Your Directors present their 46th Annual Report together with the Audited FinancialStatements of the Company for the year ended 31st March 2017.
|Particulars ||31.03.2017 ||31.03.2016 |
|Revenue from Operations ||1529.19 ||1837.91 |
|Add: Other Income ||13.79 ||17.94 |
|Total Income ||1542.98 ||1855.85 |
|Profit before interest depreciation and tax ||66.97 ||57.01 |
|Less: Finance Cost ||8.75 ||12.05 |
|Less: Depreciation & amortisation expenses ||30.83 ||29.36 |
|Add: Exceptional Items ||- ||9.17 |
|Profit Before Tax ||27.39 ||24.77 |
|Less: Tax Expenses ||- ||- |
|Profit After Tax ||27.39 ||24.77 |
In view of the accumulated losses the Board of Directors are not in a position torecommend dividend on the Preference Share Capital and Equity Share Capital of theCompany.
STATE OF COMPANY'S AFFAIR
During the year under review the plants were in operation between 8th May '16 to 24thJanuary 17 and from 13th March 17 onwards. The stoppage of plants for 37 daysduring April '16 - May 16 was for Annual Turnaround Maintenance and during January17 March '17 for 47 days was due to shortage of water on account of monsoonfailure and opportunity driven turnaround maintenance including Urea Reactor repair.During the periods of shutdown repairs and maintenance activities were undertaken toimprove the reliability and energy efficiency levels for sustained production. YourCompany produced 100% neem coated urea and achieved 562670 MTs during the year 2016-17compared to 620426 MTs in the previous year. During the year sale of Manufactured Ureawas 542352 MTs and sale of Imported Urea was 128604 MTs.
Your Company has also achieved the best ever energy efficiency levels of 6.664 GCal/MTof Urea since commissioning compared to previous year's 6.8484 GCal/MT. The plants wereoperated using mainly imported Naphtha and Furnace Oil.
Handling of Imported Urea:
Government of India allotted SPIC two coastal ports namely Karaikal and Tuticorin forhandling imported urea in the previous year. Your Company has handled 1.15 lakh tons ofImported Urea during the financial year 2016-17.
Working Capital :
Augmenting working capital to enable sustained operations of your Ammonia and UreaPlants has been assigned prime importance. After a gap of several years your Companyapproached M/s. India Ratings and Research Private Limited a Fitch Group Company forassignment of credit rating. They have assigned BBB. (minus) indicating investment grade.This rating by Fitch is expected to give comfort to the Bankers / Financial Institutionsto consider extending financial assistance to your Company.
Your Company has been able to tie up funds by way of Rupee denominated (unsecured)Masala Bonds as per RBI Guidelines for about Rs.335 crores from one of the Related Partiesto be issued in one or more tranches. During the year under review one tranche was issuedfor Rs.34.09 Crores carrying 9% interest p.a.
Progress in conversion of ammonia plant from naphtha to gas:
Indian Oil Corporation authorized to lay the Natural Gas Pipeline from Ennore toTuticorin has completed the engineering for the pipe line route from Ramnad to Tuticorinand has obtained Environmental clearance for this project. Your Company has obtainedEnvironmental Clearance to operate the plant as mixed feed using Natural gas & Naphthaas Feedstock and continues to be in the state of readiness to complete the process as andwhen gas connectivity is established.
There are no deposits covered under Chapter V of the Companies Act 2013 (the Act)during the year 2016-17 the details of which are required to be furnished. CONSOLIDATEDFINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company are prepared in accordancewith Section 129 (3) of the Act and relevant Accounting Standards Viz. AS-21(Consolidated Financial Statements) AS-23 (Accounting for Investment in Associates inConsolidated Financial Statements) and AS-27 (Financial Reporting of Interests in JointVentures) issued by the Institute of Chartered Accountants of India and forms part of theAnnual Report.
FINANCIAL STATEMENTS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts)Rules 2014 the statement containing salient features of the financial statements of theCompany's subsidiaries associates and joint ventures (in Form AOC-1) is attached to theFinancial Statements. During the year under review no company has become or ceased to beits associates and joint venture companies. The subsidiary company in
Mauritius M/s SPIC Fertilizers and Chemicals Limited (SFCL) was decided to be wound upas on 16th February 2017. The Board of Directors and shareholders of SFCL Mauritius havealso approved the winding up as on 16th February 2017.
