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Chemfab Alkalis Ltd.

BSE: 541269 Sector: Industrials
NSE: CHEMFAB ISIN Code: INE783X01023
BSE 12:42 | 02 Jul 136.95 5.10
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OPEN 129.00
PREVIOUS CLOSE 131.85
VOLUME 62
52-Week high 221.00
52-Week low 90.05
P/E 6.73
Mkt Cap.(Rs cr) 192
Buy Price 133.10
Buy Qty 200.00
Sell Price 137.95
Sell Qty 20.00
OPEN 129.00
CLOSE 131.85
VOLUME 62
52-Week high 221.00
52-Week low 90.05
P/E 6.73
Mkt Cap.(Rs cr) 192
Buy Price 133.10
Buy Qty 200.00
Sell Price 137.95
Sell Qty 20.00

Chemfab Alkalis Ltd. (CHEMFAB) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Tenth Annual Report of Chemfab AlkalisLimited along with the Audited financial statements for the Financial Year ended 31stMarch 2019. The summarized financial results for the Financial Year ended are as under:

Financial Summary:

(Rs. In Lakhs)
Particulars Year ended 31 March 2019 Year ended 31 March 2018
Total Revenue 19791.66 18780.23
Profit before Finance Cost and Depreciation 6502.92 5483.07
Less: Finance Cost 199.20 307.79
Profit before Depreciation 6303.72 5175.28
Less: Depreciation 1492.12 1197.71
Profit Before Exceptional Items 4811.60 3977.57
Exceptional Items (1963.25) -
Profit before Tax 2848.35 3977.57
Less: Tax including Deferred Tax 1172.77 1430.12
Profit after Tax 1675.58 2547.45
Other Comprehensive Income 0.47 (29.40)
Total Comprehensive Income 1676.05 2518.05
Balance brought forward from last year (13386.62) (14513.86)
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 1.72 (31.14)
Final Dividend 173.63 172.88
Tax on Dividend 35.69 35.19
Balance Carried to Balance Sheet (11918.64) (13386.62)

Performance and State of Affairs of the Company:

During the year the realization for Chemical Division increased; further the PVC Oplant was commissioned. Both these factors resulted in increase in the Sales turnover andProfitability for the year. However an amount of Rs. 1963.25 Lakhs was recognized asimpairment loss (as an exceptional item) on account of suspension of the operations ofOngole Plant. During the year under review the Company achieved Total revenue of Rs.19791.66 Lakhs and made a Profit Before Tax (PBT) of Rs. 2848.35 Lakhs.

Dividend:

Your Directors recommended the payment of Dividend of Rs.1.25/- per share (12.50%) forthe year ended March 31 2019 absorbing a sum of Rs.173.63 Lakhs subject to the approvalof the 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.

BOARD OF DIRECTORS AND ITS COMMITTEES

A. Composition of the Board of Directors

The Board of Directors of the Company comprises of Non - Executive Chairman who is apromoter of the Company along with him other Five Non - Executive Directors includingthree Independent Directors. The Company has two women Independent Directors. Thecomposition of the Board of Directors in compliance with regulation 17(1)(b) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 149 of theCompanies Act 2013.

The Company has received necessary declarations from the Independent Directors undersection 149(7) of the Companies Act 2013 stating that they meet the criteria ofindependence as specified in Section 149(6) of the Companies Act 2013 and as perRegulation of the SEBI (Listing Obligations and Disclosures Requirements) Regulations2015.

Board Composition:

The Board is well constituted with a composition of 3 Non - Independent Directors and 4Independent Directors (up to 28.03.2019) all are Non – Executive Directors.

Category Name of Directors
Non – Independent Mr. Suresh Krishnamurthi Rao
Director Mr. C S Ramesh
Mr. R Mahendran
Mr. A Janakiraman
Independent Director Mrs. Drushti Desai
Mrs. Sujatha Jayarajan
Mr. T Ramabadran
(up to 28.03.2019)

Currently the Board strength has Six Directors with the composition of Three Non– Independent and Three Independent Directors (with Two Women Independent directors)all are Non – Executive Directors constituted in line with the terms of Section 149of the Companies Act 2013 and in terms of Regulations 17(1)(b) of the SEBI (LODR)Regulations 2015.

