Your Directors are pleased to present the 75th Annual Report and Audited FinancialStatements of the Company and the Report of the Auditors for the financial year endedMarch 31 2019.
Your Directors are happy to inform that your company has reported a profit of Rs.163.14 Crore during the financial year 2018-19. The profit is after considering the extraordinary income on sale of Land to Bharat petroleum Corporation Ltd (BPCL) amounting toRs. 433.89 crore.
During the financial year 2018-19 the Company could sustain the financial productionand marketing performance at a reasonable level despite various adverse situations.
Net profit of Rs. 163.14 Crore Highest sale of organic Fertilizers
Development and launching of Phosphate Rich Organic Manure (PROM) Safety Awards forboth the production Divisions Award from Pollution Control Board Leveraging 170 acres ofLand to BPCL
Recognition in implementation of Official Language.
1. Financial Performance
Financial Performance of the Company for the year ended March 31 2019 is summarizedbelow: Rs. in crores
|Particulars ||2018-19 ||2017-18 |
|Net Sales ||1954.98 ||1928.67 |
|Other Income ||456.75 ||41.63 |
|Total Revenue ||2411.73 ||1970.30 |
|Total Expenses ||2248.59 ||2099.36 |
|Earnings before interest depreciation and Taxes (EBIDTA) ||466.19 ||209.50 |
|Interest ||280.53 ||321.42 |
|Depreciation ||22.52 ||17.15 |
|Profit before tax ||163.14 ||-129.06 |
|Other comprehensive Income ||18.00 ||2.68 |
|Total Comprehensive income ||181.14 ||-126.37 |
Due to the accumulated loss your directors have not recommended any dividend for thefinancial year 2018-19. The Company has not transferred any amount to Reserve during thefinancial year 2018-19.
2. Production and Sales
|Production ||(in MT) ||(in MT) |
| ||2018-19 ||2017-18 |
|Factamfos 20 : 20 ||634362 ||661973 |
|Ammonium Sulphate ||141754 ||180178 |
|Caprolactam ||0 ||0 |
|Sales ||(in MT) ||(in MT) |
| ||2018-19 ||2017-18 |
|Fertilisers ||781240 ||867370 |
|Caprolactam ||0 ||0 |
The company was able to maintain the momentum in production and marketing during thefinancial year 2018-19 The physical performance of the Company during the financial year2018-19 was affected by the unprecedented flood during August 2018 forcing stoppage ofplants. During the financial year 2018-19 the Ammonia plant was not operated due to highprice of RLNG. The production of Fertilisers was maintained with imported Ammonia. Thishas affected the capacity utilization of the plants due to logistics constraints. Theincrease in the prices of raw materials and unfavorable exchange rate variations haveaffected the financial performance of the Company during the financial year 2018-19.Despite the constraints Company could finish the year with a reasonably good productionand sales performance. On Production front Factamfos production for the fiscal is 6.34lakh MT and Ammonium Sulphate 1.42 Lakh MT as compared to 6.61 Lakh MT and 1.80 lakh MTrespectively during the previous year. Annual production of bulk Factamfos at CochinDivision surpassed 5 Lakh tons for the first time after 2009-10. On marketing frontduring the financial year 2018-19 Factamfos sale was 6.20 lakh MT and Ammonium Sulphatesale was 1.36 lakh MT as compared to 6.7 lakh MT and 1.7 lakh MT during the last financialyear.
During the year 2018-19 FACT Engineering Works bagged prestigious orders from BPCL-Kochi Refinery Travancore Titanium Products Ltd and Kerala Minerals and Metals Ltd. worthRs. 1030.45 lakh.
As part of revival strategy the Company leveraged 170 acres of lands to BPCL and itsproceeds after deducting the outstanding amount due to them was received during thefinancial year 2018-19.
FACT has finalized an ambitious production and marketing plan for the financial year2019-20. The Company is planning one million ton production of fertilisers during thefinancial year 2019-20.
Your Directors are happy to inform you that for the first time in the history of theCompany FACT has tied up for supply of RLNG for the entire financial year 2019-20 at areasonable rate. The Company has also planned to import and market one lakh ton ofFertilisers. The Company is also planning to restart the Caprolactam Plant in a phasedmanner.
The production and marketing performance of the Company during the first three monthsof the financial year 2019-20 is encouraging and the Company expect to end the year2019-20 with a positive result.
