To the Members
Your Directors have pleasure in presenting the 73rd Annual Report and Audited FinancialStatements of the Company and the report of the Auditors for the financial year 2016-17.
Your Directors are happy to inform you that during the financial year 2016-17 theproduction financial and marketing performance of your company has improved considerablydespite the adverse impact on the failure of monsoon in the southern part of the country.
Highlights / Achievements
Production of all fertilisers has improved as compared to last year.
Highest Sale of fertilisers in past 8 years .
Succesful Completion of trial run of Lactam plant in Petrochemical Division
Implementation of DBT in Pilot District
Fabrication of own barge for transportation of Ammonia.
Runner up award for outstanding safety performance among large scale industrygroup in Kerala for Udyogamandal Division.
Willingdon Island installation is awarded as the first among the medium sizedinstallations for safety performance
PSE Excellence award from the Indian Chamber of Commerce at New Delhi.
Excellence award from Bureaucracy Today' for CSR
PERFORMANCE - FINANCIAL PRODUCTION AND SALES
The Company's performance for the year ended March 31 2017 is summarized below.
A. FINANCIAL Rs. in Lakh
| ||2016-17 ||2015-2016 |
|Turnover ||194177 ||178008 |
|Revenue from operations ||186260 ||173599 |
|Other Income ||1716 ||2898 |
|Total Revenue ||187976 ||176497 |
|Total Expenses ||211808 ||222951 |
|Profit / Loss (-) Before Tax & Exceptional items ||(-) 23832 ||(-) 46454 |
|Exceptional items ||(-) 5136 ||1235 |
|Profit / Loss (-) After tax ||(-) 18696 ||(-) 45219 |
|B. PRODUCTION || ||in Tonnes |
| ||2016-2017 ||2015-2016 |
|Factamfos 20 : 20 ||640322 ||527445 |
|Ammonium Sulphate ||152953 ||79567 |
|Caprolactam ||770 ||0 |
|C. SALES || ||in Tonnes |
| ||2016-2017 ||2015-2016 |
|Fertilisers ||786106 ||704962 |
|Caprolactam ||770 ||0 |
Turnover of the Company for the year 2016-17 was Rs. 1941.77 crore against the previousyear figure of Rs. 1780.08 crore. The financial results of the Company for the year2016-17 shows a net loss of Rs. 186.96 crore as compared to Rs. 452.19 crore during theyear 2015-16.
Due to accumulated loss your directors are not recommending any dividend for thefinancial year 2016-17. The Company has not transferred any amount to Reserve during thefinancial year 2016-17.
The year 2016-17 was a year of mixed performance for the company. Company could achieveexcellent level of physical and financial performance during the first half of thefinancial year.
The receipt of Rs. 1000 crore towards plan loan from Government of India on 29th March2016 has helped the company to plan for optimum production levels from April 2016 andCompany could procure LNG from May 2016 maximising production levels leading to operatingprofit (before considering GoI interest) from the month of June 2016 to November 2016.However the scenario has drastically changed with the failure of monsoon (during Rabi) inSouth Indian states forcing the company to restrict production levels considerably due topiling up of fertiliser stock in field and plant storages. Despite the adverse situationin South India Company could significantly improve the performance levels compared toprevious year. Factamfos production for the year was 640322 MT in comparison with527445 MT for the year 2015-16 showing a remarkable improvement of 112877 MT. In thecase of Ammonium Sulphate the production was 152953 MT against the previous year figureof 79567 MT with an improvement of 73386 MT. During the year company imported twofertiliser parcels (one parcel NP 20:20:0:13 and one parcel MOP) for trading.
The Company has finalized an ambitious production and marketing target for thefinancial year 2017-18. Even though the Company could not achieve the targeted level ofphysical and financial performance during the 1st quarter of the financial year 2017-18the Company is hopeful of improving the financial and physical performance during the year2017-18.
Management Discussion and Analysis Report
Management Discussion and Analysis Report covering the operational aspects for the yearunder review as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is presented in a separate section forming part of Directors Report.
