To the Members
1. Your Directors place before you the Fiftieth Annual Report of the Companytogether with Statement of Accounts for the financial year ended March 31 2017.
2. FINANCIAL HIGHLIGHTS
| || |
(Rs. in Crores)
| ||2016-17 ||2015-16 |
|Sales (including other income) ||2511.86 ||2988.35 |
|EBITDA ||183.61 ||115.66 |
|Finance Costs ||118.24 ||114.74 |
|Depreciation ||35.26 ||32.32 |
|Profit/(Loss) before exceptional extraordinary items and tax ||30.11 ||(31.40) |
|Exceptional Item ||- ||216.68 |
|Profit /(Loss) before tax ||30.11 ||(248.08) |
|Tax expense ||10.70 ||(7.95) |
|Profit /(Loss) after tax ||19.41 ||(240.12) |
|Other Comprehensive Income ||0.10 ||(1.58) |
|Total Comprehensive Income ||19.52 ||(241.70) |
|Earnings Per Share (Basic & Diluted) Rs. ||1.64 ||(20.26) |
|Net Worth* ||424. 03 ||404.51 |
* Includes Revaluation Reserve of Rs. 60.72 crores and Rs. 61.03 crores respectively.
The Board of Directors recommended a dividend of Re. 0.50 per equity share of Rs. 10/-each.
4. REVIEW OF OPERATIONS
The revenue from operations for the year ended March 31 2017 was Rs. 2502.14 croresas compared to Rs. 2982.07 crores for the year ended March 31 2016.
The profit before tax for the year ended March 31 2017 was Rs. 30.11 crores ascompared to Rs. (248.08) crores for the year ended March 31 2016. Total ComprehensiveIncome stood at Rs. 19.52 crores for the year ended March 31 2017 compared to Rs.(241.70) crores for the previous year. The financial results for the year ended March 312017 were primarily achieved on account of improved operational efficiency and a stableforeign exchange rates despite the unfavourable market conditions due to failure ofmonsoon. For the year ended March 31 2016 the Exceptional Item represents outstandingdues of Rs. 16.68 crores from United Breweries (Holdings) Limited provided in view of theuncertainty of recoverability and provision for potential dimunition in the value ofinvestment in the preference share capital of Rs. 200 crores in Bangalore BeveragesLimited in view of investment having been diverted to non project activities.
As in the previous year your Company achieved full production of the reassessedcapacity of 379500 MTs during the current year.
Di-Ammonium Phosphate (DAP) and Complex Fertilizers
Your Company produced 262046 MTs of Phosphatic Fertilizers during the year comparedto 205308 MTs in the previous year due to improved availability of raw materials.
Ammonium Bi-carbonate (ABC)
Production of ABC at 13014 MTs during the year compared to 12172 MTs in the previousyear.
During the year your Company sold 379400 MTs of Urea compared to 380259 MTs in theprevious year. Sales of manufactured Phosphatic Fertilizers were 259792 MTs compared to205680 is the previous year. Sales of imported fertilizers were 291599 MTs against376164 MTs in the previous year.
Sulphonated Naphthalene Formaldehyde (SNF)
The plant set up in August 2010 for manufacture of SNF on a modular basis can take careof increased demand. The Company sold 16051 MTs of SNF during the year compared to14049 MTs in the previous year. The Company has continued with new product variants forapplications in newer areas to improve plant utilization in order to de-risk its focus onconstruction chemical industry.
Specialty Plant Nutrition (SPN) Products
In order to retain/improve soil productivity and derive increased output from the samearea of land it is necessary to maintain soil health correct imbalances in the nutrientsessential for plant growth and yield and manage irrigation properly. The countrycontinues to face a serious problem of deterioration in soil productivity due toindiscriminate and imbalanced use of NPK fertilizers inadequate use of other nutrientsessential for plant growth and injudicious use of irrigation water. Disproportionateincrease in the farm gate prices of Phosphatics and Potash compared to that of Urea hasfurther aggravated this problem. In order to arrest soil deterioration and improve soilconditions and its productivity your Company has introduced products that maintain soilhealth provide balanced and complete nutrition and improve crop health.
