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Nilachal Refractories Ltd.

BSE: 502294 Sector: Engineering
NSE: N.A. ISIN Code: INE416N01013
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Nilachal Refractories Ltd. (NILACHALREFRACT) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Thirty Seventh (38th) Annual Report togetherwith the Audited accounts of your Company for the year ended 31st March 2015.

FINANCIAL HIGHLIGHTS

(Rupees in Crores)

Particulars Year ended 31st March 2015 Year ended 31st March 2014
Turnover 8.30 9.67
Profit/(Loss) before taxation (3.16) (6.05)
Less: Tax Expense 1.22 0.59
Profit/(Loss) after tax (1.94) (5.46)
Add: Balance B/F from the previous year (15.92) (10.46)
Balance Profit / (Loss) C/F to the next year (17.87) (15.92)

FINANCIAL REVIEW

As can be observed from the above your Company’s Operations were adverselyaffected mainly due to Labour Problems and industrial slowdown and in amidst of the samethe company is managed with steady cautious measures. The Company’s factory wasdeclared lock out with continuous impasse being created by the workmen/labourer resultingin stoppage of work at factory and to safeguard the assets of the Company and life of itsemployees the lock out was declared lock out w.e.f 24th Mach 2014 and ceased on 19th Dec2014.

The Directors are quite hopeful that the operations of your Company will improvehenceforth compared to this unforeseen difficult period.

DIVIDEND:

In view of brought forward losses your directors are unable to recommend any dividendfor the financial year ended 31st March 2015.

DIRECTORS

In accordance with the provisions of the Companies Act 2013 and Article 115 of theArticle of Association of the Company Shri Niraj Jalan Shri Bhagwati Prasad Jalan andSri Saravanan Asokan Directors of the Company are liable to retire by rotation at theensuing Annual General Meeting and being eligible offer themselves for re-appointment.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return in format MGT -9 for the Financial Year 2014-15 has beenenclosed with this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of the provisions of section 134(5) of the Companies Act 2013 your Directorshereby confirm

a. In the preparation of the annual accounts for the financial year ended 31st March2015 the applicable accounting standards had been followed along with proper explanationrelating to material departures.

b. The directors had 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 31 st March 2015 and of the profit/loss of the Company for that period.

c. The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities.

d. The directors had prepared the annual accounts on a going concern basis.

e. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

f. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

PARTICULARS OF EMPLOYEES

The Whole Time Director of the Company is only the receipt of remuneration from theCompany as approved by Nomination and remuneration committee further the same was approvedby Shareholders in the Annual General Meeting held on 30-06-2015. Your Company comes underthe provisions of the rule 5 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 thereby the Wholetime Director of the Company is paid Rs1677996.00 and the Company Secretary is paid Rs 520000/-

FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE ITSDIRECTORS AND THAT OF ITS COMMITTEES

The Companies Act 2013 and revised Clause 49 of the Listing Agreement stipulates theperformance evaluation of the Directors including Chairman Board and its committeesConsidering the said provisions the Company has devised the process and the criteria forthe performance evaluation which has been recommended by the Nomination Committee andapproved by the Board.

The Criteria for performance evaluation are as under:-for CEO WTD Non-executiveDirectors.

Attendance at meeting; Participation and Contribution; Responsibility towardsstakeholders; Contribution in Strategic Planning; Compliance and Governance;ParticipationUpdation of Knowledge; Leadership; Relationships and Communications;Resources; Conduct of Meetings.

PERFORMANCE EVALUATION OF BOARD;-

Composition and Diversity of Board; Committees of the Board; Board & CommitteeMeetings; Understanding of the Business of the Company and Regulatory environment;Contribution to effective corporate governance and transparency in Company’sOperation; deliberation/decisions on the Company’s Strategies; Monitoring andimplementation of the strategies and the executive management performance and quality ofdecision making and Board’s Communication with all stakeholders.

PERFORMANCE EVALUATION OF THE BOARD LEVEL COMMITTEES:-

The Performance and effectiveness of the Committee. Frequency and duration; spread oftalent and diversity in the Committee; Understanding of regulatory environment anddevelopment; interaction with the board.

SECRETARIAL AUDIT REPORT

The Company has appointed Mr. Biswanath Khandelwal Company Secretary in Practice asSecretarial Auditor and his report is annexed below :

SECRETARIAL AUDIT REPORT

For The Financial Year Ended 31st March 2015

[Pursuant to section 204(1) of the Companies Act 2013 and rule No 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Nilachal Refractories Limited P-598/599 Lewis Road Mahabir Nagar

Kedarnath Apartment Bhubaneswar -751002 Odisha

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate governance practice by NilachalRefractories Limited (hereinafter called "the company"). The Secretarial Auditwas conducted in a manner that provided me a reasonable basis for evaluating the corporateconducts / statutory compliances and expressing my opinion thereon.