B.Meetings

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

(Disclosure in pursuant to 134 (3)(b) of the Companies Act 2013) During the FinancialYear 2018 – 19 the Board of Chemfab Alkalis Limited met six times as under:

Sl. No Dates of meetings of the Board Quarter No. of Directors on the date of Meeting Total No. of Directors attended
1 04-04-2018 First 7 5
2 10-05-2018 First 7 7
3 25-07-2018 Second 7 6
4 24-10-2018 Third 7 7
5 30-01-2019 Fourth 7 7
6 28-03-2019 Fourth 7 6

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.

C. Re-appointment of Director Retiring by Rotation

In terms of Section 152 of the Companies Act 2013 Mr. Suresh Krishnamurthi Rao (DIN-00127809) liable to retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. The Board of Directors based on therecommendation of Nomination and Remuneration Committee has recommended there-appointment of Mr. Suresh Krishnamurthi Rao (DIN- 00127809) retiring by rotation.

D. Committees of the Board

The constitution and terms of reference of Audit Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee and Risk Management Committee were alsoaligned with the requirements of regulations 18 to 22 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and the Companies Act 2013. The Company hasalso constituted Corporate Social Responsibility Committee. A detailed note on theCommittees of the Board of Directors is given in the Corporate Governance Report formingpart of the Annual Report.

E. Performance Evaluation

Section 134 of the Companies Act 2013 states that formal evaluation needs to be madeby the Board of its own performance and that of its committees and the individualDirectors. Schedule IV of the Companies Act 2013 and regulation 17(10) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 states that the performanceevaluation of Independent Directors shall be done by the entire Board of Directorsexcluding the Directors being evaluated.

Pursuant to the provisions of section 134 (3)(p) of the Companies Act 2013 and SEBI(LODR) regulations 2015 the Board has carried out an evaluation of its own performancethe Directors individually as well as the evaluation of the working of its Committees. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report.

The Board of Directors at its meeting held on May 07 2019 has evaluated theperformance of the Board its Committees and the Individual Directors as per theNomination and Remuneration Policy as provided in our website available in the followinglink www.chemfabalkalis.com as prescribed under first proviso of sec. 178 of theCompanies Act 2013.

F. Directors' Responsibility Statement

(Disclosure in pursuant to 134(3)(c) of the Companies Act 2013) As required underSection 134(5) of the Companies Act 2013 the Board of Directors hereby confirm that -

(i) in the preparation of the Annual Accounts the appli- cable accounting standardshad been followed along with proper explanation relating to material departures; (ii) theDirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of the affairs of the Company at the end of the Financial Year and of theprofit of the Company for that Financial Year;

(iii) the Directors had taken proper and sufficient care forthe maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors had prepared the Annual Accounts on a going-concern basis; (v) theDirectors had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively

G. Changes in Directors and Key Managerial Personnel

The SEBI has amended its Securities and Exchange Board of India (SEBI) (LODR)Regulations 2015 to give effect to the suggestions/recommendations provided by theCommittee under the Chairmanship of Mr. Uday Kotak with a view to enhancing the standardsof corporate governance of listed entities in India w.e.f April 01 2019.

One of the significant amendments is insertion of sub-regulation in Regulation 17(1)restricting the age limit to seventy-five (75) years for appointment or continuation ofnon-executive Directors in the Board beyond which shareholders special approval isrequired.

Consequent to the amendment of SEBI (LODR) Regulation 2015 Non – Executive andIndependent Director Mr. T. Ramabadran submitted his resignation to the board w.e.f March28 2019.

Further he has also submitted his confirmation stating that there are no other materialreasons for his resignation other than age restriction.

Mr. Somasundaram Company Secretary and Compliance Officer submitted his resignationw.e.f. 28.02.2019 and upon the recommendation of Nomination and Remuneration Committeethe Board appointed Dr. V. RAJESH fellow member of Institute of Company Secretaries ofIndia (FCS:9213) holding prescribed qualification under Rule 2(1) (Appointment andQualification of Company secretary) Rules 1988 as a Whole time Secretary of the Companyw.e.f. March 28 2019.

