Your Directors have pleasure in presenting the 34th Annual Report of the Companytogether with the Audited Accounts for the year ended March 31 2021.
Your Company's performance during the year as compared with that during the previousyear is summarized below:
(Rs in lakhs)
| || || || ||(Rs in lakhs) |
| ||Consolidated ||Standalone |
|Particulars ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Total Income (including Other Income) ||120603 ||102239 ||120673 ||102238 |
|Profit/(Loss) before Finance Cost Depreciation Amortization and Tax ||12731 ||7609 ||12806 ||7607 |
|Finance Cost ||2792 ||2916 ||2880 ||2916 |
|Depreciation and Amortization ||2530 ||2397 ||2530 ||2397 |
|Profit/(Loss) before exceptional items and tax ||7409 ||2296 ||7396 ||2294 |
|Share of profit from associate ||57 ||95 ||- ||- |
|Profit/(Loss) before tax ||7466 ||2391 ||7396 ||2294 |
|Current Tax ||2606 ||423 ||2606 ||423 |
|Deferred Tax ||(239) ||294 ||(239) ||294 |
|Profit/(Loss) for the year ||5099 ||1674 ||5029 ||1577 |
|Other Comprehensive Income ||(22) ||(134) ||(21) ||(132) |
|Total Comprehensive Income ||5077 ||1540 ||5008 ||1445 |
|Balance of profit brought forward from previous year ||18683 ||17459 ||18056 ||16927 |
|TOTAL ||23760 ||18999 ||23064 ||18372 |
|Appropriation || || || || |
|Dividend on equity shares ||487 ||192 ||487 ||192 |
|Dividend distribution tax ||- ||40 ||- ||40 |
|Impact on account of adoption of Ind AS 116 Leases ||- ||84 ||- ||84 |
|Balance profit carried forward to balance sheet ||23273 ||18683 ||22577 ||18056 |
The Company achieved highest ever consolidated revenues of Rs 120603 lakhs for yetanother year as against Rs 102239 lakhs achieved in the previous year an increase of18%. The Company's profit before tax is Rs 7466 lakhs during the year under reviewagainst profit of Rs 2391 lakhs during the previous an increase of 212%. The Companyearned a profit after tax of Rs 5099 lakhs against the profit of
Rs 1674 lakhs in the previous year an increase of 205%. The growth in revenue hasbeen mainly attributable to growth in the Exports by 28% and Domestic retail by 10% andnew initiatives in the B2B business segment.
Dividend & Dividend Distribution Policy:
Your Directors are pleased to recommend a final dividend Rs 0.15/- per equity share(i.e. 15% on equity shares of face value of Rs 1/- each) for the financial year endedMarch 31 2021. The payment of final dividend is subject to the approval of theshareholders at the ensuing Annual General Meeting (AGM) of the Company. The aforesaidfinal dividend is in addition to the interim dividends of Rs 0.10 (10%) and Rs 0.15 (15%)per Equity Share of Rs 1 each respectively declared for the year under review. The totaldividend amount for the financial year 2020-21 including the proposed final dividendamounts to Rs 0.40 per Equity Share (i.e. 40% on equity shares of face value of Rs 1/-each) and the total outflow towards dividend on Equity shares for the year amounts to Rs781 lakhs (previous year Rs 192 lakhs). In view of the changes made under the Income-taxAct 1961 by the Finance Act 2020 dividends paid or distributed by the Company shall betaxable in the hands of the Shareholders. The Company shall accordingly make the paymentof the final dividend after deduction of tax at source.
As per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations')the Company has adopted a Dividend Distribution Policy and the same is available on thewebsite of the Company at www.naclind.com.
Certifications & Awards:
Your Directors are pleased to inform that during the year under review: a) ICC (IndianChemical Council) has granted permission for use of the Responsible Care Logo for a periodof Three Years. Responsible Care has become a key differentiator in the Chemical Industryindicating environmental health safety and security performance maturity. b) Company'sR&D facility was accredited for Good Laboratory Practices (GLP) issued by NationalGood Laboratory Practice Compliance Monitoring Authority (NGCMA) Department of Scienceand Technology Government of India. This certificate is issued for Physical-ChemicalTesting (including Five Batch Analysis) and is in compliance with OECD Principles of GLP.The OECD Principles of Good Laboratory Practice (GLP) ensure the generation of highquality reliable and reproducible test data related to non-clinical health andenvironmental safety studies. Registration authorities of all OECD countries (whichincludes USA Canada Australia Japan UK Germany and many other Countries) will nowaccept the test data generated out of the R&D facility of NACL. This data is alsouseful for registration of crop protection chemicals in various other Countries. This datais also required for registration of crop protection chemicals in various other Countries.