Directors and Key Managerial Personnel Appointments
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.87/8/2006-HR-1 dated 10th June 2016 notified the appointmentof Shri K.P.S. Nair DeepaSree' Nazreth Road Aluva and Dr. S Muarli 2Lakshminivas 4th Cross 6th Main Papaiah Garden Bangalore-85 as Non Official Directors(Independent Directors) on the Board of Directors of FACT.
Government of India Ministry of Chemicals & Fertilisers Department of Fertilisersvide Order No. 130/8/2003-HR-1 dated 08/09/2016 notified the appointment of Dr AK PadheeJoint Secretary Department of Fertilizers Ministry of Chemicals & FertilizersGovernment of India as a part time Government Nominee Director on the Board of FACT inplace of Shri Vinod Kumar Thakral.
Government of India Ministry of Chemicals & Fertilisers Department of Fertilisersvide Order No.130/8/2003-HR-1 dated 08/12/2016 notified the appointment of Ms MeenakshiGupta Additional Secretary & Financial Advisor (AS&FA) Department ofFertilizers Ministry of Chemicals & Fertilizers Government of India as a part timeGovernment Nominee Director on the Board of FACT in place of Dr. AK Padhee .
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.78/2/2006-HR-1 dated 2nd February 2017 notified theappointment of Dr Gangidi Manohar Reddy H- No 17-1 Laxmi Nagar Colony HyderabadTelangana Dr. Jyoti Kaushal Sheth Opp Panigate Police station Haankhana Road Vadodaraand Prof. B Vijayakumar Anagha Chettikadavu Road Pala as Non Official Directors(Independent Directors) on the Board of Directors of FACT.
Government of India Ministry of Chemicals & Fertilisers Department of Fertilisersvide Order No. 130/8/2003-HR-1 dated 06/03/2017 notified the appointment of Ms AlkaTiwari Joint Secretary (AT)) Department of Fertilizers Ministry of Chemicals &Fertilizers Government of India as a part time Government Nominee Director on the Boardof FACT in place of Ms Meenakshi Gupta .
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/5/2008-HR-1 dated 2nd November 2016 entrusted theadditional charge of the post of CMD FACT to Shri A.B. Khare Chairman and ManagingDirector Madras Fertilisers Ltd.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/5/2008-HR-1 dated 15th March 2017 entrusted the additionalcharge of the post of Chairman & Managing Director FACT to Shri S K Lohani JointSecretary Department of Fertilisers Ministry of Chemicals and Fertilisers.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/5/2008-HR-1 dated 28th April 2017 entrusted the additionalcharge of the post of Director (Finance) FACT to Shri Suresh Warior Director (Finance)Rashtriya Chemicals and Fertilisers Ltd. (RCFL). The Board at its meeting held on30.05.2017 appointed Shri Suresh Warior Director (Finance) as the Chief FinancialOfficer of the Company in place of Shri Sreenath V. Kamath Chief General Manager(Corporate Finance). Shri S K Lohani C&MD Shri Suresh Warior Chief FinancialOfficer and Shri K.V. Balakrishnan Company Secretary are the Key Managerial personnel ofthe company.
Retirements and Resignations
On completion of five year term on 27/06/2016 Shri V.K. Anil Director (Technical)relinquished the post of Director (Technical) on 12/07/2016. Consequent to the appointmentof Dr A. K. Padhee as Government of India nominee Director Shri Vinod Kumar ThakralDirector retired from the Board with effect from 08.12.2016.
Department of Fertilisers Ministry of Chemicals & Fertilisers vide Order No.86/5/2008-HR-1(Part) dated 02.11.2016 removed Shri Jaiveer Srivastava from the post ofChairman and Managing Director. Consequent to the appointment of Ms Meenakshi Gupta asGovernment of India Nominee Director Dr A K Padhee Director retired from the Board witheffect from 08.01.2017. Consequent to the appointment of Ms Alka Tiwari as Government ofIndia Nominee Director Ms Meenakshi Gupta Director retired from the Board with effectfrom 06.03.2017.
