TO THE MEMBERS
1. Your Directors are pleased to present the 41st Annual Report covering the businessand operations along with the Audited Standalone and Consolidated Financial Statements ofthe Company for the financial year ended on March 31 2017.
2. FINANCIAL RESULTS:
The financial performance of your Company for the year ended March 31 2017 issummarized below:
| || || |
(Rupees in Lac)
|Particulars ||Consolidated* ||Standalone |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Revenue from Operations and Other Income ||53227 ||55404 ||43655 ||36930 |
|Earnings before Interest Depreciation & Tax & Exceptional item (EBIDTA) ||2691 ||5671 ||3451 ||3816 |
|Depreciation/Amortisation ||1606 ||1675 ||1431 ||1544 |
|Finance Cost ||2701 ||4966 ||1807 ||2147 |
|Profit / (Loss) before Tax & Exceptional item ||(1616) ||(970) ||213 ||125 |
|Exceptional (Expenses) / Income ||- ||2352 ||- ||3446 |
|Profit / (Loss) before Tax (PBT) ||(1616) ||1382 ||213 ||3571 |
|Tax Expenses: || || || || |
|Pertaining to current period ||- ||167 ||- ||122 |
|Mat Credit entitlement ||- ||(113) ||- ||(113) |
|Excess / Short provision for earlier years ||(46) ||- ||- ||- |
|Total Tax Expenses ||(46) ||54 ||- ||9 |
|Profit / (Loss) after Tax (PAT) ||(1570) ||1328 ||213 ||3562 |
|Earning per share (EPS) || || || || |
|Basic and diluted (in Rs.) (not annualized) ||(12.80) ||10.83 ||1.74 ||29.05 |
a) *Consolidated accounts consist of standalone and overseas subsidiary Companies andJoint Venture Company with the proportion of shareholding by group.
b) Figures for the previous period have been regrouped to the extent necessary.
Pursuant to proviso to Section 123(1) of the Companies Act 2013 a Company cannotdeclare dividend unless the carried over loss for the earlier years and the depreciationnot provided are set off against the profits of the current year. Therefore theDirectors of the Company deeply regret their inability to recommend any dividend as theprofit for the year is not enough to set off the accumulated losses of the earlier years.
4. TRANSFER TO RESERVES:
For the same reason as mentioned above no amount could be transferred to the GeneralReserve Account.
5. STANDALONE OPERATIONS:
The Directors are pleased to state that the revival steps taken by the Company'sManagement specially to focus on the agrochemicals have shown positive results in the yearunder review. The Revenue from Operations on Standalone basis during the year was Rs. 411crore with a net profit of Rs. 2.13 crore as against the revenue of Rs. 357 crore and aprofit of Rs. 35.62 crore in the previous year with the exceptional income amounting toRs. 34.46 crore on account of one time settlement with State Bank of India. The growth inbusiness is responsible for the improved results.
The Agrochemicals Division continues to be the backbone of the Company. The turnoverincreased by 13% in the current year. The operational workings of the Pharma Division alsoimproved as new products were introduced into the range and more job work was undertaken.The turnover of Pharma Division increased by 32%. The workings of Industrial ChemicalsDivision also showed better results.
6. OPERATIONS OF SUBSIDIARIES JOINT VENTURES ASSOCIATE COMPANIES:
Your Company has three overseas subsidiaries namely- SD AgChem (Europe) NV SintesisQuimica S.A.I.C Argentina and STS Chemicals (UK) Ltd. During the year the operationalresults were as follows:
(i) SD Agchem (Europe) NV: The total income was Rs. 5.30 crore with net profit of Rs.1.29 crore compared to the Income of Rs. 19.64 crore and Profit of Rs. 8.98 crore in theprevious year. The overdue export receivables from SD Agchem have been capitalized andconverted into investment as explained separately in the Report. Necessary accountingadjustments have been made to take this conversion into effect.
Further the subsidiary also successfully completed One Time Settlement of all its debtwith State Bank of India Antwerp.
(ii) Sintesis Quimica S.A.I.C Argentina (SQ):
The total revenue of this Company during the period under review was Rs. 111.98 crorewith a net loss of Rs. 21.60 crore compared to revenue of Rs. 169.73 crore with a net lossof Rs. 41.06 crore during the previous year. Your Company is negotiating with a potentialbuyer to divest SQ the details are separately provided in the Report.
(iii) STS Chemicals (UK) Limited (STS):
There was no commercial activity in the said company throughout the year. However dueto administrative expenses the loss during the period was Rs. (24) lacs against the lossof Rs. (65) lacs during the previous year. Your Company has planned to divest STS asdetailed in Point 7(c).
(iv) During the year the Company has divested its entire stake of 45% in StellarMarine Paints Limited a joint venture.
Accordingly its accounts are consolidated upto the date of divestment i.e. November11 2016.
In compliance with Section 129 of the Act a statement containing requisite detailsincluding financial highlights of the operation of all the subsidiaries in Form AOC-1 isannexed to the report as Annexure 1.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of the subsidiaries are available on the website ofthe Company www.punjabchemicals.com. These documents will also be available for inspectionduring business hours at the Registered Office of the Company.