The Srikakulam technical plant has witnessed a record annual production of 7415 MT ascompared to 5617 MT in the previous year. The plant could achieve the desired results dueto growth in the export domestic institutional business and introduction of newproducts. With improved productivity and asset utilization the plant could record higherproduction to meet the market requirement. The plant continued to take various initiativesfor energy conservation and cost savings. Zero Liquid Discharge facility operatedefficiently during the year.
Ethakota formulation unit has been able to satisfactorily meet the market demand. Itachieved production of 20106 MT/KL during the year under review compared to the previousyear production of 16606 MT/KL. This unit has been taking various initiatives fordebottlenecking safety and quality.
An encouraging working environment in both units enabled cordial relationship with alllevels and improved productivity.
The annual rainfall over the country was 109 % of long period average (LPA). Rainfallover the country as a whole during the South West monsoon season (June-September) whichis the principal rainy season of the country was above normal (109 % of LPA). During thisseason among the four broad geographical regions of the country Central India SouthPeninsular and East & Northeast India received seasonal rainfall of 115% 129% and106% of its LPA respectively while Northwest India received seasonal rainfall of 84% ofits LPA.
The Northeast monsoon season (October-December) rainfall over the country as a wholewas normal (101% of LPA). The seasonal rainfall during the northeast monsoon season overthe core region of the south peninsula (comprising 5 subdivisions viz. Coastal AndhraPradesh Rayalaseema Tamil Nadu & Puducherry South Interior Karnataka and Kerala)was also normal (110% of LPA). All the five subdivisions of the core region except Keralareceived excess/normal rainfall. (source: IMD) COVID-19 has impacted the business tocertain extent as most of the markets were closed due to nationwide lockdown during Kharifwhich is the major season in India. Unavailability of migrant labour resulted in increaseduse of herbicides.
Backed by supportive market conditions and facing COVID related hurdles your Companyachieved domestic sales of Rs 83535 lakhs (out of which domestic retail sales are Rs55497 lakhs) for the year under review against Rs 73034 lakhs (out of which domesticretail sales were Rs 50436 lakhs) in the previous year an increase by about 14%.Encouraging demand and pre-placement for major insecticides and herbicides improvedprices for one of the insecticides and fungicides have contributed positively to sales andhave offset negative factors like impact of COVID during the first quarter poorliquidation of certain brands caused by untimely rainfall at the end of September pricepressure on two major herbicides farmer protests in northern parts of India and aprovisional ban of six pesticides in Tamil Nadu.
The global traditional crop protection market in 2020 is estimated to have grown by2.7% to reach US$ 62.04 billion at ex-manufacturer level in nominal terms. Up by 12.9%the growth is more significant in real terms. COVID-19 has impacted the global economy in2020. Although many industries have been negatively affected Agriculture sector has beenmostly shielded from the impact as food production being essential in nature. Agri inputmanufacturing and supply have been excluded from the lockdown restrictions but theindustry faced challenges in terms of reduced availability of migrant labour delay inshipments at the ports reduced cotton consumption in textile industry fall in vegetableproduction due to closing of the hospitality sector and lesser demand for biofuels.
(Source: IHS Markit)
The Exports sales were Rs 33008 lakhs in the year under review as compared to Rs25743 lakhs in the previous year an increase by 28%. Consistent and increased demand fortwo fungicides from MNCs extended campaign for contract manufacturing of an insecticideand a herbicide campaign for an intermediate improved formulation and trading businesshave been contributed to growth and have offset the impact caused by COVID situation andother adversities.
Your Directors are pleased to inform that the Credit Analysis and Research Limited(CARE) vide the letter dated July 06 2021 has upgraded the rating for the Long-TermBank facilities and Short-Term Bank facilities of the Company the details of which aregiven herein below: a) Long-Term Bank facilities: CARE A; Stable (Single A; Outlook:Stable); and b) Short-Term Bank facilities: CARE A1 (A One).
