Your Directors are pleased to present the 39th Annual Reportof the Company together with the Audited Financial Statements (Standalone &Consolidated) for the year ended 31st March 2020.
1. FINANCIAL RESULTS AND PERFORMANCE:
(Rs. In Lakhs)
|Particulars || |
| ||2019-2020 ||2018-2019 ||2019-2020 ||2018-2019 |
|Net Sales / Income from Operations ||20585.63 ||33747.86 ||33432.34 ||62166.59 |
|Less: Total Expenditure ||25914.47 ||41803.04 ||42260.99 ||64881.12 |
|Profit /(Loss) from Operations before Dep. Other Income and Exceptional Items ||(5328.84) ||(8055.18) ||(8828.65) ||(2714.53) |
|Less: Depreciation ||2092.35 ||2274.98 ||2838.94 ||3251.73 |
|Profit /(Loss) from Operations before Other Income and Exceptional Items ||(7421.19) ||(5780.20) ||(11667.59) ||(5966.26) |
|Add: Other Income ||700.42 ||933.11 ||1594.67 ||1655.37 |
|Profit/(Loss) before Exceptional Items share of net profit of investments accounted for using the equity method and Tax ||(6720.77) ||(4847.09) ||(10072.92) ||(4310.89) |
|Share of net profit of Joint Ventures & associates accounted for using the equity method ||- ||- ||891.25 ||1213.97 |
|Profit/(Loss) before exceptional items ||(6720.77) ||(4847.09) ||(9181.67) ||(3096.92) |
|Add: Exceptional Items ||46051.51 ||(2584.36) ||47397.97 ||(29074.60) |
|Profit /(Loss) before tax ||39330.74 ||(7431.45) ||38216.30 ||(32171.52) |
|Tax Expenses || || || || |
|Current Tax ||- ||- ||106.00 ||730.00 |
|Earlier Year's Tax ||- ||- ||14.55 ||4.49 |
|Deferred Tax ||- ||- ||(223.62) ||(216.47) |
|Profit/(Loss) after tax ||39330.74 ||(7431.45) ||38319.37 ||(32689.54) |
|Profit attributable to non-controlling interest || ||- ||448.87 ||(412.52) |
|Profit/(Loss) for the year ||39330.74 ||(7431.45) ||38319.37 ||(33102.06) |
a) Performance of the company:
The performance of the Company for the year under review was not verysatisfactory as there was decline in top-line which was mainly attributable to drop insale of Bauxite and Bentonite. Income from operations at Standalone Level dropped by 39%and stood at Rs. 20585.63 Lakhs as against Rs. 33747.86 Lakhs for the previous financialyear ended 31st March 2019 and that the total expenses stood at Rs. 28006.82Lakhs which resulted into loss of Rs. 6720.77 Lakhs before exceptional items and taxhowever after taking into account the exceptional items of Rs. 46051.51 Lakhs theCompany reported positive bottom line of Rs. 39330.74 Lakhs for the year under review.
At Consolidated Level the income from operations dropped by 46% andstood at Rs. 33432.34 Lakhs as against Rs. 62166.59 Lakhs for the previous financialyear ended 31st March 2019 and that total expenses stood at Rs. 45099.92Lakhs which resulted into loss of Rs. 10072.91 Lakhs before exceptional items and taxhowever after taking into account the exceptional items of Rs. 47397.97 Lakhs theCompany at Consolidated Level reported positive bottom line of Rs. 38319.37 Lakhs for theyear under review.
b) Business outlook:
In the last week of March 2019 an outbreak situation arose on accountof Covid 19. The Company's performance may get hampered due to COVID-19 outbreak which hasput the country under lockdown for few months. The impact on the operations andearnings/cash flows of the Company due to Covid 19 pandemic may be assessed only afterfuture developments and clarity about domestic and export customers manufacturing facilitywhich are still uncertain and may lead it impracticable for the Company to estimateprojected revenue from operations and earnings for the next year and impact thereon due toCovid 19.
Nevertheless the management will continue to closely monitor anymaterial changes arising out of future economic conditions and impact on its business. TheCompany will also continue to focus expanding its business in foreign countries in orderto explore better quality of minerals and to achieve economies of scale. Furtherconsidering the provisions of new Mining bill Companies with captive mines and goodreserves have good opportunity to improve business and your Company has an advantage inthis regard.
2. SIGNIFICANT EVENTS DURING THE FY 2019-20 and TILL THE DATE OFREPORT:
a) Closure of Insolvency Proceedings:
The Company on 12th December 2018 moved to the NationalCompany Law Tribunal (NCLT) Mumbai Bench under appropriate and relevant provisions ofthe Insolvency and Bankruptcy Code 2016 (IBC). The said petition was admitted by the NCLTand by its order dated 15th March 2019 Corporate Insolvency ResolutionProcess ("CIRP") was initiated for the Company with effect from 15thMarch 2019. By the same Order Mr. Arun Chadha (Registration no. asIBBI/IPA-001/IP-P00165/2017-18/10334) was appointed as an Interim Resolution Professional('IRP') of the Company and pursuant to the provisions of Section 17 of IBC the power ofthe Board of Directors of the Company stood suspended and such powers were to be exercisedby the said IRP
Further the Hon'ble National Company Law Appellate Tribunal (NCLAT)had vide its order dated 8th April 2019 stayed the above referred NCLT Orderto the exception that the IRP may function and report to the office.