Tamilnadu Petroproducts Limited (TPL)
During the year under review revenue from operations was Rs. 1010.55 crores comparingto Rs. 793.55 crores in 2015-16. Operating Profit for the year was at Rs. 67.07 crorescompared to previous year figure of Rs. 12.76 crores. The Net Profit for the year was atRs. 9.55 crores as against Rs. 38.15 crores in the previous year. The decrease in the netProfit was mainly due to provision for tax and interest demand amounting to Rs. 50.14crores. On conservative basis TPL has made full provision in books of accounts for bothtax & interest demand raised by the assessing officer. Crude prices continued toremain volatile ranging from USD 58 per barrel to USD 39 per barrel impacting the toplinehowever through better strategy the company achieved higher margins as compared to theprevious year. In the month of December 2016 cyclonic storm Vardha hit Chennai causingdamage. The Chlor Alkali division was shut down for nearly 10 days due to non-availabilityof power. The LAB plant however was operated at low capacity with captive powergenerators.
Tuticorin Alkali Chemicals And Fertilizers Limited (TFL)
TFL commissioned a CO2 Recovery Plant during mid-October 2016 and since then are usingself generated CO2 gas for its plant operation. The production rate is being ramped up.The turnover for the year was lower at Rs.132.55 crores with a net loss of Rs.34.51crores. The offer of the Asset Reconstruction Company for a settlement was accepted andthe details were submitted to BIFR under a revised Draft Rehabilitation Scheme (DRS) withthe recommendation of IDBI. The DRS is currently under the consideration of NationalCompany Law Tribunal and final orders are expected.
SAFETY HEALTH AND ENVIRONMENT
Adequate care and attention have been bestowed on matters relating to safety healthand environment in the plant. Your Company is certified with the latest version of QMS -ISO 9001:2015 and EMS - ISO 14001:2015 Standards and has received two safety awards fromthe Government of Tamilnadu.
Your Company conducted health camps to create awareness on certain health relatedmatters viz. Eye camps and Cancer / Diabetes awareness. Tree planting activity was takenup in the presence of TNPCB Officials bearing in mind the need to care for environment inand around the plant.
HUMAN RESOURCE AND INDUSTRIAL RELATIONS
Your Company has taken several initiatives to ensure that the knowledge gained overdecades is shifted down to the next generation of employees. The Company has conductedSupervisory Development / Mentorship Programmes as well as put in place "SuccessionPlan and Long term career growth plans". Your Company continues to provide aconducive work environment and opportunities for development of its employees. IndustrialRelations in the Company have been cordial during the year under review. The number ofemployees as on 31st March 2017 is 641.
EXTRACT OF ANNUAL RETURN
Form MGT-9 as on 31st March 2017 as required under Section 92 of the Act is given inAnnexure I to this Report.
During the year under review there was no change in the Directors of your Company. Mr.M S Shanmugam I.A.S. TIDCO Nominee Director shall retire by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-election. All theIndependent Directors of the Company on the date of this Report have duly submitted thedisclosures to the Board stating that they have fulfilled the requirements set out inSection 149 (6) of the Act and the Listing Regulations so as to qualify themselves to actas Independent Directors. The Board of Directors at their meeting held on 18th May 2017have decided to reappoint Mr. S R Ramakrishnan as Whole-time Director of the Company for aperiod of 3 years from 30th July 2017 and continuation beyond the age of seventy years onrevised remuneration subject to requisite approvals under the Act.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Independent Directors are familiar with their roles responsibilities in the Companynature of the industry business model etc. through familiarisation programmes Documents/ Brochures Reports and Internal Policies of your Company provided to them. Presentationsare made at the Board / Committee Meetings on Company's Performance business strategyrisks involved and global business environment. Details of means of familiarization of thebusiness to Independent Directors are disclosed on the Company's website under thefollowing web link:http://spic.in/wp-content/uploads/policies/Familiarisation-Program-for-Independent-Directors.pdf
KEY MANAGERIAL PERSONNEL
As mentioned in the Report for 2015-16 Mr. K R Anandan was appointed as ChiefFinancial Officer of the Company with effect from 1st July 2016 in the place Mr. A VKumar.
PARTICULARS OF REMUNERATION OF DIRECTORS KMP AND EMPLOYEES
The information required under section 197(12) of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 for the year ended 31stMarch 2017 and forming part of this Report is given in Annexure III to this Report.
