Your Directors submit their 42nd Annual Report together with the AuditedAccounts for the financial year ended 31st March 2017.
The financial results of the Company for the financial year ended 31stMarch 2017 are summarised below
| ||2016-17 ||2015-16 |
|Sales Turnover & Other Income ||305.48 ||277.87 |
|Total Expenditure excluding ||321.82 ||280.04 |
|Finance Costs and Depreciation etc. || || |
|Finance Costs ||3.50 ||4.64 |
|Cash Profit/(Loss) ||(19.84) ||(6.81) |
|Depreciation etc. ||7.81 ||7.44 |
|Net Loss before tax ||27.66 ||14.25 |
|Provision for taxation ||- ||- |
|Net Loss after tax ||27.66 ||14.25 |
Your Directors report that during the year under review the Gross Sales of the Companyhas increased by 11 % vis-a-vis previous year due to higher production the Company hasachieved better capacity utilisation of 89% in the financial year under review as comparedto 82% and higher combined average realisation per Electro-Chemical Unit (ECU) atRs.35864 as against the ECU of Rs. 35107 during the previous year. Inspite of the abovefavorable factors the Company has incurred net loss of Rs. 27.66 crores for the yearunder review as against Rs. 14.25 crores during the previous year due to the reasonsbeyond control viz. a) provisioning of surcharge and interest amount on deferment of powerbills b) major critical repairs carried out in Plant c) provision of gratuity and leaveencashment consequent upon wage revision and on account of decrease in discount rate asper actuarial valuation. The Company has saved about Rs.6 crores only as compared to Rs.10crores during the financial year 2015-16 as a result of purchase of part of power atcheaper rates through Indian Energy Exchange under Open Access System as Punjab StatePower Corporation Limited (PSPCL) has imposed restrictions on purchasing of Power underOpen Access System w.e.f. September 2016.
In view of the accumulated losses of the Company the Directors regret their inabilityto recommend any dividend for the financial year 2016-17.
Finance and Corporate Debt Restructuring
The CDR Empowered Group had approved the proposal of the Company for One TimeSettlement (O.T.S.) of the outstanding Term Loans and Non Convertible Debentures andsanctioned Working Capital Facilities as on 1st April 2012 on 100% principal basis with acut-off date of 15th November 2012. The final tranche of O.T.S. amount had fallen due on1st April 2015. The Company could not make the payment of the same on due date. At therequest of the Company the CDR Empowered Group (CDR EG) had modified the terms &conditions of terminal payment of the CDR approved One Time Settlement (OTS) Scheme at itsmeeting held on 29th September 2015 which was further amended from time totime. Pursuant to the CDR Scheme approved by CDR EG and consent of Shareholders in theAnnual General Meeting held on 29th September 2016 the Company had issued andallotted a) i) 6605246 equity shares of Rs.10/- each at a price of Rs. 22.95/-each onpreferential basis and ii) 2769200 Fully Convertible Debentures (FCDs) of Rs.100/-eachby way of preferential allotment to the CDR Lenders upon conversion of their outstandingterminal payment and b) 406000 Non Convertible Debentures (NCDs) of Rs. 100/- each byway of preferential allotment to the CDR Lenders to the extent of Mark to Market loss inrespect of fresh equity issued by PACL. These FCDs and NCDs are carrying coupon rateequivalentto base rate of IDBI Bank Limited i.e. 10% p.a. payable six monthly basis.
During the financial year under review the Company did not raise funds by way of fixeddeposits.
The Company has become a Sick Industrial Company within the meaning of Section 3 (1)(o) of the Sick Industrial Companies (Special Provisions) Act 1985 (SICA) and a referencemade to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15 ofthe SICA was registered as BIFR Case No. 152/2015. However pursuant to the NotificationsS.0.3568(E) & S.O. 3569(E) dated 25th November 2016 issued by the Ministryof Finance SICA has been repealed with effect from 1st December 2016 and allreferences or inquiry pending before BIFR and/or AAIFR have abated. Accordingly thereference of the Company to BIFR stands abated.