The Policy for determining material subsidiaries adopted by the Board of Directorspursuant to Regulation 16 of the SEBI (LODR) Regulations 2015 (hereinafter called as"Listing Regulations") can be accessed on the Company's weblinkhttp://punjabchemicals.com/companypolicy.html
7. CONSOLIDATED RESULTS:
Your Company has prepared the Consolidated Financial Statements in accordance withSection 133 of the Companies Act 2013 and Regulation 33 of the Listing Regulations readwith Accounting Standard (AS) 21 (Consolidated Financial Statements) AS 23 (Accountingfor Investments in Associates in Consolidated Financial Statements) and AS 27 (FinancialReporting of Interest in Joint Ventures) notified by the Companies (Accounts) Rules 2014and Companies (Accounting Standard) Amendment Rules 2016. The audited consolidatedfinancial statements together with Auditors' Report form part of the Annual Report.
The consolidated accounts during the period under review show that the total revenue ofRs. 532 crore with a net loss of Rs. 15.70 crore against the total income of Rs. 554 croreand net profit of Rs. 13.28 crore in the previous period having exceptional income of Rs.23.52 crore.
8. KEY DEVELOPMENTS:
Major steps taken by the Management for the revival of the Company are summarizedbelow:
a) Pruning of Debt: i) During the year the Company continued to prune itsdebt. The Company entered into One Time Settlement (OTS) with the Central Bank of Indiafor the outstanding dues including interest and waiver of FITL principal amount. As perthe terms of OTS the Company has settled to pay Rs. 16.03 crore against the totaloutstanding of Rs. 19.71 crore (both interest and FITL principal amount). The company haspaid the initial amount of Rs. 4.01 crore being 25% of the OTS offer to the Central Bankof India and the rest will be paid in the current year (2017-18). The necessary adjustmentin the books of account will be carried out after the compliance of all conditions asspecified in the OTS have been fulfilled. ii) SD Agchem (Europe) NV a wholly ownedsubsidiary of the Company has also successfully completed OTS with State Bank of IndiaAntwerp for settling its total dues of $2.66 million in respect of the restructuredfacilities availed for a compromise amount of $1.850 million.
b) Conversion of Bills receivable into investment: During the year the Company inaccordance with the approval received from Reserve Bank of India has capitalized itsexport overdues of SD Agchem' consisting of Euro 3476978 and USD 87500 valued atRs. 259419394/- into an investment in the subsidiary. This amount was utilized toacquire the stake in the step-down subsidiary Sintesis Quimica SAIC Argentina.Accordingly SD Agchem has allotted 5789 shares of Euro 615 each to the Company.
c) Divestments: As communicated in the earlier Annual Reports the Company has beenexploring opportunities to divest its non-performing assets. In that process thefollowing actions have been taken during the year under review. i) Sintesis QuimicaS.A.I.C Argentina (SQ') now subsidiary of STS Chemicals (UK) Limited [earliersubsidiary of SD Agchem'] because of the unfavorable import and monetary policiesof the Argentine Government and lack of working capital coupled with high inflation andcomplicated labour laws has been suffering huge losses in its operations for many years.Even after reorganization of its debt under Chapter 11 of the United States' BankruptcyCode with the concerned court in a term and form established under the Argentinean Law#24422 of Reorganization and Bankruptcy Law it has not been able to pay off itsliabilities. The results of SQ have been adversely affecting the consolidated financialresults of the Company as well as the net-worth. A buyer (not a related party) hadexpressed interest in acquiring SQ. To meet the requirements of the Argentine Law the dealhas to be done in two phases:
1. In the first phase 97.8% shareholding of SQ held by SD Agchem has been transferredto STS Chemicals (UK) Limited (STS') at 1 making STS a 99.99% shareholderof SQ. SD Agchem continues to hold 1 share of SQ for and on behalf of STS again asrequired by the applicable law.
2. In the second phase the Company will sell its entire shareholding in STS to theprospective buyer and for that purpose the Company will enter into suitable agreementfor sale. Upon completion of the proposed transaction STS will cease to be a WOS of theCompany.
The Company has already posted Postal Ballot Notices along with the forms (physical aswell as e-mail) for seeking the approval of the Members. ii) During the year under reviewthe Company also disposed off its 45% stake in Stellar Marine Paints Ltd.(Stellar') a Joint Venture with Viachem LLC and Mr. B.G. Sampat.
d) Change of Registered office: To reduce recurring expenses the Company hadearlier shifted its Registered Office to a smaller premise in Chandigarh. Now for ease ofadministration the Company has decided to shift the Registered office from the UnionTerritory of Chandigarh to State of Punjab at Agro Division located at Derabassi DistrictMohali subject to the approval from the regulatory authorities and the Members of theCompany.
The Company has already posted Postal Ballot Notices along with the forms (physical aswell as e-mail) for seeking the approval of the Members.
9. STATE OF AFFAIRS OF THE COMPANY:
The State of Affairs of the Company is presented as part of Management Discussion andAnalysis Report forming part of this Report.
The Indian agriculture sector remains the backbone of the nation's economyaccounting for about 15 percent of the country's GDP. Nearly 60 percent of ruralhouseholds rely on agriculture as their principal means of livelihood. To supportcontinued growth the agrochemical industry sector is developing strategies to leverageopportunities involving insecticides and fungicides new labor-saving herbicides moreproducts moving off-patent and innovations in agrochemical solutions. Backed by thegovernment policies such as Make in India and tax reform measures the crop enhancementsolutions are being developed based on best global practices and the latest technologies.Properly designed and executed current initiatives can help India become a globalmanufacturing hub of quality crop protection chemicals.
Barring unforeseen circumstances your Company also expects to grow with the sector.
The Management has taken various steps as detailed in the foregoing paragraphs toimprove the liquidity position of the Company.
As stated earlier Central Bank of India has accepted the proposal for One TimeSettlement (OTS) for the debts of the Company. The necessary adjustment in the book ofaccounts will be carried out after the compliance of all conditions as specified in thesaid OTS.
