Your Board of Directors have pleasure in presenting the 36th Annual Reporton the business and operations of the Company together with audited financial statementsfor the Financial Year ended March 312021.
1. Standalone Financial Results
The financial performance of your Company on standalone basis is summarized below:
| || |
(Rs. in Crore)
|Particulars || |
| ||2020-21 ||2019-20 |
|Revenue from Operations ||12719.01 ||12205.95 |
|Other Income ||59.89 ||179.34 |
|Total Income ||12778.90 ||12385.29 |
|Total Expenses ||10819.96 ||11093.01 |
|Profit before Exceptional Items and Tax ||1958.94 ||1292.28 |
|Exceptional Items ||- ||(33.42) |
|Profit before Tax ||1958.94 ||1325.70 |
|Total Tax Expenses ||611.90 ||101.39 |
|Profit for the Year ||1347.04 ||1224.31 |
|Other Comprehensive Income for the Year (Net of Tax) ||151.57 ||(251.62) |
|Total Comprehensive Income for the Year ||1498.61 ||972.69 |
|Retained Earnings - Opening Balance ||3254.12 ||2381.60 |
|Add: || || |
|Profit for the Year ||1347.04 ||1224.31 |
|Any Other Change ||0.19 ||0.57 |
|Less: || || |
|Cash Dividend (including Dividend Distribution Tax) ||124.86 ||301.05 |
|Transfer to General Reserve ||50.00 ||50.00 |
|Re-measurement Loss on Defined Benefit Plans ||0.34 ||1.31 |
|Retained Earnings - Closing Balance ||4426.15 ||3254.12 |
The Company manufactures Urea in its three plants located at Gadepan District KotaRajasthan. The Company is also engaged in marketing of other fertilisers and agri-inputssuch as Di-Ammonium Phosphate (DAP) Muriate of Potash (MOP) Ammonium Phosphate Sulphate(APS) different grades of NPK fertilisers Sulphur Micronutrients and Agrochemicals.
The Financial Year 2020-21 started amidst the outbreak of Novel Corona Virus("COVID-19") pandemic and the country was under lockdown. The economies worldover were severely impacted by COVID-19 pandemic and there were lot of apprehensions aboutthe economic activity in the country. However the Company was able to continue itsoperations at normal levels. The Company's production dispatches sales and marketcollections remained unaffected. The Company is continuously monitoring the situationarising on account of COVID-19 pandemic considering both internal and external factors andtaking appropriate measures in this regard. When many sectors were under stress due topandemic the agriculture sector remained unaffected and consecutive good monsoon in thesecond year helped the Company in maintaining the growth momentum.
The Company had achieved highest ever production and sales of Urea and highest eversales volumes of DAP and MOP fertilisers. There was also growth in sales of NPKfertilisers Sulphur Micro-nutrients and Agrochemicals. The sales volumes of APSfertilizer were also encouraging. During the year under review the Company has crossed animportant milestone of sales of 5 Million MT of fertilisers. The increased sales volumesof Urea and increased volumes and better margins on marketed products have enabled theCompany to achieve highest ever revenue and profit after tax during the year.
After establishing itself firmly in its existing marketing territory the Company isnow looking forward to expanding its reach in new geographies in eastern western andsouthern part of India. The Company is increasing its presence by opening marketingoffices in these territories. Apart from DAP and MOP the focus of the Company is toexpand its volumes of APS/ NPK fertilisers in the new territories. The expansion of itsmarketing area will also allow the Company to get the advantage of different weathercycles and seasons for sale of products.
The Government of India had made additional allocation for fertiliser subsidy to clearthe backlog. The outstanding subsidy of the Company as on March 31 2021 was Rs. 1103.28Crore as against Rs. 5349.33 Crore outstanding as on March 31 2020. This has improved theliquidity position of the Company which has resulted into substantial reduction in thefinance cost and its benefit will continue in the coming year also. Further the creditrating for long term borrowings of the Company has been upgraded from CRISIL AA/Positiveto CRISIL AA+/Stable. The detailed information on the business operations of the Companythe Industry in which the Company operates and other relevant information is given in theManagement Discussion and Analysis Report attached as Annexure "A" tothis Report.
