Your Board of Directors have pleasure in presenting the 35thAnnual Report on the business and operations of the Company together with auditedfinancial statements for the Financial Year ended March 31 2020.
1. Standalone Financial Results
(Rs. in Crore)
|Particulars || |
|2019-20 ||2018-19 |
|Revenue from Operations ||12205.95 ||10094.52 |
|Other Income ||179.34 ||141.60 |
|Total Income ||12385.29 ||10236.12 |
|Total Expenses ||11093.01 ||9246.16 |
|Profit before Exceptional Items and Tax ||1292.28 ||989.96 |
|Exceptional Items ||(33.42) ||197.27 |
|Profit before Tax ||1325.70 ||792.69 |
|Total Tax Expenses ||101.39 ||247.42 |
|Profit for the Year ||1224.31 ||545.27 |
|Other Comprehensive Income for the Year (Net of Tax) ||(251.62) ||(111.35) |
|Total Comprehensive Income for the Year ||972.69 ||433.92 |
|Retained Earnings - Opening Balance ||2381.60 ||1981.57 |
|Add: || || |
|Profit for the Year ||1224.31 ||545.27 |
|Any Other Change ||0.57 ||0.93 |
|Less: || || |
|Cash Dividend (including Dividend Distribution Tax) ||301.05 ||95.34 |
|Transfer to General Reserve ||50.00 ||50.00 |
|Re-measurement Loss on Defined Benefit Plans ||1.31 ||0.83 |
|Retained Earnings - Closing Balance ||3254.12 ||2381.60 |
The Company is engaged in manufacturing of Urea with three Urea plantsat Gadepan District Kota Rajasthan. The third Urea plant of the Company("Gadepan-III Plant) had commenced the commercial production of Urea witheffect from January 01 2019. The Company also markets other branded Agri-inputs such asDi-Ammonium Phosphate (DAP) Muriate of Potash (MOP) NPK Fertilisers agrochemicalssulphur micronutrients and city compost.
Financial year 2019-20 being first full year of operation ofGadepan-III Plant the Company had achieved highest ever production of 32.66 lakh MT ofUrea in comparison to 25.04 lakh MT of Urea during the Financial Year ended March 312019. It is heartening that despite first year of operation Gadepan-III Plant ran at itsfull capacity. The Gadepan-III Plant has not only boosted the top line and bottom line ofthe Company it has also helped in reducing the gap in demand and supply of Urea in thecountry.
During the Financial Year 2019-20 the Company achieved growth in salesvolumes of DAP whereas the sales volumes of MOP NPK Fertilisers and agrochemicals wereslightly lower in comparison to the previous year.
With increased volumes of Urea the Company has focused on enhancingits marketing reach and made a multi-pronged strategy to achieve this objective. Duringthe year under review the Company has increased its presence by opening new marketingcenters in Madhya Pradesh and Uttar Pradesh. The Company has also facilitated easyavailability of funds to the dealers by introducing them to the financing schemes of thepublic sector and private sector banks. This initiative has enabled the dealers of theCompany to raise working capital at reasonable rates and helped the Company in increasingits business volumes with the existing dealers. The Company has made a plan to diversifyits sources of supply of imported fertilisers in terms of suppliers and countries fromwhich the material is imported.
The outbreak of Novel Corona Virus ("COVID-19") pandemic hitthe world and the country during last quarter of the Financial Year 2019-20 resulting intonationwide lockdown from March 25 2020. Fertiliser being an essential commodity theCompany's manufacturing operations were exempted from lockdown and the Company has beenable to continue its operations at normal levels. The Company's production dispatchessales and market collections remained unaffected. The Company has been taking allnecessary precautions to run its operations in a safe and secure manner. The Company tookseveral pro-active measures such as mobilizing its critical work force locating themwithin factory premises and adopting stringent social distancing procedures. In view ofthe above there was no impact of COVID-19 pandemic on the operations of the Company.
The Company has achieved highest ever revenue and profit after taxduring the financial year 2019-20. The increase in revenue and operating profit was mainlycontributed by higher production and sale of Urea from Gadepan-III Plant and higher salesvolumes with better margins in DAP. The reduction in margins with lower volumes of MOPagrochemicals and other products have on the other hand impacted the profitability ofthe Company to some extent.