Current Operations and Outlook
During the first Four Months of the current financial year combined averagerealisation was Rs.41200 as compared to Rs. 36660 in the corresponding period of thepreceding financial year. The average capacity utilisation of the Plant was 77% as against91%. The Sales Turnover was Rs.100.00 crores (Gross) with a Provisional Net Loss (beforetax) of Rs.1.50 crores as against Sales Turnover of Rs.104.00 crores (Gross) with a NetLoss (before tax) of Rs.1.70 crores in the corresponding period of the preceding financialyear.
The Company has suffered a loss of around Rs. 10 crores in damage of membranes/otherequipments due to Explosion in PACL plant on 9th May 2017 and Plant was underbreakdown from 10th May 2017 to 31st May 2017 which resulted inproduction loss. The Loss is covered under Insurance Policy and the expenditure will bereimbursed by Insurance Company. The Company is continuing its efforts to reduce its costsand increase its revenues. The major input cost i.e.
Power cost constitutes about 60% of the total production cost. The Government of Punjabhas made announcement to reduce the Cost of Power which will benefit the Company in thecoming years.
The Company has replaced the Membranes of its Plant Unit-1 and Unit-ll and the Anodesand Cathodes recoated in Electrolysers of its Plant Unit-1. This has resulted in reductionin power consumption per unit of Caustic Soda Lye and also lead to increase in capacityutilisation.
In view of the Company having become a Sick Industrial Company the Company hadrequested the Department of Industries & Commerce Government of Punjab to providesimilar concessions to PACL as are being provided to New Industries like exemption ofelectricity duty PI DC (Punjab Infrastructure Development Cess) Octroi etc.
The Government of Punjab has taken a decision to disband the Transport Unions in theState of Punjab. The Company will be benefitted on account of this decision of theGovernment once implemented.
The Company is planning to reduce the age of superannuation of its employees from 60years to 58 years. In this regard the Company has requested the Labour Department Punjabfor amendment in Standing Orders of the Company under the provisions of Section 3 readwith Section 10 of the Industrial Employment (Standing Orders) Act 1946.
In view of the above the Directors are hopeful of improvement in the Company'sfinancial position in the days to come.
Environment and Energy Conservation
The Company's endeavor has always to accord high priority to carryout its operations inan environment-friendly fashion and has been taking appropriate pollution control andsafety measures. Online Monitoring System has been installed at Works as per requirementof Central Pollution Control Board. A Safety Audit of the Plant was got conducted duringthe financial year 2016-17 from the National Safety Council and its recommendations arebeing implemented.
The Company continues to place a great emphasis on energy conservation. The Company isgetting the Energy Audit conducted on regular basis. The information relating toConservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo asrequired to be disclosed pursuant to the provisions of Section 134 (3) (m) of theCompanies Act 2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 is givenin Annexure-I forming a part of this report.
Change in the nature of business
There is no change in the nature of business of the Company.
The Equity Shares of the Company are listed on the BSE Limited. The Annual listing feefor the year 2017-18 has been paid to the BSE Limited.
Your Company continues to develop and upgrade the skills of its human resources. Theprocess of training and development of human resources continued. Industrial relationsremain cordial and peaceful during the year.
The Particulars of Employees and Managerial Remuneration under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) (2) & (3) of the Companies (Appointment andRemuneration of Managerial Personnel)
Annexure - II forming a part of this Report.
Having regard to the provisions of the first proviso to Section 136(1) of the Act theAnnual Report excluding the aforesaid information is being sent to the members of theCompany. The said information will be available for inspection at the Registered Office ofthe Company during working hours. Members interested in obtaining the said informationwill be furnished the same upon receipt of request.
Policy on Sexual Harassment
The Company has Zero tolerance for Sexual Harassment at Workplace and has adopted a"Policy on Sexual Harassment at Workplace" in accordance with the provisions ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and Rules made thereunder. The Policy aims to provide protection to employees at theWorkplace and prevent and redress complaints of sexual harassment and framed with theobjective of providing a safe working environment where employees feel secure. TheCompany has not received any complaint under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
As per SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 theManagement Discussion and Analysis Report for the financial year 2016-17 is annexedherewith as Annexure III forming a part of this report and the Corporate Governance Reportfor the financial year 2016-17 and Auditors' Certificate regarding compliance ofconditions of Corporate Governance are also annexed. The provisions of section 135 of theCompanies Act 2013 in respect of Corporate Social Responsibility are not applicable tothe Company in view of the losses of the Company.