The Board of Directors of the Company declared an interim dividend of Rs. 3.00 perequity share of Rs. 10 each @ 30% during the Financial Year ended March 31 2021. Furtherthe Board of Directors recommended final dividend of Rs. 4.50 per equity share of Rs. 10each @ 45% for the Financial Year 2020-21. The total dividend for the Financial Year2020-21 amounts to Rs. 7.50 per equity share of Rs. 10 each with total outgo of Rs. 312.15Crore on account of interim and final dividend. During the Financial Year 2019-20 theCompany paid total dividend (i.e. interim dividend) of Rs. 4.00 per equity share of Rs. 10each @ 40%.
The Dividend Distribution Policy of the Company is attached as Annexure"B" to this Report and also available on the website of the Company and canbe accessed at the weblink:http://www.chambalfertilisers.com/pdf/Final-Dividend-Distribution-Policy.pdf. The DividendDistribution Policy was amended with effect from November 05 2020 mainly to incorporatethe following changes:
(i) Inclusion of total dividend pay-out ratio of about 25% (inclusive of tax ondistribution of dividend in the hands of the Company if any) of the annual standaloneprofits after tax of the Company to make the Dividend Distribution Policy more specificin respect of dividend distribution out of profits of the Company.
(ii) Inclusion of additional factors viz. buy-back of shares of the Company andinvestment in new business(s) for utilization of retained earnings of the Company inorder to enable the Company to have more options in this regard.
The interim and final dividend declared/recommended by the Board of Directors are inaccordance with the Dividend Distribution Policy of the Company.
4. Consolidated Financial Statements
In pursuance of the provisions of the Companies Act 2013 the rules framed thereunderSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") and the applicable AccountingStandards the Company has prepared Consolidated Financial Statements. The AuditedConsolidated Financial Statements alongwith Auditor's Report and the Statement containingsalient 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 high standards of transparency and CorporateGovernance. The Corporate Governance Report for the Financial Year 2020-21 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 Conduct andEthics' 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 details of the subsidiaries and joint venture are given below:
(i) CFCL Ventures Limited Cayman Islands and its subsidiaries
CFCL Ventures Limited ("CVL") is a subsidiary of your Company in CaymanIslands and ISGN Corporation ("ISGN USA") in USA and ISG Novasoft TechnologiesLimited ("ISGN India") in India are subsidiaries of CVL.
There was no business activity in these subsidiaries during the year under review.
Inuva Info Management Private Limited ("Inuva") was a subsidiary of ISGNIndia. The National Company Law Tribunal Kolkata Bench vide its order dated May 03 2021had approved dissolution of Inuva upon voluntary liquidation. Accordingly Inuva standsdissolved from May 03 2021 and ceased to be a subsidiary of ISGN India and the Company.
(ii) Other Subsidiaries
Chambal Infrastructure Ventures Limited is a wholly owned subsidiary of the Company inIndia. There was no business activity in this subsidiary during the year under review.
India Steamship Limited ("ISS India") was a wholly owned subsidiary of theCompany in India. The National Company Law Tribunal Jaipur Bench vide its order datedFebruary 09 2021 had approved dissolution of ISS India through voluntary liquidation.Accordingly ISS India stands dissolved from February 09 2021 and ceased to be asubsidiary of the Company. Further India Steamship Pte. Ltd. ("ISSSingapore") a wholly owned subsidiary of the Company in Singapore had earlierapplied for closure and voluntary striking-off its name from the register of Accountingand Corporate Regulatory Authority Singapore ("ACRA"). The name of ISSSingapore was struck-off from the register of ACRA on April 06 2020 and it ceased to be asubsidiary of the Company.
(b) Joint Venture: Indo Maroc Phosphore S. A. - IMACID ("IMACID")
IMACID is a joint venture of your Company in Morocco with Tata Chemicals Limited andOCP Morocco. 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 ||April 012020 to March 312021 ||April 012019 to March 312020 |
|Production of Phosphoric Acid (MT) ||468987 ||344381 |
|Sales of Phosphoric Acid (MT) ||397670 ||293093 |
|Revenue ||Moroccan Dirham 2638.01 Million (Rs. 2097.22 Crore) ||Moroccan Dirham 1944.07 Million (Rs.1425.01 Crore) |
|Profit after Tax ||Moroccan Dirham 337.56 Million (Rs. 268.36 Crore) ||Moroccan Dirham 12.34 Million (Rs. 9.04 Crore) |
The phosphoric acid is raw material for manufacture of phosphatic fertilisers. Thedemand of phosphoric acid gradually improved and there was also upward movement in salesprices thereof during the Financial Year 2020-21 which has improved the margins of IMACID.The higher production and sales with higher margins have enabled IMACID to substantiallyimprove its financial performance during the Financial Year 2020-21.
