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Dalmia Refractories Ltd.

BSE: 500481 Sector: Engineering
NSE: DALMIAREF ISIN Code: INE200F01017
BSE 05:30 | 01 Jan Dalmia Refractories Ltd
NSE 05:30 | 01 Jan Dalmia Refractories Ltd

Dalmia Refractories Ltd. (DALMIAREF) - Director Report

Company director report

Dear Members

Your Directors hereby present the Forty-Eighth Annual Report together with AuditedFinancial Statements and the highlights of the performance of Subsidiary Companies for theyear ended March 312021.

Financial Results

Standalone

Consolidated

FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
REVENUE 218.76 290.58 394.68 450.10
Profit before Interest Depreciation and Tax 19.02 32.79 36.57 49.70
Less: Interest and financial charges 3.03 2.64 9.29 8.42
Profit before Depreciation and Tax 15.99 30.15 27.28 41.28
Less: Depreciation 6.83 8.17 15.92 17.78
Profit Before Tax 9.16 21.98 11.36 23.50
Provision for current tax 3.58 6.90 6.66 10.62
Provision for deferred tax (1.57) (2.45) (1.95) (3.25)
Profit/(loss) after tax before share of profit in associates 7.14 17.53 6.65 16.14
Less: Share of minority interest - - (0.21) (1.67)
Profit/(loss) After Tax 7.14 17.53 6.86 17.80

Note: Previous year figures have been regrouped/ re-arranged wherever considerednecessary.

State of the Company's Affairs

Fire within the zeal and commitment to achieve highest levels of success and eagernessto rise beyond all expectations - these are characteristics that have helped DalmiaRefractories Limited maintain its leadership position for well over 40 years now. DalmiaRefractories is a pioneer in Alumino-Silicate Refractories having substantial market sharein Alumina bricks used in manufacturing of cement.

During the Year ended March 31 2021 the revenue

stood at ' 218.76 Cr as compared to ' 290.58 Cr in previous year. Our Net proft stoodat ' 7.14 Cr as compared to ' 17.53 Cr during the previous year on a standalone basis.The performance of the company during the year would have been better but for the outbreakof COVID-19 across the world.

On consolidated basis the revenue stood at ' 394.68 Cr as compared to ' 450.10 Cr inprevious year. Similarly Net proft stood at ' 6.86 Cr as compared to ' 17.80 Cr duringthe previous year.

The company remains committed to its stakeholders and will continue to leverage itstechnology and manufacturing capabilities expand its reach in international marketspursue innovative technologies invest in enhancing local high-quality refractoryproduction and actively continue to pursue M&A opportunities both inside and outsideof India.

The Company continues to be engaged in the business of manufacturing distribution andservice of refractory products and services during the financial year 2020-21.

Management Discussion and Analysis Report

The Management Discussion and Analysis of financial performance and results ofoperations of the Company as required under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (hereinafter referred to as "SEBIListingRegulations") is provided in a separate section and forms an integral part of thisAnnual Report. It inter-alia gives detail of the overall industry structure economicdevelopments performance and state of affairs of your Company's business risk managementsystems and material developments during the financial year under review.

Impact of COVID-19 pandemic

Towards the end of financial year 2019-20 and during the period under review theentire global economy has faced an unprecedented disruption owing to the COVID- 19pandemic. The COVID-19 outbreak has severely impacted the business of the company withshattered supply chains halted production and deliveries to the Customers. The Plantfacilities of company were closed due to nationwide lockdown announced by the Governmentof India. However with the extra efforts put by the company to manage supply chainsmanagement effectively the impact has been minimized.

Subsequently the Company has resumed its operations in a gradual and phased mannerwith available workforce in strict compliance with Standard Operating Protocols (SOPs)issued by the Union Government and State Government from time to time and with therequisite permissions from the authorities. The health and safety of

employees remained the main key focus for the Company. Dividend

Your Directors are pleased to recommend a dividend of 10% @ ? 1 per equity share offace value of ? 10/- each for the financial year 2020-21 payable to those shareholderswhose names appear in the Register of Members as on the Book Closure / Record Date. Thedividend payout is subject to approval of the members at the Annual General Meeting of theCompany for the financial year ended on March 31 2021.

Share Capital

During the period under review the Issued Subscribed and Paid up equity share capitalof the Company was ? 3.15 crore constituting of 3152084 equity shares of ? 10/- each.There was no change in the capital structure of the Company.