Management Discussion and Analysis Report
Management Discussion and Analysis Report covering the operational aspects for the yearunder review as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015(as amended) is presented in a separate section forming part ofDirectors' Report.
Consolidated Financial Statements
The Consolidated Financial Statements of the Company for the financial year ended March31 2019 prepared in accordance with Section 129(3) of the Companies Act 2013 andrelevant accounting standards form part of the Annual Report.
Directors and Key Managerial Personnel Appointments
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/2/2017-HR-1 dated 11th January 2019 appointed Shri. KishorRungta as Chairman & Managing Director of the Company.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.88/3/2018-HR-1 dated 30th January 2019 entrusted theadditional charge of the post of Director (Finance) FACT to Shri Umesh Dongre Director(Finance) Rashtriya Chemicals and Fertilisers Ltd.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/1/2017-HR-PSU dated 18th April 2019 entrusted theadditional charge of the post of Director (Technical) FACT to Shri Sudhir DattatrayaPanadare Director (Technical) Rashtriya Chemicals and Fertilisers Ltd.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/2/2012-HR-PSU dated 18th April 2019 entrusted theadditional charge of the post of Director (Marketing ) FACT to Shri K U ThankachenDirector (Marketing) Rashtriya Chemicals and Fertilisers Ltd.
Shri C Pradeepkumar DGM (Finance) is appointed as the Chief Financial Officer of theCompany with effect from 29th January 2019.
Shri Kishor Rungta C&MD C Pradeepkumar CFO and Shri K.V. Balakrishnan NairCompany Secretary are the Key Managerial Personnel of the company.
Retirements and Resignations
On appointment of Shri Kishor Rungta as Chairman and Managing Director Shri ManojMishra ceased to be the C&MD of the Company with effect from 02.02.2019.
Government of India Ministry of Chemicals & Fertilisers Department ofFertilisers vide Order No.86/1/2017- HR-1 dated 14th January 2019 entrusted theadditional charge of Post of Director (Technical) FACT to Shri D Nandakumar Director(Marketing) FACT and Shri U Saravanan ceased to be the Director (Technical ) of theCompany with effect from 31.10.2018 Consequent to the Government of India Ministry ofChemicals & Fertilisers Department of Fertilisers Order No.88/3/2018-HR-1 dated 30thJanuary 2019 Sri Sanjay Maheshwari ceased to be the Director(Finance) of the Companywith effect from 01.02.2019.
Shri D Nandakumar Director (Marketing) retired from the service of FACT onsuperannuation with effect from 31.05.2019.
The period of the initial appointment of Shri KPS Nair Independent Director and Dr SMurali Independent Director ended in June 2019. The notification from the Government ofIndia on appointment / re-appointment of Independent Directors in place of Shri KPS Nairand Dr. S Murali is awaited.
The Board placed on record its appreciation on the valuable services rendered by ShriManoj Mishra C & MD Shri U Saravanan Director (Technical) Shri Sanjai MaheswariDirector (Finance) Shri D Nandakumar Director (Marketing) Shri KPS Nair IndependentDirector and Dr. S Murali Independent Director.
Reappointment of Independent Directors
As per section 149 (10) of the Companies Act 2013 none of the Independent Directorshas been reappointed on the Board of the Company.
Disqualification of Directors
None of the Directors has committed any disqualification as provided under section 164of the Companies Act 2013.
Annual Evaluation of Board.
FACT being a Government Company all appointments on the Board is made by theGovernment of India Ministry of Chemicals and Fertilizers Department of Fertilizers. Theperformance of Directors are evaluated by the Ministry of Chemicals & FertilizersDepartment of Fertilizers Government of India. As per Government of India Ministry ofCorporate Affairs notification dated 5th June 2015 clause (e) and (p) of sub-section 3 ofSection 134 of the Companies Act 2013 relating to appointment remuneration and Annualevaluation of Board on its performance are not applicable to FACT.
However suitable mechanism is being evolved for Annual Performance evaluation of Boardas per SEBI (LODR) Regulation 2015.
Declaration of Independent Directors
All independent directors have made declaration of independence under sub-section (6)of Section 149 of Companies Act 2013.
Meetings of the Board
During the financial year 2018-19 Eight meetings of the Board were convened and held.The details of the meetings of the Board of Directors are given in the report on CorporateGovernance which is part of this report. The intervening gap between the meetings waswithin the limit prescribed under the Companies Act 2013.
Your Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto "Meetings of the Board of Directors" and "General Meetings"respectively have been followed by the Company.