The Company does not have any material subsidiary as per the provisions of the ListingRegulations.
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.47 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.
Except as mentioned above no subsidiary associate or joint venture has been acquiredor ceased/ sold / liquidated during the Financial Year 2020-21.
7. Health Safety Quality and Environmental Protection
Your Company is operating three hi-tech Urea plants having world class technology. Thehealth and safety of people is of paramount importance for the Company and it continuouslystrives to improve the health and safety standards in its operations. The Company has inplace a Health Safety Security Environment & Quality Policy as part of a formalprocess to achieve this objective. An Integrated Management System based on ISO-45001:2018 ISO-14001:2015 ISO- 9001:2015 has been established and the Company has alsoadopted Process Safety Management System. The brief outline of the Company's initiativesin this regard is as under:
(a) Health & Hygiene
The health assessment and occupational disease monitoring of employees and contractorwork force is carried out through periodic medical examinations and hygiene monitoring atwork place.
The Company's health centre at Gadepan is equipped with requisite medical facilitiesand doctors and it provides healthcare services to employees & their familiescontractor workforce and villagers in the vicinity of the plants. Three well equippedambulances are available at Gadepan which also cater to the requirements of villagers inmedical emergencies. The Company also facilitates employees to consult a Companyaffiliated doctor to ensure the well-being of the employees. Training and awarenessprograms on health and hygiene related matters are organized from time to time.
The Company has taken all the preventive measures for protection against COVID-19pandemic. Further awareness sessions on preventive measures of COVID-19 pandemic likesocial distancing wearing mask hand sanitization hygiene etc. are being regularlyorganised amongst employees contractor workforce and residents of township at Gadepan.
(b) Safety Management
The Company strives to maintain highest levels of health and safety of all theemployees and contractor workforce through a well-defined health and safety managementsystem. The Company has implemented a number of safety measures for accident preventionlike hazard identification and risk assessment job safety analysis safety work permitsystem etc. The Company has a strong Process Safety Management System in place to takecare of safety in operation of plants and maintenance of equipment and machinery.
In order to take care of safety aspects in maintenance jobs in the plants a crossfunctional team of senior employees review the jobs on a daily basis from safetyperspective. Extensive trainings and drills are conducted by internal and external expertswhich helps in maintaining and improving safety systems. To encourage safety awarenessschemes of "Near-Miss" and "Make- to Good" reporting are in place andvarious programmes and campaigns are also organized. Keeping in view the nature of itsoperations the Company has a well-defined "Onsite Disaster Management Plan" and"Mutual Aid and Response Group" arrangement with neighbouring industry. TheCompany also provides services to all neighbouring villages surrounding Gadepan plants incase of any fire emergency.
Your Company has achieved zero reportable accident during last three consecutive years.
(c) Environment Protection
Your Company recognizes its responsibility towards protection of environment and alwayslooks for opportunities to improve its environmental performance. The Company gives utmostimportance to conservation of natural resources (including raw materials fuels andwater). The philosophy of "Reduce Re-use & Re-cycle" has been adopted forusage of the resources and reduction of waste generation and emissions.
In order to achieve zero liquid discharge in third Urea plant of the Company("Gadepan-III Plant") a reverse osmosis - zero liquid discharge plant has beeninstalled for treatment of effluent which has resulted in lesser intake of fresh waterfrom the river. Online continuous ambient air monitoring stations have been installed inthe premises in prominent directions. To monitor the quality of liquid effluent onlinecontinuous liquid effluent monitoring systems have been installed.
The Company has developed dense green belt in Gadepan campus which provides healthyenvironment to people residing in and around the campus. The greenery at the campus ismaintained through regular care and plantation of trees.
As a recognition to the dedicated efforts of the Company it has been awarded statelevel first prize in the large scale industry category under the "Factories SafetyAward Scheme-2021" by the Government of Rajasthan for the best safety performanceduring last three years. Your Company has also won "Fertilizers Association of IndiaEnvironmental Protection" award for the year 2019-20.