During the Financial Year 2019-20 the Company has recognized adeferred tax credit of Rs. 343.97 Crore in pursuance of the provisions of the TaxationLaws (Amendment) Act 2019 which has contributed to the increase in profit after tax ofthe Company. Further the Company
has provided for Rs. 62.02 Crore towards impairment loss in respect ofSingle Super Phosphate Plant write off of certain plant & machinery items and fairvalue loss on investments which had a negative impact on the profit after tax of theCompany.
During the previous year the Company had provided for Rs. 197.27 Croredue to delay in implementation of Modified New Pricing Scheme - Stage - III(Modified NPS-III") for payment on account of additional fixed cost to Ureaunits by the Ministry of Chemicals and Fertilizers Government of India(MOCF). During the Financial Year 2019-20 MOCF has amended Modified NPS-IIIand in terms of such amended Modified NPS-III the Company has reversed the aforesaidprovision of Rs. 197.27 Crore and written off an amount of Rs. 91.70 Crore towards subsidyaccrued during the previous years. The Company has also provided for a loss of Rs. 72.15Crore on account of remeasurement of fair value of its investment in CFCL Ventures Limitedand its commitment in respect of ISGN Corporation both being subsidiaries of the Company.The net impact of the above has been shown as Exceptional Items
The detailed information on the business operations of the Company theIndustry 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 ofRs. 4.00 per equity share of Rs. 10 each @ 40% (Previous Year - Dividend of Rs. 2.00 perequity share @ 20%) during the Financial Year ended March 312020. The total outgo on thisaccount was Rs. 200.69 Crore including dividend distribution tax of Rs. 34.21 Crore. TheBoard of Directors has not recommended any further Dividend for the Financial Year2019-20.
The Dividend Distribution Policy of the Company is attached as Annexure"B" to this Report. There has been no change in this policy during the yearunder review. This policy is also available on the website of the Company and can beaccessed at the weblink -http://www.chambalfertilisers.com/pdf/Final-Dividend-Distribution-Policy.pdf. The interimdividend declared 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 rulesframed thereunder Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) and theapplicable Accounting Standards the Company has prepared Consolidated FinancialStatements. The Audited Consolidated Financial Statements alongwith Auditor's Report andthe Statement containing salient features of the financial statements ofSubsidiaries/Joint Venture (Form AOC - 1) forms part of the Annual Report.
5. Corporate Governance Report and Code of Conduct
Your Directors believe in maintaining the high standards of CorporateGovernance. The Corporate Governance Report for the Financial Year 2019-20 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 as on March 312020are given below:
(i) CFCL Ventures Limited Cayman Islands and its subsidiaries
CFCL Ventures Limited (CVL) is a subsidiary of your Companyin Cayman Islands and it operates business through its subsidiaries namely ISGNCorporation (ISGN USA) in USA and ISG Novasoft Technologies Limited(ISGN India) in India.
The business of ISGN USA includes designing developing marketing anddistribution of software products for the mortgage lending industry in USA includinglicensing of the technology products as well as providing software as a service. ISGNIndia supports this business through its operations in India. ISGN USA and ISGN Indiahave sold / transferred certain assets/ liabilities to the respective buyers and thesetransactions were completed in the last quarter of the Financial Year 2019-20. Aftercompletion of these transactions these subsidiaries were not having any businessactivity.
During the Financial Year 2018-19 the shareholders of Inuva InfoManagement Private Limited (Under Liquidation) (Inuva) a subsidiary of ISGNIndia had approved its voluntary liquidation in pursuance of the provisions of Insolvencyand Bankruptcy Code
2016 (Insolvency Code) read with the Insolvency andBankruptcy Board of India (Voluntary Liquidation Process) Regulations
2017 (Insolvency Rules). The liquidator has completelyliquidated the assets of Inuva during the Financial Year 2019-20 and it was not having anyassets or liabilities as on March 31 2020. Inuva is in the process of voluntaryliquidation / dissolution.
(ii) Other Subsidiaries
Chambal Infrastructure Ventures Limited is a wholly owned subsidiary ofthe Company in India. There was no business activity in this subsidiary during the yearunder review.