To address the nutrient deficiencies noticed in the soil resulting in inadequate outputor crop failure in the areas serviced by our Marketing network our R&D unit at Hassanhas been developing nutrient mixtures enriched organic manure products and soilconditioners to mitigate crop specific issues apart from providing analytical andadvisory service to farmers. These products in addition to alleviating nutrientdeficiencies and improving tolerance to crop specific diseases also lead to betterquality and higher productivity. The response from the crop growers on the effectivenessof these products has been very positive and there is a growing demand for development ofsimilar products for other crops. In order to encourage scientific application offertilizers and plant nutrients your Company has been trying to introduce these conceptsat the grass roots level. To actively focus attention of all concerned on the specificsinvolved therein lot of customer education programs were carried out to popularize usageof SPN products under the concept of Mangala Integrated Nutrient Management (INM).
The Mangala INM concept was introduced in 2002-03 and the basket of SPN products underthe concept started evolving ever since. Concentrated and continued effort in identifyingcustomer needs introducing suitable products and educating farmers as well as channelpartners in proper use of these inputs has resulted in the Company achieving a turnover ofRs. 158 Crores during the year. Achievement of this sales turnover under the highlyunfavorable agriculture situation in the States that are critical for SPN business such asKarnataka Tamil Nadu Kerala and Andhra Pradesh is commendable.
In order to support marketing requirement with timely supply of quality Plant Nutritionproducts the Specialty Fertilizer manufacturing facility set up in 2011 at its factory inMangaluru with an annual capacity of 12000 MT of Water Soluble Fertilizers andMicronutrient Mixtures has greatly helped in growth of water soluble fertilizer andmicronutrient segments in your Company one of the fast growing agri. input segments inIndia.
Crop Protection Chemical (CPC) Products
As part of diversification and growth strategy and in order to offer a wider range ofagri. inputs your Company introduced CPC products in July 2010. As an entry plan acollaborative approach was adopted for marketing the products of reputed pesticidecompanies through its channel partner network. Subsequently your Company also startedintroducing selected molecules in its own brand. During the year under review yourCompany marketed 13 products under Mangala brand. The CPC business registered a turnoverof Rs. 45 crores. Accomplishment of this sales turnover is commendable as majority ofsouthern states were reeling under drought.
Analytical and Advisory Service
To promote the concept of Mangala INM R&D facility established at Hassan has thecapability to analyze sample substrates of soil water plant tissues plant nutrientsorganic manures soil amendments fertilizers etc. Through these facilities analysis ofthe samples pertaining to our customers is done and appropriate recommendations for soilhealth management and crop management are given. Suitable follow up is done by our expertsand extension workers to ensure effective implementation of the recommendation. All theseare provided to our customers free of cost to ensure their active participation inachieving profitability and sustainability in agriculture.
7. WORKING CAPITAL
Continued under-provisioning for fertilizer subsidy in the Union Budget with resultantunusual delay in subsidy payment by Government of India (GOI) contributed to precariousworking capital condition and increased working capital costs.
8. RENOVATION/MODERNIZATION OF AMMONIA/UREA PLANTS - NATURAL GAS CONVERSION PROJECT
As mandated by Department of Fertilizers GOI the Company has successfully completedgas conversion project of urea operations in June 2014 at a cost around Rs. 315 crores.The plant that is running successfully on naphtha/furnace oil as feedstock/fuel canseamlessly operate with natural gas without interruption whenever natural gas is madeavailable. This was confirmed by the study carried out by Projects and Development IndiaLimited (PDIL) a Govt of India company.
The Company has signed a Gas Supply Agreement with Indian Oil Corporation and a GasTransmission Agreement with GAIL (India) Limited in February 2011. Though Petronet LNGterminal of Kochi has been commissioned in September 2013 unsatisfactory progress inlaying of gas pipeline from Kochi to Mangaluru by GAIL (India) Limited has prevented yourCompany from receiving gas for Ammonia/Urea production.
9. FERTILIZER POLICY
Stage III of New Pricing Scheme (NPS) for Urea announced in March 2007 stipulated thatexisting Naphtha/Furnace Oil/LSHS units should convert to gas by March 31 2010. Thedeadline was extended until further orders in March 2010 in view of delay in formulationof NPS Stage - IV. In the meantime the Company had signed a Gas Supply Agreement withIndian Oil Corporation and a Gas Transmission Agreement with GAIL (India) Limited inFebruary 2011. The LNG terminal at Kochi has been commissioned in September 2013.
The Government of India (GOI) by its notification NO.12012/3/2010-FPP dated 2ndApril 2014 specified that the production of high cost naphtha based units will continueunder modified NPS - III till the gas availability and connectivity is provided to theseunits or June 30 2014 whichever is earlier beyond which subsidy for naphtha based unitswill not be paid which was further extended until September 30 2014. Laying of Gaspipeline from Kochi to Mangaluru by GAIL (India) Limited made negligible progress tillthen.