In furtherance upon filing an application for withdrawal of insolvencyproceedings from NCLT Mumbai Bench the Hon'ble NCLAT vide its order dated 30thSeptember 2019 set aside the said order of the NCLT Mumbai Bench dated 15thMarch 2019. The said order of NCLAT also ordered the closure of the insolvencyproceedings at NCLT Mumbai. Consequently the appointment of Mr. Arun Chadha as an IRPstood cancelled and the Company was released from all the rigours of law and as such wasallowed to function independently under the able guidance and authority of the Board ofDirectors w.e.f. 30th September 2019.
b) Arbitration award:
During the previous Financial Year ASQ Connect Ltd. (ASQ) one of thecreditors with whom the Company had entered into a settlement agreement of US $ 45million payable over 25 years and had also entered a Pledge Agreement to secure the saidsettlement; terminated the said agreement and invoked pledge of shares of the Company'stwo Indian Subsidiaries and a joint venture Company on 19th September 2018 and4th October 2018 respectively. Accordingly 100% shares of aWholly-owned-Subsidiary Ashapura International Limited (AIL); 47.86% shares of aSubsidiary Company Bombay Minerals Limited (BML); and Company's entire holding of 50% in aJoint venture Company Ashapura Perfoclay Limited (APL) had been taken over by the saidcreditor on trigger of these pledged shares.
The Company had suitably challenged with the said invocation of pledgeby the creditor in arbitration and finally an arbitration award dated 28thFebruary 2020 was received in favour of the Company.
Under the said award the aforesaid invocation of the pledged shares ofAIL BML and APL being void ab-initio was set aside. The Learned Arbitrator alsoreinstated the Settlement Agreement dated 21st July 2017 with ASQ withimmediate effect and also declared AML as the rightful owner of the said pledged shares byvirtue of setting aside such invocation.
Accordingly the Company has during the year under review regained itsownership and control over its two wholly-owned subsidiaries viz. AIL & BML and ajoint venture company (50:50 JV) viz. APL w.e.f. 28th February 2020.
Further the Company and ASQ Connect Limited have revised thesettlement terms and thus have amended and modified the Settlement Agreement dated 21stJuly 2017 by entering into an Addendum Agreement dated 22nd June 2020.
Since the Settlement Agreement dated 21st July 2017 hasbeen reinstated and the Addendum to the Settlement Agreement executed on 22ndJune 2020 the said shares of AIL BML and APL shall continue to be in pledge in favourof ASQ Connect Limited (held by Milestone Trusteeship Services Pvt. Ltd. Mumbai India'Milestone' on its behalf) as a collateral security towards the revised settlement inaccordance with the said Addendum Agreement.
c) Preferential Issue of Convertible Warrants :
During the year under review the Company had issued and allottedconvertible Warrants to M/s. Ashapura Industrial Finance Limited a Promoter Group Memberthrough postal ballot process:
|Name of Security ||Convertible Warrants |
|Date of Issue and Allotment ||28th February 2020 |
|Number of warrants ||4500000 |
|Method of allotment ||Preferential Issue |
|Issue Price ||Rs. 31.95 (Rupees Thirty One and Ninety Five Paisa) per warrant |
|Maturity Date ||Any time after the date of allotment but on or before the expiry of 18 (eighteen) months |
|Amount raised ||25% of the consideration has been collected upfront from the holders of the warrants |
|Terms and conditions || Subject to lock- in as per SEBI Regulations. |
| || Warrants shall not be sold transferred hypothecated or encumbered in any manner during the period of lock-in provided under SEBI (ICDR). |
| || Warrants shall be issued only in dematerialized form. |
| || In case Warrant Holder do not exercise Warrants within the Warrant Exercise Period the Warrants shall lapse and the amount paid shall stand forfeited by the Company. |
| || The Warrants by itself until converted into Equity Shares do not give to the Warrant Holder any voting rights in the Company in respect of such Warrants. |
d) Novel Coronavirus Outbreak:
The COVID-19 pandemic is an evolving human tragedy declared as a globalpandemic by the World Health Organisation in last month of FY 2019-2020. The outbreakstarted with restrictions on movement of people goods closure of borders etc. inseveral states followed by a nationwide lockdown from 25th of March 2020announced by the Indian Government to stem the spread of COVID-19.
To ensure social distancing and employee-safety first approachCompany's corporate offices and manufacturing facilities were closed as declared by theauthorities. From a centralized model consisting of work spaces the switch to work fromhome model for employees was carried out seamlessly and without disruptions. Our teamsreacted with speed and efficiency and quickly leveraged technology to shift the workforceto an entirely new 'work-from-home' model.
The COVID-19 pandemic had an immediate impact on the global economy andthat impact goes across all industries including mining. It has affected the entire valuechain as organizations and companies limit access to offices mine sites andmanufacturing facilities and restrictions on transportation and shipping. Consequentlyrevenues and profitability have been adversely affected. The Company is quite confidentthat the demand situation will pick up progressively. However the Company has beencontinuously monitoring the situation and has readiness to adapt to the changing businessenvironment and respond suitably.
To conserve the resources and to meet the Company's future growthplans your Directors do not recommend any dividend for the year under review.
4. TRANSFER TO RESERVES:
During the financial year under review no amount has been transferredto the General Reserve.
Pursuant to the applicable provisions of the Companies Act 2013 readwith Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 as amended from time to time Dividends that are unpaid/unclaimed fora period of seven years are required to be transferred to the Investor Education andProtection Fund administered by the Central Government. Your Company has initiated theprocess of transferring the balance lying with the unpaid/unclaimed dividend accounts inaccordance with the above provisions.