Fire Insurance Claim:
An appeal has been filed by the Insurance Company (The Oriental Insurance Company Ltd.)against the Arbitration Award in favour of the Company before the Hon'ble High Court ofDelhi. Pending final disposal of the above appeal the Company has filed the ExecutionPetitions before Hon'ble High Court of Delhi for deposit of awarded amount in MaterialDamage (MD) Claim of Rs 1048 lakhs (including interest) and Business Interruption Policyclaim of Rs 1352 lakhs (including interest) with the Court. With respect to the executionpetition filed by the Company in both the cases the Hon'ble High Court of Delhi haspassed an order vide its order dated March 19 2021 & April 9 2021 directed the
Insurance Company to deposit the awarded amount towards Material Damage claim &Business Interruption Policy respectively together with the interest upto the date ofdeposit with Court. The Company has not recognised the said claim in the books ofaccounts.
With reference to the two new Greenfield Projects in Dahej Gujarat and PydibimavaramAndhra Pradesh through its two new Wholly Owned Subsidiary (WoS) Companies namely M/s.NACLSpec-Chem Limited ("Spec-Chem") and M/s.NACL Multichem Private Limited("Multichem") respectively during the year under review Spec-Chem undertookthe first phase of the greenfield project with a capacity of 6000 MT per annum formanufacturing of five technical and one intermediate for domestic export and for captiveconsumption with a project cost of nearly Rs 20242 lakhs with debt-equity mix of 2:1.Your Board of Directors had earlier approved investing Rs 5200 lakhs in Spec-Chem for theongoing capex and the balance amount to be mobilized through debt finance. As on the dateof report your Company has already invested Rs 42 crores. To date the land acquisition& development work has been completed and the ground/civil works are in progress. Theproject is estimated to be completed in the first quarter of FY23. With reference to thegreen-field project by Multichem the subsidiary is in the process of acquiring land andobtaining necessary approvals /licenses. The Company has successfully commercializedmanufacturingoftwonewTechnical/ActiveIngredients namely Quizalofop Ethyl and Thiamethoxamand also introduced the three new formulated products namely CUBIT (Bisbyribac Sodium 10%SC) Eraze Plus (Pretilachlor 37% EW) and Fenny (Bifenthbin 10% EC) during the year underreview.
Research & Development:
In the pursuit of innovation in developing products and improving processes theCompany's R&D Centre at Shadnagar near Hyderabad has been working on new productsand better processes for manufacture of Active Ingredients (AIs)/Technical andIntermediates for Herbicides Insecticides and Fungicides. To take advantage of the Makein India manufacturing initiative processes for many generic products are under variousstages of development for manufacturing by NACL. The Company's R&D Centre received ISO17025:2017 Certificate of Accreditation from the National Accreditation Board for Testingand Calibration of Laboratories (NABL) and also recognized by the
Department of Scientific and Industrial Research (DSIR) Government of India.
Registration of the Active Ingredients and the final products is a major activity. ThisDepartment works on applying for registration in India as well as in Countries in Africaand SE Asia to enable marketing of the products. The total number of registrations NACLhas is 385 in India and 99 for exports.
Your Company continues to maintain high standards in environmental management with itsmanufacturing facilities operating well within stipulated norms due to the efficientrunning of the Zero Liquid Discharge (ZLD) facilities in Srikakulam. Srikakulammanufacturing site has an online effluent and emission monitoring devices thatcontinuously upload the data to Pollution Control Board website. These sites have alsoincreased plantation area within the factory premises.
Your Company continues to enjoy the certifications ISO:9001:2015 ISO:14001:2015 andISO 45001:2018 accredited for its proven standards covering in the areas of QualityEnvironment Safety and Health Management Systems respectively. Both Srikakulam andEthakota Units are accredited by National Accreditation Board for Testing and Calibrationof Laboratories (NABL).
During the year under review your Company has allotted 192497 fully paid equityshares upon exercise of Stock Option by the Eligible Employees of the Company pursuantto the Nagarjuna Agrichem Ltd.-Employee Stock Option Scheme-2015'(ESOS-2015') of the Company and these shares were duly admitted for trading on theStock Exchange(s). Further pursuant to Section 42 62(1)(c) of the Companies Act 2013read with Chapter V of the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2018 the Company has allotted 3420000 fully paidequity shares to Mrs. K.Lakshmi Raju Promoter and Director of the Company upon exerciseof option for conversion of 3420000 (Thirty Four Lakhs and Twenty Thousand) out oftotal allotted 5000000 Warrants issued and allotted by the Company on preferentialbasis. Such infusion of equity capital through the aforesaid preferential issue ofWarrants has strengthened the capital structure of the Company.