Transfer to Reserves

The Company proposes to retain its entire earnings in the profit and loss account andproposes not to transfer any amount to the General Reserve.

Consolidated Financial Statements

In accordance with the provisions of the Companies Act 2013 read with the IndianAccounting Standards (lnd AS) the Consolidated Financial Statements of the Company and ofall the subsidiaries for the financial year 2020-21 have been prepared in accordance withapplicable accounting standards and form part of the Integrated Annual Report.

Subsidiaries Associates and Joint Venture Companies

As on March 31 2021 the Company has 3 subsidiaries out of which 1 is a joint ventureCompany. Dalmia GSB Refractories GmbH wholly owned subsidiary of the Company situated inGermany is the material unlisted subsidiary of the Company in terms of the ListingRegulations as amended from time to time and the Company's Policy for determining materialsubsidiary. The said Policy may be accessed at the Company's websitewww.dalmiarefractories.com.

The details of the Subsidiaries are as under:

S. No. Name of the Subsidiary Status % age Holding
1. Dalmia Seven Refractories Limited Joint Venture/ Subsidiary 51%
2. Dalmia GSB Refractories GmbH Wholly Owned Subsidiary 100%
3. GSB Refractories India Private Limited Step down Subsidiary 100%

A statement containing the salient features of the financial statements of theCompany's subsidiaries joint ventures and associate companies for the FY ended March 312021 in Form AOC-1 is attached and marked

as Annexure - 1 and forms part of this report. The contribution of the Company'ssubsidiaries joint ventures and associates companies to the overall performance of theCompany during the financial year under review

could be referred from the financial highlights given above and the financialstatements forming part of the Annual Report. The Financial Statements of the Company/itssubsidiaries and the Consolidated Financial Statements of the Company are placed on theCompany's website www.dalmiarefractories.com.

During the said financial year no company ceased to be a subsidiary of the Company andapart from those mentioned above the Company does not have any other associate or jointventure Company. Further there is no material change in the business of subsidiarycompanies and the Company has taken note of all the significant transactions andarrangements entered into by its subsidiaries.

Scheme of Arrangement and Amalgamation

The Board of Directors of Company in their meeting held on 14th November2019 has approved a Scheme of Amalgamation and Arrangement amongst Dalmia RefractoriesLimited (DRL) and its subsidiary GSB Refractories India Private Limited ('GSB India')Dalmia Bharat Refractories Limited ('DBRL') (formerly known as Sri Dhandauthapani Minesand Minerals Limited) and Dalmia OCL Limited (DOCL) (formerly known as Dalmia OCL PrivateLimited/Ascension Commercio Private Limited) and their respective shareholders andcreditors in terms of Sections 230 to 232 and all other applicable provisions of theCompanies Act 2013 ('Scheme 2).

Subsequently on 5th April 2021 based on the recommendation of the AuditCommittee the Board of Directors of the Company approved modification of the aforesaidScheme. The modification involved removal of the step with regard to transfer ofrefractory undertaking from DBRL to DOCL. As a result the name of the Modified Scheme haschanged to Scheme of Amalgamation of DRL and GSB India with DBRL and their respectiveshareholders and creditors ('Scheme 2). Scheme 2 now involves amalgamation of the Companyand its subsidiary GSB India with DBRL. The appointed date of the said Scheme 2 is 1stApril 2020.

Pursuant to NCLT Orders dated 23rd February 2021 and Id" April 2021the Company has held its Shareholders and Creditors Meeting on 3rd June 2021and 27‘" May 2021 respectively to seek their respective approvals to theaforementioned Scheme of Amalgamation and both the Shareholders and the Creditors of theCompany have approved the Scheme with requisite majority. Now the Scheme is pendingbefore the NCLT Chennai for its approval.

The Board of Directors of Dalmia Cement (Bharat) Limited (DCBL) and DBRL in theirrespective meetings held on 14th November 2019 approved a Scheme ofArrangement amongst DCBL and DBRL and their

respective shareholders and creditors in terms of Sections 230 to 232 and all otherapplicable provisions of the Companies Act 2013 ('Scheme 1) for transfer and vesting ofrefractory undertaking of DCBL to DBRL by way of slump exchange on a going concern basis.The appointed date of the said Scheme would be 1stApril 2019.

Pending necessary regulatory approvals and other compliances no effect of the abovementioned schemes has been considered in these financial statements.

