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Chemfab Alkalis Ltd.

BSE: 541269 Sector: Industrials
NSE: CHEMFAB ISIN Code: INE783X01023
BSE 13:46 | 25 Mar 146.40 5.25
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NSE 13:39 | 25 Mar 142.50 1.25
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OPEN 146.40
PREVIOUS CLOSE 141.15
VOLUME 5
52-Week high 314.95
52-Week low 122.60
P/E 5.78
Mkt Cap.(Rs cr) 203
Buy Price 139.10
Buy Qty 5.00
Sell Price 142.95
Sell Qty 2.00
OPEN 146.40
CLOSE 141.15
VOLUME 5
52-Week high 314.95
52-Week low 122.60
P/E 5.78
Mkt Cap.(Rs cr) 203
Buy Price 139.10
Buy Qty 5.00
Sell Price 142.95
Sell Qty 2.00

Chemfab Alkalis Ltd. (CHEMFAB) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Ninth Annual Report of Chemfab AlkalisLimited along with the Audited financial statements for the Financial Year ended 31stMarch 2018. The summarized financial results for the Financial Year are as under:

Financial Summary:

Rs. In Lakhs

Particulars Year ended 31 March 2018 Year ended 31 March 2017
Total Revenue 18780.23 15937.50
Profit before Finance Cost and Depreciation 5483.07 3391.20
Less: Finance Cost 307.79 435.75
Profit before Depreciation 5175.28 2955.45
Less: Depreciation 1197.71 1304.83
Profit before Tax 3977.57 1650.62
Less: Tax including Deferred Tax 1430.12 97.88
Profit after Tax 2547.45 1552.74
Other Comprehensive Income (29.40) 10.99
Total Comprehensive Income 2518.05 1563.73
Balance brought forward from last year (14536.94) (15951.69)
Less: Impact of change in tax rate on Deferred Tax Asset on the items recognised in the reserves 221.00 -
Less: Appropriations
Capital Redemption Reserve 960.00 -
OCI Reserve (29.40) 10.99
Final Dividend 172.88 114.65
Tax on Dividend 35.19 23.34
Balance Carried to Balance Sheet (13378.56) (14536.94)

Performance and State of Affairs of the Company:

The sales volumes were stable and realization improved during the Financial Year2017-18 resulting in increase in the Sales turnover and Profitability for the year. Duringthe year under review the Company achieved Total revenue of Rs.18780.23 Lakhs and made aProfit Before Tax (PBT) of Rs. 3977.57 Lakhs.

Dividend:

Your Directors recommend payment of Dividend of Rs.1.25 per share (12.50%) for the yearended 31st March 2018 absorbing a sum of Rs. 172.88 Lakhs subject to the approval ofthe Members at the ensuing Annual General Meeting.

Transfer of profit to reserves:

The Company has not proposed to transfer any of its profits to reserves.

Directors & Key Managerial Personnel:

The details of Directors and Key Managerial Personnel (KMP):

Consequent to the National Company Law Tribunal Division Bench Chennai order dated30th March 2017 approving the Scheme of Amalgamation and Arrangement of Chemfab AlkalisLimited (Listed Company) with Teamec Chlorates Limited (Unlisted Company - now known asChemfab Alkalis Limited) and their respective shareholders and creditors the changes indirectors and Key Managerial Personnel (KMP) were effected by the Board at its Meetingheld on 26.04.2017 which details are as follows:

S. No Name of Directors Designation Date of appointment Date of resignation
1 Mr. Suresh Krishnamurthi Rao Non Executive Director 26.04.2017 -
2 Mr. C.S. Ramesh Non Executive Director 26.04.2017 -
3 Mr. T. Ramabadran Independent Director 26.04.2017 -
4 Mr.A. Janakiraman Independent Director 26.04.2017 -
5 Mrs.Drushti Desai Independent Director 26.04.2017 -
6 Mrs. Sujatha Jayarajan Independent Director 26.04.2017 -
7 Mr. R. Mahendran Non-Executive Director 14.03.2016 -
8 Mr. P. Santhanam Independent Director - 30.05.2017
9 Mr. K. Gopalan Independent Director - 26.04.2017
10 Mr. M. Krishna- swami Iyer Non Executive Director - 26.04.2017

 

S. No Name of KMP Designation Date of appointment Date of resignation
1 Mr. V.M. Srinivasan CEO 26.04.2017 -
2 Mr. Nitin S Cowlagi CFO 26.04.2017 -
3 Mr. G Somasundaram Company Secretary 26.04.2017 -

Subsidiaries Joint Ventures or Associate Companies:

Your Company had no Subsidiaries Joint Venture or Associates during the year 2017-18.