Subsequent to the above allotments the paid up capital of your Company stand increasedfrom Rs 192605261/- (comprising of 192605261 fully paid up equity shares of
Rs 1/- per equity share) to Rs 196217758/- (comprising of 196217758 fully paid upequity shares of Rs 1/- per equity share).
Employee Stock Option Scheme:
A) "Nagarjuna Agrichem Ltd. Employee Stock Option Scheme 2015"("ESOS-2015"): During the year under review the Company has granted 75718(Seventy Five Thousand Seven Hundred and Eighteen) stock options under ESOS-2015 to theEligible Employees. Each option would entitle the holders of the option to apply for oneequity share of the Company. Upon exercise of the vested stock options by EligibleEmployees 192497 equity shares were allotted during the year under review. B)ESOS-2020: Further pursuant to and in terms of shareholders resolution dated September 072020 the Company in accordance with Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 as amended from time to time (hereinafter referredto as "SBEB Regulations") has implemented NACL Employee Stock OptionScheme-2020' (ESOS- 2020). During the year under review the Company has granted 1735000(Seventeen Lakhs Thirty Five Thousand) stock options under ESOS-2020 to the EligibleEmployees. Each option would entitle the holders of the option to apply for one equityshare of the Company.
In compliance with the SBEB Regulations a certificate from the Auditors of the Companyconfirming that the ESOS-2015 and ESOS 2020 are been implemented in accordance with theSBEB Regulations and the resolutions passed by the members will be placed at the ensuingAnnual General Meeting. The applicable disclosure as stipulated under the SBEBRegulations as on March 31 2021 with regard to the ESOS 2015 & ESOS 2020 areuploaded on the website of the Company www.naclind.com.
Keeping in view the several factors such as current performance and future outlook ofthe Company the categories of Eligible Employees eligibility criteria (such as length ofservice grade etc.) and to enable the employees to further align with the long terminterests of the Company the Board of Directors of the Company in its meeting held onAugust 05 2021 based on the recommendations of the Compensation Committee and subject tothe approval of the members of the Company in this regard approved reduction of theexercise period under ESOS 2020 to one year from the present exercise period of two yearsfrom the date of vesting.
As per the SBEB Regulations any amendments to the stock option plans of the Companyrequires the approval of the members by means of a special resolution. Accordinglynecessary resolutions in connection with the above are being placed before the meeting atthe ensuing Annual General Meeting. The Board of Directors recommends the said resolutionsfor approval of the members by means of special resolutions.
During the year under review the Stakeholders Relationship Committee in its meetingheld on September 30 2020 has allotted 5000000 (Fifty Lakhs) Convertible Warrants on apreferential basis to Mrs.K.Lakshmi Raju Promoter and Director of the Company uponreceipt of the subscription amount of Rs 488 lakhs (representing 25% of the Issue Price of
Rs 39 each i.e. Rs 9.75 per Warrant) in compliance with the provisions of CompaniesAct 2013 and Chapter V of SEBI ICDR Regulation 2018.
Further the Company has allotted 3420000 equity shares on December 18 2020 toMrs.K.Lakshmi Raju upon receipt of balance consideration of Rs 29.25/- per warrant (i.e.75% of the issue price of Rs 39/-) aggregating to Rs 1000.35 lakhs.
Material Changes and Commitments:
Except the changed specifically described in this report there have been no materialchanges and commitments affecting the financial position of the Company which haveoccurred between the end of the financial year of the Company to which the financialstatements relate and the date of the report.
Subsidiary and Associate Companies and Consolidation of Financial Statements:
Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") along withother applicable provisions of the Act and as per Indian Accounting Standards (Ind AS 110 "Consolidated Financial Statements") the Audited Consolidated FinancialStatements for the year ended on March 31 2021 are provided in this Annual Report. TheCompany has prepared consolidated financial statements by incorporating the financialstatements of its wholly owned subsidiaries M/s.NACL Spec-Chem Limited M/s.NACL MultichemPrivate Limited M/s.LR Research
Laboratories Private Limited and M/s.Nagarjuna Agrichem (Australia) Pty Ltd with itsfinancial statements on line by line basis. The investments of the Company in M/s.NasenseLabs Private Limited an Associate Company have been accounted for in these consolidatedfinancial statements under the equity method in accordance with Ind AS 28 "Investments in Associates and Joint Ventures".