Corporate Governance

Your Directors are committed to achieve the highest standards of ethics transparencycorporate governance and continue to comply with the Code of Conduct framed for the Boardand senior management under Regulation 17 of the SEBI Listing Regulations. The endeavouris to continue and move forward as a responsible and sustainable company in order toattract as well as retain talents customers suppliers investors and to maintainfulfilling relationships with the communities

Your Company's corporate governance practices are driven by effective and strong Boardoversight timely disclosures transparent accounting policies and high levels ofintegrity in decision making.

The Corporate Governance Report for the financial year 2020-21 as required under theListing Regulations of the Company is attached hereto and forms part of this report. Therequisite cerdficate(s) from the Statutory Auditor of the Company confirming compliancewith the conditions of Corporate Governance and from Secretarial Auditor that none of theDirectors of the Company has been debarred or disqualified from being appointed orcontinuing as Director of the Company by Securities and Exchange Board of India/Ministryof Corporate Affairs or any such authority is attached to the Corporate Governance Report.

Annual Return

In terms of the provisions of Section 92(3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 the annual return of your Companyfor the financial year ended March 31 2021 will be uploaded at the Company's websitewww.dalmiarefractories.com.

Corporate Social Responsibility Initiatives

The Company is fully aware of its social responsibilities and is providing time to timeassistance through the local institutions to benefit the local residents of the nearbyareas where the Company's plants are located.

The Corporate Social Responsibility Policy adopted by the board of directors can beaccessed at the Company's website www.dalmiarefractories.com.

The prime objective of the Corporate Social Responsibility policy of the Company is tohasten social economic and environmental progress. We remain focused on generatingsystematic and sustainable improvement for local communities surrounding our plants andproject sites.

Pursuant to the said Policy the Company has spent ? 19.86 Lakhs towards corporatesocial responsibility activities during the financial year 2020-21. The said amount spentwas equal to 2% of average net profits of the Company made during three immediatelypreceding financial years. The annual report on corporate social responsibility activitiesis attached and marked as Annexure - 2 and forms part of this Report.

Directors and Key Managerial Personnel

During the financial year under review Mr. Deepak Thombre Mr. Mahendra Kumar Doogarand Mr. Chandrasekaran Nagaratnam being the Independent Directors have given theirdeclarations that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013 and Regulation 16(l)(b) of the Listing Regulations.

The term of appointment Mr. Mahendra Kumar Doogar as Independent Director of theCompany has expired on 31.03.2021 accordingly he has ceased to be an independent directorof the Company effective 01.04.2021. The Board places on record its sincere appreciationfor the valuable advice and guidance of Mr. Mahendra Kumar Doogar during his tenure asDirector of the Company

During the period under review keeping in view the performance of Mr. Deepak Thombreas Independent Director on the Board and post receipt of necessary declarations in termsof the provisions of Companies Act 2013 read with its rules made thereunder and listingregulations and upon recommendation of the Nomination and Remuneration Committee theBoard of Directors has re-appointed Mr. Deepak Thombre as an Independent Director of theCompany for another term of 2 years w.e.f September 19 2020 subject to the approval ofthe Shareholders at the forthcoming Annual General Meeting of the Company.

Pursuant to the provisions of Section 152(6) of the Companies Act 2013 Ms. LeenaRawal retires by rotation at the ensuing Annual General Meeting and being eligible offersherself for re-appointment. She has given a declaration in terms of Section 164(2) of theCompanies Act 2013 to the effect that she is not disqualified from being re-appointed asa Director of the Company.

Board of Directors Committees and Meetings

The Board of Directors of the Company met four times during the financial year 2020-21i.e. on June 16 2020 August 21 2020 November 11 2020 and February 12 2021. The timegap between two consecutive meetings of the Board did not exceed one hundred and twentydays during the financial year 2020-21.

The Board meetings were conducted through Video Conferencing in due compliance with andfollowing the procedures prescribed in the Companies Act 2013 Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI LODR Regulations") and applicable Secretarial Standards.

In terms of the provisions of Rule 8 of Schedule IV to the Companies Act 2013 aseparate meeting of the Independent Directors excluding all other Directors and Officialsof the Company was also held on February 12 2021. Reference is invited to the attachedCorporate Governance Report for the details thereof.

As on March 31 2021 there are four Board level committees. The composition terms ofreference and other details of all Board Level Committees have been elaborated in theCorporate Governance Report annexed to this Report.