Fixed Deposits:

During the year under review the Company did not raise funds by way of fixed depositsfrom the public.

Code of Conduct for prevention of Insider Trading:

The Company has a policy viz."Code of Conduct for prevention of InsiderTrading" and the same has been posted on its website www.Chemfabalkalis.com .

Name Change:

The National Company Law Tribunal (NCLT) Division Bench Chennai had vide its orderdated 30th March 2017 approved the Scheme of Arrangement and Amalgamation("Scheme") of Chemfab Alkalis Limited ("TransferorCompany"/"Amalgamated Company") with Teamec Chlorates Limited. As aconsequence and as per Clause 11 of the Order of the NCLT Chemfab Alkalis Limited(Transferor Company) stands dissolved without winding up. As per Clause 10 of the saidapproved Scheme the name of Teamec Chlorates Limited shall be changed to Chemfab AlkalisLimited. Consequent to the filing of form for name change with MCA the company's name waschanged to CHEMFAB ALKALIS LIMITED with effect from 21st July 2017.

Development and implementation of a Risk Management Policy:

The main objective of Risk Management is risk reduction and avoidance as alsoidentification of the risks faced by the business and optimizing of the risk managementstrategies. The Company has put in place a well-defined Risk Management framework.

The Company has constituted a Risk Management Committee even though the constitution ofRisk Management Committee is NOT applicable to the Company since it is mandatory only forthe top 100 listed Companies as per the listing regulations. The Risk Management Committeeassists the Board in drawing up implementing monitoring and reviewing the RiskManagement Plan. The Committee lays down the Risk Assessment and Minimization Proceduresand it reviews the Procedures periodically to ensure that the Executive Managementcontrols the risks through properly defined framework.

The composition of the Risk Management Committee is as under:

S. No Name of the Member Category
1) Mr. A. Janakiraman Chairman Non executive Independent Director
2) Mr. C.S. Ramesh Member Non executive Non Independent Director
3) Mrs. Drushti Desai Member Non executive Independent Director
4) Mr. R. Mahendran Member Non executive Non Independent Director
5) Mr. VM. Srinivasan Member Executive

The Company has obtained certification for ISO 14001 and OHSAS 18001 systems to takecare of critical operational areas. It also utilizes the services of professional bodieslike Central Leather Research Institute (CLRI)/The Energy and Resources Institute(TERI)/National Environmental Engineering Research Institute (NEERI) as also Consultantsto continuously analyze and upgrade its operations. The Company has also implementedProcess Safety Management (PsM). We are the first company in our industry to implement thesame.Also Sustainability Reporting has been carried out enhancing our commitment tosustainable development.

Details of significant and material orders passed by the regulators/ courts/ tribunalsimpacting the going concern status and company's operations in future:

During the year there were no instances of significant and material orders passed bythe regulators courts or tribunals impacting the going concern status and Company'soperations in future.

Internal Financial Control:

Your Company has well defined and adequate internal controls and procedurescommensurate with its size and the nature of its operations. This is further strengthenedby the Internal Audit done concurrently. During the year the Company got its internalcontrols over financial reporting and risk management process evaluated by independentConsultants.

Besides the Company has an Audit Committee comprising Independent and Non-ExecutiveDirectors which monitors systems control financial management and operations of theCompany.

The Audit committee at its meeting held on 10th May 2018 has evaluated the internalfinancial controls and risk management system accordingly.

Extract of the Annual Return:

An extract of the Annual Return as prescribed under subsection (3) of Section 92 of theCompanies Act 2013 ("Act") is given in Annexure 1 forming part of this Report.

Number of Board Meetings held during the year along with the dates of the meetings:

During the Financial Year 2017-2018 the Board of Chemfab Alkalis Limited met Six timesas under:

S No. Dates of meeting of the Board Quarter No of directors on the date of meeting Total No. of directors attended
1. 05/04/2017 First 4 4
2 26/04/2017 First 4 3
3 30/05/2017 First 8 5
4 27/07/2017 Second 7 7
5 23/10/2017 Third 7 6
6 31/01/2018 Fourth 7 7

The meetings of the Board were held periodically with not more than one hundred andtwenty days intervening between two consecutive meetings of the Board as prescribed underSection 173(1) of the Act.