12. PUBLIC DEPOSITS:
Your Company had not accepted any Public Deposits under Chapter V of the Companies Act2013.
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL
a) Changes in the composition of the Board of Directors and other Key ManagerialPersonnel:
There was no appointment or cessation of Key Managerial Personnel during the year.
b) Independent Directors:
As required under the Companies Act 2013 the Company has three IndependentDirectors on the Board of the Company namely Shri Mukesh D Patel (DIN:00009605) ShriVijay Dilbagh Rai (DIN:00075837) and Shri Sheo Prasad Singh (DIN: 06493455).
The Independent Directors have given the required undertaking for compliance of thecriteria of independence laid down in Section 149 (7) of the Companies Act 2013. The samehas been received and placed before the Board in its meeting held on 25th May 2017.
It may be noted that none of the Independent Director will retire in the ensuing AnnualGeneral Meeting.
c) Retirement by rotation:
In terms of Section 152 of the Companies Act 2013 and the provisions of the Articlesof Association of the Company Smt. Sindhu Seth (DIN:00109298) woman Director of theCompany retires by rotation at the forthcoming Annual General Meeting. Smt. Sindhu Sethbeing eligible has offered herself for re-appointment. The Board of Directors recommendsre-appointment of Smt. Sindhu Seth as Director of the Company liable to retire byrotation.
The brief resume and other details relating to her as stipulated under Regulation36(3) of SEBI (LODR) Regulations 2015 are furnished in the Notice convening the AnnualGeneral Meeting forming part of the Annual Report.
The Non-Executive Directors of the Company had no pecuniary relationship ortransactions with the Company other than receipt of sitting fees and commission andreimbursement of expenses incurred by them to attend meetings of the Company.
Other details of the Directors have been given in the Corporate Governance Reportattached to this Report.
d) Committees of the Board:
The Company's Board has constituted the required Committees prescribed under theCompanies Act and the Listing Regulations. The details of Composition of the Committeesand Attendance of the Committee Members in the meetings is given in the CorporateGovernance Report forming part of this Annual Report.
14. LISTING WITH STOCK EXCHANGES:
The Company's shares continue to be listed at the National Stock Exchange of IndiaLimited and BSE Limited. The Annual Listing fee for the fiscal year 2017-18 has been paidto these Exchanges.
15. ENVIRONMENT AND POLLUTION CONTROL:
The management is fully conscious of its responsibilities for safe and healthyenvironment in and around of its manufacturing sites. Environment health and safety arealways given the top priority. The steps to control wastes and emissions from the plantsare regularly monitored. The Company has the proper Effluent Treatment Plants along withthe incinerator to treat the waste materials. In addition to this the Company has alsotied up with Common Effluent Treatment Plants set up in the nearby areas of themanufacturing sites.
16. WELFARE ACTIVITIES AND CORPORATE SOCIAL RESPONSIBILITY:
i) Welfare Activities:
The Company through SDS Memorial Charitable Trust has taken up various social works forthe betterment of the society. The Company continues to organize a Blood DonationCamp' in the memory of Late Shri S.D. Shroff on 18th December every year. This year 71people including employees donated blood on that day.
ii) Corporate Social Responsibility:
Company's Corporate Social Responsibility (CSR) Policy has been posted on the websitehttp://punjabchemicals. com/companypolicy.html in compliance with the disclosure about CSRPolicy Rules 2014. During the year under review the Company was to spend Rs. 44 lacbased on the average net profit of the last three years on various activities for socialwelfare. Accordingly the activities like upgradation of schools healthcare by way ofmedical camps including eye operations sanitation and drinking water facilities inschools were undertaken. Rs. 43 lac have been spent on these activities. The balanceunspent amount of Rs. 1 lac due to administrative reasons will be spent during thefinancial year 2017-18. The detailed report as per Section 135 of the Companies Act 2013read with the Companies (CSR Policy) Rules 2014 has been attached as Annexure 2.
For other details regarding the CSR Committee please refer to Corporate GovernanceReport which forms part of this Report.
17. RESEARCH & DEVELOPMENT AND QUALITY CONTROL:
The activities of R&D are continuously undertaken to improve upon the existingprocesses decrease of Effluent load and to develop new products and by-products. TheQuality Control is the strength of the Company. All finished products pass throughstringent quality checks to ensure the customer always gets the promised products.
The Company has taken adequate insurance policies for its assets against thepossible risks like fire flood public liability marine etc.
The Company has also taken Directors and Officers insurance policy.
19. EMPLOYEES AND INDUSTRIAL RELATIONS:
The Company has the cordial harmonious and healthy relations with all level of theemployees of the Company. The Company has various Employees' Welfare Schemes such asprovision of medical facilities in the campus Co-operative stores etc. Sports andcultural activities are also given due importance. The Board of Directors placed on recordtheir appreciation for the sincere efforts and commitment of the employees. This has beenlargely responsible for the turnaround in the Company.
Their sense of belongingness is noteworthy and appreciated.
20. REGISTRAR AND SHARE TRANSFER AGENT:
M/s Alankit Assignments Ltd. RTA Division Alankit Heights 1E/13 JhandewalanExtension New Delhi are the Registrar and Share Transfer Agent of the Company for thePhysical as well as Demat shares. The members are requested to contact the Registrardirectly for any of their requirements.
21. EXTRACT OF THE ANNUAL RETURN:
The information required under Section 134 (3) (a) of the Companies Act 2013 (theAct) read together with Section 92 (3) of the Act regarding extract of the Annual Returnis appended hereto as Annexure 3 and forms part of this Report.