Your Company has not accepted any amount as deposits within the meaningof provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act2013 read with the Companies (Acceptance of Deposits) Rules 2014.
7. DIRECTORS & KEY MANAGERIAL PERSONNEL:
a) Retirement by Rotation:
In accordance with the provisions of Section 152 of the Companies Act2013 and the Articles of Association of your Company Shri Chetan Shah retires byrotation at the ensuing Annual General Meeting and being eligible has offered himself forre-appointment.
The details as required under the provisions of the Companies Act andListing Regulations are provided in the Notice convening the ensuing Annual GeneralMeeting.
b) Re-designation of Shri Chetan Shah as an Executive Chairman of theCompany:
The Board of Directors at its meeting held on 24th October2019 considering the recommendation of Nomination & Remuneration committee as alsoconsidering dynamics of the mining business viz-a-viz the need and the turn of eventsduring the year under review proposed that Shri Chetan Shah (DIN-00018960) should occupythe driver's seat and lead the Company by assuming the position of an 'Executive Chairman'of the Company.
Accordingly Shri Chetan Shah was re-designated as an ExecutiveChairman of the Company for a period of three years with effect from 24th October2019 on the terms & conditions that forms part of the agreement. Further hisappointment was duly approved by shareholders in 38th Annual General Meeting ofthe Company which was held on 27th December 2019.
In terms of provisions of the Companies Act 2013 from the date ofappointment of Shri Chetan Shah as an Executive Chairman he is forthwith considered as aKey Managerial Personnel (KMP) of the Company.
c) Appointment of Shri Hemul Shah as an Executive Director and ChiefExecutive Officer:
The Board of Directors at its meeting held on 10th February2020 on the recommendation of Nomination and Remuneration Committee appointed Shri HemulShah (00058558) as an Additional Director w.e.f. 16th February 2020 subjectto the approval of shareholders in ensuing General Meeting.
Further on the recommendation of Nomination & RemunerationCommittee as also considering his long association with Company; his rich & variedexperience in planning execution abilities and strategic intelligence the Board ofDirectors at its meeting held on 10th February 2020 proposed that he shouldbe appointed as an Executive Director and Chief Executive Officer (CEO) of the company.
Accordingly Shri Hemul Shah was appointed as an Executive Director andCEO of the Company for a period of three years w.e.f. 16th February 2020 onthe terms & conditions that forms part of the agreement which is subject to theapproval of the Shareholders of the Company. In terms of provisions of the Companies Act2013 from the date of appointment of Shri Hemul Shah as an Executive Director and CEO heis forthwith be considered as a Key Managerial Personnel (KMP) of the Company.
Accordingly pursuant to provisions of the Companies Act 2013resolution seeking approval of the shareholders for his appointment as an ExecutiveDirector and CEO of the Company forms part of the Notice convening 39th AnnualGeneral Meeting.
The relevant details of Shri Hemul Shah as required pursuant to theprovisions of the Companies Act 2013 and the Listing Regulations are furnished in theNotice of the 39th Annual General Meeting.
d) Appointment of Smt. Himani Shah as a Non-executive Woman Director:
The Board of directors at its meeting held on 10th February2020 on the recommendation of Nomination and Remuneration committee appointed Smt.Himani Shah (DIN : 02467277) as an Additional Non-Executive Director subject to theapproval of shareholders at ensuing Annual General Meeting.
Accordingly pursuant to provisions of the Companies Act 2013resolution seeking approval of the shareholders for her appointment as a NonExecutiveDirector of the Company forms part of Notice convening 39th Annual GeneralMeeting.
The relevant details of Smt. Himani Shah as required pursuant to theprovisions of the Companies Act 2013 and the Listing Regulations are furnished in theNotice of the 39th Annual General Meeting.
e) Re-appointment of Shri Pundarik Sanyal Non-Executive IndependentDirector:
Shri Pundarik Sanyal was appointed as a Non-Executive IndependentDirector w.e.f 9th February 2016 for the term of five consecutive years.Accordingly in terms of the provisions of Sections 149 152 read with Schedule IV and anyother applicable provisions if any of the Companies Act 2013 and applicable provisionsof Securities and Exchange Board of India (Listing Obligation & DisclosuresRequirements) Regulation 2015 (Listing Regulations) and based on the performanceevaluation and recommendation of Nomination and Remuneration Committee it is proposed tore-appoint Shri Pundarik Sanyal as a Non-Executive Independent Director for a furtherterm of five consecutive years w.e.f. 9th February 2021. A special resolutionseeking approval of the shareholders for his re-appointment as a Non-ExecutiveIndependent Director on the Board of Directors of the Company forms part of Noticeconvening 39th Annual General Meeting.
The relevant details of Shri Pundarik Sanyal as required pursuant tothe provisions of the Companies Act 2013 and the Listing Regulations are furnished in theNotice of the 39th Annual General Meeting.
f) Appointment of Smt. Neeta Shah as an Independent Woman Directorw.e.f. 11th November 2020.
The Board of Directors on the recommendation of Nomination andRemuneration Committee at its meeting held on 11th November 2020 appointedSmt. Neeta Shah (DIN- 07134947) as an Additional Director in the capacity of IndependentDirector for a term of five consecutive years subject to the approval of the Shareholdersof the Company.