The Audited Annual Accounts and related information of Subsidiaries and Associate asapplicable will be made available upon request. The Statement required under Section 134of the Act is attached as Annexure - I (Form AOC-1) to this Directors' Report.
During the year under review the Company has incorporated following two new WhollyOwned Subsidiary Companies: a) NACL Spec-Chem Limited (vide the certificate ofincorporation dated April 27 2020); and b) NACL Multichem Private Limited (vide thecertificate of incorporation dated May 18 2020). No other Company has become/ceased to beSubsidiary or Joint Venture or Associate Company during the financial year. There has beenno material change in the nature of the business of the aforesaid Subsidiaries andAssociate.
TheCompanyhasnoSubsidiarywhichcanbeconsidered as material in terms of the ListingRegulations.
In accordance with the provisions of Section 136(1) of the Act read with Regulation 46of the Listing Regulations the following have been placed on the website of the Companywww.naclind.com: a) Annual Report of the Company containing therein its Standalone andthe Consolidated Financial Statements; and b) Annual accounts of each of the SubsidiaryCompanies.
Internal Financial Control Systems and their adequacy:
The Company has in place adequate internal financial controls commensurate with thesize and complexity of its operations. During the year such controls were tested and noreportable material weakness in the design or operations were observed. The Company haspolicies and procedure in place for ensuring proper and efficient conduct of its businessthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of accounting records and the timely preparation of reliablefinancial information.
The Company has adopted accounting policies which are in line with the IndianAccounting Standards and the Act. These are in accordance with generally acceptedaccounting principles in India. Changes in policies if required are made in consultationwith the Auditors and are approved by the Audit Committee.
The Company's internal audit systems are geared towards ensuring adequate internalcontrols commensurate with the size and needs of the business with the objective ofefficient conduct of operations through adherence to the Company's policies identifyingareas of improvement evaluating the reliability of financial statements ensuringcompliances with applicable laws and regulations and safeguarding of assets fromunauthorized use.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory Costand Secretarial Auditors including audit of the internal financial controls overfinancial reporting by the Statutory Auditors and the reviews performed by Management andthe relevant Board and Committees including the Audit Committee the Board is of theopinion that the Company's internal financial controls were adequate and effective duringthe financial year 2020-21.
Auditors: a) Statutory Auditor and Audit Reports:
M/s. Deloitte Haskins & Sells LLP (Deloitte) Chartered Accountants MadhapurHyderabad (Firm Registration No.117366W/W-100018) Chartered Accountants were appointedas Statutory Auditors of the Company at the 30th Annual General Meeting held on August 052017 for a period of 5 years commencing form the conclusion of 30th Annual General Meetingtill the conclusion of 35th Annual General Meeting to be held in the year 2022. The firmhas consented and confirmed that the appointment is within the limit specified undersection 141(3)(g) of the Companies Act 2013. The Statutory Auditors have also confirmedthat they are not disqualified to be appointed as such in terms of the proviso to section139(1) 141(2) and 141(3) of the Companies Act 2013 and the Companies (Audit andAuditors) Rules 2014.
The Audit Report of Deloitte on the Financial Statements of the Company for theFinancial Year 2020-21 is a part of Annual Report and the report does not contain anyqualification reservation adverse remark or disclaimer.