22. NUMBER OF MEETINGS OF THE BOARD:
The Board met eight (8) times during the Financial Year 2016-17 the detailsof which are given in the Corporate Governance Report that forms part of this AnnualReport. The intervening gap between any two meetings was within the period prescribed bythe Companies Act 2013.
23. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under sub section 3 (c) of Section 134 of the CompaniesAct 2013 with respect to Directors' Responsibility Statement it is hereby confirmedthat: a) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures if any; b) the Directors have selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atMarch 31 2017 and of the profit and loss of the Company for the year ended on that date;c) the Directors have 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 have prepared the annual accounts of the Company on agoing concern' basis; e) the Directors has laid down internal financial controls tobe followed by the Company and that such internal financial controls are adequate and areoperating effectively; and f) the Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
24. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:
The current policy is to have an appropriate mix of Executive and Independent directorsto maintain the independence of the Board and separate its function of governance andmanagement. As on March 31 2017 the Board consists of 8 Members 2 of whom are ExecutiveDirectors and 3 are Independent Directors and it includes 1 Woman Director as required inthe provisions of the Companies Act 2013. The Board periodically evaluated the need forchange in its composition and size.
The Nomination and Remuneration Committee has formulated a Nomination and RemunerationPolicy under Section 178 (3) of the Companies Act 2013 which lays down criteria fordetermining qualifications positive attributes and independence of a Director andremuneration for the Directors Key Managerial Personnel and senior management levelincluding the appointment of personnel one level below the Key Managerial Personnel. Thesame is appended as Annexure 4 and can be assessed at the weblinkhttp://punjabchemicals. com/companypolicy.html.
25. AUDITORS' REPORTS:
a. Statutory Auditor Report:
The Auditors Report on Standalone Financial Statements does not contain anyqualification reservation or adverse remarks. However the Statutory Auditors haveprovided the following qualification in their Report on Consolidated Financial Statements:"As referred in Note 42 of the attached Consolidated Financial Statement in case ofSintesis Quimica S.A.I.C. a subsidiary of the Holding Company not audited by us theother auditor have issued adverse audit opinion indicating that the financial statementsof the said subsidiary have been prepared on considering the fundamental assumption ofgoing concern which doesn't hold good and the financial statements should have beenprepared at their net realizable value and which is reproduced as under: In our opinionthe Financial Statements referred to in paragraph 1.1 reasonably present in all materialrespects the information of Sintesis Quimica S.A.I.C.'s Financial Position as of March31 2017 in accordance with Argentine GAAP if the Company is considered to be goingconcern.
However there are substantial doubts about the ability of the Company to continue itsoperations and business viability. The Financial Statements referred to in paragraph 1.1does not include the adjustments in assets and liabilities to value them at their netrealizable value as would correspond if the Company enter in a state of compulsoryliquidation.
The operations and financial affairs of Sintesis Quimica S.A.I.C are material andhaving a pervasive effect on the Company's consolidated financial results as at and forthe year ended March 31 2017. In our opinion the assets and liabilities should have beenconsolidated at net realizable values and accordingly assets and liabilities of SintesisQuimica S.A.I.C are overstated at Rs. 12160 lac and Rs. 12236 lac respectively.
However we are informed by the Management that such final net realizable values areyet to be determined at this stage." The Management of the Company took note of thisqualification/ remark but opined after detailed study that Sintesis Quimica S.A.I.CArgentina step down subsidiary is continuing its business operations as at March 312017.
Further the Company is negotiating with a potential buyer for divesting the saidsubsidiary and it is in the process of seeking approval from the members of the Companythrough Postal Ballot. At this stage the impact of overstatement of assets andliabilities are not determinable.
b. Secretarial Audit Report:
The Secretarial Audit Report for the financial year 2016-17 is annexed to this Reportas Annexure 5 and forms part of this Report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.
26. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186:
Particulars relating to loans and guarantees or investments under section 186 of theCompanies Act 2013 are provided in the Note 34 to the standalone financial statement.
27. RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. During the year theCompany had not entered into any contract / arrangement / transaction with related partieswhich could be considered material in accordance with the policy of the Company onmateriality of related party transactions.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at weblinkhttp://punjabchemicals.com/companypolicy.html. Your Directors draw attention of theMembers to Note no. 32 to the standalone financial statements which set out related partydisclosure.
All related party transactions are placed before the Audit Committee for their priorapproval. Prior omnibus approval of the Audit Committee is obtained on yearly basis forthe transactions which are of repetitive nature. The transactions entered into pursuant tothe omnibus and specific approval are reviewed periodically by the Audit Committee. FormAOC-2 pursuant to clause (h) of sub-section 134 of the Companies Act 2013 and Rule 8(2)of the Companies (Accounts) Rules 2014 is enclosed as Annexure 6 and forms part ofthis Report.
28. MATERIAL CHANGES AND COMMITMENTS IF ANY:
No material changes and commitments have occurred between the end of the financial yearand the date of the Report which has the affect on the Financial Statements.
29. PARTICULARS REGARDING CONSERVATION OF ENERGY ETC.:
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure 7 andforms part of this Report.
30. RISK MANAGEMENT:
Pursuant to Schedule V of SEBI (LODR) Regulation 2015 the Company has constituted aRisk Assessment Committee. The details of the Committee and its terms of reference are setout in the Corporate Governance Report forming part of the Board's Report.
The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company has formulatedRisk Management Policy which is posted at the website of the Company under weblinkhttp://punjabchemicals.com/ companypolicy.html.
The Audit Committee also oversee the area of financial risks and controls.
31. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) of SEBI(LODR) Regulations 2015 the Board has carried out an annual performance evaluation ofthe directors individually of the Chairman and of the Board as a whole. The manner inwhich the evaluation has been carried out has been explained in the Corporate GovernanceReport.
32. DETAILS OF FAMILIARIZATION PROGRAMME:
The details of programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are put upon the website of the Company at the link http:// punjabchemicals.com/companypolicy.html
33. PARTICULARS OF EMPLOYEES:
In terms of the provisions of Section 197(12) of the Act read with Rules 5(1) 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the disclosures pertaining to remuneration and other details of the concernedemployees is annexed as Annexure 8.
34. WHISTLE BLOWER POLICY:
The Company has implemented whistleblower policy to deal with any fraudirregularity or mismanagement in the Company. The policy enables any employee or directorto directly communicate to the Chairman of the Audit Committee to report any fraudirregularity or mismanagement in the Company. The policy ensures strict confidentialitywhile dealing with concerns and also that no discrimination or victimization is meted outto any whistleblower. The Whistle Blower Policy has been posted on the website of theCompany and can be assessed at weblink http://punjabchemicals.com/ companypolicy.html.
35. INTERNAL FINANCIAL CONTROLS
The Internal Auditor of the Company periodically audit the adequacy andeffectiveness of the internal controls laid down by the Management and suggestimprovements wherever required. The risks in various departments have been identified. Thecontrols have been established to mitigate those risks and are divided as key and non-keycontrols. Any defficiency in the controls is viewed seriously and corrective actions aretaken to avoid repetition.
36. POLICY ON PREVENTION OF SEXUAL HARRASMENT AT WORKPLACE
Your Company strongly believes in providing a safe and harassment free workplacefor each and every individual working for the Company through various interventions andpractices. It is the continuous endeavor of the Management of the Company to create andprovide an environment to all its employees that is free from discrimination andharassment including sexual harassment. The Company has adopted a policy on preventionprohibition and redressal of sexual harassment at workplace in line with the provisions ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules thereunder for prevention and redressal of complaints of sexualharassment at workplace. During the year ended March 31 2017 no complaints pertaining tosexual harassment was received by the Company.
37. CEO/CFO CERTIFICATION:
In terms of the Listing Regulations. the Certificate duly signed by Shri ShalilShashikumar Shroff Managing Director (CEO) and Shri Vipul Joshi Chief Financial Officer(CFO) of the Company was placed before the Board of Directors along with the annualfinancial statements for the year ended on March 31 2017 at its meeting held on May 252017. The said Certificate is also annexed to the Corporate Governance Report.
M/s. S R B C & Co. LLP Chartered Accountants Mumbai (ICAI Firm RegistrationNo. 324982E/E300003) the existing Statutory Auditors of the Company were reappointed atthe 38th Annual General Meeting (AGM) held on September 23 2014 to hold office till theconclusion of forthcoming 41st AGM for a period of three years. Accordingly they willretire at this 41st AGM.
They cannot be re-appointed as they along with their affiliates have exhausted theirterm of total appointment at the end of the ensuing AGM. The Company therefore have toappoint another Auditor in their place as per the requirement of the Companies Act 2013.
In accordance with the provisions of Section 139 and other applicable provisions ifany of the Companies Act 2013 and the relevant Rules framed thereunder the Board uponthe recommendation of the Audit Committee has proposed to appoint M/s. B S R & Co.LLP Chartered Accountants Mumbai (ICAI Firm Registration No. 101248W/W-100022) asStatutory Auditor of the Company for a term of 5 consecutive years at the ensuing 41st AGMtill the conclusion of 46th AGM in place of retiring Auditors M/s. S R B C & Co. LLPChartered Accountants.
The Company has received a letter from M/s. B S R & Co. LLP Chartered Accountantsconfirming their eligibility to be appointed as Auditors under the relevant provisions ofChapter X of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014. Further the proposed appointment will be within the limits under Section 141 (3)(g)of the Companies Act 2013 and they are not disqualified for appointment.
The Members are requested to consider their appointment on a remuneration to be decidedby the Board for the ensuing Financial Year i.e 2017-18.
39. SECRETARIAL AUDITORS:
The Board upon recommendation of the Audit Committee has reappointed M/s. P.S. Dua& Associates Company Secretaries (CP No. 3934) as the Secretarial Auditor of theCompany for the financial year 2017-18 in terms of Section 204 of the Companies Act 2013and Rules thereunder.
40. COST AUDITORS:
The Board of Directors upon recommendation of the Audit Committee appointed M/sKhushwinder Kumar & Co. Cost Accountant Jalandhar as the Cost Auditor of the Companyto conduct audit of the cost accounts of all the Divisions of the Company for thefinancial year 2017-18. The said firm has submitted a certificate of eligibility for itsappointment. In accordance with the provisions of Section 148 of the Act read with theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditorshas to be ratified by the shareholders of the Company. Accordingly consent of the membersis sought in the ensuing Annual General Meeting. The Cost Audit Report for the financialyear 2015-16 has been filed and the report for the year under review will be filed beforethe due date.
41. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:
As required under the provisions of Investor Education and Protection Fund (Uploadingof information regarding unpaid and unclaimed amounts lying with companies) Rules 2012the Company has uploaded the details of unpaid and unclaimed amount lying with the Companyas on September 9 2016 (date of last Annual General Meeting) on the Company's website ofthe Company at weblink http://punjabchemicals.com/ unclaimedunpaidamount.html as also onthe Ministry of Corporate Affairs' website.
42. MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE REPORT:
(i) MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report on Company's performance industry trendand other material changes with respect to the Company and subsidiaries have been givenseparately in the Annual Report as required under para B of Schedule V of SEBI (LODR)Regulations 2015.
(ii) CORPORATE GOVERNANCE REPORT:
The Company strives to maintain the required standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Company has compliedwith the Corporate Governance Code as stipulated under the Listing Agreement with theStock Exchanges. The Report on Corporate Governance in accordance with para C of ScheduleV of SEBI (LODR) Regulations 2015 forms integral part of this Report. The requisitecertificate from the Practicing Company Secretary confirming compliance with theconditions of corporate governance is attached to the Report on Corporate Governance
Your Directors state that: a) No significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future. b) There is no change in the nature of business of the Company.
Your Directors wish to thank all stakeholders employees and business partnersCompany's bankers and business associates for their continued support and valuableco-operation.
The Directors also wish to express their gratitude to investors for the faith that theycontinue to repose in the Company.
| ||For and on behalf of the Board of Directors |
| ||MUKESH D PATEL |
|Place: Mumbai ||CHAIRMAN |
|Date: May 25 2017 ||DIN:00009605 |
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of theCompanies (Accounts) Rules 2014)
Statement containing salient features of the financial statement ofSubsidiaries/Associate Companies/Joint Ventures Part "A": Subsidiaries
| || || || || |
(Rs. In lac)
|S.No. ||Name of the subsidiary || |
Sintesis Quimica S.A.I.C.
SD Agchem (Europe) NV
|STS Chemicals (UK) Limited |
|1. ||Reporting period for the subsidiary concerned if different from the holding ||Same Reporting Period ||Same Reporting Period ||Same Reporting Period |
| ||company's reporting period. ||Current Year ||Previous Year ||Current Year ||Previous Year ||Current Year ||Previous Year |
|2. ||Reporting Currency ||Peso ||Peso ||Euro ||Euro ||Sterling Pounds ||Sterling Pounds |
|3. ||Exchange rate as on 31.03.2017 ||4.21 ||4.80 ||67.08 ||75.42 ||81.05 ||95.25 |
|4. ||Share capital ||84 ||96 ||7076 ||5021 ||2 ||2 |
|5. ||Reserves & Surplus ||(161) ||714 ||(8749) ||(9664) ||(121) ||(114) |
|6. ||Total Assets ||10641 ||11039 ||82 ||1640 ||106 ||125 |
|7. ||Total Liabilities ||10718 ||10229 ||1755 ||6283 ||225 ||237 |
|8. ||Investments ||- ||- ||- ||- ||106 ||124 |
|9. ||Turnover ||11198 ||16973 ||530 ||1964 ||- ||- |
|10. ||Profit / (Loss) before Taxation ||(2160) ||(4106) ||83 ||945 ||(24) ||(65) |
|11. ||Provision for Taxation ||- ||- ||(46) ||45 ||- ||- |
|12. ||Profit / (Loss) after Taxation ||(2160) ||(4106) ||129 ||900 ||(24) ||(65) |
|13. ||Proposed Dividend ||- ||- ||- ||- ||- ||- |
|14. ||% of Shareholding ||*100 ||*100 ||100 ||100 ||100 ||100 |
|15. ||Country ||Argentina ||Argentina ||Belgium ||Belgium ||U.K. ||U.K. |
*As on March 31 2017 Investment in Sintesis Quimica is through SD Agchem (Europe) NVand STS Chemicals (UK) Limited wholly owned Subsidiaries of the Company.
Part "B" Associates and Joint Ventures
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures
|Sl. No. ||Name of Associates/Joint Ventures || |
Stellar Marine Paints Limited
|1. ||Latest audited Balance Sheet Date ||11th Nov. 2016* ||31st March 2016 |
|2. ||Shares of Associate/Joint Ventures held by the company on the year end || || |
| ||Number ||22470 ||22470 |
| ||Amount of Investment in Associates/Joint Venture ||Rs. 224700 ||Rs. 224700 |
| ||Extend of Holding % ||45% ||45% |
|3. ||Description of how there is significant influence ||Shareholding above 20% ||Shareholding above 20% |
|4. ||Reason why the associate/joint venture is not consolidated ||NA ||NA |
|5. ||Networth attributable to Shareholding as per latest audited Balance Sheet ||-119.91 ||-118.84 |
|6. ||Profit / (Loss) for the year ||(1.07) ||(2.91) |
|i) ||Considered in Consolidation ||-0.48 ||-1.30 |
|ii) ||Not Considered in Consolidation ||-0.59 ||-1.61 |
*Stellar Marine Paints Limited was sold on 11th November 2016 and hence the accountsare consolidated upto that date.
NOMINATION & REMUNERATION POLICY
This Nomination and Remuneration Policy of Punjab Chemicals and Crop Protection Limitedwas approved by the Board of Directors (Board) at their Meeting held on 29.05.2014 andamended by the Board on 30.05.2016 by revising composition of the Committee and byinserting point no. (xiv) of terms of reference.
The Philosophy of the Company is that human resources are the greatest asset of theCompany. The endeavor of the management has always been to create world class humanresources and inculcate belongingness towards the Company. The employees should work inharmony understand the importance of every work and create the work culture which isadoptable and acceptable at all levels.
The responsibility to implement this work culture lies with the top level management.In view of the aforesaid philosophy and in compliance to the provisions of the CompaniesAct 2013 and the Listing Agreement the Board of Directors have constituted the "Nominationand Remuneration Committee" (hereinafter referred to as the"Committee") to oversee the Company's nomination process for the top levelmanagement. The Committee has to specifically identify screen and review individualsqualified to serve as the Executive Directors Non-Executive Directors and IndependentDirectors consistent with criteria approved by the Board and to recommend for approval tothe Board nominate for election at the Annual General Meeting of shareholders.