During the Financial Year 2018-19 the shareholders of India SteamshipLimited (Under Liquidation) (ISS India) a wholly owned subsidiary of theCompany had approved its voluntary liquidation in pursuance of the provisions ofInsolvency Code read with the Insolvency Rules. The liquidator had completely liquidatedthe assets of ISS India during the Financial Year 2019-20 and it was not having anyassets or liabilities as on March 31 2020. ISS India is in the process of voluntaryliquidation/ dissolution.
Further the Board of Directors of India Steamship Pte. Ltd.(ISS Singapore) a wholly owned subsidiary of the Company in Singapore andthe Company as its shareholder had approved the closure and voluntary striking-off thename of ISS Singapore from the register of Accounting and Corporate Regulatory AuthoritySingapore (ACRA). The assets and liabilities of ISS Singapore were settledduring the Financial Year 2019-20. The name of ISS Singapore has been struck-off from theregister of ACRA on April 6 2020 and it ceased to be a subsidiary of the Company.
(b) Joint Venture: Indo Maroc Phosphore S. A. - IMACID("IMACID")
IMACID is a joint venture of your Company in Morocco with TataChemicals Limited and OCP Morocco. Each partner is having equal stake in the jointventure (33.33% each). IMACID is engaged in the manufacture of phosphoric acid in Morocco.
The performance of IMACID is summarized below:
|Particulars ||April 012019 to March 312020 ||January 012018 to March 312019 |
|Production of Phosphoric Acid (MT) ||344381 ||472138 |
|Sales of Phosphoric Acid (MT) ||293093 ||481808 |
|Revenue ||Moroccan Dirham 1944.07 Million (Rs. 1425.01 Crore) ||Moroccan Dirham 3409.55 Million (Rs. 2475.33 Crore) |
|Profit after Tax ||Moroccan Dirham 12.34 Million (Rs.9.04 Crore) ||Moroccan Dirham 482.15 Million (Rs. 350.04 Crore) |
During the previous year the Company has considered financial resultsof IMACID for 15 months period ended March 31 2019 for preparation of its consolidatedfinancial statements in order to align the financial reporting period of IMACID and theCompany. In the current year the Company has considered financial results of IMACID for12 months ended March 31 2020 for preparation of its consolidated financial statements.
IMACID faced challenges on the demand side and the margins were alsolow due to adverse market conditions. The lower production and sales with lower marginshave impacted the financial performance of IMACID during the Financial Year 2019-20.
The Company does not have any material subsidiary as per the provisionsof the Listing Regulations.
The performance of the subsidiaries of the Company is summarized inForm AOC - 1 attached to the Financial Statements of the Company in pursuance of Section129 of the Companies Act 2013. The contribution of subsidiaries and joint venture to theoverall performance of the Company is also provided in Note no. 48 to the ConsolidatedFinancial Statements.
The Company shall place the financial statements of subsidiaries on itswebsite in pursuance of Section 136 of the Companies Act 2013.
Except as mentioned above no subsidiary associate or joint venturehas been acquired or ceased/ sold / liquidated during the Financial Year 2019-20.
7. Health Safety Quality and EnvironmentalProtection
The health and safety of people is of utmost importance to your Companyand it continuously works towards improving the safety standards at workplace. The HealthSafety Security Environment & Quality Policy of the Company sets out a formalprocess to achieve this objective. An Integrated Management System based on ISO-45001:2018 ISO-14001:2015 ISO- 9001:2015 is in place in the Company and it has alsoadopted Process Safety Management. The details of various activities of the Company inthis regard are as under:
(a) Health & Hygiene
The health assessment and occupational disease monitoring of employeesand contractor workers is carried out through periodic medical examinations and hygienemonitoring at work place.
A well-equipped health centre at Gadepan operates round the clock toprovide health services to employees & their families contractor workforce andvillagers in the vicinity of the plants. Three well equipped ambulances are available onround the clock basis 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. The Company also organizestraining and awareness programs on health and hygiene related matters from time to timethrough external experts. In addition to this various health camps and campaigns likepulse polio & swine flu vaccination blood donation immunization programme forchildren etc. are also organized periodically. The self-sustainable complex at Gadepanprovides neat clean and healthy environment to the employees and their families whichgoes a long way in their well-being.