The Company had approached Hon'ble High Court of Delhi on September 29 2014 with aprayer to direct the GOI to continue subsidy for Naphtha based plants until gas is madeavailable to the Company. Pending disposal of the matter the GOI allowed operation ofNaphtha based urea plants for 100 days from January 07 2015. The Urea production wascontinued after the expiry of said period of 100 days i.e April 16 2015 based on theorders of the Hon'ble High Court of Delhi dated April 16 2015 which ordered GOI tocontinue with the arrangement made as per Notification No. 12012/3/2010-FPP dated January07 2015 until GOI makes appropriate policy for subsidy to Naphtha based plants.
The GOI vide its Notification NO.12018/4/2014-FPP dated June 17 2015 allowedcontinuation of production of urea by 3 Naphtha based units (MFL - Manali MCFL -Mangaluru and SPIC - Tuticorin) till these plants get assured supply of gas either by gaspipeline or any other means. Albeit some restrictive conditions were imposed in terms ofthe subsidy mechanism that reduces the eligible subsidy which are discriminatory comparedto the recently converted naphtha based urea plants. Therefore the Company has approachedHon'ble High Court of Delhi seeking remedy and the matter is pending for final hearing.Moreover the Company has also appropriately represented before the Govt of India forsuitable remedy.
The Nutrient Based Subsidy Scheme (NBS) was introduced by the GOI with effect fromApril 1 2010 after de-controlling the DAP/complex fertilizers where annual/bi-annualconcession rates are announced in advance leaving the market realization to reflect thefluctuations in respective commodity prices. However the GOI is indirectly regulatingmarket realization against the objective of de-control.
Ammonia Plant Energy Reduction Project
As per the Notification No. 12018/4/2004-FPP dated June 17 2015 the energy norm isrevised downward from present norms with effect from 2018-19. In order to reduce theactual consumption of energy it is proposed to upgrade Ammonia plant with suitabletechnology in cost effective manner.
The Company had engaged M/s. Kellogg Brown & Root LLC USA (KBR) for TechnologyLicensing and Basic Engineering Development to upgrade Ammonia plant of the Company toattain reduction in the consumption of energy. Basic Engineering is completed in June2017. Appointment of detailed engineering/EPC contractor and placement of order on longlead items is planned in financial year 2017-18.
10. SAFETY HEALTH ENVIRONMENT AND POLLUTION CONTROL
The Company has obtained Occupational Health and Safety Management System certificationISO 14001:2004 and OHSAS 18001:2007 by DNV as part of its commitment to continualimprovement. The Company has ISO 22000:2005 certification for manufacturing of food gradeAmmonioum Bi-carobonate (ABC) required under FSSAI guidelines. In addition to the periodicaudits carried out under the integrated management system a statutory - annual safetyaudit was also carried out by external Auditors An Appraiser group Bengaluru. ProcessSafety Management System Gap Assessment Study was carried out by M/s Prism ConsultantsChennai in August 2016.
Extensive training programs related to rescue operations usage of personal protectiveequipment emergency management Fire Safety at home SH&E management system wereorganized for employees. Regular mock drills were also conducted to check the emergencypreparedness. Firefighting training is being conducted every Friday to train the employeesand also contractors'workman. Various training programmes (Audio Visual & practical)were conducted both at works and township.
Your Company has won the First Prize in Mega Industry category by Department ofFactories Boilers Industrial Safety & Health Government of Karnataka for adoptingbest safe practices in the year 2017. Your Company has also won Excellent Energy EfficientNational Award from CII under Fertilizer and Pharma category.
Periodic medical examination was conducted for all the employees and contract workerswhich included general physical examination systemic examination and laboratoryinvestigations. Special tests like pulmonary function test for the employees who areexposed to dust and chemicals audiometry for those exposed to noise and vision test forthose who require high visual acuity at workplace were performed periodically.
Medical examination of the canteen workers was conducted with more stress on personalhygiene and tests were conducted for any communicable diseases. Regular checkup of canteenpremises and the canteen food was carried out for maintaining hygiene and the quality ofthe food. The employees with abnormal findings on annual medical examination werecounselled and advised regarding further management. First aid training programmes wereconducted for employees and contract workers regularly.
