Bharat Rasayan Ltd.
|BSE: 590021||Sector: Agri and agri inputs|
|NSE: BHARATRAS||ISIN Code: INE838B01013|
|BSE 00:00 | 14 May||12778.75||
|NSE 00:00 | 14 May||12799.90||
|Mkt Cap.(Rs cr)||5,431|
|Mkt Cap.(Rs cr)||5430.97|
Bharat Rasayan Ltd. (BHARATRAS) - Director Report
Company director report
On behalf of the Board of Directors it is our pleasure to present the31st Annual Report together with the Audited Statement of Accounts of Bharat RasayanLimited ("the Company") for the year ended March 312020.
The summarized standalone results of your Company and are given in thetable below.
Summary of Operations
During the year your Company's profit after tax stood at Rs. 15764Lacs vis-a-vis Rs. 11152 Lacs in the previous year registering a growth of approx.41.36%.
2019-20 has been a challenging year with weakening consumer sentimentgiven the macro-economic conditions and finally the COVID-19 outbreak and its terribleimpact on lives and livelihoods. The human impact of the virus and the containment effortshave resulted in supply and demand disruptions resulting in a sharper growthdeceleration. The situation remains volatile with the trajectory of the virusundetermined evolving hot spot geographies the success of containment measuresuncertain the severity and duration of resulting economic crisis and the extent ofstructural damage unknown. There are many unknowns today and hence the near-term outlookis extremely uncertain. We stand united with the nation in the fight against COVID-19 aswe navigate our way through these dynamic uncertain times together. Our focus remains onsafety of our people protecting supply lines serving demand contributing to the societyand optimising cost and cash.
Despite the near-term ambiguity we remain confident of the medium tolong-term growth prospects of the Agro chemical sector. Our Sector is working closely withGovernments to ensure that we overcome this global health crisis together. Although thecurrent situation is much more uncertain than normal we are confident about our abilityto manage the immediate crisis and come out of it in a strengthened competitive position.We remain focused on delivering consistent competitive profitable and responsible growththrough our fundamentals of growth and sustainable business model.
During the year the Company has not transferred any amount to GeneralReserves of the Company. Dividend
Your Directors have recommended a dividend of Rs. 1.50 per equity shareof Rs. 10/- each for financial year 2019-20. The final dividend subject to the approval ofthe members at the Annual General Meeting will be paid to those members whose names appearin the Register of Members or in the records of the Depositories i.e. National SecuritiesDepositories Limited (NSDL) and Central Depository Services (India) Limited (CDSL) asbeneficial owners of the shares as at the end of business hours on the record date.
Details of Board Meetings
During the year Five (5) number of Board meetings were held detailsof which are given below:
As on 31st March 2020 the issued subscribed and paid up sharecapital of your Company stood at Rs. 42487400/- comprising 4248740 equity shares ofRs. 10/- each.
Maintaining high standards of Corporate Governance has been fundamentalto the business of your Company since its inception. A separate report on CorporateGovernance is provided together with a Certificate from the Statutory Auditors of theCompany regarding compliance of conditions of Corporate Governance as stipulated underListing Regulations. A Certificate of the CEO and CFO of the Company in terms of ListingRegulations inter-alia confirming the correctness of the financial statements and cashflow statements adequacy of the internal control measures and reporting of matters to theAudit Committee is also annexed.
The extract of annual return in Form MGT-9 as required under Section92(3) of the Companies Act and Rule 12 of the Companies (Management and Administration)Rules 2014 is appended as an Annexure to this Report and also available on the Company'swebsite at www.bharatgroup.co.in.
Committees of Board
The details of composition of the Committees formulated by the Board ofDirectors are as under: a. Audit Committee
During the year the Committee had met on 30.05.2019 14.08.2019 14.11.2019 and14.02.2020.
b. Nomination & Remuneration Committee
During the year the Committee had met on 30.05.2019 14.08.2019 and14.02.2020. c. Corporate Social Responsibility Committee
During the year the Committee had met on 30.08.2019 14.10.201911.11.2019 and 17.01.2020. The Committee had approved the CSR Policy and the Budget. TheCSR Policy is uploaded on Company's website. Further the Report on CSR Activities /Initiatives is enclosed as annexure. d. Stakeholders Relationship / Shareholder GrievanceCommittee
During the year the Committee had met on 08.04.2019 04.07.2019 04.10.2019 and08.01.2020. e. Share Transfer Committee
During the year the Committee had met on 07.05.2019 21.05.201910.07.2019 20.07.2019 10.08.2019 20.08.2019 10.09.2019 20.09.2019 14.11.201914.02.2020 and 20.03.2020.