(d) Quality Management
Your Company has adopted state of the art technology in its plants to ensure best inclass quality of Urea. The relevant raw material Urea manufactured by the Company and thefertilisers marketed by the Company are tested at the Company's laboratory at Gadepan. TheCompany sources the products marketed by it from the reputed manufacturers some of whomare large multi-national organisations. The Company also undertakes market surveyscustomer feedback surveys etc. and the outcome thereof is considered appropriately forimprovement in quality and different areas of operations.
8. Corporate Social Responsibility
The Corporate Social Responsibility ("CSR") is ingrained in the working ofyour Company since long and its CSR projects and programmes have benefitted the communityat large over the years. The CSR initiatives of the Company largely focused on the areaswhere it makes lasting impact to uplift the social and financial status of the people inthe villages and improves their living standard. The Company has developed CSR projectsand programmes keeping in view the needs and requirements of the community in the ruralareas especially the villages near its plants.
The CSR projects/ programmes of the Company cover mainly the areas of Educationincluding Technical and Vocational Education Rural Development Healthcare andSanitation Employability and Empowerment Environment Sustainability Animal Welfare andSoil Health Disaster Management etc. As a socially responsible organization yourCompany has made contribution of Rs. 5.00 Crore to the Prime Minister's Citizen Assistanceand Relief in Emergency Situation Fund i.e PM CARES Fund during the Financial Year2020-21.
The brief outline of the CSR projects / programmes of the Company is as under:
a) Project Akshar-Pre-Primary and School Education
Your Company is supporting 44 Government schools and 41 Government Aanganwadi centersof Kota and Baran Districts of Rajasthan. The Company works for enhancing overalleducation standard in these Government schools through remedial / extra classesdevelopment of infrastructure promotion of extra-curricular activities etc. With thecontinuous efforts of the Company these schools are now having quality infrastructurefacilities to support the education of the students. During the Financial Year 2020-21the Company had started 30 new SMART classes to introduce digital interface bringing thetotal number to 61 SMART classes in the aforesaid Government schools. The science labswere established in two senior secondary schools for developing science acumen amongststudents of higher classes. The substantial improvement in the academic performance of thestudents in these schools over the years is testimony to the efforts made by the Companyin this regard.
The schools were closed since March 2020 due to outbreak of COVID-19 pandemic. Thestudents were facilitated through online classes e-content sharing and problem solvingsessions to ensure continuous academic engagement of students.
CFDAV School is being run in collaboration with Dayanand Anglo Vedic College Trust& Management Society and over 63% students in this school are from nearby villages.
b) Project Saksham - Technical and Vocational Education
Your Company is continuously focusing on equipping rural youth with suitable technicalskills with an objective to enhance employment opportunities through 5 Industrial TrainingInstitutes and one Government Polytechnic College near its plants at Gadepan. Renovationand infrastructure development work at Government Polytechnic College Baran wassuccessfully completed during the Financial Year 2020-21. The Company aims to make thisinstitute as one of the top three polytechnic colleges of Rajasthan in next 2 years.During the Financial Year 2020-218 additional SMART classes were installed in the adoptedinstitutes taking the total to 24 SMART classes in 6 institutes.
During the COVID - 19 pandemic online classes were organized in the institutes tosupport the students.
During the Financial Year 2020-21 the Company also offered vocational trainingprograms in 3 vocational training centers. These centers are providing courses on solarpanel assembling & maintenance Tie & Dye techniques and jewellery designing torural youths.
c) Project Saakar - Rural Development
Realizing the need of improvement in rural infrastructure facilities your Company hasundertaken rural development projects to cater to the basic needs of the community membersresiding in nearby villages. During the Financial Year 2020-21 the Company had focused ondevelopment of the basic facilities in nearby villages such as rural roadselectrification of public places storm water drainage system community hall andcommunity sheds. The Company had undertaken construction of 3 new integrated Aanganwadicenters in school premises and renovation of 11 Government schools during the FinancialYear 2020-21.