Nomination and Remuneration Policy

The Nomination and Remuneration Policy lays down the constitution and role of theNomination and Remuneration Committee. The policy has been framed with the objective -

(a) to ensure that appointment of directors key managerial personnel and seniormanagerial personnel and their removals are in compliance with the applicable provisionsof the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015;

(b) to set out criteria for the evaluation of performance and remuneration ofdirectors key managerial personnel and senior managerial personnel;

(c) to adopt best practices to attract and retain talent by the Company; and

(d) to ensure diversity of the Board of the Company.

The policy specifies the manner of effective evaluation of performance of Board itsCommittees and individual Directors to be carried out either by the Board by theNomination and Remuneration Committee or by an independent external agency and review itsimplementation and compliance. The Nomination and Remuneration policy of the Company canbe accessed at the website of the Company at www.dalmiarefractories.com.

Performance Evaluation

During the financial year under review the annual evaluation of the performance of theBoard its committees and individual Directors was carried by the Independent Directorsthe Nomination and Remuneration Committee and the Board of Directors in compliance withthe Companies Act 2013 and SEBI LODR Regulations as amended from time to time.

The performance of Non-Independent Directors Board as a whole and the Chairman wasevaluated in a separate meeting of Independent Directors. Similar evaluation was alsocarried out by the Nomination and Remuneration Committee and the Board. Performanceevaluation of Independent Directors was done by the entire Board excluding theIndependent Director being evaluated

An indicative criteria of evaluation was circulated to the Directors to facilitate suchevaluation. Based on the feedback of the Directors and on due deliberations of the viewsand counter views the evaluation was carried out in terms of the Nomination andRemuneration Policy and such indicative criterion.

Whistle Blower Policy and Vigil Mechanism

In Compliance with the provisions of section 177 of the Companies Act 2013 andRegulation 22 of the Listing Regulations the Company has in place the Whistle BlowerPolicy and Vigil Mechanism for Directors employees and other stakeholders which providesa platform to them for raising their voice about any breach of code of conduct financialirregularities illegal or unethical practices unethical behaviour actual or suspectedfraud health safety and environmental issues. Adequate safeguards are provided againstvictimization of stakeholders who use such mechanism and direct access to the Chairman ofthe Audit Committee in appropriate cases is provided.

The aforesaid policy may be accessed at the website of the Company atwww.dalmiarefractories.com

Adequacy of Internal Financial Controls

The Company has adequate internal financial controls commensurate with the size of theCompany and nature of its business which are reviewed periodically.

The internal auditors of the Company conduct regular internal audits as per approvedplan and the Audit Committee reviews periodically the adequacy and effectiveness ofinternal control systems and takes steps for corrective measures whenever required.

The roles and responsibilities of all talents and functions have been clearly laid outthrough a number of detailed standard operating procedure and delegation of authority. Therisks identified in the audits are

immediately accounted for in the processes and gets addressed through the StandardOperating Procedures.

Particulars of Loans Guarantees and Investments

Your Company has given guarantees provided security and made investments within thelimits with the necessary approvals and in terms and accordance with the provisions ofSection 186 of the Companies Act 2013.

The particulars of such guarantees given securities provided and investments made areprovided in the Standalone Financial Statements at Note No. 5.

Related Party Policy and Transactions

The Company has formulated a Related Party Transactions Policy and the same can beaccessed at the website of the Company www.dalmiarefractories.com. Prior omnibus approvalwas obtained for related party transactions which are of repetitive nature and entered inthe ordinary course of business and at an arms' length basis. All related partytransactions are placed before the Audit Committee for review ratification and approval.

All related party transactions entered during the financial year 2020-21 were in theordinary course of the business and on an arms' length basis. The Company has not enteredinto any arrangement/ transaction with related parties which could be considered materialin accordance with the Company's Policy on Related Party Transactions. Hence nodisclosure is required to be made in Form AOC-2.

Risk Management

Your Company has formulated the Risk Management Policy that defines the adequate riskmanagement process which are based upon business environment operational controls andcompliance procedures. The major risks are assessed through a systematic procedure of riskidentification and classification. Risks are prioritized according to significance andlikelihood. The purpose of risk management is to proactively address risks.

There are no elements of risk which in the opinion of the Board may threaten theexistence of the Company.

