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Andhra Petrochemicals Ltd.

BSE: 500012 Sector: Industrials
NSE: ANDHRAPET ISIN Code: INE714B01016
BSE 00:00 | 07 Feb 62.50 -3.70
(-5.59%)
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NSE 05:30 | 01 Jan Andhra Petrochemicals Ltd
OPEN 66.25
PREVIOUS CLOSE 66.20
VOLUME 264944
52-Week high 134.00
52-Week low 61.50
P/E 14.50
Mkt Cap.(Rs cr) 531
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 66.25
CLOSE 66.20
VOLUME 264944
52-Week high 134.00
52-Week low 61.50
P/E 14.50
Mkt Cap.(Rs cr) 531
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Andhra Petrochemicals Ltd. (ANDHRAPET) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the Thirty Seventh Annual Reportof the Company together with the Audited Financial Statements for the Financial Year ended31st March 2021.

CORPORATE OVERVIEW:

Your Company is the manufacturer of Oxo-Alcohols. Oxo-Alcohols consistof the Products viz. 2 Ethyl Hexanol Normal Butanol and Iso Butanol. Your Company is anAssociate of The Andhra Sugars Ltd. and has its Regd. Office at Venkatarayapuram Tanuku.

FINANCIAL RESULTS:

Performance of the Company for the Financial Year ended 31st March2021 is summarised below:

(Rs. in lakhs)

2020-21 2019-20
Net Sales (excl. GST) 56606.74 45593.27
Profit / (Loss) before Interest & Depreciation 14110.16 3581.65
Less: Interest 912.80 152.13
Depreciation 1402.88 1281.18
Profit / (Loss) after Interest and Depreciation before Extra-Ordinary Items 11794.48 2148.34
Exceptional Items - -
Profit / (Loss) Before Tax 11794.48 2148.34
Provision for:
Current Tax 4391.00 760.00
Adjustment of Tax Expense for earlier years (24.17) (0.61)
Deferred Tax (219.72) 0.18
Profit / (Loss) After Tax 7647.37 1388.77
Other Comprehensive Income 376.36 (152.50)
Total Comprehensive Income for the period 8023.73 1236.27
Balance brought forward from previous year 10914.22 9677.95
Profit carried forward to next year 18937.95 10914.22

OPERATIONAL AND FINANCIAL PERFORMANCE:

During the year under review your Company has produced 72027 MTs ofOxo-Alcohols as compared to 66850 MTs in the previous year. Sales during the FinancialYear were 72786 MTs as compared to 65760 MTs in the previous year.

For the Financial Year 2020-21 your Company's Revenue stood atRs.566.07 crores (net of GST) as compared to Rs.455.93 crores (net of GST) for theprevious year. The growth in Revenue is 24.16%.

Your Company has earned a Net Profit (after Tax) of Rs.76.47 croresduring the year under review as against the Net Profit (after Tax) of Rs.13.89 croresearned during the previous year. The increase in Net Profit (after Tax) is 450.54%.

The Net Worth of the Company increased by 35.91% from Rs.223.47 croresas on 31.3.2020 to Rs.303.71 crores as on 31.3.2021. Interest costs of the Companydecreased from Rs.1.14 crores in Financial Year 2019-20 to Rs.0.36 crores in 2020-21following the repayment of liabilities and negotiation of better terms with bankers. Nowyour Company is debt-free.

DIVIDEND:

Considering the Company's performance for the Financial Year 2020-21your Directors felt it would be appropriate to declare the dividend. At the same timeconserving of resources is required to meet future financial requirements of the Company.Hence your Directors are pleased to inform that the Board of Directors at their Meetingheld on 24.6.2021 recommended a Dividend of Rs.1.50 ps (One rupee fifty paise) per share(@15% on 84971600 Equity Shares of face value of Rs.10/- per each Share) for theFinancial Year 2020-21. The Dividend if approved by the Members at the ensuing AnnualGeneral Meeting of the Company will be paid to all the eligible Members involving atotal cash outflow of Rs.12.75 crores. The Dividend shall be subject to deduction ofIncome Tax at source. The payout of Dividend is in line with the Company's policy to meetits Long-Term growth objectives.

