Your Board of Directors have pleasure in presenting the 34th Annual Reporton the business and operations of the Company together with audited financial statementsfor the financial year ended March 31 2019.
1. Standalone Financial Results (Rs. in Lakhs)
|Particulars ||Financial Year |
| ||2018-19 ||2017-18 |
|Revenue from Operations ||1009451.69 ||746616.60 |
|Other Income ||14160.53 ||15207.67 |
|Total Income ||1023612.22 ||761824.27 |
|Total Expenses ||924615.81 ||689810.80 |
|Profit before Exceptional Items and Tax from Continuing Operations ||98996.41 ||72013.47 |
|Exceptional Items ||19727.24 ||- |
|Profit before Tax from Continuing Operations ||79269.17 ||72013.47 |
|Tax Expenses ||24741.67 ||24364.10 |
|Profit for the Year from Continuing Operations ||54527.50 ||47649.37 |
|Profit from Discontinued Operations (after tax) ||- ||367.72 |
|Profit for the Year ||54527.50 ||48017.09 |
|Other Comprehensive Income for the Year (Net of Tax) ||(11135.38) ||(2126.47) |
|Total Comprehensive Income for the Year ||43392.12 ||45890.62 |
|Retained Earnings-Opening Balance ||198157.08 ||164699.30 |
|Add: || || |
|Profit for the Year ||54527.50 ||48017.09 |
|Any Other Change ||92.97 ||(24.70) |
|Less: || || |
|Cash Dividend (including Dividend Distribution Tax) ||9533.55 ||9517.82 |
|Transfer to General Reserve ||5000.00 ||5000.00 |
|Re-measurement Loss on Defined Benefit Plans ||83.12 ||16.79 |
|Retained Earnings- Closing Balance ||238160.88 ||198157.08 |
2. Operations and New Urea Plant
The Company had two Urea Plants (Gadepan-I and Gadepan-II) at the beginning of theFinancial Year 2018-19. The Company has completed the implementation of the new Urea Plant("Gadepan-III Plant") and commercial production of Urea commenced fromGadepan-III Plant with effect from January 1 2019. The implementation of such a capitalintensive plant with complex technology was very challenging. The management team has roseupto the occasion and completed Gadepan-III Plant within the scheduled time and estimatedcost. It is heartening that Gadepan-III Plant has achieved all its efficiency and capacityparameters and running at its full capacity. As on March 31 2019 the capital investmentof the Company in Gadepan-III Plant stood at Rs. 5762.05 Crore.
Gadepan-III Plant is an important milestone in the journey of growth of your Companyand its Benefits will accrue not only to the Company but the country as a whole. It willgo a long way in taking the country towards self-sufficiency in Urea and thereby reducingthe dependence of the country on imports. It will also Benefit the farming communityimmensely by increasing the availability of Urea manufactured in the country. The economicBenefits of Gadepan-III Plant will also flow in the form of additional revenue to theGovernment of Rajasthan and the Government of India. Further the social Benefits in theform of new avenues of employment and availability of more resources for corporate socialresponsibility initiatives of the Company will add to the development and welfare of thecommunity at large. The cumulative production and sales of Urea from Gadepan-I andGadepan-II plants was higher in comparison to the previous year. In addition to this theUrea produced from Gadepan-III plant has augmented the production and sales of Urea of theCompany.
Apart from manufacturing Urea the Company markets other branded Agri-inputs mainlyDi-Ammonium Phosphate (DAP) Muriate of Potash (MOP) NPK Fertilisers agrochemicalsseeds and micronutrients. There was some decrease in the volumes of DAP MOP and NPKFertilisers being marketed by the Company though the performance of some other productssuch as agrochemicals and seeds has improved. The implementation of Modified New PricingScheme Stage - III for payment on account of additional fixed cost to Urea Units bythe Ministry of Chemicals and Fertilizers Government of India has been delayedinordinately. This delay has caused uncertainty in some of the aspects of aforesaidpolicy. Accordingly the Company has provided for Rs. 19727.24 Lakhs during the FinancialYear ended March 31 2019 which has been shown as 'Exceptional Items'.