H. Changes in Subsidiaries Joint Ventures and Associates

Your Company does not have any Subsidiaries Joint Venture or Associates during theyear 2018-19.

I. Significant or Material Orders Passed by Regulators / Courts

The case filed by the NGO with National Green Tribunal (NGT) with respect to theconsent quantities and alleged excess production has been disposed off by the Hon'bleforum i.e. NGT in favour of the Company vide its order dated 29.01.2019.

J. Declaration by Independent Directors

The Company has received necessary declarations from Mr.A. Janakiraman Mrs.DrushtiDesai and Mrs. Sujatha Jayarajan independent directors under Section 149 (7) of theCompanies Act 2013 that they meet the criteria of independence laid down in Section149(6) of the Companies Act 2013 and regulation 25 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and their Declarations have been taken onrecord.

K. Details in respect of Frauds

The Company's auditors' report does not have any statement on suspected fraud in thecompany operations to explain as per Sec. 134(3)(ca) of the Companies Act 2013.

L. Fixed Deposits:

During the year under review the Company did not raise funds by way of fixeddeposits from the public.

M. Details 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 are as per Annexure 3.

N. 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.

O. 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 monitor- ing 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) Mrs. Drushti Desai Member Non Executive
Independent Director
3) Mr. C.S. Ramesh Member Non Executive
Non Independent Director
4) Mr. R. Mahendran Member Non Executive
Non Independent Director
5) Mr. V.M. Srinivasan Member Chief Executive Officer

The Company has obtained certification for ISO 14001 and OHSAS 18001 systems to takecare of critical operational areas. The Company has also implemented Process SafetyManagement (PSM). We are the first company in our industry to implement the same. We arecontinuing with the publishing of sustainability report enhancing our commitment tosustainable development.

P. 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 in- house R & D facilities.

The Company has a sophisticated Quality Assurance (QA) Laboratory recognized by DuPontUSA for the analysis of Chlor- Alkali brine. The Brine from various Chlor- AlkaliIndustries in India is being analyzed at CAL - QA Laboratory and this laboratory is NABLaccredited.

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 4.

Q. Cost Records

Your Company is maintaining cost records and reports in pursuant to the Companies (CostRecords and Audit) Rules 2014 as amended prescribed by the Central Government under sub– section (1) of Section 148 of the Companies Act 2013.

AUDIT RELATED MATTERS:

A. 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 2021-22.

B. Cost Auditor:

As per Sec. 148 (6) of Companies Act 2013 and rule 6(6) of the Companies (Cost recordsand audit) Rules 2014 the applicability of Cost audit is based on being the overallannual turnover of the company from all its products and services during the immediatelypreceding financial year rupees one hundred crore or more and the aggregate turnover ofthe individual product or products or service or services being for which cost recordsare required to be maintained under rule 3 is Rupees thirty five crore or more.

In conformity with the said provisions of the Companies Act 2013 the Company hasappointed Shri. A. Madha-van Cost Accountant Chennai as the Cost Auditor for the auditof cost accounts for your Company for the year ending 31st March 2020. The remunerationpaid to him is being ratified at this Annual General meeting.

C. Secretarial Audit Report:

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 your Company has appointed Mr. M.R.Thiagarajan Company Secretaries-in-Practice to undertake the Secretarial Audit of theCompany. The Secretarial Audit report in Form No.MR.3 for Financial year 2018–19 isannexed herewith as Annexure - 8.

A Certificate from a Company Secretary in practice that none of the directors on theboard of the company have been debarred or disqualified from being appointed or continuingas directors of companies by the Board/Ministry of Corporate Affairs or any such statutoryauthority is annexed herewith as Annexure – 9.

There are no qualifications or adverse remarks in the Secretarial Audit Report whichrequire any explanation from the Board of Directors.

D. Internal Financial Controls

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 controls financial management and operations of theCompany.