M/s. Deloitte Haskins & Sells Chartered Accountants the Statutory Auditors of theCompany shall hold office until the conclusion of the 46th Annual General Meeting. In linewith the policy on rotation of Auditors introduced in the Companies Act 2013 yourCompany has to change the Statutory Auditors from the financial year 2017-18. Accordinglythe Board of Directors at their Meeting held on 18th May 2017 based on the recommendationsof the Audit Committee have decided to appoint M/s. MZSK & Associates CharteredAccountants Chennai as Statutory Auditors of the Company for a period of 5 years from2017-18 subject to approval of Shareholders and ratification at every Annual GeneralMeeting. They shall hold Office from the conclusion of the 46th AGM till the conclusion of51st AGM. The resolution seeking approval of the Shareholders for the appointment andpayment of remuneration to Statutory Auditors has been proposed in the Notice conveningthe 46th AGM.
Mr. P R Tantri Cost Accountant (M. No. 2403) was appointed as the Cost Auditor of theCompany for 2016-17 to carry out the audit of your Company's Cost Accounts and Records offertilizer business. The Cost Audit Report for the year ended 31st March 2016 was filedwithin the time stipulated under the Act. The Board of Directors at their meeting held on18th May 2017 on the recommendation of the Audit Committee have re-appointed Mr. P RTantri Cost Accountant as Cost Auditor for 2017-18 at a remuneration of Rs.100000/-plus reimbursement of actual out-of-pocket expenses . As required under Section 148 of theAct and Rule 14 of the Companies (Audit & Auditors) Rules 2014 ratification byMembers is sought for the payment of remuneration to the Cost Auditor.
SECRETARIAL AUDIT REPORT
In terms of Section 204 of the Act and the Rules made thereunder your Company hasappointed Ms. B Chandra Practicing Company Secretary Chennai as Secretarial Auditor. TheSecretarial Audit Report as furnished is given as Annexure IV to this Report. There are noqualifications reservations or adverse remarks made by the Secretarial Auditor in theReport.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134 (3) of the Act your Directors tothe best of their knowledge and belief and according to information and explanationsobtained from the management confirm that:
(a) in the preparation of the annual financial statements for the year ended March 312017 the applicable Accounting Standards had been followed along with proper explanationrelating to material departures;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2017 and of the Profit of theCompany for the year ended on that date;
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) they have laid down proper internal financial controls to be followed by theCompany and such controls are adequate and operating effectively;
(f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
No loans or guarantees were given by the Company under Section 186 of the Act duringthe year under review. Your Company invested in 109300 equity shares of Rs. 10/- each ofOPG Power Generation Pvt Ltd (OPG) @ Rs. 11/- per share in order to qualify as captiveuser under Group Captive Scheme of the Electricity Rules 2005 for availing 10 MW ofpower. Subsequently during the year the equity holding in OPG was reduced to68700 equity shares to meet the regulatory requirements.
Your Company proposes to invest around Rs 12 crores in "M/s. Greenam EnergyPrivate Limited" a company incorporated for setting up a 25 29 MW DC solarproject at an estimated cost of Rs. 136 Crores. The technology to be adopted by thecompany using fl oating panels to generate solar power will be the first of its kind inIndia.The approval of shareholders is being sought at this AGM for the proposedinvestment.
RELATED PARTY TRANSACTIONS
The transactions entered into during the financial year with related parties as Definedunder the Act were in the ordinary course of business and at arm's length basis. Detailsof Contracts / arrangements with related parties as required under Section 188 (1) and 134(h) of the Act have been disclosed in Form AOC-2 and is attached as Annexure VI. Asrequired under Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 approval of the Members is being sought at the 46th AGM for thetransactions with Related Parties considered material in nature.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There were no material changes or commitments affecting the financial position of yourCompany that has occurred between the end of the financial year i.e. 31st March 2017 andthe date of this Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOConservation of Energy
Your Company has an Energy Audit group which identifies potential areas forimprovement scans the environment for innovative and reliable solutions and considersproposal for implementation. Efforts are continuously being taken to reduce energyconsumption in the plants
Some of the activities implemented during the year are:
To avoid the energy loss and improve reliability of the Fired heaters theconvection tube bundle was renewed in Raw Naphtha Vapouriser. Also Convection tube coilsof Process Naphtha Vapouriser were replaced with new tubes.
To avoid the energy loss and to improve the efficiency Combustion Air Preheaterexchanger cold module was renewed.