Health awareness programmes on various subjects like Organ donation KidneyTransplantation / Kidney care Personal Hygiene Management & Prevention of CommonJoint Problems Stress Management & Work-Life balance were conducted by the expertsfor the employees. Health camps-Eye camps Dental check-up/awareness camps Blood donationcamp were conducted at OHC and neighboring places and schools.
Environmental Pollution Control
As an ISO 14001 certified Company many environmental management programs have beenimplemented to improve the environmental performance. Your Company has installedWastewater treatment plant to treat recycle and reuse the entire quantity of sewage andprocess effluents thereby achieving the status of zero liquid effluent discharge. This isachieved by upgrading the effluent treatment system by the installation of Lamellaclarifier Ultra-filtration and Reverse Osmosis (RO) technologies for the treatment oftrade effluent and Membrane Bio- reactor (MBR) technology for the treatment of domesticeffluent. As a part of social corporate responsibility the Company has implemented therainwater harvesting system at the Township and has installed sewage treatment plant totreat the sewage generated at the Township. The treated sewage water is used for gardeningpurpose. In addition to the existing 64 acres of green belt the Company has planted 2000saplings during 2016-17.
Environment Laboratory of the Company has been accredited for ISO/IEC 17025:2015standard by National Accreditation Board for Testing and Calibration Laboratories (NABL).
The Company has installed Continuous Ambient Air Quality Monitoring (CAAQM) stationinside factory premises for continuous monitoring of ambient air quality. Ambient airquality data from CAAQM station is being displayed in LED display board at the entrance offactory facing National Highway for public information. The Company has also installedContinuous Online Monitoring Systems in Urea prill tower DAP plant stack and SulphuricAcid plant stack as per the Central Pollution Control Board (CPCB) guidelines.
On the occasion of "World Environment Day - 2016" celebration organizedjointly by Dakshina Kannada District Administration Karnataka State Pollution ControlBoard and Mangaluru City Corporation on 17.06.2016 the Company has been awarded theEnvironment Award for undertaking Green Nurturing program in the neighbouring schools.
The Company actively participated in "Swachha Mangaluru Abhiyana" initiatedby Ramakrishna Mission and conducted 7 cleanliness drives in this financial year inMangaluru City.
11. EXTRACTS OF ANNUAL RETURN
Pursuant to the provisions of Section 92 of the Companies Act 2013 read with Rule 12of the Companies (Management and Administration) Rules 2014 the extracts of AnnualReturn are furnished in Annexure 1 attached to this Report.
12. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
During the year five Board Meetings were held on May 06 2016 September 02 2016October 19 2016 January 28 2017 and March 22 2017.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 your Directors confirm that:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to 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 at the end of the financial year and ofthe profit and loss of the Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
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 operating effectively;
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
14. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration of independence from the Independent Directors andthe same have been noted by the Board of Directors in its meeting held on May 18 2017.
The Board of directors at its meeting held on May 06 2016 based on the recommendationof the Nomination and Remuneration Committee appointed Mr. D A Prasanna as AdditionalDirector which was approved by the members at the Annual General Meeting held on September27 2016. The Board of Directors appointed Mr. Sunil Sethy and Mrs. Rita Menon asAdditional Directors at its meeting held on July 29 2017. Mr. Akshay Poddar will beretiring by rotation and being eligible offers himself for reappointment at the ensuingAnnual General Meeting.
The Board of Directors in its meeting held on October 19 2015 had appointed Mr. V. S.Venkataraman as Additional Director of the Company. The members at their Annual GeneralMeeting held on September 27 2016 did not approve appointment of Mr. V. S. Venkataramanas Director of the Company. Mr. Deepak Anand Mr. Kapil Mehan and Mrs. Ritu Mallyaresigned from the Board of Directors with effect from October 07 2016 June 03 2017 andJuly 06 2017 respectively.
16. DIRECTORS' TRAINING & FAMILIARIZATION
In accordance with the provisions of Regulation 25 (7) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company had organized a FamiliarizationProgramme. Mr. D A Prasanna who was inducted on the Board of Directors on May 06 2016visited the Company's plant at Mangaluru on May 31 2016 for two days and the managementmade a presentation on the nature of the industry and the business model practiced by theCompany explaining the various manufacturing activities viz. Urea DAP ammonia etc.and was briefed about the end to end production process and operation of the plant.
17. PERFORMANCE EVALUATION
Pursuant to the provisions of the Section 134 178 and Sch. IV of the Companies Act2013 and Regulation 17 of the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 the following performance evaluations were carried out;
a. Performance evaluation of the Board Chairman and Non-Independent Directors by theIndependent Directors;
b. Performance evaluation of the Board its committees and Independent Directors by theBoard of Directors; and
c. Performance evaluation of every Director by the Nomination and RemunerationCommittee.