b) Internal Auditor:
The Board of Directors of the Company has appointed M/s. M.Bhaskara Rao & Co.Chartered Accountants Hyderabad as Internal Auditors to conduct internal audit of theCompany for the financial year ended March 31 2021 and their reports are reviewed by theAudit Committee from time to time. The Board of Directors re-appointed M/s.Bhaskara Rao & Co. Chartered Accountants Hyderabad as Internal Auditors for thefinancial year ending March 31 2022. c) Cost Auditor:
The Board of Directors of the Company on the recommendation of the Audit Committeeappointed M/s. K. Narasimha Murthy & Co. Cost Accountants Hyderabad to conduct costaudits relating to Insecticides (Technical Grade and Formulations) of the Company for theyear ending March 31 2022. The Company has received their written consent that theappointment will be in accordance with the applicable provisions of the Act and rulesframed thereunder. Pursuant to the provisions of Section 148 of the Act read with Rulesmade thereunder members are requested to consider the ratification of the remuneration ofRs 800000 payable to M/s. K. Narasimha Murthy & Co. Cost Accountants Hyderabadfor the financial year 2021-22. As a matter of record relevant cost audit report forfinancial year ended 2020 were filed with the Central Government within a stipulatedtimeline. d) Secretarial Auditor and Secretarial Audit Report:
Pursuant to Section 204 of the Act read with the Rule 9 of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board has appointed Mr. K.V.Chalama Reddy Practicing Company Secretary to carry out secretarial audit in terms ofthe Act for the financial year 2020-21. The secretarial audit report for the FY 2020-21issued by Mr.K.V.Chalama Reddy Practicing Company Secretary in form MR-3 is enclosed tothis report as Annexure II and the report does not contain anyqualification reservation adverse remark or disclaimer.
Reporting of Frauds by Auditors:
During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditors have not reported any instances of frauds committed in the Company by itsOfficers or Employees to the Audit Committee under Section 143(12) of the Act.
As on the date of this report Company's Board comprises of 11 (Eleven) Directors outof which 2 (two) are Non-Executive Non-Independent Directors (NEDs) including 1 (One)Woman Director. Further out of the remaining Directors 6 (six) are Non-ExecutiveIndependent Directors including 1 (one) Women Independent Director 2 (two) are InvestorsNominee Directors and 1 (one) is an Executive Director. a) Director(s) to retire byrotation:
In accordance with the provisions of Section 152 of the Act and Articles ofAssociation of the Company Mr.N.Vijayaraghavan Director (DIN: 02491073) of the Companyretires by rotation at the forthcoming Annual General Meeting of the Company and beingeligible offer himself for re-appointment.
The necessary resolution for re-appointment of Mr.N.Vijayaraghavan forms part of theNotice convening the AGM. The profile and particulars of experience that qualifyMr.N.Vijayaraghavan for Board membership are disclosed in the said Notice. b) KeyManagerial Personnel:
In terms of Section 203 of the Companies Act 2013 the following are the Key ManagerialPersonnel of the Company: i) Mr. M. Pavan Kumar Managing Director & CEO ii) Mr. R.K.SPrasad Chief Financial Officer iii) Mr. Satish Kumar Subudhi Company Secretary &Head-Legal.
During the year under review there were no changes to the Key Managerial Personnel ofthe Company. c) Independent Directors:
In terms of Sections 149 152 Schedule IV and all other applicable provisions of theCompanies Act 2013 read with Companies (Appointment and Qualification of Directors)Rules 2014 (including any statutory amendment(s) modification(s) or re-enactment thereoffor the time being in force) the Independent Director can hold office for a term of up tofive (5) consecutive years on the Board of Directors of the Company and shall not beliable to retire by rotation.
All the Independent Directors have given declaration that they meet the criteria ofindependence laid down under Section 149(6) of the Act read with Regulation 16(b) ofListing Regulations.
In the opinion of the Board there has been no change in the circumstances which mayaffect their status as Independent Directors of the Company and the Board is satisfied ofthe integrity expertise and experience (including proficiency in terms of Section 150(1)of the Act and applicable rules thereunder) of all Independent Directors on the Board.Further in terms of Section 150 read with Rule 6 of the Companies (Appointment andQualification of Directors) Rules 2014 as amended Independent Directors of the Companyhave included their names in the data bank of Independent Directors maintained with theIndian Institute of Corporate Affairs. d) Evaluation of performance of the Board ofDirectors:
Pursuant to the provisions of the Act and Listing Regulations the Board has carriedout the evaluation of its own performance and Committees of the Board the performances ofDirectors individually the Executive Director the Chairperson of the Board etc. Variousparameters under the guidance note issued by the Institute of Company Secretaries of Indiaand SEBI were considered for evaluation and after receiving the inputs from theDirectors the performance evaluation exercise was carried out. The parametersinclude attendance of Directors at Board and Committee meetings integrity credibilityexpertise and trustworthiness of Directors Board's monitoring of various complianceslaying down and effective implementation of various policies level of engagement andcontribution of the Directors safeguarding the interest of all stakeholders etc. Theperformance evaluation of the Board as a whole was carried out by the IndependentDirectors. The performance evaluation of each Independent Director was carried out by theBoard. The Directors expressed their satisfaction with the evaluation process.