d) Project Arogya - Healthcare and Sanitation
The Company aims to create a quality healthcare network in rural areas to cater to theneeds of community members. The healthcare activities and awareness sessions were resumedin the month of November 2020. The community members were facilitated in healthcare campsawareness sessions on low cost protein and iron rich meal water borne disease and itsprevention etc. in 26 villages. The Company has also carried out awareness sessions inthese villages for COVID-19 vaccination. The healthcare facilities were also extended inthe remote villages of Dehradun and Tehri districts in Uttarakhand.
e) Project Pragati - Employability and Empowerment
With the objective of creating alternate livelihood opportunities for the communitymembers especially women in rural areas the Company is facilitating various self-helpgroups in nearby villages. These groups are emerging as small livelihood clusters andsupporting the members to earn a decent income from various on-farm and off-farmlivelihood activities. Your Company is supporting rural women for production of reusableface masks school uniforms school bags reusable carry bags jute bags and low costsanitary napkins.
The Company is also facilitating small and marginalized farmers to adopt modernagriculture practices and optimize farm input cost to improve the farm income.
f) Project Bhoomi - Environmental Sustainability Animal Welfare and Soil Health
The Company is running two agriculture development laboratories in Gadepan (Rajasthan)and Agra (Uttar Pradesh) along with a mobile soil testing van in Budaun District of UttarPradesh. These laboratories are facilitating farming community especially small andmarginalized farmers to avail soil health card facility and farm advisory services forbalanced usage of fertilisers and optimize farm output. In order to promote sustainableagriculture practices amongst small and marginalized farmers a farmer education centerhas been established.
g) Disaster Management
Your Company remained at the forefront to provide immediate relief to the communityresiding in areas near its plants and to the migrating population which is the mostaffected section of the community with COVID - 19 pandemic. In order to provide immediaterelief to the community members more than 9500 food kits were distributed in thecommunity. In addition to this more than 37000 reusable face masks were distributedamongst community members. The Company had organized sanitization drives at villages incollaboration with the local government on periodic basis.
The Ministry of Corporate Affairs Government of India had amended the Companies(Corporate Social Responsibility Policy) Rules 2014 ("CSR Rules") vide itsnotification dated January 22 2021. The Corporate Social Responsibility Policy of theCompany has been amended mainly to align it with the requirements under the amended CSRRules and the CSR activities to be undertaken by the Company has been updated. The revisedpolicy contains aims and objectives of CSR Projects / Programmes of the Company andincludes guiding principles for selection implementation and monitoring of CSR activitiesas well as formulation of the annual action plan. The Corporate Social ResponsibilityPolicy of the Company is available at the website of the Company athttp://www.chambalfertilisers.com/csroverview.
The composition and terms of reference of Corporate Social Responsibility Committee aregiven in the Corporate Governance Report. The Annual Report on Corporate SocialResponsibility Activities (including the details of the development and implementation ofthe Corporate Social Responsibility Policy) as prescribed under Section 135 of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules 2014is 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. 19.58 Crore. As against this the Company had spent Rs.19.65 Crore on CSR projects / programmes during the Financial Year 2020-21.
9. Directors and Key Managerial Personnel
The Board of Directors of the Company was having ten directors as on March 31 2021with eight Non-Executive Directors including five independent directors a ManagingDirector and a Joint Managing Director.
The shareholders of the Company at the Annual General Meeting held on September 102020 appointed Mrs. Rita Menon (DIN: 00064714) as an Independent Director of the Companyto hold office for a term of 5 (five) consecutive years from September 10 2020 toSeptember 09 2025. The Board of Directors is of the opinion that Mrs. Rita Menon is aperson of integrity with high level of ethical standards and having worked in seniorpositions in various departments / ministries of Government of India she possessesrequisite expertise and experience for appointment as Independent Director of the Company.Mrs. Rita Menon is exempt from the requirement to undertake online proficiencyself-assessment test conducted by the Indian Institute of Corporate Affairs.
The shareholder of the Company at the Annual General Meeting held on September 10 2020has also approved the appointment of Mr. Pradeep Jyoti Banerjee (DIN: 02985965) as anIndependent Director of the Company to hold office for a term of 5 (five) consecutiveyears from December 012019 to November 30 2024.
Mr. Nimesh Nagindas Kampani (DIN: 00009071) completed his tenure on September 14 2020and ceased to be a Director of the Company with effect from September 15 2020.