Auditors & Auditors' Report

Secretarial Auditors

In terms of section 204 of the Companies Act 2013 and in accordance with theprovisions of regulation 24A of the SEBI Listing Regulation as amended from time to timeMr. N.C. Khanna Practicing Company Secretary was appointed as the Secretarial Auditor ofthe company to conduct the Secretarial Audit for

the financial year 2020-21. The Secretarial Audit Report for the financial year endedMarch 31 2021 in prescribed Form MR-3 is annexed as Annexure-3 of this Report.

There is no qualification reservation or adverse remark in the Secretarial AuditReport.

Statutory A uditors

M/s. Chaturvedi & Shah LLP Chartered Accountants were appointed as the StatutoryAuditors of the Company at the Annual General Meeting held on 24th August 2017to hold office as such till the conclusion of Annual General Meeting of the Company forthe year 2021-22.

The Company has received a certificate from them to the effect that they are eligibleto continue as the Statutory Auditors of the Company and that they comply with the limitsprescribed under the Companies Act 2013 read with relevant rules. They have alsoconfirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.

The Reports submitted by the Statutory Auditor on the Standalone and Consolidatedfinancial statements of the Company are self-explanatory and do not contain anyqualification reservation adverse remark or disclaimer.

The Auditor has not reported any matter under Section 143(12) of the Act during theyear under review.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo.

The Statement reflecting the particulars relating to conservation of energy technologyabsorption and foreign exchange earning and outgo is attached to the Report as Annexure-4.

Particulars of Remuneration of Directors' Key Managerial Personnel and Employees'

The particulars of remuneration of Directors and Key Managerial Personnel and otherparticulars in terms of Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure-5of the Report.

A statement sharing the names and other particulars of the employees in terms of theprovisions of Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in Annexure-5A.

Employees' Stock Option Scheme

During the year 33000 stock options were vested into eligible employees in terms ofthe Dalmia Refractories

Limited - Employee Stock Option Plan 2018 (DRL ESOP Plan 2018). No stock option hasbeen exercised during the year.

There is no change in the ESOP plan during the financial year under review. The ESOPplan is in compliance with the SEBI Regulations.

As required under the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 the applicable disclosures as on March 31 2021 are availableon the Company's website at www.dalmiarefractories.com.

A certificate from the Statutory Auditor on the implementation of your Company'sEmployees Stock Option Scheme will be placed at the ensuing Annual General Meeting forinspection by the Members.

Public Deposits

The Company has not accepted any deposits from the public till date.

Industrial Relations

The industrial relations during the year under review remained harmonious and cordial.

Disclosures

No significant or material orders were passed by the Regulators or Courts or Tribunalsimpacting the going concern status and Company's operations in future.

The Company has complied with all the applicable Secretarial Standards (SS) issued bythe Institute of Company Secretaries of India from time to time and approved by theCentral Government.

The Company is required to maintain cost records as specified by the Central Governmentunder sub-section (1) of section 148 of the Companies Act 2013 and such records are dulybeing maintained.

Disclosure Under the Sexual Harassment of Women at Workplace (prevention Prohibitionand Redressal) Act 2013

Your Company is committed to ensuring that all are treated with dignity and respect.The Human Resource department in collaboration with other functions ensure protectionagainst sexual harassment of women at workplace and for the prevention and redressal ofcomplaint in this regard.

In line with the requirements of the Sexual Harassment of Women at the Workplace(Prevention Prohibition & Redressal) Act 2013 an Anti-Sexual Harassment Policy hasbeen put in place and Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. During the

financial year 2020-21 no complaint has been received by ICC.

Material Changes and Commitments

Apart from disclosures made in the report no other material changes and commitmentshave occurred after the close of the year till the date of this report which affect thefinancial position of the Company.

Directors Responsibility Statement:

In terms of the provisions of Section 134(5) of the Companies Act 2013 your Directorsdeclare that:

i) in the preparation of the Annual Accounts for the financial year ended March 312021 the applicable Accounting Standards have been followed along with proper explanationrelating to material departures;

ii) the Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

iii) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets

of the Company and for preventing and detecting frauds and other irregularities;

iv) the Directors had prepared the annual accounts on a going concern basis.

v) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

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.

Acknowledgment

The Directors also take this opportunity to place on record their sincere thanks andappreciation for assistance and continued support to the Company from its Bankers Stateand Central Government agencies employees and other stakeholders of the Company.

For and on behalf of the Board of Directors
ofDalmia Refractories Limited
Deepak Thombre
Place: Pune Chairman
Dated: 11th August 2021 DIN: 02421599

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