f. Committee of Directors
During the year the Committee had met on 04.04.2019 03.06.201923.07.2019 20.09.2019 12.12.2019 06.02.2020 18.02.2020 24.02.2020 and 09.03.2020.
g. Directors' Responsibility Statement
Pursuant to the requirement Clause (c) of Sub-Section (3) of Section134 of the Companies Act 2013 your Directors confirm that:
(a) in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;
(b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss 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 in the case of a listed company had laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
Statutory Auditors Report and Notes to Financial Statements
The Independent Auditor's Report of M/s. R.D Garg & Co. CharteredAccountants the Statutory Auditors of the Company on the financial statements of theCompany for the financial year ended 31st March 2020 read with relevant Notes toFinancial Statements are self-explanatory and do not call for any further explanation.
In terms of the provisions of Section 148 and all other applicableprovisions of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014 M/s. M.K.Singhal & Co. Cost Accountants have been appointed as Cost Auditors toconduct the audit of cost records of your Company for the financial year 2019-20. Theremuneration proposed to be paid to them requires ratification of the shareholders of theCompany. In view of this your ratification for payment of remuneration to Cost Auditorsis being sought at the ensuing AGM.
Your Company has filed the Cost Audit Report with the Ministry ofCorporate Affairs for the relevant financial year.
In terms of Section 204 of the Act and Rules made thereunder M/s.Mamta Jain & Associates Practicing Company Secretary have been appointed SecretarialAuditors of the Company. The report of the Secretarial Auditors is enclosed as annexure tothis report. The report is self-explanatory and do not call for any further comments.
Reporting of Frauds by Auditors
During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditors have not reported any instances of frauds committed in the Company byits Officers or Employees to the Audit Committee under Section 143(12) of the Actdetails of which needs to be mentioned in this Report.
There were no changes in the credit ratings of the Company. As on March312020 the Company had credit rating of AA- for long term and A1+ for short term.
The Company has not accepted any deposits from the public during theyear under review. No amount on account of principal or interest on deposits from thepublic was outstanding as on March 312020.
Particulars of Loans Guarantees or investments (i) Amount outstandingas at 31st March 2020
(ii) Loans Guarantees and Investments made during the Financial Year2019-20
The details in relation to the composition of Audit Committeeestablishment of Vigil Mechanism for directors and employees Internal Financial Controlsand Director's Remuneration Policy of the Company have been given in the CorporateGovernance Report forming part of this Annual Report.
No significant or material orders were passed by the Regulators orCourts or Tribunals which impacts the going concern status and Company's operations infuture.
Compliance with Secretarial Standards
The Company has complied with all the applicable provisions ofSecretarial Standard-1 and Secretarial Standard-2 relating to 'Meetings of the Board ofDirectors' and 'General Meetings' respectively issued by Institute of Company Secretariesof India.
Related Party Transactions
In line with the requirements of the Companies Act 2013 and amendmentto the Listing Regulations your Company has formulated a revised Policy on Related PartyTransactions which is also available on the Company's website at www.bharatgroup.co.in.The Policy intends to ensure that proper reporting approval and disclosure processes arein place for all transactions between the Company and Related Parties.
All Related Party Transactions are placed before the Audit Committeefor review and approval. All Related Party Transactions are subjected to review with therequirements of Related Party Transactions under the Companies Act 2013 and ListingRegulations. All Related Party Transactions entered during the year were in OrdinaryCourse of the Business and at Arm's Length basis. The disclosure of Related PartyTransactions as required under Section 134(3)(h) of the Companies Act 2013 in Form AOC-2is attached as Annexure.
The Company i.e. Bharat Rasayan Limited (BRL) has executed a JointVenture ("JV") Agreement on 18.02.2020 with Nissan Chemical Corporation (NCC)a company incorporated in Japan and with
Nissan Bharat Rasayan Private Limited a company incorporated in India("JV" Company). The joint venture will operate through a company named 'NissanBharat Rasayan Private Limited' a company incorporated in India in which BRL has 30%share and NCC has 70% share. The Joint Venture Company
i.e. Nissan Bharat Rasayan Private Limited has decided to construct newmanufacturing factory in India for various technical products. Nissan Chemical Corporationis a research based Company and is one of the largest manufacturers of agrochemicals inJapan having global operations. Nissan Chemical Corporation has developed goodrelationship of mutual trust with Bharat Rasayan Limited and thus Nissan ChemicalCorporation wants to enter into joint venture with Bharat Rasayan Limited. The detaileddisclosure as required under Regulation 30 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 read with the relevant circulars is given below.