Directors' Responsibility Statement:

As required under Section 134 (5) of the Companies Act 2013 the Board of Directorshereby confirm:-

(i) That in the preparation of the Annual Accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(ii) That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of the affairs of the Company at the end of theFinancial Year and of the profit of the Company for that Financial Year;

(iii) That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors had prepared the Annual Accounts on a going-concern basis;

(v) That the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(vi) That the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Particulars of contracts or arrangements with related parties:

The contracts or arrangements entered into with related parties along withjustification for entering into such contract or arrangement referred to in sub-section(1) of section 188 in the prescribed form no. AOC 2 is as per Annexure 2.

Technology absorption Conservation of energy and Research and development:

The Company has an in-house Research and Development Department where the main areasof focus are Energy Conservation Process Upgradation and Environmental Preservation. TheMinistry of Science and Technology Department of Scientific and Industrial ResearchGovernment of India has recognized the Company's inhouse R & D facilities which isvalid upto 31st March 2019. The Company has a sophisticated Quality Assurance (QA)Laboratory recognized by DuPont USA for the analysis of Chlor- Alkali brine. The Brinefrom various Chlor- Alkali Industries in India is being analyzed at CAL- QA Laboratory.

The Company continues to take all possible steps to conserve energy in every area ofits operations. Brief details on Conservation of Energy and Technology Absorption aregiven in Annexure 3

Annual Evaluation made by the Board of its own performance and that of its Committeesand Individual Directors

The Board of Directors at its meeting held on 10th May 2018 has evaluated theperformance of the Board its Committees and the Individual Directors as per theNomination and Remuneration Policy disclosed in Annexure 1 to Corporate Governance Report.

Declaration by Independent Directors as required under Section 149(7) of the CompaniesAct 2013

Mr. T. Ramabadran Mr.A. Janakiraman Mrs.Drushti Desai and Mrs. Sujatha JayarajanIndependent Directors of the Company have given their statement of declaration underSection 149(7) of the Companies Act 2013 (‘the Act") that they meet thecriteria of independence as provided in Section 149 (6) of the Act and their Declarationshave been taken on record.

Statutory Auditors:

As per the provisions of Sections 139 142 and other applicable provisions of theCompanies Act 2013 if any read with the Companies (Audit and Auditors) Rules 2014 theAuditors M/s.Deloitte Haskins & Sells LLP (Firm Registration No 117366W /W-100018)were appointed as Statutory Auditors of the Company at the Annual General Meeting held on04.09.2017 for a period of Five(5) consecutive Financial Years from 2017-18 to 2021-22subject to the ratification of the members at every Annual

General Meeting. The Directors recommend the ratification of M/s. Deloitte Haskins& Sells LLP as the Statutory Auditors of the Company for this Financial Year.

Cost Auditor:

In conformity with the provisions of the Companies Act 2013 the Company has appointedShri. A. Madhavan Cost Accountant Chennai as the Cost Auditor for the audit of costaccounts for the chemicals manufactured by the Company for the year ending 31st March2019. The remuneration paid to him is being ratified at this Annual General meeting.

Secretarial Audit Report:

Mr. M.R. Thiagarajan Company Secretary is appointed as Secretarial Auditor of yourcompany in the meeting of the Board for the financial year 2018 -19. The Secretarial AuditReport for the period 2017-18 is attached to the Annual Report.

Particulars of loans guarantees or investments u/s 186 of the Companies Act 2013:

Particulars of investments made by the Company during the Financial Year 2017-18 aregiven below and they are within the prescribed limits under Section 186 of the CompaniesAct 2013:

S. No Loans Guarantees & Investments made in Amount Higher of 60% of Paid up capital and Free Reserves and Securities Premium or 100% of Free Reserves Remarks
1 Titanium Equipment and Anode Manufacturing Company Limited Rs. 25 lakhs Rs. 21209.75 lakhs Guarantees given and expired during the year

Vigil Mechanism:

The Company has established a vigil mechanism also called the Whistle Blower Policywhich has been adopted by the Board for Directors and employees to report concerns aboutunethical behavior actual or suspected fraud or violation of the Company's Code ofConduct or Ethics Policy. It provides for adequate safeguards against victimization ofpersons who use such mechanism and makes provision for direct access to the Chairperson ofthe Audit Committee in appropriate or exceptional cases. Confidentiality of Whistle Blowershall be maintained to the greatest extent possible. Details of the vigil mechanism areposted on the Company's website.

Board Composition:

The Board is well constituted with a composition of 3 Non Executive and 4 Non ExecutiveIndependent Directors.