The evaluation process covered adequacy of the composition of the Board and itsCommittees disclosure of information to the Board and Committees performance of dutiesand obligations governance parameters participation of the members of the Board and theCommittees.
Based on the evaluation done by the Directors the performance of the Board itsCommittees and the Directors was satisfactory and the quality quantity and timeliness offlow of information between the management and the Board was appreciable.
18. NOMINATION & REMUNERATION POLICY
Based on the recommendation of the Nomination and Remuneration Committee the Board hasapproved the Nomination & Remuneration Policy which deals with appointment and removalof the Directors evaluation of the Directors remuneration for the Directors KeyManagerial Personnel and Senior Management which is attached to this Report as Annexure 2.
19. SUBSIDIARIES ASSOCIATE COMPANIES AND JOINT VENTURES
The Company does not have any Subsidiary Associate Company or Joint venture.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors has constituted a CSR Committee and also approved the CSRPolicy.
Terms of Reference:
The CSR Committee formulates and recommends to the Board a CSR Policy which shallindicate the activities to be undertaken by the Company as specified in Schedule VII ofthe Companies Act 2013. The Committee also recommends the amount of expenditure to beincurred on CSR activities and monitors the CSR Policy of the Company from time to time.
During the year the Committee met twice on May 062016 and September 02 2016. Theattendance at the meeting was as follows
|Name of the member ||Status ||No. of meetings attended |
|Narendra Mairpady ||Chairman ||2 |
|D A Prasanna@ ||Member ||1 |
|Kapil Mehan% ||Member ||2 |
@ w.e.f 06.05.2016 % up to 03.06.2017.
Based on the recommendation of the CSR Committee the Company has formulated acomprehensive CSR policy. The details of CSR policy CSR initiative and activities duringthe year and the Annual Report on Company's CSR activities are furnished in Annexure 3attached to this report.
21. COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM
The composition of the Audit Committee during the year is shown in the CorporateGovernance Report attached as Annexure 7.
The Company has established a vigil mechanism through Whistleblower Policy and theAudit Committee of the Company is responsible to review periodically the efficient andeffective functioning of the vigil mechanism to deal with instances of fraud andmismanagement and suspected violations of the Company's Code of Business Conduct andEthics if any. No fraud has been reported by the Auditors to the Audit Committee or theBoard.
The Policy provides for adequate safeguards against victimization of employees andDirectors who express their concerns. The Company has also provided direct access to theChairman of the Audit Committee on reporting issues concerning the interests of theemployees and the Company. The whistleblower policy is placed on the website of theCompany www.manaalorechemicals.com.
22. RISK MANAGEMENT
The Company has the requisite processes and procedures in place to assist in minimizingexposure to risk that threaten the existence of the Company including vendor contractingtransferring risk through personal liability health travel and life insurance;preventing/controlling risk through training and supervision; and by analyzing the risk ina manner that considers the whole organization and not just its individual components.
The heads of departments regularly review and assess the departmentalpolicies/procedures and identify risks perform analysis of the frequency and severity ofpotential risks select the best techniques to manage risk implement appropriate riskmanagement techniques and monitor evaluate and document results.
23. LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013 during the year. The details of the investmentsmade by Company are given in the notes to the financial statements.
24. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the year were at arm'slength. All related party transactions are approved by the Audit Committee and the Boardof Directors. The details of related party transactions as per Form AOC-2 is enclosed asAnnexure 4 to the Directors' Report. There were no related party transactions made by theCompany with the Promoters Directors and Key Managerial Personnel which may have apotential conflict with the interest of the Company at large.
The Company has not accepted any fixed deposits in the past or during the year.
26. STATUTORY AUDIT
M/s. K. P. Rao & Co Chartered Accountants (FRN 003135S) were first appointed asauditors at Company's 36th Annual General Meeting held on September 22 2003.Currently they are holding office of the auditors up to the conclusion of the 50thAnnual General Meeting. Since M/s. K. P. Rao & Co has completed maximum number ofconsecutive years for which they were eligible to be re-appointed in the Companyincluding transitional period of 3 years M/s. K. P. Rao & Co. shall not be eligiblefor re-appointment at the conclusion of 50th Annual General Meeting asStatutory Auditor as per Section 139(2) of the Companies Act 2013.