As energy conservation activity Primary Reformer and High Temperature Shift IIbed catalyst were completely renewed with new catalyst in Ammonia plant. Also Secondaryreformer catalyst was discharged sieved and charged back. No top up was made.
To avoid energy loss through the heat exchangers several exchangers re-tubed /replaced.
To reduce the energy loss and improve the performance Superheater coils inBoiler (South) was renewed. Cold Air heater tubes in Boiler (North) & (South) wererenewed. Additional Steam Generation Unit Air Preheater 4th pass tubes were renewed.
As energy conservation activity in Urea cooling tower existing high capacitycooling water supply pump was replaced with one low capacity pump.
Performance of all pumps and compressors were studied with our energy Auditgroup. Various energy saving technologies like provision of VFD speed reduction impellertrimming and smoothening the fl uid passage with special coatings were implemented.
Steam system audit were carried out periodically and the faulty traps and leakshas been addressed immediately. Technology Absorption - Nil
Foreign Exchange Earnings and Outgo:
The foreign exchange earned in terms of actual inflows and the foreign exchange outgoin terms of actual outflows during the year:
| || ||(Rs.in Lakhs) |
|Particulars ||2016-17 ||2015-16 |
|Foreign Exchange earned ||153.84 ||85.37 |
|Foreign Exchange outgo ||114864.79 ||125377.23 |
INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM
Your Company has adequate internal financial control systems to monitor businessprocesses financial reporting and compliance with applicable regulations. The systems arereviewed by Internal Auditors and reported to the Audit Committee of the Board foridentification of deficiencies and necessary time bound actions are taken to improveefficiency at all the levels. The Committee also reviews the internal auditors' reportkey issues significant processes and accounting policies. SAP implementation wassuccessfully put in place during the year under review.
Risk Management is an integral part of the business process. The Company has a RiskManagement Committee and a Policy on Risk Management to identify and draw mitigation plansto manage risk. The Audit Committee of the Board reviews the risk management reportperiodically.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
Corporate Governance Report 2016-17 along with the Certificate of the StatutoryAuditors M/s. Deloitte Haskins & Sells Chartered Accountants confirming complianceto conditions of Corporate Governance as stipulated in the Listing Regulations forms partof this Report.
PERFORMANCE EVALUATION OF THE BOARD COMMITTEES AND DIRECTORS
Your Company has a structured framework for evaluation of the Individual DirectorsChairperson Board as a whole and its Committees. The Independent Directors at theirMeeting held on 30th January 2017 evaluated the performance of Non-Independent DirectorsBoard as a whole Chairperson and assessed the quality quantity and timeliness of flow ofinformation between the Company Management and the Board that is necessary for the Boardto effectively and reasonably perform their duties. The Board of Directors at theirMeeting held on 18th May 2017 evaluated the performance of all Directors and the Board asa whole and its Committees through circulation of questionnaires to assess theperformance on select parameters related to roles responsibilities and obligations of theBoard and functioning of the Committees. The evaluation criteria was based on theparticipation contribution and offering guidance to and understanding of the areas whichare relevant to the Directors in their capacity as Members of the Board/Committees.
NUMBER OF MEETINGS OF THE BOARD
During the year under review six Board Meetings were held the details of which areprovided in the Corporate Governance Report.
The details of the composition and meetings of the Audit Committee held are provided inthe Corporate Governance Report.
POLICY ON MATERIAL SUBSIDIARY
The Board had approved the Policy on Material Subsidiary as per the Listing Regulationsand is available on the Company's website under the web link:http://spic.in/wp-content/uploads/ policies/Determining-Material-Subsidiary-Policy.pdf.
NOMINATION AND REMUNERATION POLICY
Your Company has a Nomination and Remuneration Policy as required under Section 178(3)of the Act and the Listing Regulations. The details of the Policy are given in Annexure IIto this Report.
POLICY ON RELATED PARTY TRANSACTIONS
The Policy on Related Party Transaction as required under the Listing Regulations isavailable on the Company's website under the weblink:http://spic.in/wp-content/uploads/policies/ Policy-on-Related-Parties.pdf.
POLICY ON INSIDER TRADING
Your Company has a Code of Conduct for Prevention of Insider Trading with a view toregulate trading in securities by the Directors and designated employees of the Company inline with SEBI (Prohibition of Insider Trading) Regulations 2015.
POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013. (POSH)
The Company has zero tolerance for sexual harassment at workplace. A policy is in placeand an Internal Complaints Committee has been constituted which is monitoring theprevention prohibition and redressal of sexual harassment at workplace in line with theprovisions of POSH and the Rules made there under. There were no complaints reported underthe POSH during the year under review.