(b) Safety Management
In order to ensure highest levels of health and safety of all theemployees and contractor workforce there is a well-defined health and safety managementsystem in place in your Company. The Company has implemented a number of safety measuresfor accident prevention like hazard identification and risk assessment job safetyanalysis safety work permit system etc. A strong Process Safety Management system isalso in place to take care of safety in operation of plants and maintenance of equipmentand machinery.
In order to take care of safety aspects in maintenance jobs in theplants a cross functional team of senior management members review the jobs on a dailybasis from safety perspective and ensures that all recommended actions are taken toprevent hazards. Extensive trainings and drills are conducted by internal and externalexperts which helps in maintaining and improving safety systems. The schemes of"Near-Miss'' and Make-to Good reporting are in place and variousprogrammes and campaigns are organized to encourage safety awareness and involvement amongemployees and contractor workforce. Keeping in view the nature of its operations theCompany has a well-defined "Onsite Disaster Management Plan and "MutualAid and Response Group arrangement with neighboring industry. The Company alsoprovides services to neighboring villages surrounding Gadepan plants in case of any fireemergency.
(c) Environment Management
Your Company gives utmost importance to protection of environment andconservation of natural resources. There is a strong focus on optimization of resourceconsumption (including raw materials fuels and water) and reduction of waste generationand emissions to the atmosphere.
Your Company has a robust mechanism in place to ensure that all theenvironmental parameters are maintained within the permissible limits. A dedicatedEnvironment Management Cell monitors the compliances related to environment.
The Company's Gadepan campus made a positive change in ecology bydeveloping a dense green belt comprising of variety of fruits and shrubs. Regularplantation is done in the campus to provide soothing & healthy environment for peopleworking/residing in and around the complex. The campus is a habitat to many species ofbirds which include large number of peacocks. 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.
The Gadepan-III Plant of the Company has a reverse osmosis-zero liquiddischarge plant for treatment of effluent which has resulted in lesser intake of freshwater from the river. The Gadepan-III Plant is more energy efficient and thereforeconsumes less natural resources. Bio-Methanation plant is operational at Gadepan to handlethe kitchen waste of plant canteen and township facilities and bio-gas is being utilizedin the kitchen facility of guest house.
(d) Quality Management
Your Company has adopted state of the art technology in its plants toensure world class quality of the product. The Urea manufactured by the Company ispreferred in its marketing territory because of its quality. The Company is having awell-equipped laboratory at Gadepan for testing of raw material as well as end product.The quality is ensured at all stages of manufacturing processes maintenance and supportservices. The Company sources the products marketed by it from the reputed manufacturersand the quality of branded products is ensured through testing at different stages. TheCompany gives utmost importance to customer feedback which is one of the most importanttool for recognizing the areas of improvement.
8. Corporate Social Responsibility
The Corporate Social Responsibility ("CSR) has always beengiven due importance by the Company since inception. The Company has developed projectsand programs keeping in view the needs and requirements of the community in the ruralareas especially the villages near its plants. The CSR projects / programs of the Companycover the areas of Education including Technical and Vocational Education RuralDevelopment Health care and Sanitation Employability and Empowerment and EnvironmentalSustainability Animal Welfare and Soil Health.
The brief outline of the CSR projects / programs of the Company is asunder:
a) Project Akshar - Pre-primary & School Education
The comprehensive school education program aims to deliver betteraccess to quality education to children from deprived and disadvantaged section of thesociety. Your Company is supporting more than 7700 students through 41 GovernmentAanganwadi centers and 44 Government schools of District Kota and Baran in Rajasthan. YourCompany has adopted two additional government schools during the Financial Year 2019-20.The Company is giving priority to modernization of educational means in the adoptedschools. During the Financial Year 2019-20 10 additional smart classes and 2 digitalEnglish labs were set up in adopted schools taking the total number to 31 smart classes 2digital English labs and 44 computer labs. 4 science labs were also developed in SeniorSecondary Schools for developing science acumen amongst students of higher classes. TheCompany is also focusing on promotion of extra-curricular activities which plays a vitalrole in holistic development of the child.
CFDAV School is being run in collaboration with DAV College Trust andManagement Society and over 61% students in this school are from nearby villages.