Consequent to the appointment of Shri SK Lohani Joint Secretary Department ofFertilisers as C &MD Shri AB Khare ceased to be the C&MD of the Company witheffect from 16.03.2017.
The Board place on record its appreciation of the valuable services rendered by ShriVinod Kumar Thakral Director Dr A K Padhee Director Ms Meenakshi Gupta DirectorShri Jaiveer Srivastava C&MD Shri AB Khare C&MD and Shri V.K. Anil Director(Technical).
Annual Evaluation of Board.
FACT being a Government Company all appointments in the Board is made by theGovernment of India Ministry of Chemicals and Fertilizers Department of Fertilizers. Theperformance of Directors are evaluated by the Ministry of Chemicals & FertilizersDepartment of Fertilizers Government of India. As per Government of India Ministry ofCorporate Affairs notification dated 5th June 2015 clause (e) and (p) of sub-section 3 ofSection 134 of the Companies Act 2013 relating to appointment remuneration and Annualevaluation of Board on its performance are not applicable to FACT.
Declaration of Independent Directors
All independent directors have made a declaration of independence under sub-section (6)of Section 149 of Companies Act 2013.
Meetings of the Board
During the financial year 2016-17 nine meetings of the Board were convened and held.The details of the meetings of the Board of Directors are given in the report on CorporateGovernance which is part of this report. The intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013.
Director's Responsibility Statement
Pursuant to Sec.134(3)(c) of the Companies Act 2013 your Directors hereby state that:
(a) in the preparation of annual accounts for the year ended March 31 2017 theapplicable accounting standards had been followed along with proper explanation relatingto material departures.
(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2017 and of profit andloss statement for the year ended March 31 2017.
(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
(d) the directors have prepared the annual accounts on a going concern basis.
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Company is committed to maintain the highest standard of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Board lays emphasison transparency and accountability for the benefit of all stake-holders of the Company.The Report on Corporate Governance as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 annexed to this report forms an integral partof this report.
(1) Statutory Auditors.
M/s. K.Varghese & Co. Chartered Accountants Kochi was reappointed as StatutoryAuditors of the Company for the year 2016-17 by the Comptroller and Auditor General ofIndia. M/s Narotham Madhav & Ramesh Chartered Accountants Hyderabad and M/s Sarathy& Balu Chartered Accountants Chennai were reappointed as Branch Auditors for theyear 2016-17 by the Comptroller and Auditor General of India.
The report of the statutory Auditors on the financial statements of the company for theyear ended 31st March 2017 is unmodified report. However the Statutory Auditors in theirreport has emphasized certain issues which are being addressed by the Company.
(2) Cost Auditors
M/s. BBS & Associates Cost Accountants Kochi has been re-appointed as CostAuditors of the Company for the year 2016-17.
(3) Secretarial Audit
M/s SVJS & Associates Company Secretaries Kochi have been appointed asSecretarial Auditors of the Company for the year 2016-17. The report of the SecretarialAuditor is annexed to this report as Annexure-1.
In line with the provision of Section 177 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Audit Committee of theBoard has been constituted. Details of Members/ Meetings of the Audit Committee areelaborated in the report on Corporate Governance.
FACT-RCF Building Products Limited (FRBL) is the associate company of FACT. During thefinancial year no Company has become/ceased to become subsidiaries/Joint Ventures andAssociate Company of FACT.
Report on Performance of Joint Venture
During the financial year 2016-17 the financial results of FRBL show a net loss of Rs.27.15 crore. Due to the accumulated loss the entire networth of FRBL has been eroded.
During the financial year 2016-17 the Company has not accepted any deposit frompublic. However as on 31.3.2017 Rs. 0.49 lakh is lying in unclaimed matured fixeddeposit account.