Mr. Anil Kapoor (DIN: 00032299) completed his tenure as Managing Director of theCompany on April 15 2021 and ceased to be the Managing Director and Director of theCompany with effect from April 16 2021. The Board of Directors expresses its sincerethanks and appreciation of the immense contribution made by Mr. Anil Kapoor during histenure as Managing Director of the Company.
Mr. Gaurav Mathur (DIN: 07610237) had been working as Whole Time Director designated asJoint Managing Director of the Company since January 06 2020. The Board of Directors atits meeting held on February 04 2021 had appointed Mr. Gaurav Mathur as Managing Directorof the Company for a period from April 16 2021 to January 05 2025 subject to approvalof the shareholders of the Company.
There was no change in Chief Financial Officer and Company Secretary of the Companyduring the year under review.
Ms. Radha Singh (DIN: 02227854) Independent Director shall attain the age of 75 yearson November 24 2021. The shareholders of the Company at the Annual General Meeting heldon September 15 2017 had re-appointed Ms. Radha Singh as an Independent Director of theCompany for further term of 5 (five) consecutive years that is upto September 14 2022.Pursuant to Regulation 17(1A) of Listing Regulations the Board of Directors on therecommendation of the Nomination and Remuneration Committee has recommended to theshareholders of the Company to approve continuation of Ms. Radha Singh as an IndependentDirector of the Company after she attains the age of 75 years.
Mr. Saroj Kumar Poddar (DIN: 00008654) is due for retirement at the forthcoming AnnualGeneral Meeting and has offered himself for reappointment. Further Mr. Saroj Kumar Poddarattained the age of 75 years on September 15 2020 and pursuant to Regulation 17(1A) ofListing Regulations the Board of Directors on the recommendation of the Nomination andRemuneration Committee recommends to the shareholders of the Company the re- appointmentof Mr. Saroj Kumar Poddar as a Director of the Company liable to retire by rotation.
All the Independent Directors have submitted declarations that they meet the criteriaof independence as provided under Section 149(6) of the Companies Act 2013 the rulesframed thereunder and the Listing Regulations. In terms of Section 150 of the CompaniesAct 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors)Rules 2014 as amended the names of all the Independent Directors of the Company havebeen included in the data bank maintained by the Indian Institute of Corporate Affairs.
During the Financial Year 2020-21 Mr. Anil Kapoor and Mr. Gaurav Mathur had notreceived any commission or remuneration from any subsidiary of the Company.
Five meetings of the Board of Directors were held during the Financial Year 2020-21.
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 director of companies by the Securitiesand Exchange Board of India /Ministry of Corporate Affairs or any such statutoryauthority is enclosed as Annexure "F" to this Report.
10. Internal Financial Controls
The Company has internal financial controls commensurate to the size and nature of itsbusiness. 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 also given in the Management Discussion andAnalysis Report attached as Annexure "A" to this Report.
11. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act 2013 and ListingRegulations the Company has formulated a Remuneration Policy. The Remuneration Policyinter-alia includes the appointment criteria & qualification requirements processfor appointment & removal retirement policy remuneration structure etc. of theDirectors including Managing Director and Whole Time Director(s) Key Managerial Personnel(KMP) and other senior management personnel of the Company. As per the RemunerationPolicy a person proposed to be appointed as Director KMP or other senior managementpersonnel should be a person of integrity with high level of ethical standards. In case ofappointment as an Independent Director the person should fulfill the criteria ofindependence 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 was amended with effect from February 04 2021 mainly to modifythe definition of "Senior Management" and deletion of the definition of"Management Committee" to keep flexibility in order to accommodateorganizational changes from time to time.
The policy was also updated by including the provisions related to requirement ofpossession by the Directors of one or more core skills/ expertise / competenciesidentified by the Board of Directors.
The Remuneration Policy of the Company is available on the website of the Company atthe weblink: http://chambalfertilisers.com/pdf/ RemunerationPolicy.pdf.
12. Disclosures under the Companies Act 2013 Rules thereunder and SecretarialStandards
a) Your Company has not issued any shares during the Financial Year 2020-21.