An Ordinary resolution seeking approval of the shareholders for herappointment as Non-Executive Independent Woman Director on the Board of Directors of theCompany forms part of Notice convening 39th Annual General Meeting.
The relevant details of Smt. Neeta Shah as required pursuant to theprovisions of the Companies Act 2013 and the Listing Regulations are furnished in theNotice of the 39th Annual General Meeting.
g) Resignation of Whole Time Director & Chief Executive Officer:
Shri Rajnikant Pajwani (DIN-00086007) resigned from his position ofWhole-Time Director & Chief Executive Officer (CEO) of the Company citing his personalcommitment towards his family and was relieved from his services as such w.e.f. 1stJune 2019. Since the Company was then under CIRP his resignation was submitted to thekind attention of Shri Arun Chadha IRP which was subsequently taken on record andratified by the Board of Directors at its meeting held post NCLAT award on 24thOctober 2019.
The Board takes this opportunity to acknowledge his service and alsoexpress its appreciation for the purposeful contribution made by him during his longassociation of 43 years at different levels and positions with Ashapura Group.
h) Resignation of Smt. Navita Gaiha Non-Executive IndependentDirector:
Smt. Navita Gaiha who was appointed as Non-Executive IndependentDirector of the company resigned w.e.f. 10th June 2020 due to her otherprofessional commitments & responsibilities. The Board takes this opportunity toacknowledge her service and places on record its appreciation for the contribution made byher as a member of Board.
i) Resignation of Shri Ajay Phalod Chief Executive Officer of theCompany:
During the period under review Shri Ajay Phalod who was appointed asChief Executive Officer (CEO) of the company resigned w.e.f. 15th February2020 citing pursuance of better prospects. The Board takes this opportunity toacknowledge his service and places on record its appreciation for the contribution made byhim during his tenure.
j) Declaration by Independent Directors:
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed under the provisions of section 149(6) of the Companies Act 2013 read withschedules & rules issued thereunder as well as regulation 16 of the ListingRegulations (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force).
k) Board's Opinion Regarding Integrity Expertise and Experience(Including the proficiency) of the Independent Directors appointed during the year:
The Board is of the opinion that the Independent Directors appointedduring the year under review are person(s) of integrity and possess coreskills/expertise/competencies (including the proficiency) as identified by the Board ofDirectors as required in the context of Company's business(es) and sector(s) for theCompany to function effectively.
l) Appointment of Key Managerial Personnel (KMP):
a From the date of appointment of Shri Chetan Shah as an ExecutiveChairman w.e.f. 24th October 2019 he is forthwith considered as a KeyManagerial Personnel (KMP) of the Company.
b. In accordance with the provisions of Sections 2(51) and 203 of theCompanies Act 2013 Shri Sachin Polke Company Secretary & Vice President isrecognized as the KMP of the Company.
c. From the date of appointment of Shri Hemul Shah as an ExecutiveDirector & CEO w.e.f. 16th February 2020 he is forthwith considered as aKMP of the Company.
d. During the time when the Company was under CIRP the InterimResolution Professional as on 12 th June 2019 in his capacity and to complywith the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) had nominated andappointed Shri Ashish Desai as Chief Financial Officer (CFO) of the Company to carry outthe functions/duties as may be entrusted upon them in terms of provisions of the CompaniesAct 2013 Listing Regulations and/or any other applicable legislations till the time theCompany would be under CIRP Later the Board of Directors at its meeting held post NCLATaward on 24th October 2019 considering the applicable provisions of lawdecided to ratify the appointment of Shri Ashish Desai as CFO of the Company and that hecontinues to be considered as KMP of the Company.
e. In addition the following Executives of your Company have beenrecognized as whole-time Key Managerial Personnel to perform such duties/ functions as maybe assigned to them under their prescribed designation and/or generally and specificallyassigned to them by the Board of Directors and/or its Committee from time to time:
1. Smt. Surekha Sathe - Vice President - IT (Superannuated w.e.f. 30thJune 2020)
2. Shri Akhilesh Sinha - Vice President - HR
8. DISCLOSURES RELATING TO SUBSIDIARIES ASSOCIATES AND JOINT VENTURES:
a) Business performance and overview of the principal subsidiaries andjoint venture companies:
Ashapura Internationa Limited (AIL):
For the year under review the Company has registered a 10% increase inrevenue i.e. Rs. 45800.76 Lakhs from Rs. 41743.41 Lakhs in the previous financial yearand a 15% rise in its profit before tax i.e. Rs. 3732.02 Lakhs from Rs. 3236.52 Lakhs inthe previous financial year on account of its robust portfolio of bulk Bentonite sales andBentonite based specialty products.
Bombay Minerals Limited (BML):
Excessive government levies of royalty and export duty continue toerode the export competitiveness of Indian Bauxite versus other global suppliers Bauxiteexports from india have virtually ground to a halt. The Company continues to sell Bauxiteand Bauxite-based value-added products in the domestic market. The Company has seen amarked reduction in its revenues i.e. Rs. 7959.60 Lakhs from Rs. 13033.43 Lakhs in theprevious financial year and has registered a post-tax loss of Rs. 1396.91 Lakhs for theyear under review. The Company intends to focus on value added products such as browntubular alumina and proppants hereon.