The Company achieved higher revenue and Profits during the year under review incomparison to the previous year. This was mainly due to production and sales of Urea fromGadepan-III Plant higher production and sales of Urea from Gadepan-II Plant and higherprices and better margins in some of the products marketed by the Company. The higherdividend income in comparison to the previous year has also contributed to the increase inProfit during the Financial Year 2018-19.
The detailed information on the business operations of the Company the Industry inwhich the Company operates and other relevant information is given in the ManagementDiscussion and Analysis Report attached as Annexure "A" to this Report.
3. D ividend
The Board of Directors recommends dividend of Rs. 2.00 per equity share of Rs. 10each @ 20% (Previous Year - Rs. 1.90 per equity share @19%) for the financial year endedMarch 31 2019. The total outgo on this account will be Rs. 10035.22 Lakhs (Previous Year- Rs. 9517.82 Lakhs) including dividend distribution tax of Rs. 1711.06 Lakhs. TheDividend Distribution Policy of the Company is attached as Annexure "B"to this Report. There has been no change in this policy during the year under review. Thispolicy is also available on the website of the Company and can be accessed at theweblink-http://www.chambalfertilisers.com/pdf/Final-Dividend-Distribution-Policy.pdf. Thedividend recommended by the Board of Directors is in accordance with the DividendDistribution Policy of the Company.
4. Consolidated Financial Statements
In pursuance of the provisions of the Companies Act 2013 the rules framedthereunder Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") and the applicableAccounting Standards the Company has prepared Consolidated Financial Statements. TheAudited Consolidated Financial Statements alongwith Auditor's Report and the Statementcontaining salient features of the financial statements of Subsidiaries/Joint Venture(Form AOC 1) forms part of the Annual Report.
5. Corporate Governance Report and Code of Conduct
Your Directors strive to maintain the highest standards of Corporate Governance.The Corporate Governance Report for the Financial Year 2018-19 is attached as Annexure"C" to this Report. All the Directors of the Company and senior managementpersonnel have confirmed the compliance of Code of Conduct and Ethics of the Company. Thedeclaration of the Managing Director confirming compliance with the Code of Conductand Ethics' of the Company is enclosed as Annexure "D" to this Report andAuditor's Certificate confirming compliance with the conditions of Corporate Governance isenclosed as Annexure "E" to this Report.
6. Subsidiaries and Joint Venture
The Company had seven subsidiaries and a joint venture as on March 31 2019 thedetails of which are given below:
(i) CFCL Ventures Limited and its subsidiaries
CFCL Ventures Limited ("CVL") is a subsidiary of your Company in CaymanIslands and it operates business through its subsidiaries namely ISGN Corporation("ISGN USA") in USA and ISG Novasoft Technologies Limited ("ISGNIndia") in India. ISGN USA is engaged in designing developing marketing anddistribution of software products for the mortgage lending industry in USA. The businessincludes licensing of the technology products as well as providing software as a service.This business is supported by ISGN India which is having its software development centrein India. ISGN USA continued its focus in getting new customers from the residentialmortgage market in addition to looking at operating efficiencies to reduce its operationalcost. The performance of software business remained subdued during the Financial Year2018-19.
Inuva Info Management Private Limited (Under Liquidation) ("Inuva") is asubsidiary of ISGN India. There has been no business activity in Inuva. During the yearunder review the shareholders of Inuva had approved its voluntary liquidation inpursuance of the provisions of Insolvency and Bankruptcy Code 2016 ("InsolvencyCode") read with the Insolvency and Bankruptcy Board of India (Voluntary LiquidationProcess) Regulations 2017 ("Insolvency Rules"). Accordingly Inuva is in theprocess of voluntary liquidation.
(ii) Other Subsidiaries
India Steamship Pte. Limited ("ISS Singapore") is a wholly ownedsubsidiary of the Company in Singapore and India Steamship Limited (Under Liquidation)("ISS India") and Chambal Infrastructure Ventures Limited are wholly ownedsubsidiaries of the Company in India. During the year under review there was no businessactivity in these subsidiaries. During the year under review the shareholders of ISSIndia had approved its voluntary liquidation in pursuance of the provisions of InsolvencyCode read with the Insolvency Rules. ISS India is in the process of voluntaryliquidation. Further the Board of Directors of ISS Singapore and the Company as itsshareholder had approved the closure and voluntary striking-o_ the name of ISS Singaporefrom the register of Accounting and Corporate Regulatory Authority Singapore. The processof voluntary striking-off / closure of ISS Singapore is yet to be completed.