The Audit committee at its meeting held on May 07 2019 has evaluated the internalfinancial controls and risk management system accordingly.

E. Internal Auditor

The board appointed M/s. Mukesh Manish & Kalpesh Chartered Accountants asinternal auditor for the Financial Year 2019 – 20 based on the recommendation of theAudit Committee.

BOARD COMMITTEE COMPOSITION

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

A. Audit Committee

Pursuant to regulation 18 of SEBI (LODR) Regulations 2015 and the provision of Section177(8) read with Rule 6 of the companies (Meeting of Board and its Powers) Rules 2014 theCompany has duly constituted a qualified and independent Audit Committee. The AuditCommittee of the Board consists three "Independent Directors" and One "Non– Independent Director" as members having adequate financial and accountingknowledge. The composition procedures powers and role/functions of the audit committeeand its terms of reference are set out in the Corporate Governance Report forming part ofthe Boards Report.

During the period under review the suggestions put forth by the Audit Committee wereduly considered and accepted by the Board of Directors. There were no instances ofnon-acceptance of such recommendations.

Consequent to the resignation of Mr. T. Ramabadran the board reconstituted thecommittee w.e.f.28th March 2019 in terms of Section 177 of the Companies Act 2013 and interms of Regulation 18 of SEBI (LODR) Regulations 2015 is under:

S. No Name of the Member Category up to 28.03.2019 Category from 28.03.2019
1 Mr. T. Ramabadran Chairman Independent Director Resigned
2 Mr. A. Janakiraman Member Independent Director Chairman Independent Director
3 Mrs. Drushti Desai Member Independent Director Member Independent Director
4. Mrs. Sujatha Jayarajan Member Independent Director Member Independent Director
5. Mr. C.S. Ramesh Member Non-Independent Director Member Non-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.

B. Nomination and Remuneration Committee:

Consequent to the resignation of Mr. T. Ramabadran the Board reconstituted thecommittee w.e.f.28th March 2019 in terms of Section 178 of the Companies Act 2013 and interms of Regulation 19 of SEBI (LODR) Regulations 2015 as under:

Composition:

S. No Name of the Member Category up to 28.03.2019 Category from 28.03.2019
1 Mr. T. Ramabadran Chairman Independent Director Resigned
2 Mr. A. Janakiraman Member Independent Director Member Independent Director
3 Mrs. Drushti Desai Member Independent Director Chairperson Independent Director
4. Mr. C.S. Ramesh Member Non-Independent Director Member Non-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 clearand meets appropriateperformance benchmarks; and

3) Remuneration to Directors key managerial personneland 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 and available in yourcompany website www.chemfabalkalis.com.

C. Stakeholders' Relationship Committee:

Consequent to the resignation of Mr. T. Ramabadran the Board reconstituted thecommittee w.e.f.28th March 2019 in terms of Section 178 of the Companies Act 2013 and interms of Regulation 19 of SEBI (LODR) Regulations 2015 as under:

Composition:

S. No Name of the Member Category up to 28.03.2019 Category from 28.03.2019
1 Mrs. Drushti Desai Chairperson Independent Director Chairperson Independent Director
2 Mr. C.S. Ramesh Member Non-Independent Director Member Non-Independent Director
3 Mr. Suresh Krishnamurthi Rao Member Non-Independent Director Member Non-Independent Director
4. Mr. T. Ramabadran Member Independent Director Resigned

D. 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 Independent Director
2) Mrs. Drushti Desai Member Independent Director
3) Mr. C.S. Ramesh Member Non-Independent Director
4) Mr. R. Mahendran Member Non-Independent Director
5) Mr. V.M. Srinivasan Member Chief Executive Officer

E. 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.

The Board constituted the Corporate Social Responsibility Committee in terms ofprovisions of the Companies Act 2013 as under:

S. No Name of the Member Category up to 28.03.2019 Category from 28.03.2019
1 Mr. C.S. Ramesh Chairman Non-Independent Director Chairman Non-Independent Director
2 Mr. A. Janakiraman Member Independent Director Member Independent Director
3 Mr. R.Mahendran Member Non-Independent Director Member Non-Independent Director
4. Mrs. Sujatha Jayarajan Member Independent Director Member Independent Director
5. Mr. T. Ramabadran Member Independent Director Resigned

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 2018 – 19 are given in Annexure – 5 to this Report.