The Company is committed to maintain the highest standard of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The Board lays emphasison transparency and accountability for the benefit of all stake-holders of the Company.The Report on Corporate Governance as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 annexed to this report forms an integral partof this report.
(1) Statutory Auditors and Statutory Auditor's Report
M/s. Babu A Kallivayalil & Co. Chartered Accountants Kochi was reappointed asStatutory Auditors of the Company for the year 2018-19 by the Comptroller and AuditorGeneral of India. M/s Narotham Madhav & Ramesh Chartered Accountants Hyderabad wasreappointed as Branch Auditors for the year 2018-19 for the Area / Regional Offices atAndhra Pradesh Telengana and Karnataka States. M/s Siv Ram & Raj CharteredAccountants Chennai was appointed as Branch Auditors for the year 2018-19 for the Area/ Regional Offices at Tamil Nadu and Kerala by the Comptroller and Auditor General ofIndia.
The report of the Statutory Auditors on the financial statements for the financial year2018-19 is an unmodified report.
(2) Cost Audit
As prescribed under section 148 of the Companies Act 2013 read with the Companies(Cost Report and Audit ) Rules 2014 the cost accounting records are being maintained bythe Company. M/s BBS & Associates Cost Accountants Kochi has been reappointed asCost Auditors of the Company for the year 2018-19. Cost Audit report for the financialyear 2017-18 was filed with Ministry of Corporate Affairs on 23.10.2018.
(3) Secretarial Audit
M/s SVJS & Associates Company Secretaries Kochi has been appointed asSecretarial Auditors of the Company for the year 2018-19. The report of the SecretarialAuditor is annexed to this report as Annexure-1. The Secretarial Auditors have notmade any adverse remarks or comments in the report.
Comments of C& AG
Comptroller and Auditor General of India(C&AG) has conducted a supplementary auditunder section 143(6) of the Companies Act 2013 on the financial statements includingconsolidated financial statement of the Company for the financial year 2018-19. C&AGhas not given any comment on the financial statements of the Company.
In line with the provisions of Section 177 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 an Audit Committee of the Boardhas been constituted. Details of Members/ Meetings of the Audit Committee are elaboratedin the report on Corporate Governance annexed here with. There were no instances in whichthe Board had not accepted any recommendation of the Audit Committee.
FACT-RCF Building Products Limited (FRBL) and Kerala Enviro Infrastructure Ltd. are theassociate companies of FACT. During the financial year no Company has become/ceased tobecome subsidiaries/Joint Ventures and Associate Company of FACT. In accordance with theprovisions of Section 129(3) of the Companies Act 2013 a statement containing salientfeatures of the financial statements of the associate companies and joint ventures in FormAOC1 is provided as part of the Annual Report.
Report on financial position and Performance of Joint Venture
During the financial year 2018-19 the financial results of FRBL shows a net loss ofRs. 2.71. crore. Due to the accumulated loss the entire networth of FRBL has been eroded.The Company has created provisions for the entire investment made in FRBL.
The financial results of Kerala Enviro Infrastructure Ltd. for the financial year2018-19 shows a profit of Rs. 4.92 Crore.
During the financial year 2018-19 the Company has not accepted any deposit frompublic.
Investor Education and Protection Fund (IEPF)
During the year 2018-19 FACT has transferred an amount of Rs. 0.49 lakh to InvestorEducation and Protection Fund.
Contract or arrangement with related parties
The transactions entered with related parties for the year under review were on armslength basis and in the ordinary course of business. The disclosure in form No AOC-2 forthe transactions with related parties during the period under review is enclosed as Annexure-2.
Corporate Social Responsibility
FACT continues to give priority on various Social Responsibility measures during thefinancial year 2018-19 . The Company has constituted a Board level Committee as per theprovisions of Companies (Corporate Social Responsibility Policy) Rules 2014. Annual Reporton CSR as per the provisions of Companies (Corporate Social Responsibility Policy) Rules2014 is annexed to this report as Annexure-2A.
Material changes and commitments
There were no material changes and commitments affecting the financial position of thecompany between the end of financial year (31st March 2019) and the date of the report.Similarly there was no change in the nature of business of the company during thefinancial year 2018-19 .
FACT has formulated a risk management policy for identification of potential area ofrisk and mitigation of the same. FACT is having adequate risk management infrastructure inplace capable of addressing all potential risks.