In 25th State Level Bhamashah Awards - 2019 the Company wasconferred with "Commendation Letter - Shiksha Vibhushan by the Government ofRajasthan for its contribution in the field of education. Your Company was also conferredwith the 3rd Rajasthan CSR Award in "Education and Skill DevelopmentCategory by the Government of Rajasthan.
b) Project Saksham - Technical and Vocational Education
Technical Education project / program of the Company aims to enhancethe skills and employability of the students in order to enable them to get betteremployment opportunities. Your Company is supporting 5 Industrial Training Institutes(ITIs) i.e. ITI Sangod ITI Sultanpur ITI Baran ITI Jhalawar and ITI Khanpur inRajasthan. More than 1300 students are enrolled in these institutions pursuing courses in10 different employable trades.
In order to expand the technical education initiative your Company hasadopted Government Polytechnic College Baran during the Financial Year 2019-20. Thisinitiative is expected to support more than 780 students in 4 different diplomaengineering courses.
The objective of the Company is to enhance the infrastructure andeducation level in the adopted institutions and create employment opportunities for thestudents. The employees of the Company are involved in the management of theseinstitutions to ensure that the institutions follow the plans to meet the above objective.
During the Financial Year 2019-20 10 additional smart classes wereadded and 1575 trainees were certified in the courses such as "Fire and Safetyand "Occupational Health and First Aid in these institutions. In order tobridge the gender gap in institutions two trades - Computer Operator and ProgrammingAssistant in ITI Jhalawar and Sewing Technology in ITI Baran are reserved for femalecandidates only.
Your Company is also offering short term vocational training programsin 4 Vocational Training Centers at Gadepan Simliya Palaitha and Rajgarh villages. Thesecenters are providing certificates courses on Advance Tailoring Food preservation andValue addition Tie and Dye techniques Motor Driving Automobile Repairing and SolarPanel Assembling and Repairing etc.
c) Project Saakar - Rural Development
The Company has made significant investment over the years for thedevelopment of rural infrastructure to provide better living opportunity to the communitymembers.
During the Financial Year 2019-20 your Company has undertakenconstruction of cement concrete roads drainage improvement system development ofplayground community shed drinking water facility etc. in nearby villages. The Companyhas also undertaken renovation and maintenance activities in 17 Government Schools duringthe Financial Year 2019-20.
d) Project Arogya - Health Care and Sanitation
Your Company is focusing on improvement in health and hygieneconditions of people in the rural areas through organizing various awareness programs andhealth checkup camps.
In order to address the outbreak of COVID-19 pandemic special sessionswere organized in all adopted schools. The Company has also provided necessary support inthe nearby areas including support to local administration to spray disinfectant invillages.
The health care facilities are also extended in the remote villages ofDehradun and Tehri districts in Uttarakhand.
e) Project Pragati - Employability and Empowerment
With the aim of enabling community to become self-reliant by developingtheir competencies and skills 44 Self Help Groups having more than 600 members are beingsupported in nearby villages.
The Company is facilitating women for production of schools bagsreusable bags and school uniforms. These women has also started making low cost sanitarynapkins for rural women and school going girls.
The Company is also facilitating small and marginalized farmers withOn-farm livelihood activities which enable the farmers to access modernagriculture practices.
f) Project Bhoomi - Environmental Sustainability Animal Welfare andSoil Health
The Company is running two agriculture development laboratories inGadepan (Rajasthan) and Agra (Uttar Pradesh) along with three mobile soil testing vans inRajasthan and Uttar Pradesh. These laboratories are providing soil testing reports tofarmers for balanced usage of fertilisers. Based on the analysis reports advisoryservices are being offered to the farmers to optimize farm outputs. Farmer's trainingdistribution of horticulture plants etc. are also being organized by your Company onregular basis.
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 amountequivalent to 2% of the average net profits of the Company made during the immediatelypreceding three financial years works out to Rs. 15.30 Crore. As against this the Companyhad spent Rs. 15.33 Crore on CSR projects / programs during the Financial Year 2019-20.
9. Directors and Key Managerial Personnel
The Board of Directors of the Company consists of ten directors. Thereare eight non- executive directors including five independent directors a ManagingDirector and a Joint Managing Director.