OTHER MATTERS

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

During the year under review the Company did not provide loans guarantees orinvestment u/s 186 of the Companies Act 2013.

B. Remuneration details of Directors and Employees

The Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under sub-section (3) of section 178 is posted in our company website inthe followinglinkhttps://chemfabalkalis.com/wp-content/uploads/2019/04/policies-Policy-for-Nomination-and-Remuneration.pdf and forms part of this Report pursuant to first proviso of Sec. 178 of theCompanies Act 2013.

C. Debentures

During the year under review the Company has not issued any debentures. As on datethe Company does not have any outstanding debentures.

D. Bonus Shares

During the year under review the Company has not issued any bonus shares.

E. Borrowings

The Company has outstanding borrowings including IND AS accounting adjustment entriesand interest accrued of Rs. 3417.05 Lakhs during the financial Year ended March 31 2019.

F. Deposits

The Company has not accepted any deposit in terms of Chapter V of the Companies Act2013 read with the Companies (Acceptance of Deposit) Rules 2014 during the year underreview and as such no amount on account of principal or interest on public deposits wasoutstanding as of the balance sheet date.

G. Transfer to Investor Education and Protection Fund

As required under the provisions of Sections 124(5) and 125(2)(c) of the Companies Act2013 final dividends pertaining to the financial year 2010 -11 which were lying unclaimedwith the Company for the past seven years was transferred to the Investor Education andProtection Fund during the Financial Year 2018-19.

The details of unclaimed dividend transferred to the Investor Education and ProtectionFund has been detailed in the Corporate Governance Report forming part of the AnnualReport which is also available in the company's website.

H. Credit Ratings

CARE has re-affirmed its rating of "CARE A - Stable" for Long term Bankfacilities; and CARE A2+ for Short term Bank facilities.

I. Code of Corporate Governance

In compliance with the requirement of regulations 24 to 27 of SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015 a detailed report on Corporate Governanceis annexed to this report as Annexure – 7 together a Certificate from M/s. DeloitteHaskins & Sells LLP Chartered Accountants affirming compliance with the said Code isappended as Annexure – 9 .

J. 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 confirmedcompliance with the Code.

K. Management Discussion and Analysis Report

In accordance with the requirement of the Listing regulations the ManagementDiscussion and Analysis Report is presented in a separate section of the Annual Report isappended as Annexure - 1

L. 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.

M. 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 isavailable in our Company's website.

N. Extract of the Annual Return:

An extract of the Annual Return as prescribed under sub- section (3) of Section 92 andas per Sec. 134(3)(a) of the Companies Act 2013 ("Act") is prepared and postedin our Company website in the following link www.chem-fab.alkalils.com and forms part ofthis Report is appended as Annexure - 2

O. Employees' Stock Option Scheme:

The Shareholders of the Amalgamated entity Chemfab Alkalis Limited had approved theEmployees' Stock Option Scheme titled as "CAESOS – 2015" through PostalBallot on March 05 2016. "CAESOS-2015" is compliance with SEBI (Share BasedEmployee Benefits) Regulations 2014. The details are available on our websitewww.chemfabalkalis.com

The purpose of the Scheme is: i) to attract retain and motivate talented and criticalemployees. ii) to encourage employees to align Individual perfor mance with the Company'sObjectives; and iii) to reward employee performance with ownership. The details of CAESOS– 2015 form part of the Notes to Accounts of the Financial Statements in this AnnualReport.

As per the approval given by the Shareholders of Chem-fab Alkalis Limited the Optionsgranted to the employees of the amalgamated Company Chemfab Alkalis Limited also carry theeligibility of application of the Swap ratio of 10:7 (i.e. 10 shares of Rs.10 each forevery 7 shares of Rs.5 each held) mentioned in the Scheme of Amalgamation of erstwhileChemfab Alkalis Limited to the Company approved by the NCLT vide its Order dated30.03.2017.