Your Company had also approved voluntary liquidation of its wholly owned subsidiary -India Steamship International FZE ("ISS UAE") in United Arab Emirates and ISSUAE was liquidated during the Financial Year 2018-19.
(b) Joint Venture : Indo Maroc Phosphore S. A.-IMACID ("IMACID")
IMACID is a joint venture of your Company in Morocco with Tata Chemicals Limitedand OCP Morocco and each partner is having equal stake in the joint venture (33.33%each). IMACID is engaged in the manufacture of phosphoric acid in Morocco.
The performance of IMACID is summarized below:
|Particulars ||January 1 2018 to March 31 2019 ||January 1 2017 to December 31 2017 |
|Production of Phosphoric Acid (MT) ||472138 ||409160 |
|Sales of Phosphoric Acid (MT) ||481808 ||408213 |
|Revenue ||Moroccan Dirham 3409.55 Million (Rs. 247533.01 Lakhs) ||Moroccan Dirham 2279.87 Million (Rs. 150851.90 Lakhs) |
|Profit after Tax ||Moroccan Dirham 482.15 Million (Rs. 35004.36 Lakhs) ||Moroccan Dirham 177.98 Million (Rs. 11776.21 Lakhs) |
. IMACID follows calendar year as its financial year. The financial results of IMACIDfor the calendar year 2017 had been considered for the purpose of preparation of theconsolidated financial statements of the Company for the previous financial year. In orderto align the financial reporting periods the Company has considered financial results ofIMACID for 15 months period ended March 31 2019 for preparation of its consolidatedfinancial statements for the financial year 2018-19. The financial performance of IMACIDduring the period ended March 31 2019 was much better in comparison to the previous yeardue to higher production and sales at improved margins. The Company does not have anymaterial subsidiary as per the provisions of the Listing Regulations.
The performance of the subsidiaries of the Company is summarized in Form AOC - 1attached to the Financial Statements of the Company in pursuance of Section 129 of theCompanies Act 2013. The contribution of subsidiaries and joint venture to the overallperformance of the Company is also provided in Note no. 48 to the Consolidated FinancialStatements.
The Company shall place the financial statements of subsidiaries on its website inpursuance of Section 136 of the Companies Act 2013 and shall provide a copy of thesestatements to any shareholder seeking it. These documents will also be available forinspection by members during business hours at the registered office of the Company atGadepan District Kota Rajasthan PIN - 325208.
Save and except voluntary liquidation of ISS UAE no other subsidiary associate orjoint venture has been acquired or ceased / sold / liquidated during the year underreview.
7. Health Safety Quality and Environmental Protection
Your Company firmly believes that health and safety of people is of utmostimportance. In order to maintain high standards of safe work practices your Company hasformulated a Health Safety Security Environment & Quality Policy and seniormanagement of the Company periodically reviews and assesses the adherence to the policy.
Your Company has established an Integrated Management System based on OHSAS-18001:2007ISO-14001:2015 and ISO-9001:2015 and it has also adopted Process Safety Management andguidelines of British Safety Council. The details of various activities and achievementsof the Company in the areas of health and hygiene safety environment protection andquality management are as under:
(a) Health & Hygiene
The Company believes that healthy and hygienic work environment not only Benefits theworkforce but it also increases their productivity and works as a retention tool. There isa system in place in the Company for health assessment and occupational disease monitoringof employees and contractor workforce through periodic medical examinations and hygienemonitoring at work place. The health centre at Gadepan provides services round the clockto employees their families contractor workforce and villagers in the vicinity of theplants. Apart from regular doctors and trained nursing staff specialist doctors likechild specialist eye specialist dental surgeon gynecologist etc. visit the healthcentre. There are three ambulances available on round the clock basis at Gadepan. TheCompany also facilitates employees to consult a Company affiliated doctor to ensure thewell-being of the employees. The Company continuously strives to maintain a neat and cleanwork place and adequate resources are made available to ensure hygienic workingenvironment. The Company organizes periodic training and awareness programs related tohealth and hygiene through external experts. Various health camps and campaigns like pulsepolio vaccination blood donation immunization programme for children and swine fluvaccination drives are also organized from time to time.