Pursuant to the provisions of Section 177 of the Act and the Listing RegulationsWhistle Blower Policy for Directors and employees to report genuine concerns or grievanceshas been put in place and a Vigil Mechanism established the details of which areavailable on the website of the Company under weblink:http://spic.in/wp-content/uploads/policies/Whistle-Blower-Policy-and-Vigil-Mechanism.pdf.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has a CSR Policy in line with the provisions of the Act. As a responsiblecorporate citizen your Company in its endeavour to contribute for the sustaineddevelopment and growth of the Society has taken several initiatives. Your Company is notrequired to spend towards CSR activities in view of absence of Profits computed underSection 198 of the Act. However the details of CSR initiatives undertaken voluntarily byyour Company are given in Annexure V to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The year 2016-17 witnessed erratic monsoon which affected fertilizer consumptionincluding Urea. Due to this aberrations in seasonal monsoon the inflow to the majorreservoirs was also low resulting in the reduced cropping in command area in KarnatakaAndhra Pradesh and Tamil Nadu. Crop shifts and reduced area under coarse grains resultedin reduced consumption of chemical fertilizers including Urea. In spite of unfavourableseasonal conditions India retained the position of second largest consumer of fertilizersin the world.
During the fiscal year 2016-17 the indigenous production imports supplies to themarket and sale of Urea was less than that of the previous year. India produced a total of24.201 million ton of Urea which is 1.1% lesser than the production recorded during theprevious year. The import of Urea under Government of India account during the year stoodat 5.481 million ton which is 35.3% less over the last year. The total supplies to themarket stood at 30.00 million ton which is less by 8 % that of the previous year. The saleof urea during the year recorded 29.607 million ton which is 7.4 % less than that of theprevious year. (Source: Ministry of Chemicals and Fertilizers Government of India).
The capacity utilization of Urea has declined from 95.2% to 90.8% in the current year.Due to the failure of north east monsoon there was a drastic reduction in the consumptionof Urea especially in the southern states. As a result the stocks available in the markethad increased to 1.337 million tonnes which is 43.5% higher than that of the previousyear.
Comparison of All India Urea Production Import Supplies and Sales with previous year.
Government of India is taking all out efforts to introduce Direct Benefit Transfer(DBT) of subsidy to farmers. The Department of Fertilizers is implementing this scheme inall states through the lead fertilizes supplier (LFS). Your Company being the LFS forTamil Nadu and Pondicherry is taking necessary actions to implement the introduction ofsale of fertilizers through Electronic Point of Sales (ePOS) Devices to capture the buyerdetails. Once this scheme is rolled out in all the States 100% of eligible subsidywill be paid to the manufacture / company after the purchase of the fertilizer by thebeneficiary captured through this ePOS machines. Because of this there will be a majorimpact on the working capital requirement as "on account payment" of subsidyupon receipt of stocks are target market will be withdrawn. Tissue Culture Business: Thefinancial year 2016-17 recorded the highest ever turnover of Rs. 855 Lacs. For the firsttime after introduction of Gerbera we have recorded the highest sales of 1.236 Millionplants. As part of the business development initiatives we have initiated export ofGerbera Plants to Sri Lanka and entered in a virgin market namely Uttar Pradesh.
As mentioned in the last year's report the completion of gas pipeline infrastructureby IOC and steady supply of gas are important requirements for stable operation of yourCompany. Your company has also started working on modernization of the Ammonia/Urea Plantsto achieve lower energy consumption to improve reliability and cost effective capacityexpansion with mixed feedstock consisting of Naphtha and Natural Gas. Your company hasengaged a leading process licensor M/s KBR to carry out Basic Engineering & Designpackage for this purpose. This investment will have to be in line with the gasavailability so that we are ready in time.