Internal Financial Control
FACT is having an Internal Control System commensurate with the size scale andcomplexity of its operations. The Internal Audit wing of FACT headed by Deputy GeneralManager monitors and evaluate the efficacy and adequacy of Internal Control System in theCompany. The observation of internal audit and recommendations along with correctiveactions thereon are presented to the Audit Committee of the Board. Based on therecommendation of Internal Audit the functional heads take necessary corrective actionsin their functional area thereby strengthen internal control.
Vigil Mechanism & Whistle Blower Policy
FACT is having a vigil mechanism for directors and employees to report their concerns.The Directors and employees can approach Chairman Audit Committee of the Board directlyand report their concern in appropriate case. The vigil mechanism and whistle blowerpolicy is published in the web site of the Company www.fact.co.in.
Code of Conduct
FACT is having a code of conduct known as FACT Code of business Conduct and Ethicsapplicable to the members of the Board and all senior executives of the Company. The codehas been posted on the Company's website www.fact.co.in . The code lays down the standardprocedure of business conduct which is expected to be followed by the Directors and seniorexecutives of the Company.
The Board members and Senior Executives of the Company have affirmed compliance of theCode of Conduct for the financial year 2018-19.
Prevention of Insider Trading
No instances of insider trading have been reported on FACT shares till date. A Code ofConduct for prevention of insider trading and code for corporate disclosure is publishedin the website of the company www.fact.co.in .
Particulars of Loan given Investment made Guarantees given and securities provided
Particulars of Investment made by the Company are provided in the financial statementfor the year 2018-19.
During the financial year 2018-19 FACT has not provided any loan/guarantee or made anyinvestment within the purview of Section 186 of the Companies Act 2013.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has formulated an Anti Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up toredress complaints received regarding sexual harassment.
The following is the summary of sexual harassment complaints received and disposed offduring the period under review:
|Number of complaints at the beginning of the year ||Nil |
|Number of complaints received during the year ||Nil |
|Number of complaints disposed off during the year ||Nil |
|Number of complaints at the end of the year ||Nil |
Particulars of Employees
During the year under review none of the employees of the Company had drawnremuneration in excess of the limit prescribed under section 134 (3)( c) of the CompaniesAct 2013 read with Companies (Appointment of Managerial personnel) Rules 2014.
During the Financial year 2018-19 FACT has finalised the integrity pact in line withGovernment of India guidelines in this regard.
The Right to Information Act 2005
FACT is complying the provisions of the Right to Information Act 2005 and the detailsrelating to Public Information Officer Assistant Public Information officer AppellateAuthority Nodal officer etc. are published in the website of the Company www.fact.co.in.
Extract of Annual Return
The Extract of Annual Return of the Company as provided under Sub section (3) ofSection 92 of Companies Act 2013 in Form MGT9 is annexed as Annexure-3.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Information regarding the conservation of energy technology absorption and foreignexchange earnings and-outgo as required to be disclosed in terms of the Companies(Accounts) rules 2014 is set out in a separate statement attached to this report.
Director's Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors hereby statethat :
(a) in the preparation of annual accounts for the year ended March 31 2019 theapplicable accounting standards had been followed along with proper explanation relatingto material departures.
(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2019 and of profit andloss statement for the year ended March 31 2019.
(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. (d)the directors have prepared the Annual Accounts on a going concern basis.
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and (f) the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Board of Directors state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview.
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the company underany scheme.
4. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees or by trustees for the benefit of employees.
5. Neither the Managing Director nor the whole time Directors of the Company receiveany remuneration or commission from its Associate Company.
6. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
7. No fraud has been reported by the auditors to the Audit Committee or to the Board.
8. There were no cases filed pursuant to the Sexual Harassment of Women at Work Place(Prevention Prohibition and Redressal) Act 2013.
Your Directors gratefully acknowledge the valuable guidance and support extended by theDepartment of Fertilisers Department of Public Enterprises and other Departments ofGovernment of India and the State Governments of Kerala Tamilnadu Karnataka AndhraPradesh and Telangana and Union Territory of Puducherry.
The Directors deeply appreciate the committed efforts put in by the employees and lookforward to their dedicated services and endeavor in the years ahead to enable the Companyto scale greater heights.
The Directors also acknowledge the continued support extended by the ShareholdersDealers Suppliers Bankers Valued Customers and Auditors of the Company the Press andElectronic Media.
For and on behalf of the Board of Directors.
CHAIRMAN AND MANAGING DIRECTOR
Place : Udyogamandal
Date : 31-07-2019