(b) Safety Management
There is a robust safety management system in place in your Company to ensurehighest levels of safety of all the employees contractor workforce as well as equipmentand machinery. Gadepan-III Plant has some advanced safety features such as control roomair conditioner system had been designed to handle leakage of Ammonia and some criticalareas of the plant are equipped with automatic flooding system in case of fire.
The Company has taken various safety measures to prevent any mishap and respond to anyaccident that may occur in the fastest and most appropriate manner like Hazardidentification risk assessment and mitigation procedures safety work permit system etc.A strong Process Safety Management system is also in place. Before executing anymaintenance job a cross functional team reviews the jobs from safety perspective andensures that all recommended actions to prevent hazards are taken. Extensive trainings anddrills are conducted by internal and external experts on rescue work at height workinginside confined space fire-fighting emergency handling electrical safety materialhandling road safety use of breathing air sets etc. To encourage safety awarenessschemes of "Near-Miss" & "Make-to Good" reporting are in place. Inorder to create more awareness on Safety & Environment your Company organizes variousprogrammes throughout the year like
National Safety Week Road Safety Week Fire Services Day World Environment DayChemical Disaster Prevention Day etc. involving employees their families and contractorworkforce.
Your Company has a well-Defined "Onsite Disaster Management Plan" and MutualAid and Response Group arrangement with neighboring industry. Regular mock drills firedrills and table top drills are conducted to ensure its effectiveness. The Companyprovides help to all neighboring villages around Gadepan through district administrationin case of any fire emergency.
(c) Environment Management
Environmental sustainability is paramount to any industry and your Company is consciousof its responsibility towards the impacts of its operations on the environment includingwith respect to resource consumption waste generation and emissions to the atmosphere.The Company's investors suppliers customers local communities as well as government andregulatory agencies are vital stakeholders in its efforts towards establishment ofenvironment friendly manufacturing that minimizes waste and pollution.
The Company has a mechanism in place to ensure that all the environmental parametersare maintained within the permissible limits and a dedicated Environment Management Cellcontinuously monitors the environmental compliances. The new Urea plant of the Company ismore energy efficient and consumes less natural resources. The Company has also installeda reverse osmosis-zero liquid discharge plant for treatment of effiuent which has alsoresulted in less fresh water intake from the river. In order to treat the Ureacontaminated effiuent stripping unit with hydrolyser has also been installed in new Ureaplant. Your Company has installed Bio-Methanation plant to handle the kitchen waste ofplant canteens and bio-gas is being utilized in the kitchen facility of guest house atGadepan.
The Company maintains a dense green belt at its Gadepan campus which is also a habitatto many species of birds. Regular plantation is done in the complex to provide a soothingand healthy environment for people to live and work. Only treated waste water is used inmaintaining the green belt through irrigation network spread all over the complex. Use ofpolythene bags is strictly prohibited in the Gadepan campus.
(d) Quality Management
Your Company is ISO 9001:2015 Certified and quality is given very high priority.The quality assurance is ensured at all stages of manufacturing processes maintenance andsupport services. The Company sources the products marketed by it from reputed suppliersand quality parameters are checked regularly. The quality reviews are regularly conductedand feedback from end users is accorded high value. The Company has a well-equippedlaboratory at Gadepan with high quality instruments like high performance liquidchromatography ion chromatograph etc. for monitoring of critical quality parameters.
Your Company regularly participates in national and international benchmarkingsurveys and awards for independent assessment and opportunity for continual improvement.One of the Urea manufacturing plants of the Company (Gadepan I plant) won theFertilizer Association of India Best Production Performance Award 2018 for a NitrogenousFertilizer Plant. The Company was also conferred with Environment Protection Award 2018for a Nitrogenous Fertilizer Plant - Runner Up by Fertilizer Association of India.