1. Name(s) of parties with whom the agreement is entered
(a) Joint Venture Partner - Nissan Chemical Corporation("NCC") a company incorporated in Japan.
(b) Joint venture Company 'Nissan Bharat Rasayan Private Limited' acompany incorporated in India ("JV Company").
2. Purpose of entering into the agreement
(a) Nissan Chemical Corporation is a research based Company and is oneof the largest manufacturers of agrochemicals in Japan having global operations. NCC isdesirous of expanding its manufacturing base in India by entering into a joint venturewith BRL.
(b) Bharat Rasayan Limited is a leading manufacturer of technical gradepesticides intermediates and bulk formulations in India and is desirous of forming ajoint venture with NCC.
(c) Nissan Chemical Corporation has developed good relationship ofmutual trust with Bharat Rasayan Limited and thus Nissan Chemical Corporation wants toenter into joint venture with Bharat Rasayan Limited.
(d) NCC and BRL have decided to establish a joint venture and jointlyundertake the business through the JV Company.
3. Shareholding if any in the entity with whom the agreement isexecuted
(a) BRL does not hold any shares of NCC.
(b) As per the terms of the joint venture agreement ("JVAgreement") upon subscription / acquisition of shares of the JV Company NCC willhold 70% and BRL will hold 30% of the total share capital of the JV Company.
4. Significant terms of the agreement (in brief) special rights likeright to appoint directors
in capital structure etc.
Significant terms of the JV Agreement (in brief) are set out hereunder:
(a) The Board of Directors of the JV Company shall initially compriseof not more than eight (8) Directors. NCC shall have the right to nominate five (5)Directors BRL shall have the right to nominate two (2) Directors and one (1) Directorshall be an independent professional.
(b) NCC and BRL have rights of pre-emption in case of fresh issuance ofshares of the JV Company.
(c) BRL and NCC have affirmative vote rights in respect of certainmatters concerning the JV Company.
(d) There is a restriction on transfer of shares of the JV Company byBRL and NCC for a period of 10 years subject to certain exceptions.
(e) In case BRL and NCC propose to transfer their shares in the JVCompany to a third party then the other party has a right of first refusal.
(f) If NCC is transferring its shares in the JV Company to a thirdparty then BRL has a tag along right.
(g) Under the terms of the JV Agreement a non-compete restriction hasbeen imposed on BRL with respect to the business of the JV Company with certainexceptions.
5. Whether the said parties are related to promoter/ promoter group/group companies in any manner. If yes nature of relationship
(a) The JV Company had been incorporated by Mr. Sat Narain Gupta andMr. Rajender Prasad Gupta on 12/12/2019.
(b) Mr. Sat Narain Gupta and Mr. Rajender Prasad Gupta are part of thePromoter Group of BRL.
(c) Currently Mr. Sat Narain Gupta and Mr. Rajender Prasad Gupta hold100% of the paid up equity share capital of the JV Company.
(d) Mr. Sat Narain Gupta and Mr. Rajender Prasad Gupta intend totransfer 100% of their shareholding in the JV Company to BRL for a total purchaseconsideration of Rs. 100000/- which is the face value of the shares.
6. Whether the transaction would fall within related partytransactions? If yes whether the same is done at "Arm's length"
BRL and NCC are not related parties as defined under the CompaniesAct 2013. Therefore the formation of a joint venture between BRL and NCC pursuant to theJV Agreement is not a related party transaction for BRL.
7. In case of issuance of shares to the parties details of issueprice class of shares issued
The JV Company will initially issue equity shares to both NCC and BRLat face value i.e. Rs. 10/- per equity share. All equity shares of the JV Companyproposed to be issued to BRL and NCC by the JV Company shall be pari passu with eachother. There are no classes of shares presently contemplated in the JV Company.
8. Any other disclosures related to such agreements viz. details ofnominee on the board of directors of the listed entity potential conflict of interestarising out of such agreements etc.
(a) NCC and BRL as shareholders of the JV Company shall have the rightto nominate certain Directors on the Board of the JV Company. NCC shall have the right tonominate five (5) Directors and BRL shall have the right to nominate two (2) Directors.
(b) The Managing Director of the JV Company shall be appointed fromamongst the Directors nominated by NCC.
Business Responsibility Report
The Securities Exchange Board of India (SEBI) on November 2019 as perthe requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) and for better compliance with corporate governance normsdecided to make it mandatory for top 1000 listed companies to prepare annual businessresponsibility report covering their activities related to environment and stakeholderrelationships as a part of its Annual Report. Bharat Rasayan Limited (the"Company") being one of the top thousand listed company has to approve and adoptthe Business Responsibility Policy (the "Policy") which is based on principleslaid down in the National Voluntary Guidelines on Social Environmental and Economicresponsibilities of a Business published by the Ministry of Corporate Affairs towardsconducting business by a company. The Business Responsibility Report forms a part of thisAnnual Report.