Ashapura Perfociay Ltd. (APL):
The Company saw modest reduction of revenue for the year under reviewi.e. Rs. 28423.32 Lakhs versus Rs. 28938.43 Lakhs in the previous financial year butregistered an 8% increase in profit before tax i.e. Rs. 3492.74 Lakhs versus Rs. 3227.50Lakhs in the previous financial year on account of cost efficiencies. The Companycontinues to dominate the premium grade Bleaching Clay segment in India and is nowdirecting its efforts to ram-up exports in the mid-tier Bleaching Clay segment in SouthEast Asia.
Other Overseas Subsidiaries:
The other overseas subsidiaries and joint ventures of the Company inUAE Oman exhibited modest increases in revenues. The Company's step- down subsidiary inGuinea is slated to commence operations next year.
b) Companies which have become and ceased to be subsidiary associateand/or joint venture:
During the year under review Ashapura Guinea Resources SARL - GuineaAshapura Minex Resources SAU - Guinea and Societe Guineenne des Mines de Fer - Guineabecame wholly owned overseas step down subsidiaries and FAKO Resources SARL - Guineabecame overseas step down subsidiary with 90% interest.
Further pursuant to the Arbitration award dated 28thFebruary 2020 the company has regained the ownership and control of its two Wholly OwnedSubsidiaries viz. Ashapura International Limited and Bombay Minerals Limited and one Jointventure company viz. Ashapura Perfoclay Limited however their shares are continued to beunder pledge with ASQ Connect Limited.
Ashapura Maritime FZE - UAE ceased to be subsidiary of the companyw.e.f. 15th March 2020.
c) Material Subsidiaries:
As required under Regulations 16(1)(c) and 46 of the SEBI (ListingObligations and Disclosure Requirement) Regulations 2015 (Listing Regulations) the Boardof Directors have approved the Policy for determining Material Subsidiaries. The detailsof the Policy are available on the Company's website at www.ashapura.com/investor-corner.php
9. CONSOLIDATED FINANCIAL STATEMENTS:
Pursuant to the provisions of Section 129(3) of the Companies Act2013 the Consolidated Financial Statements of the Company and its Subsidiaries &Associates have been prepared in accordance with the Indian Accounting Standards whichforms part of this Annual Report. Further pursuant to the provisions of the said sectiona statement containing salient features of the Financial Statements of the Company'sSubsidiaries and Associate companies (in Form AOC - 1) is given in this Annual Report.
In accordance with Section 136 of the Companies Act 2013 the AuditedFinancial Satements including Consolidated Financial Statements Financial Statements ofsubsidiaries and all other documents required to be attached to this Report have beenuploaded on the website of the Company at www.ashapura.com/investor-corner.php
10. STATUS OF THE PENDING LITIGATIONS:
A. SHIPPING MATTERS:
The Contracts of Affreightment ('COA') were entered into by the Companywith certain Shipping Companies - viz.  Pacific Basin I.H.X. (UK) Ltd. (Pacific Basin) Eitzen Bulk A/S [now known as Ultrabulk A/S] (Ultrabulk) and  Armada Singapore PteLtd. (Armada) (collectively referred to as 'COAs')
In pursuance to disputes with regard to termination of COAs the abovesaid shipping companies obtained favourable foreign arbitration awards which weresubsequently declared enforceable by the Hon'ble Bombay High Courts.
In the matter of Pacific Basin and Ultrabulk ASQ Connect Limited(ASQ) a Company incorporated under the laws of England and Wales purchased theenforceable rights to recover the decreed amounts by way of assignment deeds. Pursuant tothese deed of assignment ASQ entered into a settlement agreement on 21st July2017 with the Company wherein it agreed to recover USD 45 million over a period of 25years on terms and conditions as described in the said settlement agreement. However onan alleged breach of the said settlement agreement ASQ invoked the pledge of shares ofAML's Subsidiaries and Joint Venture namely Bombay Minerals Limited AshapuraInternational Limited and Ashapura Perfoclay Limited which was created for securingperformance of the said settlement agreement. AML initiated Arbitration against ASQ forsuch invocation of pledge in October 2019 and by an Arbitration award dated 20thFebruary 2020 the said invocation of pledge was set aside. The Arbitrator also reinstatedthe above settlement agreement and declared AML to be the rightful owner of theseSubsidiaries and Joint Venture.
Subsequently AML has settled with ASQ once again and accordinglyexecuted an addendum on 22nd June 2020 revising certain terms of the settlementagreement dated 21st July 2017. Pursuant to the said addendum ASQ shallwithdraw its execution proceedings from Bombay High Court in due course of time.
In the matter of Armada the said shipping company had filed anexecution application in Hon'ble Bombay High Court for recovery of its claims granted bythe arbitration awards dated 16th February 2010.
Later Armada has assigned its awards to Global Value Investments PteLtd (Singapore) (GVI). The Bombay High Court has allowed substitution of GVI in place ofArmada in the above execution proceedings.
The Company has settled with GVI and accordingly has executed asettlement agreement on 27th February 2020. GVI shall withdraw its executionapplication from Bombay High Court in due course of time.
B. FOREX DERIVATIVES:
The Company had approached the Bankers and has successfully settled theclaims amicably with most of the bankers.
The Company has settled with HDFC Bank Ltd. and almost all theproceedings filed by the said Bank at various tribunal and Courts of Law are withdrawn.
The company has also settled with J P Morgan and payments are beingmade as per terms of settlement agreement; post which Proceedings filed by J P Morgan willbe withdrawn by them in due course.
11. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITIONOF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31st MARCH 2020 AND 11thNOVEMBER 2020 (DATE OF THE REPORT):
Other than as stated elsewhere in this report there are no materialchanges and commitments affecting the financial position of the Company between the end ofthe current financial year and the date of this report.
12. SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATIONS:
Other than as stated elsewhere in this report during the year underreview the Company has not received any significant or material order passed by anyregulatory authority court or tribunals which shall affect the going concern status ofthe Company.
13. MEETINGS OF THE BOARD:
During the year under review since the powers of board were suspendeddue to corporate Insolvency Resolution Process (CIRP) no board of directors meeting wereheld during first two quarters of Financial Year 2019-2020. Pursuant to the order ofNCLAT the Board of Director were allowed to function independently w.e.f. 30thSeptember 2019. Accordingly five Meetings of the Board of Directors were convened afterclosure of Corporate Insolvency Resolution Process (CIRP). The dates of the meetings areprovided in the Report on Corporate Governance which forms a part of this Annual Report.
14. DIRECTOR'S RESPONSIBILITY STATEMENT:
In pursuance of Section 134(5) of the Companies Act 2013 read with therules made there under including any enactment or re-enactment thereon (the CompaniesAct 2013) the Directors hereby confirm that:
a. in the preparation of the annual accounts the applicable IndianAccounting Standards had been followed along with proper explanation relating to materialdepartures;
b. the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the Profit of the Company for that period;
c. the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d. the directors had prepared the annual accounts on a going concernbasis;
e. the directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively;
f. the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
15. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The information required under Section 197(12) of the Companies Act2013 read with rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is set out in "Annexure - A" to this Report.
Further the statement containing particulars of employees in terms ofsection 197(12) of the Companies Act 2013 read with rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in aseparate statement and that forms part of the annual report.
Considering the provisions to section 136 of the Companies Act 2013the annual report excluding the aforesaid statement required to be given under rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is being sent to the shareholders of the company and others entitled thereto. Thesaid statement is available for inspection of members will be available electronically forinspection. Members seeking to inspect such documents can send an email to firstname.lastname@example.org.
16. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN ANDSECURITIES PROVIDED:
Particulars of loans given investments made guarantees given andsecurities provided in accordance with the provisions of Section 186 of the Companies Act2013 are given in the Notes to Financial Statements (Please refer to Note no. 5 & 6).
17. DISCLOSURES ON POLICIES ADOPTED BY THE COMPANY:
A. Nomination & Remuneration Policy:
Pursuant to the provisions of the Companies Act 2013 and ListingRegulations the Board of Directors based on the recommendations of the Nomination &Remuneration Committee adopted a Policy for selection and appointment of Directors KeyManagerial Personnel & Senior Management and for determining their remunerationsqualifications positive attributes and independence of Directors. The policy also ensuresthat the relationship of remuneration to performance is clear so as to meet appropriateperformance benchmark.
The Policy on Nomination & Remuneration is available on the websiteof the Company viz. www.ashapura.com/investor-corner.php. The details about theNomination & Remuneration Committee and payment of remuneration to the Directors areprovided in the Report on Corporate Governance which forms part of this Annual Report.
B. Performance Evaluation Policy and Annual Performance Evaluation:
The Board of Directors adopted the performance evaluation policy withan objective of evaluating the performance of the each and every Director of the BoardCommittees of the Board including the performance of the Board as a whole which wouldcontribute significantly to performance improvements at all the three levels i.e. theorganizational the board and the individual director level which in turn would help inincreased accountability better decision making enhanced communication and moreefficient Board operations.
Accordingly pursuant to the provisions of Companies Act 2013 ListingRegulations and Performance Evaluation Policy of the Company the Board of Directors inconsultation with the Nomination & Remuneration Committee and Independent Directorscarried out & analysed the annual performance evaluation of all the Directors theBoard as a whole and its Committees.
The annual performance evaluation was carried out based on detailedquestionnaires drafted in accordance with the guidance note issued by SEBI. Theperformance of the individual Directors was evaluated after seeking inputs from all theDirectors other than the one who is being evaluated. The evaluation was based on thecriteria such as Director's knowledge and understanding of their role Company's visionand mission Director's commitment qualification skill and experience assertiveness incommunication etc.
The performance of the Board was evaluated on the basis of variouscriteria such as composition of the Board information flow to the Board mattersaddressed in the meeting strategic issues roles and functions of the Board relationshipwith the management engagement with the Board and external stakeholders and otherdevelopment areas.
The performance of the Committees was evaluated after seeking theinputs of committee members on the criteria such as understanding the terms of referenceCommittee composition Independence contributions to Board's decisions etc.
Further the performance of Chairman & Executive Director wereevaluated on certain additional parameters depending upon their roles and responsibilitiessuch as leadership relationship with stakeholders execution of business plans riskmanagement development of plans and policies in alignment with the vision and mission ofthe Company etc.
Similarly criteria for evaluation of Independent Directors includeeffective deployment of knowledge and expertise willingness to devote time and effortstowards his/her role high ethical standards adherence to applicable codes and policieseffective participation etc.
The Independent Directors had met separately on 10thFebruary 2020 and discussed inter-alia the performance of the Chairman Whole-TimeDirector & Chief Executive Officer of the Company and the Board as a whole. TheNomination and Remuneration Committee has also carried out evaluation of every Director'sperformance.
The Board evaluation report on performance of each individual Directorand the Board as a whole was placed before the Board of Directors for appropriate analysisand confirmation.
Based on the annual performance evaluation the Board expressed itssatisfaction with the performance evaluation process.