8. Corporate Social Responsibility ("CSR")
As a part of long term strategy for sustainable development your Company isworking mainly in the areas of Education including Technical & Vocational EducationRural Development Healthcare Employability and Empowerment and Soil Health. The CSRinitiatives of the Company are directed towards upliftment of the society especially thevulnerable and marginalized members of the society. The brief outline of the CSRinitiatives of the Company is as under:
a) Pre-primary & School Education
A comprehensive school education program is being driven by the Company through 42government schools and 41 Aanganwadi centers of District Kota and Baran in Rajasthan. Theeducation program is creating an ecosystem for more than 7500 students to experience andreceive quality academic support. With the aim to increase the outreach of the educationprogram additional 5 government aanganwadi centers and 5 government schools were adoptedduring the Financial Year 2018-19. Girl child education is one of the key target areas ofeducation project. During the year under review enrollment of girls in the adoptedGovernment schools has reached to 53%. Digitalization of the education system in adoptedschools is one of the major initiatives in recent years. During the Financial Year2018-19 additional smart interactive classes were set up in 6 schools taking the totalnumber to 21 schools. The computer education is also given utmost importance in theadopted schools where students are learning to operate computer from class 1stitself. Apart from delivering quality educational services the Company is also focusingon overall development of the said schools and Aanganwadis such as infrastructuredevelopment teachers' training free coaching to meritorious students for highereducation entrance exams sports promotion extra-curricular activities etc. During theFinancial Year 2018-19 15 libraries were set up in adopted schools and the Company alsofacilitated installation of Reverse Osmosis Unit with water cooler facility in 10 adoptedGovernment schools. CFDAV School is being run in collaboration with DAV College Trust andManagement Society and over 65% students in this school are from nearby villages. In 24thState Level Bhamashah Awards 2018 the Company was conferred with CommendationLetter - Shiksha Vibhushan by the Government of Rajasthan for its contribution in thefield of education in District Kota Rajasthan.
b) Technical and Vocational Education
Your Company has adopted five Government Industrial Training Institutes (ITIs) i.e.ITI Sangod (2011-12) ITI Sultanpur (2014-15) ITI Baran (2015-16) ITI Jhalawar (2015-16)and ITI Khanpur (2017-18). The renovation and maintenance of the exterior of ITI Khanpurwas completed during the year under review. The management of the Company is closelyinvolved in the running of these ITIs to ensure the quality of education and availabilityof requisite infrastructure to the students. Total 1371 seats are being offered to ruralyouth under 10 different trades in the aforesaid ITIs. To promote digital learning smartinteractive classes were installed and digital methods were adopted to provide training toyouth. Encouraged with the Digital India Mission ITI Sangod has developed its own AndroidApplication. To improve employability options of trainees additional Certificationcourses are also being offered to students in the areas such as Fire and SafetyOccupational Health and First Aid and Spoken English & Personality Development. Duringthe year under review the Company has received commendation letter from the Government ofRajasthan for its contribution as industrial partner in development of aforesaid ITIs.
c) Rural Development Your Company believes that the process of inclusion can beaccelerated through infrastructure development. The Company has continued to contributetowards building quality infrastructure facilities in the rural areas near its plants atGadepan. In order to develop Gadepan' as model village pond renovation cementconcrete roads storm water drain construction and plantation activities were completedduring the year under review. To encourage community to avoid usage of polythene variouscommunity sensitization drives were organized in the villages. For proper disposal ofwaste a solid waste management system is being developed in the Gadepan Gram Panchayat.
Your Company has constructed community places such as Shed boundary wall playgroundetc. and provided bore wells and submersible pumps in nearby villages during the year.
d) Health Care The health care initiatives aim to provide access to qualityessential health services to rural population. The awareness campaigns health care campsetc. are a process in continuum. To create awareness amongst school students and traineesof ITIs the students were trained on various health topics like First Aid trainingNutritional Awareness sessions Menstrual Health & Hygiene and Physical Activity. Thehealthcare facilities were also extended in the remote villages of Tehri and Dehradundistricts in Uttarakhand.
e) Employability and Empowerment In order to promote micro finance and self-helpinitiatives amongst women folks 39 Self Help groups are operating in 8 villages. Further10 small village level livelihood clusters have been started to support various incomegeneration activities of women. The Company has also facilitated augmentation of garmentproduction house facility during the year under review to provide livelihood to 25marginalized women. The Company is also facilitating the rural community to avail Benefitsof various social security schemes such as pension Ujjwala Yojana Pradhan Mantri JanDhan Yojana Jeevan Jyoti Beema Yojana Jeevan Suraksha Yojana etc.