To fulfill the objective of creating preparing policies of the top level managementand retaining the good efficient and professional human resources the committee shalloversee the appointment of Key Managerial Personnel and senior management level includingthe appointment of personnel one level below the Key Managerial Personnel.
The Committee shall ensure that remuneration so paid to them is reasonable andsufficient to attract retain and motivate the employees.
The committee shall also co-ordinate and overview the annual self evaluation of theperformance of the Board and of individual Directors in the governance of the Company.
Another important responsibility of the committee is to create a sound successionplanning of the senior leadership vital for the robust future of the Company. Thereforethe committee has to adopt a rigorous process to ensure that the Board selects the rightcandidates for the senior leadership positions.
Review of Policy:
The policy is to be reviewed by the Board to ensure it remains consistent with Board'sobjectives and responsibilities.
Publication of Policy:
A copy of this policy is available at the website of the Company(www.punjabchemicals.com). This policy is to be made available to the shareholders of theCompany upon request.
The present composition of the Committee and terms of reference are appended herewith.
NOMINATION AND REMUNERATION COMMITTEE Composition:
In Compliance to the Companies Act 2013 (hereinafter referred to as "Act")and the Listing Agreement the Board of Directors in its meeting held on 29th May 2014changed the name of the Remuneration Committee by renaming it as "Nomination andRemuneration Committee" (hereinafter referred to as the "Committee"). ThisCommittee comprises of the following Directors:
|1. ||Shri Vijay Rai ||: ||Chairman & Member of the Committee |
| ||Independent Director || || |
|2. ||Shri M.D. Patel ||: ||Member of the Committee |
| ||Independent Director || || |
|3. ||Shri S.P. Singh ||: ||Member of the Committee |
| ||Independent Director || || |
|4. ||Smt. Sindhu Seth ||: ||Member of the Committee |
| ||Non-Independent Director || || |
As per the Act the members of the Committee shall be Non-Executive Directors and atleast half of them shall be independent.
Terms of Reference:
The Terms of Reference of the Committee shall interalia include the following:
i) To finalise the criteria for determining qualification experience positiveattributes and independence of persons who are qualified to become Directors (Executiveand Non-Executive) Key Managerial Personnel and at Senior Management level and torecommend to the Board their appointment and / or removal.
ii) To carry out evaluation of performance of Directors as well as Key Managerial andSr. Management Personnel.
iii) To establish the criteria and process to assist the Board and each of itsCommittees in their performance evaluations.
iv) To determine Remuneration for the Directors Key Managerial Personnel and othersenior officers based on the Company's size financial position and trends and practiceson remuneration prevailing in peer companies especially in the manufacturing industry.
v) To recommend for the rewards linked directly to their efforts performancededication and achievements relating to the Company's operations.
vi) To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
vii) To recommend/review remuneration of the Managing Director and Executive Directorsbased on their performance and defined assessment criteria.
viii) To make recommendations to the Board as appropriate for the service conditionsof the Key Managerial Personnel and other senior officers.
ix) a) To develop the process and recommend to the Board for approval of CEO (ManagingDirector) and Succession Plan ("the succession plan").
b) To review the Succession Plan periodically with the CEO develop and evaluatepotential candidates for executive positions and recommend to the Board any change ifrequired under the Succession Plan.
x) To meet atleast once in a year in conjunction with other Committee meetings andBoard Meetings. Additional meetings of the Committee can be held from time to time asdetermined by the Board or the Chairman of the Committee if so requested by any member ofthe Committee.
xi) To administer monitor and formulate detailed terms and conditions of theEmployees' Stock Option Scheme as and when the Company comes with the scheme and torecommend:
a) The quantum of options to be granted under Employees' Stock Option Scheme peremployee and in aggregate;
b) The conditions under which option vested in employees may lapse in case oftermination of employment for misconduct;
c) The exercise period within which the employee should exercise the option and thatthe option would lapse on failure to exercise the option within the exercise period;
d) The specified time period within which the employee shall exercise the vestedoptions in the event of termination or resignation of an employee;
e) The right of an employee to exercise all the options vested in him at one time or atvarious points of time within the exercise period;
f) The procedure for making a fair and reasonable adjustment to the number of options.
g) The granting vesting and exercising of options in case of employees who are on longleave and the procedure for cashless exercise of options.
xii) A member of the Committee is not entitled to be present when his or her own salaryor fee is discussed at a meeting or when his or her performance is being evaluated.
xiii) To carry out any other function as is mandated by the Board from time to time and/ or enforced by any statutory notification amendment or modification as may beapplicable.
xiv) To change the composition of the Committee from time to time and place the newcomposition or any new term of reference on the website of the Company after approval ofthe Board.
Chairman Nomination and Remuneration Committee
This report is to be read with our letter of even date which is annexed as"Annexure A" and forms an integral part of this report.
Annexure A to Secretarial Audit Report
Punjab Chemicals and Crop Protection Limited
SCO No- 183 1st Floor Sector-26 Chandigarh-160019 (CIN: L24231CH1975PLC003603)
Our Report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andbooks of accounts of the Company.
4. Where ever required we have obtained and relied on the management representationabout the compliance of laws rules and regulations and happening of events etc.