Pursuant to the provisions of Regulation 43A of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has formulated itsDividend Distribution Policy which is available on the website of the Companywww.theandhrapetrochemicals.com

CAPITAL & RESERVES:

Authorised and Paid-up Capital:

The Authorised Capital of the Company is Rs.125.00 crores and thePaid-up Capital is Rs.84.97 crores.

Reserves:

The total Reserves position as on 31.3.2021 stood at Rs.218.74 croresas against Rs. 138.50 crores for the previous year 2019-20.

MANAGEMENT DISCUSSION AND ANALYSIS: INDUSTRY STRUCTURE ANDDEVELOPMENTS:

COVID-19 Pandemic forced both the State and Central Governments toimpose lock-downs across the Country for most part of the first half of the Financial Year2020-21 hampering all economic activities. The health and well-being of our employeesbecame a top priority for the Company. The challenge posed by the COVID-19 isunprecedented.

During the Financial Year 2020-21 the Plant was shut down for a periodof 35 days.

In spite of the COVID-19 crisis and Plant shut-down your Company couldmanage to post a Net Profit of Rs.76.47 crores (after Tax) for the year under review dueto the International / National Product Prices coupled with implementation of costreduction / Energy Savings measures. Moreover your Company developed BPCL-KOCHI asalternative raw material (Propylene) supplier which to some extent diluted the Risk ofsingle source.

OPPORTUNITIES AND THREATS:

Estimated demand of Oxo-Alcohols at 275000 MTPA with healthy growthrate of 8% to 10% per annum in general is a good opportunity for the Company withexisting capacity of 80000 MTPA considering the huge demand-supply gap in the country.As such there are no constraints in the Company's Production capability as HindustanPetroleum Corporation Limited (HPCL) is able to meet the Company's full Propylenerequirement. Sales Realization is also expected to improve on account of extension of theAnti-Dumping Duties by 5 more years in the recent Sunset Review by the Govt. of India onimports from certain countries.

However commissioning of BPCL Oxo-Alcohols plant at Cochin in 2021-22downturn in product price scenario internationally and dumping of the products andcurrency fluctuations may impact the Company's performance to some extent.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

As required by the provisions of the Companies Act 2013 InternalControl Systems Report has been appended to Independent Auditor's Report given byStatutory Auditors for the Financial Year 2020-21. The Company has Internal ControlSystems commensurate with the size of its business operations. A Chartered Accountantsfirm is engaged to carry out Internal Audit covering the entire operations. The audit firmsubmits Internal Audit Report periodically with their suggestions and/or corrections.Audit Committee critically deliberates and reviews such Internal Audit Reports and ensureseffectiveness of the control systems through necessary recommendations.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:

In the area of Human Resources the employees are being trained to meetthe Plant requirements from time to time by motivating them in a positive way and theIndustrial Relations continued to be cordial throughout the year.

The total number of employees employed as on 31.3.2021 is 290.

FUTURE OUTLOOK:

Your Company's performance is expected to be reasonable in view ofIndia's GDP growth in the Financial Year 2021-22 projected by the World Bank and forecastof International Petrochemicals prices. However the disrupted business environment due tothe COVID-19 Pandemic may impact the performance to some extent.

Though your Company signed Natural Gas (NG) term sheet agreement withGAIL in the year 2019 the NG Project got delayed. As per the GAIL's revised projectschedule the NG Project is going to be completed by Q3 of 2021-22 and the NG is expectedto be available from Q4 of 2021-22 and may likely bring down the cost of production.However the cost benefit will be based on the NG prices which are going to be fixed oncein every six months. The Company's performance to a large extent is dependent oninternational supply and demand for these products and their prices which are influencedby crude prices exchange fluctuations and dumping by sources other than that covered byAnti-Dumping Duty.

RISKS AND CONCERNS:

Your Company is depending for its major raw material i.e. Propylenefrom a single source - HPCL Visakha refinery. However the risk is built in the projectevaluation. Risk is slightly diluted to some extent this year by sourcing Propylene fromBPCL - KOCHI when HPCL plant was under shutdown / maintenance.