f) Soil Health The Company is providing support to the farmers to adopt modernagriculture practices. Under soil health initiatives the Company is running twoagriculture development laboratories in Agra and Gadepan and three mobile soil testingvans in Rajasthan and Uttar Pradesh. Based on the soil test and analysis necessary adviceis being provided to the farmers to ensure optimum usage of farming inputs and ensuringmaximum farm produce. The composition and terms of reference of Corporate SocialResponsibility Committee are given in the Corporate Governance Report. The Annual Reporton Corporate Social Responsibility Activities (including the details of the developmentand implementation of the Corporate Social Responsibility Policy) as prescribed underSection 135 of the Companies Act 2013 and the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is attached as Annexure "G" to this Report.
For the purpose of Section 135 of the Companies Act 2013 the amount equivalent to 2%of the average net Profits of the Company made during the immediately preceding threefinancial years works out to Rs.1258.55 Lakhs. As against this the Company had spent Rs.1265.94 Lakhs on CSR projects / programs during the Financial Year 2018-19.
9. Directors and Key Managerial Personnel
The Board of Directors of the Company consists of eight directors. There are sevennon-executive directors including four independent directors and a Managing Director.During the year the Managing Director has not received any commission or remunerationfrom any subsidiary of the Company. Mr. Aditya Narayan (DIN: 00012084) ceased to be aDirector of the Company upon completion of his tenure on September 18 2018. Mr. VivekMehra (DIN: 00101328) was appointed as an Independent Director of the Company at theAnnual General Meeting ("AGM") held on September 18 2018 to hold office for aterm of 5 (five) consecutive years from September 18 2018 to September 17 2023.
Mr. Shyam Sunder Bhartia (DIN: 00010484) is due for retirement at the forthcoming AGMand has offered himself for re-appointment. All the Independent Directors have submitteddeclarations that they meet the criteria of independence as provided under Section 149(6)of the Companies Act 2013 the rules framed thereunder and the Listing Regulations. Inpursuance of the provisions of Section 2(51) and 203 of the Companies Act 2013 read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr. AnilKapoor Managing Director Mr. Abhay Baijal Chief Financial officer and Mr. RajveerSingh Company Secretary are Key Managerial Personnel of the Company. During the yearthere was no change in the Key Managerial Personnel. Four meetings of the Board ofDirectors were held during the financial year 2018-19.
Other information on the Directors and the Board Meetings is provided in the CorporateGovernance Report attached as Annexure "C" to this Report.
A Certificate obtained by the Company from a company secretary in practice confirmingthat none of the Directors on the Board of Directors of the Company have been debarred ordisqualified from being appointed or continuing as directors of companies by theSecurities and Exchange Board of India /Ministry of Corporate Affairs or any suchstatutory authority is enclosed as Annexure "F" to this Report.
10. Internal Financial Controls
The Company has internal financial controls commensurate to the size and nature ofits business. The Company has policies and procedures in place for ensuring orderly andefficient conduct of its business and operations including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information. The details of internal control system are given in theManagement Discussion and Analysis Report attached as Annexure "A" tothis Report.
11. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act 2013 andListing Regulations the Company has formulated a Remuneration Policy. The RemunerationPolicy inter-alia includes the appointment criterion & qualification requirementsprocess for appointment & removal retirement policy remuneration structure etc. ofthe Directors including Managing Director and Whole Time Director(s) Key ManagerialPersonnel (KMP) and other senior management personnel of the Company. As per theRemuneration Policy a person proposed to be appointed as Director KMP or other seniormanagement personnel should be a person of integrity with high level of ethical standards.In case of appointment as an independent director the person should fulfill the criterionof independence prescribed under the Companies Act 2013 rules framed thereunder and theListing Regulations. The Remuneration Policy also contains provisions about the payment offixed & variable components of remuneration to the Managing Director and Whole TimeDirector(s) and payment of sitting fee & commission to the non-executive Directors anddescribes fundamental principles for determination of remuneration of senior managementpersonnel and other employees which are as follows:
a) demand-supply relationship of the concerned job expertise;
b) need of organization to retain and attract talent and its ability to pay;
c) employees' social aspiration for enhancing standard of living; and
d) compensation trends in the industries in which the Company operates.