Accordingly the Audit Committee has recommended appointment of M/s. S. R. Batliboi& Co. LLP Chartered Accountants (Firm Registration No. 301003E/E300005) as StatutoryAuditors for a period of 5 years commencing from the conclusion of 50th AnnualGeneral Meeting till the conclusion of the 55th Annual General Meeting subjectto ratification by shareholders at every Annual General Meeting.
M/s. S. R. Batliboi & Co. LLP Chartered Accountants have consented to the saidappointment and confirmed that their appointment if made would be within the limitsspecified under Section 141(3)(g) of the Companies Act 2013. They have further confirmedthat they are not disqualified to be appointed as Statutory Auditor in terms of theprovisions of the proviso to Section 139(1) 141(2) and 141(3) of the Act and theprovisions of the Companies (Audit and Auditors) Rules 2014. The Board of Directorsrecommends to the shareholders the appointment of M/s. S. R. Batliboi & Co. LLPChartered Accountants as Statutory Auditors of the Company from the conclusion of the 50thAnnual General Meeting till the conclusion of 55th Annual General Meetingsubject to ratification by shareholders at every Annual General Meeting.
27. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedMr. S. Kedarnath Practicing Company Secretary to undertake the Secretarial Audit of theCompany for the year 201617. The Secretarial Audit report is annexed herewith as Annexure5.
28. COST AUDIT
The Company re-appointed Mr. P. R. Tantri Cost Accountant Membership No. 2403 as theCost Auditor for the year 201617. The Cost Audit Report for the year ended March 31 2016was filed by the Company with the Ministry of Corporate Affairs on September 30 2016.
29. AUDITORS' REPORT & SECRETARIAL AUDIT REPORT
There were no qualifications reservations or adverse remarks made by the StatutoryAuditor and the Secretarial Auditor in their respective reports.
30. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of this report.
31. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013
Details pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company shall form part of this report. However in terms of Section 136of the Act this report is being sent to all the members of the Company excluding theaforesaid information. The said particulars are available for inspection by the Members atthe Registered Office of the Company.
32. DISCLOSURE AS PER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 the internal complaints committee is constituted and nocomplaint/case has been filed/pending before the Committee during the year.
33. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in Annexure 6attached to this report.
34. CORPORATE GOVERNANCE
The Company is committed to good corporate governance practices. The Board endeavors toadhere to the standards set out by the Securities and Exchange Board of India (SEBI) oncorporate governance practices and accordingly has implemented all the mandatorystipulations.
A detailed Corporate Governance Report in line with the requirements of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 regarding the corporategovernance practices followed by the Company and the Statutory Auditors' certificaterelating to compliance of mandatory requirements along with Management Discussion andAnalysis report are given as Annexure 7 and 8.
Your Directors wish to place on record their sincere appreciation of the guidance andadvice given by Mr. Kapil Mehan Mrs. Ritu Mallya Mr. Deepak Anand and Mr. V. S.Venkataraman during their association with the Company.
Your Directors thank the Company's clients vendors investors and bankers for theirsupport. Your Directors also wish to place on record their appreciation of the excellentperformance of the employees.
Your Directors express their gratitude to the Government of India the StateGovernments the Customs and Excise Departments and other government agencies for theirsupport and look forward to their continued support in the future.
For and on behalf of the Board of Directors
July 29 2017
Nomination & Remuneration Policy
This policy on nomination and remuneration of Directors Key Managerial Personnel andSenior Management ("Nomination and Remuneration Policy") has been formulated bythe Nomination and Remuneration Committee in pursuance of Section 178 of the CompaniesAct 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and approved by the Board of Directors.
"Board" means Board of Directors of the Company "Company" meansMangalore Chemicals & Fertilizers Limited "Directors" mean Directors of theCompany.
"Key Managerial Personnel" means
Chief Executive Officer or the Managing Director or the Manager;
Chief Financial Officer;
Company Secretary; and
Such other officer as may be prescribed.
"Nomination and Remuneration Committee" means Committee of Board of Directorsof the Company constituted as per the provisions of Section 178 of the Companies Act 2013and the Rules made thereunder.
"Senior Management" means personnel of the Company who are members of itscore management team excluding Board of Directors comprising all members of managementone level below the Executive Directors including the functional heads.
3. Nomination and Remuneration Committee
The Board of Directors shall constitute a Nomination and Remuneration Committee inaccordance with the requirements of Section 178 of the Companies Act 2013 the Companies(Meeting of Board and its Powers) Rules 2014 and Regulation 19 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations").