In a separate meeting the Independent Directors evaluated the performance of theNon-Independent Directors and performance of the Board as a whole. They also evaluated theperformance of the Chairperson taking into account the views of Executive Director and NonExecutive Directors.
e) Meeting of Independent Directors:
The details on the separate meeting of the Independent Directors are reported in theReport on Corporate Governance. f) Familiarization Programme for the IndependentDirectors:
In compliance with the requirement of Listing Regulations the Company has put in placea familiarization programme for the Independent Directors to familiarize them with theirrole rights and responsibility as Directors the working of the Company nature of theindustry in which the Company operates business model etc. The same is available on thewebsite of the Company i.e. www.naclind.com. Through the Familiarization programme theCompany apprises the Independent Directors about the business model corporate strategybusiness plans and operations of the Company. These Directors are also informed about thefinancial performance annual budgets internal control system statutory compliances etc.They are also familiarized with Company's vision core values ethics and corporategovernance practices.
At the time of appointment of Independent Director necessary information includingvarious documents such as the information's about Company Memorandum and Articles ofAssociation Annual Reports for previous 2 years Investor Presentations and recent MediaReleases Brochures Organization policies are provided. Further a formal letter ofappointment has also given explaining fiduciary duties roles responsibility and theaccompanying liabilities that come with the appointment as an Independent Director of theCompany.
On an on-going basis periodic presentations are made at the Board and Committeemeetings on the performance updates of the Company Industry scenario business strategyinternal control and risks involved and mitigation plan. The Directors are also providedwith quarterly update on relevant statutory changes judicial pronouncements and importantamendments.
During the year under review 7 (seven) Board Meetings were held the details of thesame are given in Corporate Governance Report which forms part of this Annual Report. Theprovisions of Act and the Listing
Regulations were adhered to while considering the time gap between two meetings.
The Audit Committee comprising of Mr.Sudhakar Kudva as the Chairman and Mr.RaghavenderMateti Mr.N.Sambasiva Rao Mr.N.Vijayaraghavan are the members. The details about AuditCommittee including the brief description of its terms of reference and number of meetingsheld during the year are mentioned in the Corporate Governance Report. There have been noinstances during the year when recommendations of the Audit Committee were not accepted bythe Board.
Criteria for selection of candidates for appointment as Directors Key ManagerialPersonnel and Senior Management Personnel.
Your Company has laid down well-defined criteria for the selection of candidates forappointment as Directors Key Managerial Personnel and Senior Management Personnel. Thedetails of the same forming part of Company's Nomination and Remuneration Policy areavailable at the Company's website at www.naclind. com.
Criteria for making payment to Non-Executive Directors of the Company.
Your Company has laid down well-defined criteria for making payment to Non-ExecutiveDirectors of the Company. The details of the same are available at the Company's websiteat www.naclind.com.
Directors' Responsibility Statement:
Pursuant to Section 134(3)(c) and 134(5) of the Act the Board of Directors to thebest of their knowledge and ability confirm that: a) in the preparation of the annualaccounts the applicable accounting standards have been followed along with properexplanations relating to material departures; b) it has selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atMarch 31 2021 and of the Profit/Loss of the Company for the year ended on that date; c)it has taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities; d) it has prepared theAnnual Accounts of the Company on a going concern' basis; e) it has laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively; and f) it has devised proper systemsto ensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively.
Corporate Social Responsibility:
Corporate Social Responsibility (CSR) has been an integral part of your Company'sculture and it has been associated directly or indirectly for contributing towardssociety's development. For the year under review Company did a number of CSR activitiesin surrounding areas of Srikakulam and Ethakota where the Company's factories aresituated. Such activities includes RO Water Supply to surrounding Villages Village &Community Development Scholarships to Merit students contribution to Vidhya VolunteerScheme street lightning and bore-well maintenance development of school facilitiescommunity centers and bus shelters in the surrounding villages of the factories providingmedical services and vocational courses and conducting various medical camps etc. Theseprojects are largely covered under Schedule VII of the Companies Act 2013 (Act').
In accordance with the CSR provisions in the Act the Company has formed a CSRCommittee and a CSR Policy is in conformity with the provisions of the Act. The CSR Policycan be accessed on the Company's website at http://www.naclind.com. The Annual Report ofCSR activities are annexed herewith as Annexure-III and forming part of thisReport.