Category Name of Director
Non Executive Mr. Suresh Krishnamurthi Rao
Director Mr. C S Ramesh
Mr. R Mahendran
Non Executive Mr. A Janakiraman
Independent Director Mrs. Drushti Desai
Mr. T Ramabadran
Mrs. Sujatha Jayarajan

Board Committee:

The Board has constituted the following committees viz. Audit Committee Nomination andRemuneration Committee Stakeholders' Relationship Committee Risk Management Committeeand Corporate Social Responsibility Committee.

Audit Committee:

The composition of the Audit Committee constituted by the Board in terms of Section 177of the Companies Act 2013 and in terms of Regulation 18 of The SeBi (LODR) Regulations2015 is as under:

S. No Name of the Member Category
1 Mr. T. Ramabadran Chairman Non-Executive Independent Director
2 Mr. C.S. Ramesh Member Non-Executive Non-Independent Director
3 Mr.A. Janakiraman Member Non-Executive Independent Director
4. Mrs. Sujatha Jayarajan Member Non-Executive Independent Director
5. Mrs. Drushti Desai Member Non-Executive Independent Director

The Audit Committee acts in accordance with the terms of reference specified by theBoard of Directors in terms of Section 177(4) of the Act and in terms of Regulation 18 ofThe SEBI (LODR) Regulations 2015. It also oversees the vigil mechanism and is obliged totake suitable action against the Directors or employees concerned when necessary.

Nomination and Remuneration Committee:

In terms of Section 178 of the Companies Act 2013 and the Rules prescribed thereunderyour Company is mandatorily required to constitute a Nomination and RemunerationCommittee.

Composition:

S. No Name of the Member Category
1 Mr. T. Ramabadran Chairman Non-Executive Independent Director
2 Mr. C.S. Ramesh Member Non-Executive Non-Independent Director
3 Mr.A. Janakiraman Member Non-Executive Independent Director
4. Mrs. Drushti Desai Member Non-Executive Independent Director

Accordingly the Company has set up a Nomination and Remuneration Committee which hasformulated the criteria for determining the qualifications positive attributes andindependence of a Director and ensures that:

1) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;

2) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

3) Remuneration to Directors key managerial personnel and senior management involves abalance between fixed and variable pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.

The Nomination and Remuneration Policy of your Company is set out in Annexure 1 to theReport on Corporate Governance forming part of this Report.

Stakeholders' Relationship Committee:

The Company has constituted the Stakeholders' Relationship Committee to take note ofShare Transfer and Transmission and consider and resolve the grievances of the Stakeholders of the Company.

Composition:

S. No Name of the Member Category
1 Mrs. Drushti Desai Chairman Non-Executive Independent Director
2 Mr. C. S. Ramesh Member Non-Executive Non-Independent Director
3 Mr. T. Ramabadran Member Non-Executive Independent Director
4 Mr. Suresh Krishnamurthi Rao Member Non-Executive Non-Independent Director

Risk Management Committee:

The Company has constituted a Risk Management Committee even though the constitution ofRisk Management Committee is NOT applicable to the Company since it is mandatory only forthe top 100 listed Companies as per the listing regulations. The Risk Management Committeeassists the Board in drawing up implementing monitoring and reviewing the RiskManagement Plan. The Committee lays down the Risk Assessment and Minimization Proceduresand it reviews the Procedures periodically to ensure that the Executive Managementcontrols the risks through properly defined framework.

Composition:

S. No Name of the Member Category
1) Mr. A. Janakiraman Chairman Non executive Independent Director
2) Mr. C.S. Ramesh Member Non executive Non Independent Director
3) Mrs. Drushti Desai Member Non executive Independent Director
4) Mr. R. Mahendran Member Non executive Non Independent Director
5) Mr. V.M. Srinivasan Member Executive

Corporate Social Responsibility (CSR) Committee:

According to Section 135 of the Companies Act 2013 ("the Act") a Companyhaving a Net Worth of Rs.500 Crores or more or Turnover of Rs.1000 Crores or more orNet Profit of Rs. 5 Crores or more during any financial year shall constitute a CorporateSocial Responsibility (CSR) Committee of the Board consisting of three or more Directorsof which at least one shall be an Independent Director.