Your Company is grateful for the co-operation and continued support extended by theDepartment of Fertilizers Ministry of Chemicals and Fertilizers Ministry of Petroleumand Natural Gas Ministry of Agriculture Ministry of Corporate Affairs and otherDepartments of the Central Government the Government of Tamilnadu Governments of otherStates Tamilnadu Industrial Development Corporation Limited Tamilnadu Generation andDistribution Corporation Ltd Financial Institutions and Banks. The Directors appreciatethe dedicated and sincere services rendered by all the employees of your Company.
| ||For and on behalf of the Board of Directors |
| ||ASHWIN C MUTHIAH |
|Place : Chennai ||(DIN:00255679) |
|Date : 18 May 2017 ||Chairman |
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Committee (NRC) constituted under the Companies Act2013 (the Act) and the Listing Agreement is to guide the Board to identify persons who arequalified to become Director and who may be appointed in Sr. Management and recommend tothe Board the appointment and removal of Director KMP and Senior Management Personnel aswell in accordance with the criteria laid down for determining qualification positionattribute and independence of a Director and recommend to the Board a Policy relating toremuneration of Director Key Managerial Personnel and other employees. The Nomination andRemuneration Policy (Policy) of Southern Petrochemical Industries Corporation Limited(SPIC) has been formulated with the objective of guiding the Board in identifying talentrecognise talent and retain talent for achieving Organisational goals with growth for allthe Employees and Stakeholder value enhancement. SPIC acknowledges that it is important toprovide a mix of reasonable remuneration an atmosphere congenial for decision making bythe Directors / Sr. Management Personnel and working atmosphere to the Employees. ThePolicy applies to the Board of Directors Key Managerial Personnel Senior Management andthe Employees of the Company. Senior Management means employees of the Company who aremembers of its core management team excluding the Board of Directors including FunctionalHeads.
Criteria for appointment of Independent Directors / Non-Executive Directors
The proposed appointee as Independent Director shall meet the criteria specified in therelevant provisions of the Companies Act 2013 and the Listing Agreement with stockexchanges. He shall declare his independent status prior to his appointment to the Boardand maintain the same during his tenure as an Independent Director. The IndependentDirector and the Non-Executive Director shall possess adequate qualification necessaryskills and expertise and business experience including board procedures.
Criteria for appointment of Executive Directors
The Executive Director could be a Managing Director (MD) Manager with substantialpowers of Management as Defined under the Companies Act 2013 or Whole-time Director.
The appointee(s) shall have requisite educational qualification with exposure in thebusiness line of the Company. He shall have adequate skills and leadership qualities tolead a team of professionals or as the case may be the function assigned to him. Dependingon the role and responsibility he shall have had hands-on experience in the relevantfiled. The suitability of a candidate shall be determined on a case to case basis andrecommended by the NRC for consideration of the Board. After his appointment being aDirector of the Company he shall adhere to the Code of Business Conduct and Ethicsstipulated for Directors Senior Management Personnel Officers and Employees.
Remuneration for Directors
(a) For Executive Directors:
The remuneration of the Whole-time / Executive Directors shall comprise of a fixedcomponent and a performance linked pay as may be recommended by the NRC and approved bythe Board of Directors / Shareholders. Remuneration trend in the industry and in theregion for a similar position academic background qualifications experience andcontribution expected of the individual will be considered in fixing the remuneration. TheExecutive Directors are not eligible to receive sitting fees for attending the meetings ofthe Board and Committees of the Board.
(b) For Non-Executive Directors including Independent Directors:
The Non-Executive Directors will be paid sitting fees for attending the BoardMeetings and Meetings of the Committees of the Board as per the provisions of the Act theArticles of Association of the Company and as recommended by the NRC. The fees payable tothe Independent Directors and Women Directors shall not be lower than the fee payable toother categories of Directors. In addition to this the travel and other expenses incurredfor attending the Meetings are to be met by the Company. Subject to the provisionsof the Act and the Articles of Association the Company in General Meeting may by specialresolution also sanction and pay to the Non-Executive Directors remuneration / commissionin accordance with the relevant provisions of the Act. The Company shall have no pecuniaryrelationship or transactions with any Non-Executive Directors.
Criteria for appointment of Key Managerial Personnel (KMP)
The Company is required to appoint a MD/Manager/CEO and in their absence a Whole-timeDirector as one of the KMPs besides a Company Secretary (CS) and a Chief Financial Officer(CFO). The Chief Executive Officer (CEO) can also be a Member of the Board. Thequalification experience and stature of the CEO could be in line with that of theExecutive Directors. Where the CEO is the KMP he shall act subject to the superintendenceand control of the Board and have the substantial powers of Management. The CS shall havethe qualification prescribed under the Companies Act 2013 and requisite experience todischarge the duties specified in law and as may be assigned by the Board/MD from time totime.