Based on my verification of the Company’s Books Papers Minutes Books Forms andReturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit I hereby report that in my opinion the Company has duringthe financial year ended 31st March 2015 complied with the statutory provisions listedhereunder and also that the Company has proper Board processes and compliance mechanism inplace to the extent in the manner and subject to the reporting made hereinafter:

1 have examined the secretarial compliance based on the books papers minute booksforms and returns filed and other records maintained by Nilachal Refractories Limited("the Company") for the financial year ended on 31st March 2015 according tothe provision of:

1. The Companies Act 2013 (the Act) and the rules made thereunder

2. The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade thereunder;

3. The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

4. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’) to the extent applicable to theCompany:-

• The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations1992;

• The Securities and Exchange Board of India (Substantial Acquisition of Sharesand Takeovers) Regulations 2011;

• The Securities and Exchange Board of India (Registrars to a Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;

5. The Listing Agreement entered into by Company with Bombay Stock Exchange Limited andCalcutta Stock Exchange Limited.

During the period under review the company has complied with the provisions of ActRules Regulations Guidelines Standards etc mentioned above.

I have relied on the representation made by the Company and its officers for system andmechanism formed by the Company for compliances under the other act laws and regulationsapplicable to the Company

I further report that the Board of Directors of the Company is duly constituted withproper balance of Non-Executive Directors and Executive Directors Independent Directorswith one Woman Director The changes in the composition of the Board of Directors thattook place during the period under review were carried out in compliance with theprovisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings agenda andrelated notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views if anyare captured and recorded as part of the minutes.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

B.N. Khandelwal
Company Secretary in Practice
Place: Kolkata ACS: 1614
Date : 7th July 2015 CP: 1148

The Company has taken a certificate as laid down under sec 92(2) of the Companies Act2013 and rule 11(2) of Companies (Management and Administration) Rules 2014 from Mr.B.N.Khandelwal Practicising Company secretary.

ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE ETC

Information pursuant to section 134(3)(m) of the Companies Act 2013 read with rule 8of Companies (Accounts) Rules 2014 in respect of conservation of Energy and TechnologyAbsorption and Foreign Exchange Earning and Outgo is given in Annexure -1 forming part ofthis Report.

INDUSTRIAL RELATIONS

The Company has always aimed to maintain cordial relations with its industrialpersonnel and will continue to do in future.

ISO CERTIFICATION

Your Company is having a status of ISO 9001:2000 Certification. Your company is highlycommitted to the highest standard of quality.

CORPORATE GOVERNANCE

The Company is committed in maintaining the highest standards of Corporate Governanceand adheres to the stipulations prescribed under clause 49 of the Listing Agreement withthe Stock Exchange. A Report on Corporate Governance & Shareholders Informationtogether with a Auditors’ Certificate regarding Compliance of the same are annexed asa part of this Annual Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT:

In accordance with the Listing Agreement Requirements Management Discussion &Analysis Report is presented in a separate section forms a part of the Annual Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Management continuously reviews the Internal Control Systems and procedures for theefficient conduct of the Company’s business. The Company adheres to the prescribedguidelines with respect to the transactions financial reporting and ensures that all itsassets are safeguarded and protected against losses. Internal Control System areimplemented to safeguard the Company’s assets from loss or damage to keep a constantcheck on the cost structure to prevent revenue leakages to provide adequate financialand accounting controls and implement accounting standards.

The board have appointed a Chartered Accountants firm who are conducting the InternalAudit of the Company. The report thereof is placed before the Audit Committee.

INSURANCE

The assets of the Company are adequately insured against the loss of fire and otherrisks which are considered necessary by the management.

FIXED DEPOSITS

Your company has not accepted any public deposit during the year under review.

LISTING

The equity shares of your Company continued to be listed on Bombay Stock ExchangeLimited (BSE) and Calcutta Stock Exchange Limited (CSE).

CORPORATE SOCIAL RESPONSIBILITY:

Corporate Social Responsibility is the continuing commitment by the business to behaveethically and contribute to economic development while improving the quality of life ofthe workforce and their families as well as of the local community and society at large.

As a part of its policy for corporate social responsibility the Company undertakes arange of activities to improve living conditions of the people in the neighborhood of allits plants. In structuring its efforts to the various aspects of Corporate SocialResponsibilities the Company takes account in guidelines and statements issued bystakeholders and other regulatory bodies. Corporate Social Responsibility and Sustainabledevelopment will continue to be the leading priorities at the Company which it shallconsistently strive to touch lives and makes a difference.