Composition:

S. No Name of the Member Category
1 Mr. C.S. Ramesh Chairman Non-Executive Non Independent Director
2 Mr. T. Ramabadran Member Non-Executive Independent Director
3 Mr.A. Janakiraman Member Non-Executive Independent Director
4. Mrs. Sujatha Jayarajan Member Non-Executive Independent Director
5. Mr. R. Mahendran Member Non-Executive Non-Independent Director

As your Company's Net Profit is more than Rs 5 Crores the Board has constituted theCorporate Social Responsibility Committee in accordance with Section 135 of the CompaniesAct 2013. The Company is committed to operate in a socially responsible manner in termsof protecting the environment and conserving water resources and energy. Details of theCSR Policy drawn up by the Company and the CSR expenditure and initiatives taken duringthe year 2017-18 are given in Annexure 4 to this Report.

Remuneration details of Directors and Employees:

The details of remuneration paid to the Directors and employees of your Company are setout in Annexure 5

Code of conduct for Directors and Senior Management:

The Board of Directors had adopted a code of conduct for the Board Members andemployees of the company. This Code helps the Company to maintain the standard of BusinessEthics and ensure compliance with the legal requirements of the Company.

The Code is aimed at preventing any wrong doing and promoting ethical conduct at theBoard level and by employees. The Compliance Officer is responsible to ensure adherence tothe Code by all concerned.

The Code lays down the standard of conduct which is expected to be followed by theDirectors and the designated employees in their business dealings and in particular onmatters relating to integrity in the work place in business practices and in dealing withstakeholders.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code.

Disclosure on Sexual Harassment of Women at workplace (Prevention Prohibition andRedressal) Act 2013 :

Presently the Company does not have any woman employee at the work place. Hence thecompany has not constituted a separate committee under the sexual harassment of Women atworkplace (Prevention Prohibition and Redressal) Act 2013.

However the company has zero tolerance for sexual harassment at work place.

Employees' Stock Option Scheme :

The Shareholders of the Amalgamated entity Chemfab Alkalis Limited approved theEmployees' StockOption Scheme titled as "CAESOS - 2015 through Postal Ballot on 05thMarch 2016. CAESOS-2015 is in compliance with The SEBI (Share Based Employee Benefits)Regulations 2014. The details are available on our website www.chemfabalkalis.com . Thepurpose of the Scheme is:

i) to attract retain and motivate talented and critical employees.

ii) to encourage employees to align Individual performance with the Company'sObjectives; and

iii) reward employee performance with ownership.

The details of CAESOS - 2015 form part of the Notes to Accounts of the FinancialStatements in thisAnnual Report.

As per the approval given by the Shareholders of Chemfab Alkalis Limited the Optionsgranted to the employees of the amalgamated Company Chemfab Alkalis Limited also carry theeligibility of application of Swap ratio of 10:7 (i.e. 10 shares of Rs.10 each for every7 shares of Rs.5 each held) mentioned in the Scheme of Amalgamation of erstwhile ChemfabAlkalis Limited with the Company approved by the NCLT vide its Order dated 30.03.2017.

Shares issued under Employee Stock Option Scheme (ESOS) as at 10.05.2018: 60000

Price at which shares were issued: Rs.52.43 Employee wise details (Name - Designation -No. of shares)

1. Mr. V M Srinivasan - CEO - 35714 shares

2. Mr. Nitin S Cowlagi - CFO - 14286 shares

3. Mr. V R Raguraman - AVP Admin - 10000 shares

Consideration received against issuance of shares - Rs.3145800/-

Diluted EPS - Rs.18.16/-

Equity Shares with differential voting rights: NA

Sweat Equity Shares: NA

Details of Voting rights not exercised: NA

Listing of Equity Shares of the Company after the amalgamation of erstwhile listedCompany Chemfab

Alkalis Limited with the Company:

After the Amalgamation of erstwhile listed Company Chemfab Alkalis Limited with theCompany the listing application was made and the Company's Equity Shares got listed inBSE and NSE on 25.04.2018. The Company has paid the listing fee for the financial year2018-19 to the Stock Exchanges.

Acknowledgement

The Directors thank all the Shareholders Customers Dealers Suppliers BankersFinancial Institutions and all other business associates for their continued support tothe Company and the confidence reposed in its Management. The Directors also thank theGovernment authorities for their co-operation. The Directors wish to record their sincereappreciation of the significant contribution made by the CCALmates at all levels to itsprofitable and successful operations.

For and on behalf of Board of Directors of
CHEMFAB ALKALIS LIMITED
(formerly known as Teamec Chlorates Limited)
Place: Chennai Suresh Krishnamurthi Rao
Date: 10.15.2018 CHAIRMAN
DIN No: 00127809