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 2020-21 were onarm's length basis and in the ordinary course of business. No material related partytransaction (in terms of the Company's Policy on Related Party Transactions) was enteredduring the year by the Company and no contracts or arrangements were entered during theyear with related parties which are required to be disclosed under section 134(3)(h) ofthe Companies Act 2013 in Form AOC-2.
d) A copy of annual return of the Company is available on the website of the Company atthe weblink: http://chambalfertilisers.com/ annualreturns/
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 of Directors the Committees of the Board ofDirectors Chairman of the Company and the individual Directors;
ii) The composition of Audit Committee; and
iii) The details of establishment of Vigil Mechanism/Whistle Blower Policy.
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 Financial Year 2020-21 the auditors secretarial auditors and costauditors have not reported any fraud under Section 143(12) of the Companies Act 2013 andthe 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 2020-21 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 2021 and of the profitand loss of the Company for the year ended March 31 2021;
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 Annual General Meeting held on September 152017 had appointed M/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 from the conclusion of thirty-second Annual General Meeting of theCompany held on September 15 2017 till the conclusion of thirty-seventh Annual GeneralMeeting of the Company.
The maintenance of cost records as specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013 is required by the Company inrespect of production of fertilisers and accordingly such accounts and records are madeand maintained by the Company.
The Board of Directors of the Company has appointed M/s. K.G. Goyal & AssociatesCost Accountants for conducting audit of cost records of the Company as applicable forthe Financial Year ending March 312022. As required under the Companies Act 2013 andRules framed thereunder your Directors are seeking ratification from the members of theCompany for the remuneration payable to M/s. K.G. Goyal & Associates CostAccountants.
15. Secretarial Audit
The Board of Directors of the Company had appointed M/s. RMG & Associates CompanySecretaries for conducting secretarial audit of the Company for the Financial Year2020-21. The Secretarial Audit Report issued by the aforesaid Secretarial Auditor isattached as Annexure "H" 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 conservation is of paramount importance for sustainability of the operationsand it also results into saving of natural and financial resources. The Company alwaysseeks to make its manufacturing facilities energy efficient and evaluates various optionsto achieve this objective. Gadepan-III Plant of the Company is energy efficient incomparison to the existing plants. The requisite information with regard to conservationof energy technology absorption and foreign exchange earnings and outgo in terms of theCompanies (Accounts) Rules 2014 is set out in Annexure "I" attached tothis Report.
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 document containing Key and Non-Key risks including way forward for mitigationthereof as approved by the Risk Management Committee is also reviewed by the AuditCommittee and the Board of Directors 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 2020-21.
19. Particulars of employees
Your Company believes that human resource is vital to the growth and sustainability ofan organization. Your Company always strives to keep its human resource motivated andencourages merit and healthy relations. The information required to be disclosed inpursuance of Section 197 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 is attached as Annexure"J" to this Report.
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 Whole Time Director(s)/ Managing Director of the Company. Eachstock option when exercised would 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 2020-21. 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 581000 equity shares of the Company as on March 31 2021 (918500 equityshares as on March 31 2020) being 0.14 % of the paid up share capital of the Company.The ownership 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 Year2020-21.
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://chambalfertilisers.com/pdf/ESOP-Disclosure-2020-21.pdf. Thedisclosures in respect of ESOS 2010 are also given in the notes to the FinancialStatements.
21. Business Responsibility Report
In pursuance of the provisions of the Listing Regulations the Business ResponsibilityReport for the Financial Year 2020-21 describing the initiatives taken by the Companyfrom environmental social and governance perspective forms part of the Annual Report.
22. Investor Service Centre
The in-house Investor Service Centre of your Company is located in the Corporate Officeof the Company at New Delhi which provides prompt and efficient service to the investors.The Company takes various initiatives for investor satisfaction including reminders toinvestors about unclaimed dividends.
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 2021-22.
The members are requested to refer to general shareholders' information given inCorporate Governance Report attached hereto.
The Board of Directors wishes to place on record its appreciation of the support andco-operation received from all the stakeholders including the Department of FertilisersGovernment of India Government of Rajasthan and other State Governments FinancialInstitutions & Banks investors and customers. The Board of Directors also conveys itsappreciation of the commitment hard work and dedication of the employees at all levels.
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For and on behalf of Board of Directors
|Place : New Delhi ||Rita Menon ||Gaurav Mathur |
|Date : May 10 2021 ||Director ||Managing Director |