4. Role of Nomination and Remuneration Committee
The role of the Committee shall inter-alia include the following:
a. Formulation of the criteria for determining qualifications positive attributes andindependence of a Director and recommend to the Board a policy relating to theremuneration of the Directors Key Managerial Personnel and Senior Management;
b. Formulation of criteria for evaluation of Independent Directors and the Board;
c. Formulation of process for grant allot issue administer cancel and forfeitemployees' stock options under any ESOP schemes of the Company and to exercise such powersas conferred by the Board of Directors from time to time;
d. Devising a policy on Board diversity;
e. Identifying persons who are qualified to become Directors and who may be appointedin senior management in accordance with the criteria laid down in this policy andrecommend to the Board their appointment and removal.
f. Recommend to the Board whether to extend or continue the term of appointment of theIndependent Director on the basis of the report of performance evaluation of IndependentDirectors.
5. Guidelines on Nomination and Remuneration
a. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director Key Managerial Personnel or atSenior Management level and recommend to the Board his/her appointment.
b. The Company should ensure that the person so appointed as Director / IndependentDirector / Key Management Personnel / Senior Management Personnel shall not bedisqualified under the Companies Act 2013 Rules made thereunder Listing Regulations orany other enactment for the time being in force.
c. The Director / Independent Director / KMP / Senior Management Personnel shall beappointed as per the procedure laid down under the provisions of the Companies Act 2013Rules made thereunder Listing Regulations or any other enactment for the time being inforce.
d. On the recommendation of the Committee the Board of Directors shall decide the termor the tenure of individual Directors and Key Managerial Personnel which shall be subjectto the provisions of the Companies Act 2013 and the Rules made there under and theListing Regulations if applicable.
e. The sitting fees of the Directors shall be determined by the Board and shall bewithin the limits prescribed under the provisions of the Companies Act 2013 and the Rulesmade thereunder.
f. The Committee shall recommend to the Board the remuneration compensation andcommission to be paid to the Managing Director/Whole time Director/Non - ExecutiveDirectors which shall be in accordance with the percentage/slabs/conditions laid down inthe Articles of Association of the Company and as per the provisions of the Companies Act2013.
g. The Committee shall carry out evaluation of performance of every Director and KeyManagerial Personnel.
h. Any revision changes or modification in the pay structure of ManagingDirector/Whole time Director/Non - Executive Directors shall be subject to recommendationof the Committee.
i. The Committee shall conduct annual performance appraisals for Managing/Whole TimeDirector/Executive Director and recommend to the Board for any variation in the salarywithin the limits approved by the shareholders.
j. The Committee authorizes the Managing Director to decide and approve theremuneration pay structure and annual increment of the Senior Management and KeyManagerial Personnel in consultation with respective Appraisal Committee constituted fromtime to time for review of annual appraisals and performance ratings.
k. The Committee may recommend to the Board with reasons recorded in writing removalof a Director Key Managerial Personnel or Senior Management Personnel if any DirectorKey Managerial Personnel or Senior Management Personnel suffers any disqualification underthe Companies Act 2013 or under any other applicable Acts and Rules thereunder.
l. The Director Key Managerial Personnel and Senior Management Personnel shall retireas per the applicable provisions of the Act and the prevailing HR policy of the Company.The Board will have the discretion to retain the Director Key Management PersonnelSenior Management Personnel even after attaining the retirement age for the benefit ofthe Company.
m. The Board of Directors shall have the optimum combination of Directors fromdifferent areas to have diversified board composition.
n. A member of the Committee is not entitled to be present when his or her ownremuneration is discussed at a meeting or when his or her performance is being evaluated.
6. Amendments to the Policy
The Board of Directors on its own and/or as per the recommendations of the Nominationand Remuneration Committee can amend this Policy as and when deemed fit. Any or allprovisions of this Policy would be subject to revision/ amendment in accordance with theRules Regulations Notifications etc. on the subject as may be issued by relevantstatutory authorities from time to time.
In case of any amendment(s) clarification(s) circular(s) etc. issued by the relevantauthorities which make the provisions laid down under this Policy inconsistent with suchamendment(s) clarification(s) circular(s) etc. then such amendment(s) clarification(s)circular(s) etc. shall prevail upon the provisions hereunder and this Policy shall standamended accordingly from the effective date as laid down under such amendment(s)clarification(s) circular(s) etc.