The CFO shall hold Degree/Diploma in Finance from reputed institutions such as theICAI ICMA IIMs leading recognised Universities etc. with good work experience infinance function including but not limited to funding taxation forex and other corematters. As required under the Listing Agreement the appointment of CFO shall be subjectto the approval of the Audit Committee and recommendation of the NRC.
The NRC in exceptional circumstances shall have the discretion to decide whether thequalification expertise and experience possessed by a person are sufficient /satisfactory for the position and to decide the remuneration payable to an appointee underthis Policy on a need base while recommending to the Board.
The Committee shall evaluate at least once in a year the performance of every Directorand Key Managerial Personnel.
Criteria for appointment of Staff Officers and Senior Management Personnel
Manpower resource requirement for various functions shall be determined and approved bythe Managing Director or WTD or such other persons delegated with the powers. Thefunctional heads shall be involved in the process of selection of candidates and theirrecommendations duly considered by the HR Department.
The qualification experience and skill expected of a Sr. Management personnel shall bedetermined on case to case basis depending on the position role and responsibility.
Manner of appointment
The Functional Head shall decide the job description for a position and the requisitequalification and experience expected of the candidates. Candidates may be called forthrough references HR Consultants leading portals advertisements etc. depending onthe exigencies. Screening shall be done by the HR Department in consultation withFunctional Head. The shortlisted candidates may be interviewed by the Functional Head orsome other Senior Departmental Person as may be nominated by him along with the HRRepresentative. Experts or Consultants can also be engaged in this process if required.
Upon deciding the remuneration joining time etc. Offer letter shall be issued to theselected candidate. On due acceptance by the candidate and on his joining the Company afinal appointment letter shall be issued.
The Employees of the Company shall be governed by the Service conditions set out in theService Rules/Standing Orders of the Company as amended from time to time.
Guidelines for fixing remuneration to Employees who are not Directors
The remuneration and other terms of employment are aimed to invite inspire and retaintalent for performing the requisite role. The remuneration package and other termsamenities perquisites etc. for an employee in Senior Management Key Managerial Personsand Officer cadre may be determined on case to case basis depending on the position roleresponsibility qualification and previous experience of the appointee and availability ofpersons willing to accept the offer. Evaluation of Senior Management Personnel will beconditional on successfully completing the period of probation as may be consideredappropriate.
The eligibility to receive performance pay shall be decided based on appraisal of theindividual concerned by his immediate superior and approved by the Functional Head or theWhole-time Director with reference to the targets fixed and achieved. The Chairman or theWhole-time Director shall have the authority to moderate the ratings in line with theOrganizational performance.
Remuneration and other benefits to staff cadre employees shall be in terms of the wagesettlements entered into between the Management and the representatives of theStaff/recognised Union from time to time.
In fixing the remuneration structure to the employees due regard shall be given toensure best possible benefits to the employees within the framework of law and consideringthe Organisational goals performance of the Company and sustainability to pay. Thepackage shall maintain a balance between fixed and incentive pay refl ecting short andlong term performance objectives appropriate to the working of the Company.
Employees will also be covered under Group Accident Insurance Health Insurance andDirectors and Officers Liability Insurance as may be applicable to the respective cadre.
Changes to the Policy
The Board may vary the above criteria on need basis. The NRC on its own or at therequest of the Board may review and recommend the Policy from time to time and introducechanges depending on the prevailing economic scenario and manpower requirements and theperformance of the Company.
ANNEXURE - III
DETAILS OF MANAGERIAL REMUNERATION AS REQUIRED UNDER SEC 197(12) OF THE COMPANIES ACT2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014.
i) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year
|Name of the Director ||Designation ||Ratio |
|Mr. S R Ramakrishnan ||Whole Time Director ||13 |
Remuneration to Non - Executive Directors is only by way of sitting fees of Rs.50000/- for attending each Meeting of the Board. Sitting fee is not payable for attendingthe Meetings of the Committees.
ii) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;
|Name ||Designation ||Remuneration % Increase for the FY |
| || ||2016-17 |
|Mr. S R Ramakrishnan ||Whole Time Director ||0 |
|Mr. K R Anandan ||Chief Financial Officer ||0 |
|Mr. M B Ganesh ||Company Secretary ||0 |
During the year there was no increase in the sitting fees of Rs. 50000/- payable tothe Non - Executive Directors.
iii) The percentage increase in the median remuneration of employees in the financialyear - 8%.
iv) The number of permanent employees on the rolls of Company is 641.
v) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration; Nil
The increase in salary of employees other than the managerial personal was based onthe infl ation rate during March 2016 and this has been effected to our employees acrossthe Organisation.