Your Company treats its "Human Resources" as one of its mostimportant assets.
Your Company continuously invests in attraction retention anddevelopment of talent on an ongoing basis. A number of programs that provide focusedpeople attention are currently underway. Your Company thrust is on the promotion of talentinternally through job rotation and job enlargement.
Disclosure as per Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace andhas already adopted a policy on prevention prohibition and redressal of sexual harassmentat workplace in line with the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules framed thereunder.
During the financial year 2019-20 the Company has not received anycomplaint on sexual harassment. Vigil Mechanism
Pursuant to the requirement of the Act the Company has establishedvigil mechanism a channel through which the Directors and Employees of the Company have asecure mechanism to report genuine concerns including any unethical behavior actual orsuspected frauds taking place in M/s Bharat Rasayan Limited for appropriate action orreporting.
The Board of Directors has carried out an annual evaluation of its ownperformance Board Committees and individual Directors pursuant to the provisions of theAct and the corporate governance requirements as prescribed by Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI Listing Regulations").
Directors who were designated held separate discussions with each ofthe Directors of the Company and obtained their feedback on overall Board effectiveness aswell as each of the other Directors.
A separate meeting of the Independent Directors ("Annual IDMeeting") was convened which reviewed the performance of the Board (as a whole) theNon-Independent Directors and the Chairman.
Some of the key criteria which were being considered for performanceevaluation were as follows:
Attendance at Board or Committee Meetings;
Contribution at Board or Committee Meetings;
Guidance/support to Management outside Board/Committee Meetings;
Degree of fulfilment of key responsibilities;
Board structure and composition; and
Effectiveness of Board process Risk Management Policy
In terms of the requirement of the Act the Company has developed andimplemented the Risk Management Policy and the Audit Committee of the Board reviews thesame periodically.
The main objective of this policy is to ensure sustainable businessgrowth with stability and to promote a pro-active approach in reporting evaluating andresolving risks associated with the business. In order to achieve the key objective thepolicy establishes a structured and disciplined approach to Risk Management in order toguide decisions on risk related issues.
Declaration by Independent Directors
Shri Pankaj Gupta Shri Ram Kanwar Smt. Sujata Agarwal Shri SureshKumar Garg and Shri Rajesh Gupta are independent Directors on the Board of your Company.In the opinion of the Board and as confirmed by these Directors they fulfil theconditions specified in Section 149 of the Act and the Rules made thereunder about theirstatus as Independent Directors of the Company.
Company's Policy on Appointment and Remuneration
During the year under review the Company is duly following theNomination and Remuneration Policy. This remuneration policy has been prepared pursuant tothe provisions of Section 178(3) of the Companies Act 2013 ("Act") and therelevant Listing Regulations.
Ratio of Remuneration of Director
The information required under Section 197 of the Act and the Rulesmade thereunder in respect of employees of the Company is enclosed as Annexure to theBoard's Report.
Internal Financial Control
The internal financial controls with reference to the FinancialStatements are commensurate with the size and nature of business of the Company.
Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory and secretarial auditors and external consultants and the reviews being made bymanagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the financial year 2019-20.
Secretarial Auditors' Report/ Secretarial Compliance Report
The Secretarial Auditors' Report do not contain any qualificationsreservations or adverse remarks. Report of the Secretarial Auditor is given as an annexurewhich forms part of this report.
In accordance with the SEBI Circular dated February 8 2019 theCompany has obtained an Annual Secretarial Compliance Report from M/s. Mamta Jain &Associates Practicing Company Secretary confirming compliances with all applicable SEBIRegulations Circulars and Guidelines for the year ended 31st March 2020.
Directors and Key Managerial Personnel
Shri Rajender Prasad Gupta and Shri Ajay Gupta Directors of theCompany retire by rotation at the forthcoming Annual General Meeting and being eligibleoffer themselves for reappointment.
During the year the Non-Executive Directors of the Company had nopecuniary relationship or transactions with the Company other than the sitting feescommission and reimbursement of expenses if any incurred by them for the purpose ofattending meetings of the Company.
Pursuant to the provisions of Section 203 of the Act the KeyManagerial Personnel of the Company are Mr. Rakesh Verma Chief Financial Officer and Ms.Nikita Chadha Company Secretary of the Company.