C. Corporate Social Responsibility Policy:
The Company has adopted the Corporate Social Responsibility (CSR)Policy in accordance with the provisions of Section 135 and Schedule VII of the CompaniesAct 2013. The CSR Policy lays down the guiding principles for social welfareprograms/projects for the benefit of different segments of the society especially thedeprived under-privileged and differently abled persons. The Policy is available on thewebsite of the Company viz. www.ashapura.com/investor-corner.php. The Compositionof the CSR Committee is given in the Report on Corporate Governance.
During the year under review considering the continued reflection ofnegative Net Worth; taking into account the performance of the Company your Company hasnot specifically made provision for CSR activities for the Financial Year 2019-2020 asrequired under Section 135 of the Companies Act 2013.
D. Vigil Mechanism - Whistle Blower Policy:
The Company has vigil mechanism named a Whistle Blower Policy incompliance with the provisions of Section 177 of the Companies Act 2013 and ListingRegulations wherein the employees/directors can report the instances of unethicalbehaviour actual or suspected fraud mismanagement or any violation of the Code ofConduct and/or laws applicable to the Company and seek redressal. This mechanism providesappropriate protection to a genuine Whistle.
The said Policy is available on the website of the Company viz. www.ashapura.com/investorcorner.php.During the year under review no complaint has been received under the Whistle BlowerPolicy (Vigil Mechanism).
E. Risk Management Policy:
The Board of Directors of your Company has laid down a Risk ManagementPolicy that identifies elements of risks involved in all the activities of the Company andthe same are systematically addressed through mitigating actions on a continuing basis.The policy is reviewed by the Audit Committee on regular basis considering the industry& global risk associated with the business of the Company.
F. Prevention of Sexual Harassment at Workplace:
The Company has zero tolerance for sexual harassment of women atworkplace and has adopted a Policy for prevention prohibition and redressal of sexualharassment at workplace in terms of provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder and constituted Internal Complaint Committee (ICC) for safe working environmentwhere all employees treat each other with courtesy dignity and respect irrespective oftheir gender race caste creed religion place of origin sexual orientationdisability economic status or position in the hierarchy.
The ICC which has been constituted as per the policy in this regardsprovides a forum to employees to lodge Complaints if any therewith for appropriateredressal.
During the year no complaint was lodged with the ICC nor any suchinstance was reported and the management is happy to take the same on record. The saidPolicy is available on the website of the Company viz. www.ashapura.com/investor-corner.php.
G. Related Party Transactions Policy:
Pursuant to the applicable provisions of the Companies Act and ListingRegulations the Company has in place the Policy on Related Party Transactions and thesame is uploaded on Company's website at www.ashapura.com/investor-corner.php. Thispolicy deals with the review and approval of related party transactions.
All transactions with related parties are approved by the AuditCommittee prior to entering into any kind of transactions. The Audit Committee has afterobtaining approval of the Board of Directors laid down the criteria for granting omnibusapproval for transactions which are repetitive in nature and entered in the ordinarycourse of business and at an arm's length basis which also forms part of the Policy. Thesaid omnibus approval is granted for one financial year at a time. Moreover to monitor duecompliance all related party transactions are placed before the Audit Committee & theBoard on a quarterly basis specifying the nature value and terms & conditions of thetransactions for their review and confirmation.
During the year under review all the transactions entered pursuant tothe contracts and arrangements with related parties under Section 188 (1) of the CompaniesAct 2013 were on arm's length basis and in the ordinary course of business. Furtherthere were no material related party transactions entered into by the Company during thefinancial year under review and hence the disclosure of related party transactions asrequired under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to yourCompany.
The details of related party transaction are disclosed in the notes toFinancial Statements. (Note No. 38).
18. AUDIT COMMITTEE:
The Company has in place an Audit Committee in terms of therequirements of the Companies Act 2013 read with the rules made thereunder and Regulation18 of the Listing Regulations. Detailed information pertaining to the Audit Committeeincluding its composition meeting etc. has been provided in the Corporate GovernanceReport which forms part of this Annual Report.
19. AUDITORS AND AUDITORS' REPORT:
A. Statutory Auditors:
M/s. P A R K & Co. Chartered Accountants were appointed as theStatutory Auditors of the Company to hold office till the conclusion of the 41st AnnualGeneral Meeting to be held in the year 2022. M/s. P A R K & Co. have confirmed theireligibility and qualification required under Section 139 141 and other applicableprovisions of the Companies Act 2013 and rules made thereunder (including any statutorymodification(s) or re- enactment(s) thereof for the time being in force).
The Auditors' Report for the financial year ended 31stMarch 2020 on the Financial Statements (standalone & consolidated) of the Companyforms part of this Annual Report.
B. Branch Auditors:
In terms of provisions of Section 139 143(8) and other applicableprovisions if any of the Companies Act 2013 and rules framed thereunder M/s. Sri Sesha& Ravi Chartered Accountants Chennai appointed as the Branch Auditors for carryingout the audit of the books of accounts of the Company's Branches at Chennai and Kodur andas such holds their office till the conclusion of the 41st Annual GeneralMeeting to be held in the year 2022.
C. Cost Auditors:
Pursuant to the provisions of Section 148 of the Companies Act 2013M/s. S. K. Rajani & Co. Cost Accountants were appointed as the Cost Auditors of theCompany to conduct audit of the Company's Cost Accounting Records in respect of theproducts of the Company for the financial year 2020-2021 at the remuneration of Rs.162565/- (Rupees One lakh Sixty Two Thousand Five Hundred and Sixty Five only) per annumplus Goods and Service Tax (GST) and out of pocket expenses.