vi) The remuneration paid is as per the Remuneration Policy of the Company. vii)Statement showing the names of the top ten employees in terms of remuneration drawn underRule 5(2) :
|Employee Name ||Designation ||Qualifications ||Experience ||Date of Joining ||Age ||Last Employment & Position held ||Remuneration Received (Rs.) |
|Ramakrishnan S R ||Whole Time Director ||B.E(CHEMICAL) ||2 Yrs 7 M ||30-Jul-2014 ||68 ||Sri Ram Group ||5908728 |
|Anandan K R ||Chief Financial Officer ||CA. CWA. CS ||8 M ||01-Jul-2016 ||54 ||TPL ||4093413 |
|Gopalakrishnan K ||Asst Vice President (Admin & CS) ||BAMADIP(PR) ||13 Yrs 10 M ||01-May- 2003 ||51 ||SICAL Joint Manager-PR ||3302806 |
|Nachiappan N ||Asst Vice President - Imports & Distribution ||B.Sc. M.B.A ||34 Yrs 9 M ||09-Jun-1982 ||57 ||SPIC staff ||3025800 |
|Ravichandran NR ||DGM Projects & Re-Vamp ||B.TECH (ELECTRONICS) ||27 Yrs 3 M ||20-Dec-1989 ||52 ||SPIC EMS Trainee ||2689596 |
|Senthil Nayagam P ||DGM Production ||B.E(CHEMICAL) ||23 Yrs 1 M ||17-Feb-1994 ||46 ||SPIC EMS Trainee ||2294539 |
|Rajagopalan N ||Head - IT ||DIP(ADV COM) B.Sc.M.Sc. ||2 Yrs 4 M ||12-Nov-2014 ||51 ||FREELANCER ||2165379 |
|Venkata Krishnan R ||General Manager - Legal ||B.COM. BL. ML ||2 Yrs 1 M ||11-Feb-2015 ||58 ||GIMPEX LIMITED - GM -LEGAL ||2051565 |
|Madhukar V ||Head - HR ||M.A ||2 Yrs 4 M ||01-Dec-2014 ||49 ||GRUPO AN- TOLIN PUNE PRIVATE LIMITED ||2029680 |
|Palanisamy V ||AGM (Production) - Urea ||B.E(CHEMICAL) ||20 Yrs ||01-Mar-1997 ||43 ||SPIC Trainee ||1896406 |
3 The employment of Whole time Director is contractual and all others are regularemployees.
3 None of the employees mentioned above
- hold either by themselves or along with their spouse and dependent children not lessthan two percent of the equity shares of the Company - is a relative of anydirector or manager of the Company. viii) There are no employees covered under Rule 5 (2)(i) (ii) and (iii) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of whom the details are required to be provided.
| ||For and on behalf of the Board of Directors |
| ||ASHWIN C MUTHIAH |
|Place : Chennai ||(DIN:00255679) |
|Date : 18th May 2017 ||Chairman |
SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LIMITED "SPIC HOUSE" 88 MOUNTROAD GUINDY CHENNAI 600 032 Our report of even date is to be read along with thisletter.
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 refl ected 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 the Management representation about thecompliance 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 procedures 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.
| ||B.Chandra |
|Place : Chennai ||Company Secretary in Practice |
|Date : 16-05-2017 ||ACS No: 20879 C P No: 7859 |
ANNEXURE - VI
Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014)
Disclosure of particulars of contracts/arrangements entered into by the Company duringthe year 2016-17 with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arm's length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arm's length basis : NIL
2. Details of material contracts or arrangement or transactions at arm's length basis:
|a) Name of the related party and nature of relationship ||: Wilson International Trading Pte Ltd Singapore |
| ||Enterprise over which KMP (as per AS-18) is able to exercise significant infl uence |
|b) Nature of contracts/arrangements/ transactions ||: Purchase of Raw materials |
|c) Duration of the contracts / arrangements/ transactions ||: 1st April 2016 - 31st March 2017 |
|d) Salient terms of the contracts or arrangements or transactions including the value if any ||: Rs. 220.42 Crores |
|e) Date of approval by the Board if any ||: 26.05.2016 (Omnibus approval by Audit Committee) |
|f) Amount paid as advances if any ||: -- |
Note: Materiality is determined based on applicable threshold limits as per Rule 15(3)of Companies (Meetings of Board and its Powers) Rules 2014.