Crude prices Exchange rate fluctuations are also a matter of concern.

CAUTIONARY STATEMENT:

The statements describing the Company's outlook estimates orpredictions may be forward-looking statements based on certain assumptions of futureevents. Actual results may differ materially from those expressed or implied since theCompany's operations are influenced by external or internal factors. Your Company closelymonitors all major developments likely to affect the Operations and will respond to meetthe potential threats and to gain from any possible opportunities.

DEPOSITS:

During the year under review your Company did not accept any depositswithin the meaning of provisions of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014.

SAFETY HEALTH AND ENVIRONMENT:

Your Company has evolved Safety Health and Environment Policy.

Safety:

Company has completed 15.63 million accident-free man-hours in the last 12years

Total 2160 man-hours used for conducting Safety PEP talks Safety inductiontraining and refresher trainings for employees including Contract / Contractor workmen andtruck drivers.

Safety of Human and Plant assets are of top priority to the Company.Continuous training of personnel at various levels on safety and strict compliance ofregulations is ensured which resulted in another accident-free year.

Health:

Health monitoring of all employees including contract labour andcanteen workers is done on regular basis.

Environment:

Online emission Ambient air and effluent monitoring systems are inplace. Data is being transmitted to Central Pollution Control Board (CPCB) and AndhraPradesh Pollution Control Board (APPCB) for monitoring.

INSURANCE:

All the insurable assets of the Company including Plant and MachineryBuildings and Inventories are insured on reinstatement value basis.

Land taken on Lease from Visakhapatnam Port Trust

Your Company has taken on lease 75.00 Acres of land from VisakhapatnamPort Trust (VPT) on which Oxo-Alcohol Plant has been established. The land is locatedadjacent to HPCL Visakha Refinery which supplies major Raw Materials. In this connectiona Lease Agreement was entered into on June 27 1989 with VPT for a period of 30 yearswhich expired on June 26 2019.

Your Company submitted Technical Bid on VPT website and Financial Bidin the year 2019. Also on the advice of VPT Company participated in E-Auction. VPTfurther advised the Company to submit the Manufacturing Process of the Company and thesame was submitted to them. VPT informed the Company that for various reasons the Tenderhas been cancelled. VPT released another fresh Tender for the said land on CommercialLease Rentals instead of Industrial Lease Rentals. Your Company filed a Write Petition on8.9.2020 challenging the cancellation of the earlier Tender. The Hon'ble High Court ofAndhra Pradesh has granted Stay Order on 15.9.2020 and asked VPT to submit the Counter.The Petition came up for hearing on 27.1.2021. As there was no Counter from VPT theHon'ble Court extended the Stay Order till further orders. As per leagal advice theCompany also paid land rentals of Rs.23.59 crores (for the period from 27.6.2019 to31.3.2022) to the VPT on 30.4.2021 as the Land has been already in use by the Company.

LISTING:

The Equity Shares of your Company are listed on the BSE Limited.Mumbai. The Annual Listing Fees for the year 2021-22 has been paid.

ANNUAL RETURN:

Pursuant to the provisions of Section 92(3) (a) of the Companies Act2013 the Annual Return of the Company as at 31st March 2021 is available on theCompany's website www.theandhrapetrochemicals.com.

DIRECTORS:

Sri A A Krishnan ceased to be Director consequent upon his sad demisewith effect from 21.10.2020. Your Directors placed on record their commendableappreciation of the valuable guidance rendered by him during his tenure as Director of theCompany.

Dr. Rajat Bhargava I.A.S. Nominee of Andhra Pradesh IndustrialDevelopment Corporation Ltd. (APIDC) ceased to be Director consequent upon hiswithdrawal by the APIDC with effect from 7.11.2020. Your Directors placed on record theirappreciation of the valuable guidance rendered by him during his tenure as Director of theCompany.

Sri R Karikal Valaven I.A.S. Chairman & Managing Director ofAPIDC Nominee of APIDC was co-opted by the Board at its Meeting held on 8.2.2021 as anAdditional Director. His appointment is being placed for the approval of the Shareholdersat the ensuing 37th Annual General Meeting (AGM).