Shares allotted under employee stock option scheme during the report period (ESOS) andas at 07.05.2019: 99000 number of shares. Out of the same 1st tranche of 60000 shareswere allotted during the FY 2018-19 and 2nd tranche of 39000 shares were allottedsubsequent to the FY 2018-19 and before the Board report dated 07.05.2019 Price at whichshares were issued: Rs.52.43 Employee wise details (Name - Designation - No. of shares)

Sl. No Name of the Employees Designation 1st Tranche 2nd Tranche
01. Mr. V M Srinivasan CEO 35714 shares 35714 Shares
02. Mr. Nitin S Cowlagi CFO 14286 shares 3286 shares
03. Mr. V R Raguraman VP - Admin 10000 shares -
Consideration received Rs. 3145800/- Rs.2044770/-

Diluted EPS - Rs.11.96/-

Equity Shares with differential voting rights: NA Sweat Equity Shares: NA

Details of Voting rights not exercised: NA

P. 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.

Q. Green initiatives

Electronic copies of the Annual Report 2018-19 and Notice of the Tenth Annual GeneralMeeting are sent to all the members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddresses physical copies of the Annual Report 2018 - 19 and the Notice of the TenthAnnual General Meeting are sent in the permitted mode. Members requiring physical copiescan send a request to the Company. Further the soft copy of the Annual Report (in pdfformat) is also available on our website www.chemfabalkalislimited.com Pursuant to Section108 of the Companies Act 2013 Rule 20 of the Companies (Management and Administration)Rules 2014 and Listing Regulations the Company is providing e-voting facility to allmembers to enable them to cast their votes electronically on all resolutions set forth inthe notice. The instructions for e-voting are provided in the notice.

R. Human Resources

Employee relation continues to be cordial and harmonious at all levels and in all thedivision of the Company. The Board of Directors would like to express their sincereappreciation to all the employees for their continued hard work and dedication.

The number of employees as on March 31 2019 was 216. The table containing the namesand other particulars of employees in accordance with the provisions of Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) and 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is appended as Annexure - 6 to theBoard's Report.

ACKNOWLEDGEMENT

The Directors thank the Shareholders Customers Dealers Suppliers Bankers FinancialInstitutions and all other business associates for their continued support to the Companyand the confidence reposed in its Management. The Directors also thank the Governmentauthorities for their co-operation. The Directors wish to record their sincereappreciation of the significant contribution made by the CCAL mates 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)
Sd/-
Suresh Krishnamurthi Rao CHAIRMAN
DIN No: 00127809
Place: Chennai
Date : 07.05.2019

Annexure – 4

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

A. Conservation of Energy

Particulars Details
(i) The steps taken or impact on conservation of energy VFD operation LED Conversion and other operational controls has resulted in savings of 10.65 Lakhs of Units during FY 2018-19.
(ii) The steps taken by the company for utilising alternate sources of energy Commissioning of 110KW Roof Top Solar has resulted in Generation of 99719 Units
(iii) The capital investment on energy conservation equipments Capital investment on Energy conservation initiatives was Rs. 7.23 Lakhs during FY 2018-19

B. Technology Absorption

Particulars Details
(i) The efforts made towards technology absorption 1. Work in Progress for Installation of Vapour Absorption Machine (VAM) as substitute for Screw Chiller for generation of chilled water by utilising surplus steam from heat recovery in Hydrochloric acid plant.
2. Study of Replacement of 2nd Generation electrolyser with latest 6th Generation electrolyser undertaken
(ii) The benefits derived like product improvement cost reduction product development or import substitution -
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- a) License to use of Technology Know-how and IP Rights to manufacture Oriented PVC ("PVC- O") from Molecor Tecnologia S.L. Spain
a) the details of technology imported b) 2018
b) the year of import; c) Yes
c) whether the technology been fully absorbed; d) N.A.
d) if not fully absorbed areas where absorption has not taken place and the reasons thereof

C. Foreign exchange earnings and Outgo-

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.