5. The Compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedure on test basis.
6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
| ||For P.S. Dua & Associates |
| ||Company Secretary |
|Place: - Ludhiana ||P.S. Dua |
|Date :- 25 May 2017 ||FCS No. 4552 C P No. 3934 |
ANNEXURE 7 TOTHE DIRECTORS' REPORT
CONSERVATIONOF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOINACCORDANCE WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)RULES 1988.
A) CONSERVATION OF ENERGY
a) Steps taken for Conservation of Energy and Impact:
Required modifications in the process and re-engineering in the plants arecarried out to increase production as well as to conserve energy per unit ofproduction.
Boiler automation is carried out by installing VFD to save power.
Natural cooling tower and new Air Compressors installed to save power.
Use of cooling water instead of chilled water in winter season.
Screw Brine Compressor and bigger size Brine Compressor installed to take loadof whole plant and save power and replaced the old one.
Use of LED lamps instead of CFL lamps.
b) Steps taken by the Company for utilizing alternate sources of energy:
The working is being done on a proposal to use pet coke in existing husk/coalfired boilers to reduce cost of generation of steam c) Capital investment on energyconservation equipments:
The Company has spent Rs. 20 lacs (approx.) on energy conservation items andequipments. The company also continuously monitors the energy conservation and make therequired investment wherever required.
Above efforts and monitoring helps in energy conservation and save cost.
B. TECHNOLOGY ABSORPTION:
(i) The efforts made towards technology absorption;
Inhouse technologies to improve upon the efficiency and quality of the products areused. Also technologies are developed and upgraded for the new product as per theavailable infrastructure.
(ii) Benefits derived as a result of the above efforts e.g. Product improvement andcost reduction product development import substitution etc.
The simplified processes reduce the cost of production with better quality andadditional safety. Environment friendly processes are tried/developed.
Various foreign and domestic customers have carried out the audit of manufacturingsites and approved the same to get the products manufactured.
(iii) Technology imported during the last 3 years:
The Company has not imported any technology.
(iv) The expenditure incurred on Research and Development:
| ||2016-17 ||2015-16 |
|a) Capital ||- ||- |
|b) Recurring ||97 ||61 |
|c) Total ||97 ||61 |
|d) Total R &D expenditure as %age of total turnover ||0.25% ||0.12% |
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.
| || ||(Rs. in lac) |
| ||2016-17 ||2015-16 |
|i) Earned ||23949 ||22909 |
|ii) Used ||6615 ||6998 |
For and on behalf of the Board of Directors
MUKESH D PATEL
Date: May 25 2017
DISCLOSURE REQUIRED UNDER SECTION 197 (12) OF THE COMPANIES ACT 2013 READ WITH RULE5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
|Requirements || || || || |
|1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2016-17 and percentage increase / (decrease) in the remuneration of each director. ||Director's Name ||Disclosure Remuneration in Rs. lac ||Ratio to MRE ||% increase/ (decrease) in remuneration in 2016-17 over 2015-16 |
| ||Shri M.D. Patel ||3.30 ||0.79 ||22.22 |
| ||Shri Shalil Shroff Managing Director ||68.10 ||16.29 ||9.19 |
| ||Shri Vijay Rai ||3.30 ||0.79 ||37.5 |
| ||Capt. S. S. Chopra ||1.50 ||0.35 ||- |
| ||Smt. Sindhu Seth ||1.50 ||0.35 ||11.11 |
| ||Shi Sheo Prasad ||2.70 ||0.64 ||63.64 |
| ||Shri SS Tiwari* ||1.20 ||0.29 ||-94.68 |
| ||Shri Avtar Singh Whole Time Director ||65.37 ||15.63 ||20.01 |
* Shri S.S Tiwari was Whole Time Director (WTD) upto 28.05.2015 and hence theremuneration paid to him during the financial year 2015-16 includes the remuneration asWTD and sitting fees as Non-Executive Director
2. The percentage increase in remuneration of Chief Financial Officer and CompanySecretary in the financial year 2016-17.
|Name ||Designation ||Remuneration (in Rs. lac) ||% increase in remuneration |
|Shri Punit K Abrol ||Company Secretary ||42.31 ||30.65 |
|Shri Vipul Joshi ||Chief Financial Officer ||53.88 ||18.09 |
| ||Median FY 2015-16 ||Median FY 2016-17 ||% increase/ decrease |
| ||(in Rs.) ||(in Rs.) || |
|3. The percentage increase in the median remuneration of employees in the financial year. ||430371 ||418523 ||-2.75% |
| ||As on 31.03.2017 ||As on 31.03.2016 |
|4. The number of permanent employees on the roll of the Company. ||879 ||835 |
|5. Average percentile increase already made in the salaries of employees other than the managerial remuneration in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. ||Aggregate of remuneration paid to Employees in FY 2016-17 (Rs. in lac) ||Aggregate of remuneration paid to Employees in FY 2015-16 (Rs. in lac) ||% increase / decrease |
| ||4157 ||3782 ||9.68 |
| ||The average increase in salary of employees other than managerial personnel is 9.68 percent and increase in salary of managerial personnel is 14.27 percent from the previous year. The increment given to each individual employee is based on his experience performance market trend and contibution to the Company's progress. |
| ||The increase in managerial remuneration is as per the remuneration approved by the Members and the Central Government based on various parameters like market trend financial position of the Company and the responsibilities. |
|6. Afirmation that the remuneration is as per the remuneration policy of the Company. ||Remuneration paid to Directors KMP's and other employees during the year is as per the Remuneration Policy of the Company. |
1. The Median salary of the staff Members is arrived by taking into account the grosssalary of the employees who worked through the year. The employees who joined or left inany part of the year have not been considered for computing the median.
2. No Stock option was granted to Directors.