In accordance with the provisions of the Companies Act 2013 andArticles of Association of the Company Directors Sri Mullapudi Thimmaraja and Sri Y S SSuresh retire by rotation at the ensuing 37th AGM and being eligible offer themselvesfor reappointment. Their reappointment is being placed for the approval of theShareholders at the ensuing 37th AGM.

KEY MANAGERIAL PERSONNEL:

Details of Key Managerial Personnel (KMP) of the Company are as under:

Sl No. Name of the person Designation
1. Sri K Narasappa President
2. Sri P Ratna Rao Senior General Manager (Finance)
(CFO & KMP upto 23.3.2021)
3. Sri M V V S V Prasadu Deputy Secretary & Assistant Manager (Finance)
(KMP upto 23.3.2021)
4. Sri G Adinarayana Chief Financial Officer & Company Secretary
(KMP from 24.3.2021)

Sri G Adinarayana has been appointed as the Chief Financial Officer& Company Secretary of the Company with effect from 24.3.2021. He is an AssociateMember of The Institute of Cost & Management Accountants of India (ICMA) & FellowMember of The Institute of Company Secretaries of India (ICSI). He is also the ComplianceOfficer of the Company.

AUDIT COMMITTEE:

Audit Committee comprises Non-Executive Independent Directors Sri A AKrishnan Dr. Pamidi Kotaiah and Dr. (Smt.) D Manjulata Dr. V N Rao Sri P VenkateswaraRao and Sri Ravi Pendyala Non-Executive Non-Independent Director as its Members. Sri A AKrishnan was the Chairman of the Committee until he ceased to be the Member of theCommittee with effect from 21.10.2020 consequent upon his sad demise. Sri P VenkateswaraRao is the Chairman of the Committee with effect from 5.11.2020.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act 2013and Rules made thereunder the Company has appointed M/s Nekkanti S R V V S Narayana &Co. Company Secretaries (CP No.7839) Hyderabad to undertake the Secretarial Audit ofthe Company. The Secretarial Audit Report is included as Annexure - 'A' and formsan integral part of this Report.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act 2013 and Securities& Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 your Board has carried out annual performance evaluation of the Boardits Committees and the individual Directors.

The performance was evaluated based on the parameters such aseffectiveness of Board / Committee process and functioning contribution of Board /Committee Members to overall effectiveness of the Board / Committee avoiding conflictwith the Company's interest bonafide discharge of responsibilities in the interest of theCompany and upholding ethical standards integrity etc.

In terms of Regulation 25 of the SEBI Listing Regulations 2015 Boardtook on record the declarations and confirmations received from Independent Directors.

Independent Directors met on 23.6.2021 wherein as per the Report ofthe Lead Independent Director the annual performance evaluation of the Chairman and theNon-Independent Directors was carried out by the Independent Directors. The evaluationprocess reflected valuable contribution of Members of the Board / Committee thereof.

NUMBER OF MEETINGS OF THE BOARD:

The details of the Number of Meetings of the Board held during theFinancial Year 2020-21 are given in the Corporate Governance Report which forms part ofthis Report.

CREDIT RATING:

ICRA Ltd. has upgraded Long-Term credit rating of the Company from[ICRA] BBB+ to [ICRA] A- and short-term credit rating from [ICRA] A2 to [ICRA] A2+assigned earlier to the Rs.94.18 crores Line of Credit of the Company.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY:

Your Company has not given any loans or guarantees covered under theprovisions of Section 186 of the Companies Act 2013. Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the Notes to theFinancial Statements.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

As per the provisions of the Companies Act 2013 and Securities &Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 your Company has established a Vigil Mechanism / Whistle Blower Policy for Directorsand employees to report genuine concerns on unethical behaviour actual or suspected fraudor violation of the Company's Code of Conduct in prescribed manner.

The Policy provides adequate safeguards against victimisation of thecomplainant and direct access to the Chairman of the Audit Committee. The protecteddisclosures if any reported under this Policy will be appropriately and expeditiouslyinvestigated.