Particulars Amount
Foreign exchange earnings Rs. 18.13 Lakhs
Foreign Exchange outgo Rs. 3482.52 Lakhs

REMUNERATION DETAILS

DISCLOSURE PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013 READ WITH RULE 5 OFCOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 AND COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) AMENDMENT RULES 2016

The Information required under section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is as below:

(i) the ratio of the remuneration of each Director to the median remuneration of theemployees of the company for the financial year

Amount Rs. in Lakhs

Sl. No. Director Name Remuneration FY 2018-19 Median Remuneration of Employees FY 2018-19 Ratio
1 Mr. Suresh Krishnamurthi Rao 377.00 4.86 77.57
2 Mr. C.S.Ramesh 9.33 4.86 1.92
3 Mrs. Drushti Desai 8.58 4.86 1.77
4 Mr. Janakiraman A 9.18 4.86 1.89
5 Mr. Mahendran R 8.35 4.86 1.72
6 Mrs. Sujatha Jayarajan 8.43 4.86 1.73
7 Mr. T.Ramabadran * 10.40 4.86 2.14

*Up to 28.03.2019

(ii) the percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year.

Sl. No. Director Name Remuneration FY 2018-19 Remuneration FY 2017-18 % Increase/(Decrease)
1 Mr. Suresh Krishnamurthi Rao 377.00 26.00 1350%
2 Mr. C.S.Ramesh 9.33 6.38 46%
3 Mrs. Drushti Desai 8.58 1.05 717%
4 Mr. Janakiraman A 9.18 1.20 665%
5 Mr. Mahendran R 8.35 0.68 1128%
6 Mrs. Sujatha Jayarajan 8.43 5.93 42%
7 Mr. T.Ramabadran * 10.40 7.45 40%
8 Mr. V.M Srinivasan CEO 143.21 119.79 20%
9 Mr. Nitin S Cowlagi CFO 40.05 52.18 -23%
10 Mr. G Somasundaram CS** 19.88 19.99 -

*Up to 28.03.2019

** Up to 28.02.2019

(iii) the percentage increase in the median remuneration of employees in the financialyear

Median Remuneration Median Remuneration % Increase
FY 2018-19 FY 2017-18
4.86 4.38 11%

(iv) Number of permanent employees on the rolls of company – 216

(viii) average percentile increases already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof pointing outif there are any exceptional circumstances for increase in the managerial remuneration.

Particulars FY 2018-19 FY 2017-18 % Increase
Employees Salary 1670.62 1521.73 10%
Managerial Remuneration 431.27 53.49 706%

(xii) affirmation that the remuneration is as per the remuneration policy of theCompany.

(item (v) (vi) (vii) (ix) (x) (xi) Omitted by Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 Dated 30th June 2016.

INFORMATION AS PER RULE 5(2) OF CHAPTER XIII COMPANIES (APPOINTMENT AND REMUNERATIONOF MANAGERIAL PERSONNEL) RULES 2014

Employee Name Designation & Nature of Employment Qualification and Experience (in years) Age Date of Joining & Previous Employment details Remuneration (Rs. In lakhs) Percentage of equity shares held whether employee is a relative of any director or manager of the company
Mr. V.M. Srinivasan CEO (Permanent Employee) B.Sc MBA Experience –30 Years 51 26/04/2017 Previous Employment – CEO the erstwhile amalgamated Company Chemfab Alkalis Limited and Floking Pipes 143.21 0.25 No

TOP 10 EMPLOYEES IN TERMS OF REMUNERATION DRAWN

Statement pursuant to Section 134 of the Companies Act 2013 read with rule 5(2) and5(3) of the Companies Act (Appointment and Remuneration of Managerial Personnel) Rules2014 and Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules2016 Statement as per rule 5(2) of the above said rule

REMUNERATION:

As prescribed under Section 197(12) of the Companies Act 2013 ("Act") andRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the details are given in Annexure 6 in terms of provisions of Section 197(12) ofthe Companies Act 2013 and Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 a statement showing names of the employees and otherparticulars drawing remuneration in terms of the said Rules forms part of this report.