The Board of Directors at its meeting held on August 10 2019 hadre-appointed Mr. Anil Kapoor (DIN: 00032299) as Managing Director of the Company for aperiod from February 16 2020 to April 15 2021 which was approved by the members of theCompany at the Annual General Meeting held on September 28 2019.
The Board of Directors at its meeting held on November 8 2019 hadappointed:
(i) Mr. Gaurav Mathur (DIN: 07610237) as Whole Time Director designatedas Joint Managing Director of the Company for a period of 5 (five) years with effect fromJanuary 06 2020 subject to approval of the shareholders of the Company; and
(ii) Mr. Pradeep Jyoti Banerjee (DIN: 02985965) as an AdditionalDirector in the category of Independent Director of the Company with effect from December012019 and subject to approval of the shareholders of the Company the term ofappointment of Mr. Pradeep Jyoti Banerjee as an Independent Director of the Company shallbe 5 (five) years with effect from December 01 2019.
The Board of Directors is of the opinion that Mr. Pradeep JyotiBanerjee is a person of integrity with high level of ethical standards and having workedin senior positions with large multinational organization he possesses requisiteexpertise and experience for appointment as Independent Director of the Company.
The tenure of appointment of Mr. Nimesh Nagindas Kampani (DIN:00009071) Independent Director shall expire on September 14 2020. Mr. Nimesh NagindasKampani has requested the Board of Directors not to consider him for re-appointment. TheBoard of Directors expresses its sincere gratitude and appreciation of the contribution ofMr. Nimesh Nagindas Kampani as an Independent Director of the Company.
Mr. Saroj Kumar Poddar (DIN: 00008654) Chairman shall attain the ageof 75 years on September 15 2020. Pursuant to Regulation 17(1A) of Listing Regulationsthe Board of Directors on the recommendation of the Nomination and RemunerationCommittee recommends to the shareholders of the Company to approve continuation of Mr.Saroj Kumar Poddar as non-executive Director of the Company after he attains the age of 75years.
Mr. Chandra Shekhar Nopany (DIN: 00014587) is due for retirement at theforthcoming Annual General Meeting and has offered himself for re-appointment.
All the Independent Directors have submitted declarations that theymeet the criteria of independence as provided under Section 149(6) of the Companies Act2013 the rules framed thereunder and the Listing Regulations. In terms of Section 150 ofthe Companies Act 2013 read with Rule 6 of the Companies (Appointment and Qualificationof Directors) Rules 2014 as amended the names of all the Independent Directors of theCompany have been included in the data bank maintained by the Indian Institute ofCorporate Affairs.
During the Financial Year 2019-20 the Managing Director and JointManaging Director had not received any commission or remuneration from any subsidiary ofthe Company.
Seven meetings of the Board of Directors were held during the FinancialYear 2019-20.
Other information on the Directors and the Board Meetings is providedin the Corporate Governance Report attached as Annexure "C" to thisReport.
A certificate obtained by the Company from a company secretary inpractice confirming that none of the Directors on the Board of Directors of the Companyhave been debarred or disqualified from being appointed or continuing as director ofcompanies by the Securities and Exchange Board of India /Ministry of Corporate Affairs orany such statutory authority is enclosed as Annexure "F" to this Report.
10. Internal Financial Controls
The Company has internal financial controls commensurate to the sizeand nature of its business. The Company has policies and procedures in place for ensuringorderly and efficient conduct of its business and operations including adherence to theCompany's policies 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 the ManagementDiscussion and Analysis Report attached as Annexure "A" to this Report.
11. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act2013 and Listing Regulations the Company has formulated a Remuneration Policy. TheRemuneration Policy inter-alia includes the appointment criterion &qualification requirements process for appointment & removal retirement policyremuneration structure etc. of the Directors including Managing Director and Whole TimeDirector(s) Key Managerial Personnel (KMP) and other senior management personnel of theCompany. As per the Remuneration Policy a person proposed to be appointed as DirectorKMP or other senior management personnel should be a person of integrity with high levelof ethical standards. In case of appointment as an Independent Director the person shouldfulfill the criterion of independence prescribed under the Companies Act 2013 rulesframed thereunder and the Listing Regulations. The Remuneration Policy also containsprovisions about the payment of fixed & variable components of remuneration to theManaging Director and Whole Time Director(s) and payment of sitting fee & commissionto the non-executive Directors and describes fundamental principles for determination ofremuneration of senior management personnel 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 topay;
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 April 012019.Apart from certain changes of clarificatory nature the Remuneration Policy was amendedmainly to the effect that Nomination and Remuneration Committee shall also recommend tothe Board of Directors all remuneration in whatever form payable to the Directors KMPsand senior management 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 of the Company.