The Whistle Blower Policy may be accessed on the Company's website atthe link:http://www.theandhrapetrochemicals.com/wp-content/uploads/WHISTLE-BLOWER-POLICY-1.pdf

RISK MANAGEMENT:

Pursuant to the provisions of the erstwhile Listing Agreement yourBoard of Directors at its Meeting held on 27.3.2015 framed and adopted a Risk ManagementPolicy of the Company to identify and mitigate the risks. The Risk Management frameworkdefines the Risk Management approach of the Company and includes periodic review of suchrisks and also Risk Mitigation measures and reporting mechanism of such Risks. RiskManagement Policy of your Company can be viewed by entering the URL http://www.theandhrapetrochemicals.com/wp-content/uploads/POLICY-ON-CORPORATE-RISK-MANAGEMENT.pdf.

Now pursuant to the recently amended provisions of Regulation 21 ofthe SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 theCompany has constituted Risk Management Committee on 24.6.2021 with Sri P NarendranathChowdary Managing Director Sri Mullapudi Thimmaraja and Sri Ravi Pendyala Directorsand Dr V N Rao Independent Director as its members.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:

Details of composition of CSR Committee are given in the CorporateGovernance Report which forms part of this Report.

As per the provisions of Section 135 and Schedule VII of the CompaniesAct 2013 and the Company's CSR Policy Company had spent an amount of Rs.8716211/-towards CSR expenditure for the Financial Year 2020-21. The report on CSR activities asrequired under the Companies (CSR Policy) Rules 2014 is set out as Annexure -"B" whch is forming part of this Report.

Contribution to COVID-19:

Your Directors are glad to report that as a part of Corporate SocialResponsibility activity your Company contributed Rs.50.00 lakhs during the Financial Year2020-21 to the A P State Disaster Management Authority (APSDMA) with a view to support theefforts of the Govt. of Andhra Pradesh in tackling the unprecedented crisis arising fromCOVID-19 Pandemic.

NOMINATION AND REMUNERATION COMMITTEE:

Nomination and Remuneration Committee comprises Dr. (Smt.) D ManjulataIndependent Director as Chairperson and Sri A A Krishnan Independent Director SriMullapudi Thimmaraja Non-Independent Director and with effect from 5.11.2020 Dr. V N RaoIndependent Director as its Members. Sri A A Krishnan ceased to be the Member of theCommittee with effect from 21.10.2020 consequent upon his sad demise.

NOMINATION AND REMUNERATION POLICY:

The Board of Directors of your Company has on recommendation of theNomination & Remuneration Committee adopted a Nomination & Remuneration Policywhich lays down the framework in relation to the criteria for selection and appointment ofBoard Members and remuneration of Directors / Key Managerial Personnel and SeniorManagement of the Company. This Policy can be accessed on the Company's website at thelink:http://www.theandhrapetrochemicals.com/wp-content/uploads/NOMINATION-REMUNERATION-POLICY.pdf

AUDITORS:

M/s C V Ramana Rao & Co. Chartered Accountants Visakhapatnamwere appointed as Statutory Auditors of the Company for five Financial Years from 2017-18to 2021-22. Fixation of their remuneration for the Year 2021-22 is being placed at theensuing 37th AGM for the approval of Members. The total fees paid by the Company for theyear 2020-21 to the Statutory Auditors for all services rendered by them is Rs. 7.37lakhs.

COST AUDITORS:

M/s Narasimha Murthy & Co. Cost Accountants Hyderabad wereappointed by the Board as Cost Auditors of the Company for the year 2021-22 andappropriate resolution in this connection has been included in the Notice calling theensuing Annual General Meeting of the Company for ratification purpose. Cost Auditors'Report in respect of Financial Year ended 31st March 2020 has been filed with theMinistry of Corporate Affairs on 25.6.2020 i.e. within the stipulated time.