The Remuneration Policy has been amended with effect from April 1 2019. Apart fromcertain changes of clarificatory nature the Remuneration Policy was amended mainly to theeffect that Nomination and Remuneration Committee shall also recommend to the Board ofDirectors all remuneration in whatever form payable to the Directors KMPs and seniormanagement personnel of the Company and the Board of Directors shall take intoconsideration the recommendations of Nomination and Remuneration Committee whileconsidering the appointment and remuneration of Directors KMPs and senior managementpersonnel. The remuneration Policy of the Company is available at the website of theCompany at the weblink http://www.chambalfertilisers.com/pdf/ REMUNERATION-POLICY.pdf.
12. Disclosures under the Companies Act 2013 Rules thereunder and SecretarialStandards
a) Your Company has not issued any shares during the Financial Year 2018-19.
b) No significant and material orders have been passed by the regulators or courts ortribunals or statutory and quasi-judicial bodies impacting the going concern status andCompany's operations in future.
c) All Related Party Transactions entered during the financial year 2018-19 were onarm's length basis and in the ordinary course of business. No material Related PartyTransactions (i.e. transaction(s) exceeding ten percent of the annual consolidatedturnover of the Company as per last audited financial statements) were entered during theyear by the Company. Accordingly disclosure of contracts or arrangements with RelatedParties as required under section 134(3)(h) of the Companies Act 2013 in Form AOC-2 isnot applicable.
d) The extract of annual return in Form MGT-9 is attached as Annexure "H" tothis Report which is also available on the website of the Company at the weblinkhttps://www.chambalfertilisers.com/annualreturns/. A Copy of annual return of the Companyis also available on the aforesaid weblink.
e) The following information is given in the Corporate Governance Report attached as Annexure"C" to this Report:
i) The performance evaluation of the Board the Committees of the Board Chairman ofthe Company and the individual Directors;
ii) The Composition of Audit Committee; and
iii) The details of establishment of Vigil Mechanism.
f) The particulars of loans and guarantees given security provided and investmentsmade if any under Section 186 of the Companies Act 2013 are given in the Notes to theFinancial Statements.
g) During the year the auditors secretarial auditors and cost auditors have notreported any fraud under Section 143(12) of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014.
h) The Company has complied with the applicable Secretarial Standards prescribed underSection 118(10) of the Companies Act 2013.
i) The Company has complied with the provisions relating to the constitution ofInternal Complaints Committees under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
j) There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year 2018-19 and thedate of this report.
13. Directors Responsibility Statement Your Directors hereby state that:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2019 and of the Profitand loss of the Company for the year ended March 31 2019;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively;and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
14. Auditors and Cost Auditors
The Notes to the Financial Statements read with the Auditor's Reports areself-explanatory and therefore do not call for further comments or explanations. Therehas been no qualification reservation adverse remark or disclaimer in the Auditor'sReports.
The shareholders of the Company at the AGM held on September 15 2017 had appointedM/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/ N500016)as Auditors of the Company to hold office for a term of 5 (five) consecutive years fromthe conclusion of Thirty-second AGM of the Company held on September 15 2017 till theconclusion of Thirty-seventh AGM of the Company. The maintenance of cost records asspecified by the Central Government under sub-section (1) of Section 148 of the CompaniesAct 2013 is required by the Company in respect of production of fertilisers andaccordingly such accounts and records are made and maintained by the Company. The Board ofDirectors of the Company has appointed M/s. K.G. Goyal & Associates Cost Accountantsfor conducting audit of cost accounts of the Company as applicable for the financialyear 2019-20. As required under the Companies Act 2013 and Rules framed thereunder yourDirectors are seeking rati_cation from the members of the Company for the remunerationpayable to M/s K.G. Goyal & Associates Cost Accountants.
15. S ecretarial Audit
The Board of Directors of the Company had appointed M/s. RMG & AssociatesCompany Secretaries for conducting secretarial audit of the Company for the financial year2018-19. The Secretarial Audit Report issued by the aforesaid Secretarial Auditor isattached as Annexure "I" to this Report.
There has been no qualification reservation observation disclaimer or adverse remarkin the Secretarial Audit Report.
16. Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
The energy efficient operation of plants results into manifold Benefits in the formof saving of natural and financial resources and reduction of carbon footprint. TheCompany takes continuous initiatives to make its manufacturing facilities energyefficient. The new Urea plant of the Company is energy efficient in comparison to theexisting plants. The requisite information with regard to conservation of energytechnology absorption and foreign exchange earnings and outgo in terms of the Companies(Accounts) Rules 2014 is set out in Annexure "J" attached to thisReport.
17. Risk Management
Your Company has developed and implemented a Risk Management Policy. The RiskManagement Committee of the Company periodically reviews all risks finalise the riskdocument and monitors various risks of the Company including the risks if any which maythreaten the existence of the Company. The composition and terms of reference of the RiskManagement Committee are given in the Corporate Governance Report. The risk documentcontaining Key and Non-Key risks including way forward for mitigation thereof as approvedby the Risk Management Committee is also reviewed by the Audit Committee and the Board ofDirectors periodically.
During the year the Company has not accepted any deposits from the public underChapter V of the Companies Act 2013. There was no public deposit outstanding as at thebeginning and end of the financial year 2018-19.
19. Particulars of employees
Your Company believes that human resource is vital to the growth and sustainabilityof an organization. Your Company maintains very healthy work environment promotes theculture of entrepreneurship at all levels in the organization and encourages the employeesto contribute their best. The information required to be disclosed in pursuance of Section197 of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is attached as Annexure "K" to thisReport.
20. Employees Stock Option Scheme
The members of the Company had approved CFCL Employees Stock Option Scheme 2010 asamended and revised from time to time ("ESOS 2010") for grant of stock optionsexercisable into not more than 4162000 equity shares of face value of Rs. 10/- each toeligible employees and Managing Director of the Company. Each stock option when exercisedwould be converted into one fully paid up equity share of Rs. 10/- of the Company.
The Company has not granted any stock options during the year under review.
There has been no change in ESOS 2010 during the financial year 2018-19. ESOS 2010 isin compliance with Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 ("ESOP Regulations") and implemented through CFCL EmployeesWelfare Trust ("Trust"). For the purpose of ESOS 2010 the Trustee of the Trustwas holding 1335900 equity shares of the Company as on March 31 2019 (1696900 equityshares as on March 31 2018) being 0.32% of the paid up share capital of the Company. Theownership of these shares cannot be attributed to any particular employee till he / sheexercises the stock options granted to him / her and the concerned shares are transferredto him / her. Hence the concerned employees to whom the stock options were granted underESOS 2010 cannot exercise voting rights in respect of aforesaid shares held by the Trusteeof the Trust as such employees are not holders of such shares. The Trustee has notexercised the voting rights in respect of the aforesaid shares during the financial year2018-19.
The disclosures required to be made under ESOP Regulations read with SEBI circular no.CIR/CFD/Policy Cell/2/2015 dated June 16 2015 are given on the website of the Company atthe weblink http://www.chambalfertilisers.com/pdf/esop-2019.pdf. The disclosures inrespect of ESOS 2010 are also given in the notes to the Financial Statements.
21. Business Responsibility Report
In pursuance of the provisions of the Listing Regulations the BusinessResponsibility Report for the financial year 2018-19 describing the initiatives taken bythe Company from environmental social and governance perspective forms part of the AnnualReport.
22. Investor Service Centre
The in-house Investor Service Centre of your Company is located in the Corporateoffice of the Company at New Delhi which provides prompt and efficient service to theinvestors. The Company takes various initiatives for investor satisfaction such asreminders to investors about undelivered shares unclaimed dividend etc.
The equity shares of your Company are listed at National Stock Exchange of IndiaLimited and BSE Limited. The Company has paid annual listing fees to these Stock Exchangesfor the financial year 2019-20. The members are requested to refer to generalshareholders' information given in Corporate Governance Report attached hereto.
The Board of Directors places on record its appreciation of the co-operationextended by all the stakeholders including the Department of Fertilisers Government ofIndia Government of Rajasthan and other State Governments Financial Institutions &Banks investors and customers. The Board of Directors also convey its appreciation of theservices rendered by each and every employee with utmost commitment and dedication.
| ||For and on behalf of Board of Directors |
|Place : New Delhi ||Saroj Kumar Poddar |
|Date : May 16 2019 ||Chairman |