The Remuneration Policy of the Company is available at the website ofthe Company at the weblink http://www.chambalfertilisers.com/ pdf/REMUNERATION-POLICY.pdf.
12. Disclosures under the Companies Act 2013Rules thereunder and Secretarial Standards
a) Your Company has not issued any shares during the Financial Year2019-20.
b) No significant and material orders have been passed by theregulators or courts or tribunals or statutory and quasi-judicial bodies impacting thegoing concern status and Company's operations in future.
c) All related party transactions entered during the Financial Year2019-20 were on arm's length basis and in the ordinary course of business. No materialrelated party transaction (in terms of the Company's Policy on Related Party Transactions)was entered during the year by the Company and no contracts or arrangements were enteredduring the year with related parties which are required to be disclosed under section134(3)(h) of the Companies Act 2013 in Form AOC-2.
d) The extract of annual return in Form MGT-9 is attached as Annexure"H" to this Report which is also available on the website of the Company atthe weblink: http://chambalfertilisers.com/pdf/Form-MGT-9-2019-20.pdf.
e) A copy of annual return of the Company is available on the weblink:http://chambalfertilisers.com/annualreturns/.
f) The following information is given in the CorporateGovernance Report attached as Annexure "C" to this Report:
i) The performance evaluation of the Board of Directors the Committeesof the Board of Directors Chairman of the Company and the individual Directors;
ii) The composition of Audit Committee; and
iii) The details of establishment of Vigil Mechanism.
g) The particulars of loans and guarantees given security provided andinvestments made if any under Section 186 of the Companies Act 2013 are given in theNotes to the Financial Statements.
h) During the Financial Year 2019-20 the auditors secretarialauditors and cost auditors have not reported any fraud under Section 143(12) of theCompanies Act 2013 and the Companies (Audit and Auditors) Rules 2014.
i) The Company has complied with the applicable Secretarial Standardsprescribed under Section 118(10) of the Companies Act 2013.
j) The Company has complied with the provisions relating to theconstitution of Internal Complaints Committees under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
k) There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the FinancialYear 2019-20 and the date of this report.
13. Directors Responsibility Statement Your Directors hereby statethat:
a) in the preparation of the annual accounts the applicable accountingstandards have been followed and no material departures have been made from the same;
b) the Directors have 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 as at March 31 2020and of the profit and loss of the Company for the year ended March 31 2020;
c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concernbasis;
e) the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate andoperating effectively; and
f) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
14. Auditors and Cost Auditors
The Notes to the Financial Statements read with the Auditor's Reportsare self-explanatory and therefore do not call for further comments or explanations.There has been no qualification reservation adverse remark or disclaimer in theAuditor's Reports.
The shareholders of the Company at the Annual General Meeting held onSeptember 15 2017 had appointed M/s. Price Waterhouse Chartered Accountants LLP (FirmRegistration No. 012754N/ N500016) as Auditors of the Company to hold office for a term of5 (five) consecutive years from the conclusion of Thirty-second Annual General Meeting ofthe Company held on September 15 2017 till the conclusion of Thirty-seventh AnnualGeneral Meeting of the Company.
The maintenance of cost records as specified by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 is required by theCompany in respect of production of fertilisers and accordingly such accounts and recordsare made and maintained by the Company.
The Board of Directors of the Company has appointed M/s. K.G. Goyal& Associates Cost Accountants for conducting audit of cost records of the Company asapplicable for the Financial Year 2020-21. 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 Cost Accountants.
15. Secretarial Audit
The Board of Directors of the Company had appointed M/s. RMG &Associates Company Secretaries for conducting secretarial audit of the Company for theFinancial Year 2019-20. The Secretarial Audit Report issued by the aforesaid SecretarialAuditor is attached as Annexure "I" to this Report.