COST RECORDS:

Company has complied with the requirement with regard to maintenance ofcost records as specified by the Central Government under Section 148(1) of the CompaniesAct 2013.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:

Particulars prescribed under Section 134 (3) (m) of the Companies Act2013 read with the Rule 8 (3) of Companies (Accounts) Rules 2014 are given below:

I) CONSERVATION OF ENERGY

1. Steps taken or impact on conservation of energy:

(a) Ethyl Propyl Acrolein Interchanger: This is a Kaizen Idea generatedinternally. Here aldol reactors solution temperature will be interchanged with the EPAdecanter solution by the addition of EPA interchanger to increase the temperature from 40degrees to 100 degrees before going to Vaporizer. Due to the increase in feed temperatureof Vaporiser the steam requirement to Vaporizer has come down to 500 Kg/hr (4140 MT/annum)& also reduced the waste generation rate to 100 kg/hr (588 MT/ annum) & increasedthe 2-EH Production by 1 MT/day (345 MT/annum). The overall savings expected with thisProject is around Rs.3.2 crores/annum (achieved Rs.1.79 crores in 7 months operation).

(b) REFINING COLUMN HEAVIES RECYCLE PROJECT: This is one more Kaizen Ideagenerated internally. In this Project Refining column heavies will be recycled toVaporiser & 2-EH content in the heavies will be recovered. With this Project Companycould recover/produce extra 310 MTs of 2-EH per year & saves 36 batch still operationsin a year which results in overall savings of around Rs.2.00 crores per year.

(c) Reformer Energy Saving Coating: Heat resistance coating has been appliedinside the reformer & achieved savings of around Rs.72.00 lakhs/annum.

(d) Fuel saving by isolation of standby ZNO beds: By isolating 2 Zinc Oxidebeds Company has saved around Rs.16.00 lakhs/annum.

2. Steps taken by the Company for utilising alternate sources ofenergy.

Company could not initiate any steps in this regard in view of thenon-viability.

3. Capital investment on Energy conservation equipments: Rs.20.00lakhs.

II) TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:

a) Efforts made & Benefits: Technology has been fullyabsorbed and various innovative ideas enable the Company to operate the Plant even above105% load.

b) Imported Technology: NIL

c) Expenditure incurred on Research & Development: NIL

III) Foreign Exchange earnings and outgo: (On cash basis)

(Rs. in lakhs)

For the year ended 31.3.2021 For the year ended 31.3.2020
i. Earnings NIL NIL
ii. Outgo for products 726.53 500.79

PARTICULARS OF EMPLOYEES:

There is no employee of your Company drawing a remuneration requiringdisclosure under Section 197 (12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedfrom time to time. None of the employees holds (by himself or along with his spouse anddependent children) more than 2% of the Equity Shares of the Company.

DEMATERIALISATION OF SHARES:

As on 31st March 2021 out of the total number of 84971600 EquityShares 80807352 Equity Shares constituting 95.10% stand dematerialised.

RELATED PARTY TRANSACTIONS:

As per the provisions of Regulation 23 of the Securities & ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 yourCompany has established a Policy on materiality of Related Party Transactions and ondealing with Related Party Transactions.

The Policy on Related Party Transactions as approved by the Board ofDirectors is available on the website of the Company. The weblink of the same ishttp://www.theandhrapetrochemicals.com/wp-content/uploads/POLICY-ON-RELATED-PARTY-TRANSACTIONS.pdfAll transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. All Related Party Transactions areplaced before the Audit Committee and the Board for approval. Omnibus approval is grantedby the Audit Committee on yearly basis for transactions which are repetitive in nature. Astatement giving details of all Related Party Transactions is placed before the AuditCommittee and the Board for review and ratification on a quarterly basis.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:

Your Company has in place a Prevention of Sexual Harassment Policy inline with the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. In compliance with the provisions of the said Actan Internal Complaints Committee (ICC) was set up to redress complaints received regardingsexual harassment. During the year 2020-21 there were no complaints received by the ICC.

PARTICULARS OF REMUNERATION:

The information required under Section 197 of the Act and the Rulesmade thereunder in respect of employees of the Company is as follows:-

(a) the ratio of the remuneration of each director to the medianremuneration of the employees of the company for the Financial Year:

Our Directors draw remuneration only by way of Sitting Fees. Thedetails of the same are provided in Corporate Governance Report which forms an Annexure tothis report. No other remuneration is drawn by them. Managing Director does not draw anyremuneration. Hence the ratio of remuneration of each Director to the median remunerationis not required to be given.