7. Governing law
This Policy shall be governed by the Companies Act 2013 read with Rules madethereunder as may be in force for the time being as well as Regulation 19 of the ListingRegulations or such other Rules/Regulations as may be notified by SEBI from time to time.
Form No. AOC - 2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto.
1. Details of contracts or arrangements or transactions not at arm's length basis:
There were no contracts/arrangements entered into by the Company with related partiesreferred to in sub-section (1) of Section 188 of the Companies Act 2013 which are not atarm's length basis during the year ended March 31 2017.
2. Details of material contracts or arrangements or transactions at arm's length basis:
|Name(s) of the related party and nature of relationship ||Nature of contracts/ arrangements/ transactions ||Durations of the contracts/ arrangements/ transactions ||Salient terms of the contracts/ arrangements/ transactions including the value if any ||Date(s) of approval by the Board if any ||Amount paid as |
advance if any
|(a) ||(b) ||(c) ||(d) ||(e) ||(f) |
|Zuari Agro Chemicals Limited ||Purchase of goods in the ordinary course of business ||Not applicable ||Based on prevailing market conditions and is at arm's length basis ||Not applicable ||Nil |
For and on behalf of the Board of Directors
July 29 2017
Conservation of Energy Research and Development & Technology Absorption
Foreign exchange earnings and outgo
CONSERVATION OF ENERGY
A. Power and Fuel Consumption
|Description ||Unit ||Current |
| || || ||2016-17 ||2015-16 |
|1. ||Electricity || || || |
| ||A. Purchased Units ||Lakh kwh ||166.90 ||130.78 |
| ||Total Amount (Including minimum demand charges) ||Rs. Lakh ||1250.39 ||915.10 |
| ||Minimum Demand Charges ||Rs. Lakh ||116.36 ||107.10 |
| ||Unit Rate: (Excluding minimum demand cha rges) ||Rs./kwh ||6.79 ||6.18 |
| ||B. Own Generation || || || |
| ||Through Generator || || || |
| ||Units ||Lakh kwh ||2401.95 ||2465.06 |
| || ||(Net) || || |
| ||Units per litre of furnace oil ||kwh/L ||4.18 ||4.18 |
| ||Unit Cost ||Rs./kwh ||6.65 ||7.14 |
|2. ||Furnace Oil ||kl ||57399.79 ||58901.57 |
| ||Total Amount ||Rs. Lakh ||11785.23 ||13742.17 |
| ||Average Rate ||Rs./kl ||20531.84 ||23330.74 |
B. Consumption per unit of Production
|Products (with details) ||Unit ||Current Year 2016-17 ||Previous Year 2015-16 |
|Electricity - Urea ||Kwh ||635.26 ||642.5 |
|- DAP ||Kwh ||44 ||57 |
|- 20:20:00:13 ||Kwh ||41.5 ||57 |
|Furnace Oil - Urea ||kl ||0.040 ||0.046 |
|- DAP ||kl ||0.004 ||0.004 |
|- 20:20:00:13 ||kl ||0.006 ||0.006 |
RESEARCH AND DEVELOPMENT & TECHNOLOGY ABSORPTION
A. Research and Development
|1. Specific areas in which R&D were carried out by the Company ||1. Following New products were formulated and developed in SNF plant |
| || ChemCFNL SNF Liquid- SF 48 55 56. They are produced in commercial scale and sold in the market. |
| ||2. Indigenization of high efficiency trays of Urea reactor |
|2. Benefits derived as a result of the above R & D ||1. Increased product portfolio in construction chemicals market. |
| ||2. Saving of foreign exchange due to Indigenization of equipment & spares |
|3. Future plan of action ||Indigenization of imported equipment and development of new products. |
|4. Expenditure on R&D ||No separate account is maintained. |
B. Technology absorption adaptation and innovation
|1. Efforts in brief : made towards technology ||1. About 35% of plant lighting is changed to LED type from conventional lighting. |
|absorption adaptation and innovation ||2. Upgradaton of lighting system of Raw Naphtha Fired heater to remote lighting from manual system. |
|2. Benefits : derived as a ||1. Energy saving and lower maintenance cost |
|result of the above efforts e.g. product improvement cost reduction product development import substitution ||2. Operational safety |
|3. In case of : imported technology following information may be furnished ||Not applicable |
FOREIGN EXCHANGE EARNINGS & OUTGO 2016-17
|Foreign Exchange earned ||: Rs. 1.49 crores |
|Foreign Exchange used ||: Rs. 960.64 crores |