Directors & Key Managerial Personnel
The Punjab State Industrial Development Corporation Limited (PSIDC) nominated Shri D.P.Reddy IAS as Director and Chairman of the Company vice Shri Anirudh Tewari IAS w.e.f. 26thApril 2017. Consequently Shri Anirudh Tewari IAS resigned as a Director of the Companyw.e.f. 26th April 2017. The Board of Directors of the Company has appointedShri D.P. Reddy IAS as Additional Director of the Company w.e.f. 26th April2017.
The PSIDC nominated Shri Rakesh Kumar Verma IAS as Director and Chairman of theCompany vice Shri D.P. Reddy IAS w.e.f. 30th June 2017. Consequently ShriD.P. Reddy IAS resigned as a Director of the Company w.e.f. 30th June 2017.The Board of Directors of the Company has appointed Shri Rakesh Kumar Verma IAS asAdditional Director in the capacity of Chairman the Company w.e.f. 30th June2017.
The PSIDC nominated Shri Moneesh Kumar PCS as its Nominee Director on the Board ofDirectors of the Company in place of Shri Amit Dhaka IAS w.e.f. 2nd January2017. Shri Amit Dhaka IAS resigned as a Director as well as Managing Director of theCompany w.e.f. 2nd January 2017. The Board of Directors of the Company hasappointed Shri Moneesh Kumar PCS as Additional Director of the Company w.e.f. 2ndJanuary 2017 and has also appointed him as the Managing Director of the Company for aperiod of five years w.e.f. 2nd January 2017.
The PSIDC nominated Shri Amit Dhaka IAS as its Nominee Director on the Board ofDirectors of the Company in place of Shri Moneesh Kumar PCS w.e.f. 20th March2017. Shri Moneesh Kumar PCS resigned as a Director as well as Managing Director of theCompany w.e.f. 20th March 2017.The Board of Directors of the Company hasappointed Shri Amit Dhaka IAS as Additional Director of the Company w.e.f. 20thMarch 2017 and has also appointed him as the Managing Director of the Company for aperiod of five years w.e.f. 20th March 2017. The Directors feel that theCompany will benefit tremendously from his rich experience.
Shri Rakesh Kumar Verma IAS and Shri Amit Dhaka IAS hold office as Directors tillthe date of the ensuing Annual General Meeting. Notices in writing have been received froma member under Section 160 of the Companies Act 2013 signifying their intention topropose at the ensuing Annual General Meeting the appointment of Shri Rakesh Kumar VermaIAS and Shri Amit Dhaka IAS as Directors of the Company whose period of office shall beliable to determination by retirement of Directors by rotation.
Smt Indu Malhotra IAS Director of the Company retires as Director by rotation at theensuing Annual General Meeting and being eligible offers herself for re-appointment.
The Directors place on record their appreciation of the valuable contribution made byShri Anirudh Tewari IAS Shri D.P. Reddy IAS and Shri Moneesh Kumar PCS.
During the year under view Shri Pradeep Nauharia resigned as Company Secretary &Sr. General Manager(Co. Affairs) with effect from 19th October 2016. The Board ofDirectors of the Company had appointed CS Sugandha Kukreja as Company Secretary andCompliancy Officer of the Company with effect from 20th October 2016.
The Board of Directors of the Company had appointed Shri Ajay Pal Singh as ChiefFinancial Officer of the Company on 24th May 2017 on Contractual Basis for afurther period of one year with effect from 6th June 2017.
The Audit Committee of the Board comprises of Shri D.C. Mehandru Shri J.S. Mann andShri Amit Dhaka IAS Managing Director with Shri D.C. Mehandru as its Chairman.
Risk Management Committee
The Board of Directors of the Company has constituted a Risk Management Committee tomonitor and review the Risk Management Plan of the Company.
