and remuneration of Directors Key Managerial Personnel(KMP) and Senior Management Personnel of the Company.
Nomination and Remuneration Policy is annexed to Directors' Report. (Refer Annexure-3)and is also available on the website of the Company www.dfpcl . com
RISK MANAGEMENT COMMITTEE
The Board of Directors of the company has constituted a Risk Management Committee toassess risks in the operations of business units of the Company to mitigate and minimizerisks assessed in the operations of business units periodic monitoring of risks in theoperations of business units and other matters delegated to the Committee by Board ofDirectors of the Company from time to time.
Information on the development and implementation of a Risk Management Policy for theCompany including identification therein of elements of risk which in the opinion of theBoard may threaten the existence of the Company is given in the Corporate GovernanceReport.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Board of Directors of the Company has constituted Corporate Social Responsibility(CSR) Committee having following members as on 31st March 2017;
|1. Shri Pranay Vakil ||Chairman |
|2. Smt. Parul Mehta ||Member |
|4. Shri S R Wadhwa ||Member |
Your Company is engaged in concerted CSR initiatives through Ishanya Foundation andDeepak Foundation and with the introduction of statutory requirements for CSR initiativesas per the Companies Act 2013 the CSR initiatives of your Company have been reaffirmedand the entire approach has become more structured. The Board of Directors of the Companyhas approved a comprehensive CSR Policy which is available on the website of the Companyat www.dfpcl.com
The details of the initiatives taken by the Company on CSR during the year as per theCompanies (Corporate Social Responsibility Policy) Rules 2014 is given in Annexureforming part of this report. (Refer Annexure-4)
The extract of Annual Return is annexed to Directors' Report. (Refer Annexure-5).
PERFORMANCE EVALUATION OF CHAIRMAN
DIRECTORS BOARD AND COMMITTEES
Information on the manner in which formal annual evaluation has been made by the Boardof its own performance and that of its Committees and individual directors is given in theCorporate Governance Report.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
The Company has practice of conducting familiarization program of the independentdirectors as detailed in the
Corporate Governance Report which forms part of the Annual Report.
WHISTLE BLOWER POLICY
The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting the highest standards of professionalism honestyintegrity and ethical conduct. The Company has a Whistle Blower Policy under which theemployees are free to report violations of the applicable laws and regulations and theCode of Conduct.
Whistle Blower Policy is available on the website of the Company at www.dfpcl.com
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Company's internal financial control systems are commensurate with the naturesize and complexity of the businesses and operations. These are periodically tested andcertified by Statutory as well as Internal Auditors. Significant audit observations andthe follow up actions are reported to the Audit Committee.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this Report except for the Order of the National Company Law Tribunal(NCLT) dated 30th March 2017 sanctioning the Scheme of Arrangement involvingthe Company and its Wholly Owned Subsidiaries.
PARTICULARS OF EMPLOYEES AND RELATED
Pursuant to the provisions of Section 136(1) of the Act and as advised the statementcontaining particulars of employees as required under Section 197(12) of the Act read withRule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 will be available for inspection at the Registered Office of the Companyduring working hours. Members interested in obtaining a copy of the same may write to theCompany Secretary and the same will be furnished on request. Hence the Annual Report is
being sent to all the Members of the Company excluding the aforesaid information.
Your Company has not accepted any deposits covered under Chapter V of the CompaniesAct 2013 and hence no details pursuant to Rules 8 (v) and 8 (vi) of the Companies(Accounts) Rules 2014 are reported.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
Pursuant to Section 22 of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 read with Rule 14 the internal committee constitutedunder the said act has confirmed that no complaint/case has been filed/ pending with theCompany during the year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
As required by the Companies (Accounts) Rules 2014 the relevant data pertaining toconservation of energy technology absorption and foreign exchange earnings and outgo areannexed to Directors' Report. (Refer Annexure-6).
Your Directors wish to place on record their sincere appreciation to the Company'sbankers customers vendors investors and all other stakeholders for their continuedsupport during the year. Your Directors are also pleased to record their appreciation fortheir dedication and committed contribution made by employees at all levels who throughtheir competence and hard work have enabled your Company to achieve good performanceamidst challenging times and look forward to their support in the future as well.
| ||For and on behalf of the Board |
|Mumbai ||S. C. MEHTA |
|Dated 30th June 2017 ||Chairman & Managing Director |