Annual Evaluation of Board Performance and Performance of itsCommittees and of Directors
Pursuant to the applicable provisions of the Act and the ListingRegulations the Board has carried out an annual evaluation of its own performanceperformance of the Directors as well as the evaluation of the working of its Committees.
The NRC has defined the evaluation criteria procedure and timeschedule for the Performance Evaluation process for the Board its Committees andDirectors.
The performance of the Board and individual Directors was evaluated bythe Board after seeking inputs from all the Directors. The performance of the Committeeswas evaluated by the Board after seeking
inputs from the Committee Members. The criteria for performanceevaluation of the Board included aspects such as Board composition and structureeffectiveness of Board processes contribution in the long term strategic planning etc.The criteria for performance evaluation of the Committees included aspects such asstructure and composition of Committees effectiveness of Committee meetings etc. Theabove criteria for evaluation was based on the Guidance Note issued by SEBI.
In a separate meeting the lndependent Directors evaluated theperformance of Non-Independent Directors and performance of the Board as a whole. Theyalso evaluated the performance of the Chairman taking into account the views of ExecutiveDirectors and Non-Executive Directors. The NRC reviewed the performance of the Board itsCommittees and of the Directors. The same was discussed in the Board Meeting that followedthe meeting of the lndependent Directors and NRC at which the feedback received from theDirectors on the performance of the Board and its Committees was also discussed.
Significant highlights learning and action points with respect to theevaluation were discussed by the Board.
Transfer of Amounts to Investor Education and Protection Fund
Pursuant to the provisions of the Investor Education Protection Fund(Uploading of Information regarding Unpaid and Unclaimed amounts lying with Companies)Rules 2012 the Company has already filed the necessary form and uploaded the details ofunpaid and unclaimed amount lying with the Company as on the date of last AGM (i.e. 25thSeptember 2019) with the Ministry of Corporate Affairs.
As per SEBI Listing Regulations Corporate Governance Report withAuditor's Certificate thereon and Management Discussion and Analysis Report are attachedwhich form part of this report.
Particulars of Employees
Pursuant to the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 none of the employees was in receipt of remuneration exceeding thelimit specifies in the Act and the corresponding rules.
Top Ten Employees in Terms of Remuneration drawn during the year
*The Remuneration includes only Gross Salary earned including leaveencashment variable incentive fixed incentive perquisites and profit based commissionif any and without any statutory deductions (like EPF I.Tax etc.). Other reimbursement(if any like medical petrol driver etc.) are not included.
Details of Conservation of Energy Technology Absorption ForeignExchange Earnings and Outgo
(a) Conservation of Energy
Energy conservation has been an important thrust area of the managementand is being continuously monitored and efforts to conserve and optimize the use of energythrough improved operational methods and other means are being continued on an ongoingbasis. We have persistent in our efforts to ensure reuse recycling to the extentpossible.
Wherever possible energy conservation measures have already beenimplemented by your Company.
With growing concerns there has been an exhaustive search made formeans of alternative energy which may be considered for implementation in future and yourCompany would continue to explore alternative sources of energy in future. Sustainabilityis deeply rooted in all the operations of your Company.
The energy consumption and the cost of production are being kept undercontrol.
(b) Technology Absorption and Research and Development (R&D)
Technology Absorption Adaptation & Innovation
1. The Company has no technical collaboration and the processes arecarried out on the standard known technology and efforts are made to improve upon the sameon an ongoing basis.
2. The Company has been in a position to cater to the requirements ofcustomers both Indian and foreign.
3. The Company has not imported any technology so far.
Research & Development (R&D)
1. Company's In-house R&D facilities are recognized by the Ministryof Science and Technology New Delhi.
2. R&D efforts of the Company are directed towards qualityassurance and improvement of existing products quality.
3. Development of new processes for products is carried out on anongoing basis. Several new products were developed during the year under review withspecial impetus on following aspects:
Develop new products for contribution in growth of the Company.
Competitive in terms of technical & commercial point ofview.
Enhanced effectiveness of products towards end use.
More environment friendly process.
More safe to manufacture.
4. Expenditure on R&D by Company's In-house R&D Unit:
Total R&D expenditure (as % of total expenditure) : 0.25%
(c) Foreign exchange earnings and Outgo
During the year the total foreign exchange used was Rs. 50025.39 Lakhsand the total foreign exchange earned was Rs. 58615.14 Lakhs.
Your Directors place on record their appreciation for employees at alllevels who have contributed to the growth and performance of your Company.
Your Directors also thank the clients vendors bankers shareholdersand advisers of the Company for their continued support.
Your Directors also thank the Central and State Governments and otherstatutory authorities for their continued support.