Directors' Responsibility Statement
Pursuantto Section 134(5) of the Companies Act 2013 the Directors confirm that:
(i) In the preparation of the annual accounts for the financial year ended 31"March 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures;
(ii) 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 at the end of the financial year and ofthe loss of the Company for the period under review;
(iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) The Directors have prepared the annual accounts for the financial year ended31" March 2017 on a going concern' basis;
(v) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
(vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Declaration of Independent Directors
All the Independent Directors have met requirements specified under Section 149 (6) ofthe Companies Act 2013 regarding holding the position of 'Independent Director' andnecessary Declaration from each Independent Director under Section 149(7) of the Act hasbeen received. The Independent Directors have held a separate meeting during the yearunder review.
Related Party Transactions Policy
During the year under review the Company has not entered into any arrangement orcontract or transactions with related parties except the remuneration paid to the KeyManagerial Personnel.
Vigil Mechanism and Whistle Blower Policy
The Board of Directors of the Company had adopted the Vigil Mechanism and WhistleBlower Policy of the Company. The same has also been placed on the Company's Websitewww.punjabalkalies.com.
Pursuant to the provisions of the Companies Act 2013 and under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anAnnual Performance Evaluation of its own performance and all the Directors individually.
The evaluation of Non-Independent Directors Chairman and the Board as a whole was doneat a separate meeting by the Independent Directors.
M/s. S. Tandon & Associates Chartered Accountants (Regn. No. 006388N) and M/s.A.K. Sood & Associates Chartered Accountants (Regn. No. 000072N) had been appointedas Auditors of the Company in the 39th Annual General Meeting (AGM) held on 29thSeptember 2014 for a period of 3 (Three) years in terms of provisions of Section 139 ofthe Companies Act 2013 to hold office from the 39th AGM to the 42ndAGM in the year 2017 (subject to ratification by the members at every Annual GeneralMeeting). Accordingly the tenure of M/s. S. Tandon & Associates CharteredAccountants and M/s. A.K. Sood & Associates Chartered Accountants as Auditors of theCompany shall conclude in the ensuing Annual General Meeting. The Board of Directors placeon record their appreciation for the services rendered by M/s. S. Tandon & AssociatesChartered Accountants and M/s. A.K. Sood & Associates during their tenure as Auditorsof the Company. Further the Board recommends the appointment of M/s Hari S. &Associates Chartered Accountants (Regn No.007709N) as Auditors of the Company in place ofretiring auditors M/s. S. Tandon & Associates Chartered Accountants and M/s. A.K.Sood & Associates Chartered Accountants in terms of provisions of Section 139 of theCompanies Act 2013 for the approval of members in the ensuing Annual General Meeting tohold office from the conclusion of the ensuing Annual General Meeting till the conclusionof the fifth consecutive Annual General Meeting in the year 2022 (subject to theratification by members at every Annual General Meeting). Certificate from the proposedauditors has been received to the effect that their appointment if made would be withinthe limits prescribed under Section 139 of the Companies Act 2013.
The Board has subject to the approval of the Shareholders appointed M/s. J.K. Kabra& Co. Cost Accountants as Cost Auditors of the Company for conducting an audit of thecost accounting records of the Company in respect of the financial year 2017-18.
M/s. A. Arora & Co. Practising Company Secretaries were appointed as SecretarialAuditors of the Company for the Financial Year 2016-17. Their Secretarial Audit Report ofthe Company for the financial year ended 31st March 2017 is annexed asAnnexure-IV to this Report. The Report does not contain any qualification. M/s. A. Arora& Co. Practising Company Secretaries were reappointed as Secretarial Auditors of theCompany for the Financial Year 2017-18.
Extract of Annual Return
Pursuant to Section 134 (3)(a) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of Annual Return in FormMGT-9 is annexed as Annexure-V to this Report.
Your Directors place on record their appreciation of the cooperation and supportextended by the Central and State Governments Financial Institutions Punjab StateIndustrial Development Corporation Limited Punjab State Power Corporation LimitedCompany's Bankers and esteemed customers.
Your Directors also acknowledge the valuable contribution made by the members ofmanagement team staff and workforce.
| ||For and on behalf of the Board |
| ||Sd/- |
|Place : Chandigarh ||(RAKESH KUMAR VERMA) |
|Date : August 16 2017 ||Chairman |