The Directors noted the observations made by Auditors with regard to method ofaccounting pursuant to Accounting Standard 15 and will give the effect of the same incoming year. Further the Directors also noted the Auditors comment on non-charging ofDepreciation in accounts. Since there was no production in plant and it was completelyidle the Company has not charged depreciation and the machines were not put to useduring the year under review for a single day during the period under review as there wascomplete lock out in the factory from the Month of March 2014 to December 2014 and postceasing of lock out the Company has not yet commenced production .

APPRECIATION

Your Directors record their sincere appreciation for the assistance support andguidance provided by Company’s Customer Supplier Government Authorities Bankersinvestors financial institution and shareholders for their consistent support to thecompany. The Directors also commend the continuing commitment and dedication of theemployees at all levels which has been critical for the Company’s growth. TheDirectors look forward for their continuing support in future.

For and on behalf of the Board
Place: Kolkata Bhagwati Prasad Jalan
Date: 14th August 2015 Chairman

ANNEXURES TO DIRECTORS' REPORT

Information under section 134 3(m) read with the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules 1988 and forming part of the Directors’Report for the year ended 31st March 2015

CONSERVATION OF ENERGY:

Energy conservation measures taken;

The Company is committed to conserve energy and making best use of the resources. Aconsiderable amount of time and effort will be earmarked for conserving power across allour plants.

• Idle running of Machines has been controlled

• Operating efficiency of Shaft Kiln has been improved.

• Successful simultaneous operation of two Gas producers to fire increased greenproduction and bring down the specific consumption of coal.

Additional investments and proposals if any being implemented for the reduction ofconsumption of energy:

No additional investment is proposed but all efforts are on to conserve energy byimproving operation Constant reviews of operations and process is being done to identifyenergy saving areas.

Impact of the measures at (a) and (b) above for reduction of energy consumption anconsequent impact on cost of production of goods.

With the implementation of the above measures there will be considerable reduction inenergy consumption.

Total energy consumption and energy consumption Impact of the measures at (a) and (b)above for reduction of energy consumption and energy consumption per unit of production asper Form A of the Annexure is annexed.

TECHNOLOGY ABSORPTION:

The details of the efforts made towards absorption of technology are given separatelyin the Report in Form B

FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign Exchange Earning : Rs. 2601095.00 *

Foreign Exchange Out Go : Rs. NIL

FORM- A

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

Power and fuel consumption:

Particulars 2014-15 2013-14 2012-13
1) Electricity
Purchased 243528 489096 2755584
Units(Kwh) 2037447 3834801 15449288
Total Amount(Rs) 8.36 7.84 5.61
Rate per unit (in Rs./Kwh)
Own Generation
Through Diesel Generator - 5590 37550
Unit (Kwh) - 1.47 2.45
Unit per Ltr. of Diesel oil - 36.93 18.99
Cost/Unit (Rs.)
- NA NA
Through Steam Turbine Generator
2) Steam Coal Grade ‘B’ and E used in Gas Producer.
Quantity (Tonnes) 9565
Total Cost (RS) 45192150
Average Rate (Rs/MT) 4725
3) Furnace Oil & L.D.Oil
Quantity (KL) 398KL
Total Amount (Rs.) 15541119
Average Rate 38966
4) LSHS Other Internal Generation N.A NA NA

CONSUMPTION PER UNIT OF PRODUCTION

Particulars 2014-15 2013-14 2012-13
Refractories Produced (MT)
Electricity (KWH/Ton) 1197.45 20137
172.49 138
Furnace oil & L.D Oil (Litres/Ton) 17.08
LSHS (Kg/Ton) NA NA
Steam Coal (Gross) Grade B & E (KG/Ton) 475
Net Coal after dust (Kg/Ton) 338

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

RESEARCH AND DEVELOPMENT (R&D)

1. Specific areas in which R&D was carried out by the Company:

No R & D was carried out with in the meaning of applicable standard.

2. Benefits derived as a results of the above R&D Not Applicable

3. Future plan of action:

Your Company recognizes the need for cleaner and greener environment by taking variousconservation measures reduction of emission of harmful substances in the environmentreduction in wastages and various other useful measures. It further plans to improve itsproductivity and quality.

4. Expenditure on R & D

Nil

Technology absorption adaption and innovation: N.A.

For and on behalf of the Board
Place: Kolkata Bhagwati Prasad Jalan
Date: 14th August 2015 Chairman