Contract or arrangement with related parties
The transactions entered with related parties for the year under review were on armslength basis and in the ordinary course of business. The disclosure in form No AOC-2 forthe transactions with related parties during the period under review is enclosed asAnnexure -2 of the report
Corporate Social Responsibility
FACT continues to give priority on various Social Responsibility measures during thefinancial year 2016-17. The Company has constituted a Board level Committee as per theprovisions of Companies (Corporate Social ResponsibilityPolicy) Rules 2014. Annual Reporton CSR as per the provisions of Companies (Corporate Social Responsibility Policy) Rules2014 is annexed to this report as Annexure 3.
Material changes and commitments
There were no material changes and commitments affecting the financial position of thecompany between the end of financial year (31st March 2017) and the date of the report.Similarly there was no change in the nature of business of the company during thefinancial year 2016-17.
FACT has formulated a risk management policy for identification of potential area ofrisk and mitigation of the same. FACT is having adequate risk management infrastructure inplace capable of addressing all potential risks.
Internal Financial Control
FACT is having an Internal Control System commensurate with the size scale andcomplexity of its operations. The Internal Audit wing of FACT headed by Asst. GeneralManager monitors and evaluate the efficacy and adequacy of Internal Control System in theCompany. The observation of internal audit and recommendations along with correctiveactions thereon are presented to the Audit Committee of the Board. Based on therecommendation of Internal Audit the functional heads take necessary corrective actionsin their functional area thereby strengthen internal control.
FACT is having a vigil mechanism for directors and employees to report their concerns.The Directors and employees can approach Chairman Audit Committee of the Board directlyand report their concern in appropriate case. The vigil mechanism and whistle blowerpolicy is published in the web site of the Company www.fact.co.in.
Code of Conduct
FACT is having a code of conduct known as FACT Code of business conduct and Ethicsapplicable to the members of the Board and all senior executives of the Company. The codehas been posted on the Company's website www.fact.co.in The code lays down the standardprocedure of business conduct which is expected to be followed by the Directors and seniorexecutives of the Company. Senior management personnel have confirmed compliance with thecode of conduct.
Prevention of Insider Trading
No instances of insider trading have been reported on FACT shares till date. None ofthe Directors and key managerial personnel is holding any shares in FACT. A code ofconduct for prevention of insider trading and code for corporate disclosure is publishedin the website of the company www.fact.co.in
Particulars of Loan given Investment made Guarantees given and securities provided
Particulars of Investment made and guarantees given along with the purpose for whichthe guarantee is given are provided in the financial statement for the year 2016-17.
During the financial year 2016-17 FACT has not provided any loan/guarantee or made anyinvestment within the purview of Section 186 of the Companeis Act 2013.
The Board of Directors state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview.
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the company underany scheme.
4. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees or by trustees for the benefit of employees .
5. Neither the Managing Director nor the whole time Directors of the Company receiveany remuneration or commission from its Associate Company.
6. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
7. No fraud has been reported by the auditors to the Audit Committee or to the Board.
8. There were no cases filed pursuant to the Sexual Harassment of Women at Work Place(Prevention Prohibition and Redressal) Act 2013.
Extract of Annual Return
Extract of Annual Return of the Company in Form MGT9 is annexed as Annexure 4 to thisreport
Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
Information regarding the conservation of energy technology absorption and foreignexchange earnings and-outgo as required to be dislosed under the Act is set out in aseparate statement attached to this report.
Your Directors gratefully acknowledge the valuable guidance and support extended by theDepartment of Fertilisers Department of Public Enterprises and other Departments ofGovernment of India and the State Governments of Kerala Tamilnadu Karnataka AndhraPradesh and Telangana and Union Territory of Puducherry.
The Directors deeply appreciate the committed efforts put in by the employees and lookforward to their dedicated services and endeavor in the years ahead to enable the Companyto scale greater heights.
The Directors also acknowledge the continued support extended by the ShareholdersDealers Suppliers Bankers and Customers of the Company the Press and Electronic Media.
For and on behalf of the Board of Directors.
| ||Sd/- |
| ||S.K. LOHANI |
|Udyogamandal ||CHAIRMAN AND MANAGING DIRECTOR |
|Date: 11.08.2017 ||DIN-06912948 |