There has been no qualification reservation observation disclaimeror adverse remark in the Secretarial Audit Report.
16. Energy Conservation Technology Absorption andForeign Exchange Earnings and Outgo
The Company always seeks to make its manufacturing facilities energyefficient and evaluates various options in this regard from time to time. Gadepan-IIIPlant of the Company is energy efficient in comparison to the existing plants. Therequisite information with regard to conservation of energy technology absorption andforeign exchange earnings and outgo in terms of the Companies (Accounts) Rules 2014 isset out in Annexure "J" attached to this Report.
17. Risk Management
Your Company has developed and implemented a Risk Management Policy.The Risk Management Committee of the Company periodically reviews all risks finalise therisk document and monitors various risks of the Company including the risks if any whichmay threaten the existence of the Company. The composition and terms of reference of theRisk Management Committee are given in the Corporate Governance Report.
The risk document containing Key and Non-Key risks including wayforward for mitigation thereof as approved by the Risk Management Committee is alsoreviewed by the Audit Committee and the Board of Directors periodically.
During the year the Company has not accepted any deposits from thepublic under Chapter V of the Companies Act 2013. There was no public deposit outstandingas at the beginning and end of the Financial Year 2019-20.
19. Particulars of employees
Your Company believes that human resource is an important asset whichplays a vital role in the performance and growth of the Company. Your Company maintains acordial work environment and encourages the employees to contribute their best. Theinformation required to be disclosed in pursuance of Section 197 of the Companies Act2013 read with the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is attached as Annexure "K" to this Report.
20. Employees Stock Option Scheme
The members of the Company had approved CFCL Employees Stock OptionScheme 2010 as amended and revised from time to time (ESOS 2010) for grant ofstock options exercisable into not more than 4162000 equity shares of face value of Rs.10/- each to eligible employees and Whole Time Director(s)/ Managing Director of theCompany. Each stock option when exercised would be converted into one fully paid up equityshare of Rs. 10/- of the Company.
The Company has not granted any stock options during the year underreview.
There has been no change in ESOS 2010 during the Financial Year2019-20. ESOS 2010 is in compliance with Securities and Exchange Board of India (ShareBased Employee Benefits) Regulations 2014 (ESOP Regulations) and implementedthrough CFCL Employees Welfare Trust ("Trust). For the purpose of ESOS 2010the Trustee of the Trust was holding 918500 equity shares of the Company as on March312020 (1335900 equity shares as on March 312019) being 0.22% of the paid up sharecapital of the Company. The ownership of these shares cannot be attributed to anyparticular employee till he/ she exercises the stock options granted to him / her and theconcerned shares are transferred to him / her. Hence the concerned employees to whom thestock options were granted under ESOS 2010 cannot exercise voting rights in respect ofaforesaid shares held by the Trustee of the Trust as such employees are not holders ofsuch shares. The Trustee has not exercised the voting rights in respect of the aforesaidshares during the Financial Year 2019-20.
The disclosures required to be made under ESOP Regulations read withSEBI circular no. CIR/CFD/Policy Cell/2/2015 dated June 16 2015 are given on the websiteof the Company at the weblink:http://chambalfertilisers.com/pdf/ESOP-Disclosure-2019-20.pdf. The disclosures in respectof 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 2019-20 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 theCorporate Office of the Company at New Delhi which provides prompt and efficient serviceto the investors. The Company takes various initiatives for investor satisfactionincluding reminders to investors about unclaimed dividends.
The equity shares of your Company are listed at National Stock Exchangeof India Limited and BSE Limited. The Company has paid annual listing fees to these StockExchanges for the Financial Year 2020-21.
The members are requested to refer to general shareholders' informationgiven in Corporate Governance Report attached hereto.
The Board of Directors wishes to place on record its appreciation ofthe co-operation extended by all the stakeholders including the Department of FertilizersGovernment of India Government of Rajasthan and other State Governments FinancialInstitutions & Banks investors and customers. The Board of Directors also conveys itsappreciation of the commitment and dedication of the employees at all levels.
| || |
For and on behalf of Board of Directors
| ||Anil Kapoor ||Gaurav Mathur |
|Place : New Delhi ||Managing Director ||Joint Managing Director |
|Date : May 23 2020 || || |