(b) the percentage increase in remuneration of each Director ChiefExecutive Officer Chief Financial Officer Company Secretary or Manager if any in theFinancial Year:

Company was paying Sitting Fees of Rs. 20000/- for attending eachMeeting of the Board and Rs. 15000/- for attending each Meeting of Committee of the Board(as approved by the Board of Directors at its Meeting held on 5.11.2018). Board ofDirectors at their Meeting held on 5.11.2020 has approved the payment of Sitting Fees ofRs.30000/- for attending each Meeting of the Board and Rs.25000/- for attending eachMeeting of Committee of the Board. Other details are as follows:

Name of the Person % increase in remuneration
Sri K Narasappa President 10.00%
Sri P Ratna Rao Senior General Manager (Finance) (CFO upto 23.3.2021) 8.00%
Sri M V V S V Prasadu Deputy Secretary & Assistant Manager (Finance) 9.00%
(KMP upto 23.3.2021)
Sri G Adinarayana NIL
Chief Financial Officer & Company Secretary
(with effect from 24.3.2021)

(c) the percentage increase in the median remuneration of employees inthe Financial Year: 2.74%

(d) the number of permanent employees on the rolls of Company: 290

(e) average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last Financial Year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration

The average increase in salaries of employees other than managerialpersonnel in 2020-21 was 2.74%. Percentage increase in the managerial remuneration for theyear was NIL.

(f) affirmation that the remuneration is as per the Remuneration Policyof the Company:

The Company's Remuneration Policy is driven by the success andperformance of the individual employees and the Company. Through its compensation packagethe Company endeavours to attract retain develop and motivate a high performance staff.The Company follows a compensation mix of fixed pay benefits and performance basedvariable pay. Individual performance pay is determined by business performance and theperformance of the individuals measured through the annual appraisal process. The Companyaffirms remuneration is as per the Remuneration Policy of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators /Courts that would impact the going concern status of the Company and its futureoperations.

Bombay Stock Exchange (BSE) imposed a penalty of Rs.168000/- fornon-appointment of Company Secretary & Compliance Officer for 168 days i.e. from1.10.2018 to 17.3.2019. Company made a representation to BSE for waiver of the penalty onthe ground that it could not succeed in spite of its best and sincere efforts inlocating a suitable candidate for the position of Company Secretary. On 26.10.2020 BSEinformed the Company that its "Committee for Reviewing Representations for Waiver ofFines Levied under Standard Operating Procedure (SOP)" which considered theCompany's representation for waiver of penalty did not accede to the Company's contentionand as such requested the Company to pay the penalty imposed. Accordingly Company paidthe same on 5.11.2020.

DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of knowledge and belief and according to the informationand explanations obtained by them your Directors make the following statement in terms ofSection 134(3)(c) of the Companies Act 2013:

i) that in the preparation of the Annual Accounts for the year ended 31st March 2021the applicable Accounting Standards have been followed along with proper explanationrelating to material departures if any;

ii) that Accounting Policies have been selected and applied consistently and thatjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2021 and of the Profit ofthe Company for the year ended on that date;

iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv) the annual accounts have been prepared on a going concern basis;

v) that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

vi) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

BUSINESS RESPONSIBILITY REPORT:

As per Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Business Responsibility Report is enclosed vide Annexure- "C" of this Report and is also available on the Company's website:www.theandhrapetrochemicals.com

REPORT ON CORPORATE GOVERNANCE:

As required under Regulation 34(3) of Securities & Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Reporton Corporate Governance and the Auditors' Certificate on the compliance of CorporateGovernance are annexed (Annexure "D") and form part of the Directors'Report.

ACKNOWLEDGEMENTS:

Your Directors acknowledge the co-operation and continued valuablesupport received from Central and State Government authorities the Promoters - The AndhraSugars Limited and Andhra Pradesh Industrial Development Corporation Ltd. (APIDC)Financial Institutions Banks Shareholders Customers Hindustan Petroleum CorporationLtd. (HPCL) Gas Authority of India Ltd. (GAIL) Bharat Petroleum Corporation Ltd.(BPCL) and other Suppliers. Your Directors place on record their deep sense ofappreciation of the valuable contribution made by the employees at all levels.

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