Your Company has received consent from M/s. S. K. Rajani & Co.Cost Accountants to act as the Cost Auditors of your Company for the financial year2020-2021 along with a certificate confirming their independence. As per the provisions ofthe Companies Act 2013 a resolution seeking approval of the Shareholders for theremuneration payable to the Cost Auditors forms part of the Notice convening AnnualGeneral Meeting.
The Company has maintained the cost accounts and records in accordancewith Section 148 of the Companies Act 2013 and Rules framed thereunder. The Cost AuditReport for the financial year 2019-2020 was filed with the Ministry of Corporate Affairson 27th October 2020.
D. Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 your Company had engaged the services of Shri Virendra G. Bhatt CompanySecretary in Practice Mumbai to undertake the Secretarial Audit of the Company for thefinancial year ended 31 st March 2020.
The Secretarial Audit Report in Form No.: MR - 3 for theFinancial Year ended 31st March 2020 is annexed with this report as "Annexure- B". Company's reply to the Secretarial Auditor's Observations:
In terms of the provisions of Section 110 of the Companies Act 2013read with Rule 22 of the Companies (Management and Administration) Rules 2014 theCompany had mentioned the date of declaration of result in Postal Ballot Notice as 20thFebruary 2020. As such in order to abide by the timeline already communicated to theShareholders' through the Postal Ballot Notice the Postal Ballot result wasfiled/submitted on 20th February 2020.
The Company has started the filing of quarterly reports as required tobe filed under Regulation 74(5) of SEBI (Depositories and Participants) Regulations 2018from the quarter ended 30th September 2019 onwards.
The Company has not filed Form CHG-1 (for Creation of charge) asconfirmation from respective Banks not yet received and it is under process.
20. INTERNAL (FINANCIAL) CONTROL SYSTEM & THEIR ADEQUACY:
The Company has an adequate Internal Control System commensurate withthe size scale and nature of its operation. The Audit Committee reviews the adequacy andeffectiveness of Internal Control System. The Company continues to improve the presentinternal control systems by implementation of appropriate policy and processes evaluatedbased on the recommendation of Internal Auditors.
The Company had appointed M/s. Atul HMV & Associates LLP CharteredAccountants as its Internal Auditors for Financial Year 2019-2020 which carried out theperiodic audit as per the Scope of Work approved by the Audit Committee. The AuditCommittee of the Board of Directors of the Company periodically reviews the Internal AuditReports submitted by the Internal Auditors. Internal Audit observations and correctiveaction taken by the Management are presented to the Audit Committee. The status ofimplementation of the recommendations are reviewed by the Audit Committee on a regularbasis and concerns if any are reported to the Board. The Company is taking due action toensure that the Internal Control is strengthened in all the areas of operations!
Besides this the Company has also implemented 'SAP' Systems anadvanced IT business solution platform to achieve standardized operations that ensuresseamless data and information flow. This would further ensure ease in working environment& style and shall enable the Company to be in line with the best global practices.
21. COMPLIANCE WITH SECRETARIAL STANDARDS:
The Company has complied with the Secretarial Standards issued by theInstitute of Company Secretaries of India on;
1. Meetings of the Board of Directors
2. General Meetings
3. Reports of the Board of Directors
22. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:
The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed under theCompanies Act 2013 are provided in "Annexure - C" to this Report.
23. EXTRACT OF ANNUAL RETURN:
The Extract of Annual Return of the Company in Form MGT-9 as providedunder Section 92(3) of the Companies Act 2013 is annexed herewith as "Annexure -D" to this Report.
Further in accordance with the provisions of Section 92(3) of theCompanies Act 2013 the copy of Annual Return of the Company is available on its websiteat www.ashapura.com/investor-corner.php
24. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A report on 'Corporate Governance' along with the Certificate from M/s.P A R K & Co. Chartered Accountants regarding its compliance and 'ManagementDiscussion and Analysis' Report as stipulated under Regulation 34 of the ListingRegulations are set out separately which forms part of this Report.
25. BUSINESS RESPONSIBILITY REPORT:
The Business Responsibility Report for the year ended 31stMarch 2020 as stipulated under Regulation 34 of the SEBI Listing Regulations is set outseparately which forms part of this Report.
26. EXTENSION GRANTED FOR HOLDING 38th ANNUAL GENERALMEETING:
During the period under review the company was under CorporateInsolvency Resolution Process (CIRP) an application was made by IRP Shri Arun Chaddha tothe Registrar of Companies Mumbai for an extension for convening the 38thAnnual General Meeting for the Financial Year ended 31st March 2019.Accordingly vide an order dated 3rd September 2019 an extension of threemonths was granted to company for holding 38th Annual General Meeting.Accordingly the Company duly convened its 38th Annual General meeting on 27thDecember 2019.
Your Directors wish to express their appreciation for the assistanceand co-operation received from the financial institutions banks employees investorscustomers members & shareholders and all other business associates for the continuoussupport given by them to the Company and their confidence in its management during theyear under review and look forward for their contributed support in future.
| ||For and on Behalf of the Board of Directors |
| ||SD/- |
| ||CHETAN SHAH |
| ||EXECUTIVE CHAIRMAN |
| ||(DIN: 00018960) |
|Place : Mumbai || |
|Date : 11th November 2020 || |
|E. & O.E. are regretted || |