Change in the nature of business:
There is no change in the nature of business of the Company.
Significant and Material Orders passed by the Regulators or Courts:
During the year the Company has not received any significant and material orderspassed from Regulators or Courts or Tribunals impacting the going concern status and theCompany's operations in future.
Particulars of Loans Guarantees or Investments under Section 186:
The details of Loans Guarantees and Investments made during the financial year endedMarch 31 2021 in compliance with the provisions of Section 186 of the Act read with theCompanies (Meetings of the Board and its Powers) Rules 2014 have been disclosed in theFinancial Statements forming part of this Annual Report.
Extracts of Annual Return:
Pursuant to Section 92(3) and Section 134(3)(a) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 the extracts of the Annual Return ofthe Company is available on the website of the Company at www.naclind.com.
Risk Management Policy:
Pursuant to the provisions of Section 134 and other applicable provisions if any ofthe Act and Listing Regulations the Company constituted the Risk Management Committee andframed Risk Management Policy which inter-alia covers implementation and monitoring ofthe risk management plan for the Company. The Committee is responsible for reviewing therisk management plan and ensuring its effectiveness. The details about Committee includingthe brief description of its terms of reference are given in the Corporate GovernanceReport. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis.
Related Party Transactions:
All the related party transactions are entered into during the financial year were onarm's length basis and in the ordinary course of Company's business the same are incompliance with the applicable provisions of the Act and Regulation 23 of ListingRegulations. Except the transactions disclosed herein form AOC-
2 (enclosed) the Company has not entered into any contract arrangement ortransactions with any related party which could be considered as material within themeaning of Regulation 23 of the Listing Regulations. Related Party Transactions (RPTs)under Indian Accounting Standards (IndAS) -24 are disclosed in the notes to the financialstatement.
In accordance to Section 134 of the Companies Act 2013 and Rule 8 of the Companies(Accounts) Rules 2014 the particulars of the contract or arrangement entered into by theCompany with related parties referred to in Section 188(1) in Form AOC-2 is annexed asAnnexure IV of this report.
Necessary disclosures and the statement of all related party transactions is presentedbefore the Audit Committee and the Board of Directors on a quarterly basis specifying thenature value and terms and conditions of the transactions. All Related Party Transactionsare approved by the Audit Committee and omnibus approval is obtained for the transactionswhich are foreseen and repetitive in nature. The transactions entered into pursuant to theomnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.Approval of the shareholders is being sought for 2 (two) material RPTs at the ensuingAnnual General Meeting.
The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website www.naclind.com. The details of the transactions with Related Partiesare provided in the accompanying financial statements.
Vigil Mechanism/Whistle Blower Policy:
The Company has implemented Whistle Blower Policy to deal with any fraud irregularityor mismanagement in the Company. The policy enables any employee or Director to directlycommunicate to the Chairman of the Audit Committee to report any fraud irregularity ormismanagement in the Company. The policy ensures strict confidentiality while dealing withconcerns and also that no discrimination or victimization is meted out to anywhistleblower. The Whistle Blower Policy as approved by the Board is uploaded on theCompany's website www.naclind.com. During the year under review your Company has notreceived any complaints under the said policy of the Company. It is affirmed that nopersonnel of the Company has been denied access to the Audit Committee.
Nomination and Remuneration Policy:
Pursuant to Section 178(3) of the Act the Company has adopted a policy on Nominationand Remuneration of Directors Key Managerial Personnel and Senior Management Personnel.The Nomination and Remuneration Committee (NRC) has formulated the criteria fordetermining qualification positive attributes and independence of Directors in terms ofprovisions of Section 178(3) of the Act and as Listing Regulations. The details aboutCommittee including the brief description of its terms of reference are given in theCorporate Governance Report.
In compliance with Regulation 34 read with Para-C of Schedule V of Listing Regulationsa separate report on Corporate Governance has been included in this Annual Report togetherwith the Auditor's Certificate confirming compliance of the Corporate Governance asstipulated under the said Regulations. All the Board members and the Senior ManagementPersonnel have affirmed compliance with the Companies "Code of Conduct for Board andSenior Management Personnel" for the financial year 2020-21.
A certificate signed by the Managing Director & CEO and Chief Financial Officer(CFO) certifying the financial statements and other matters as required under Regulation17(8) of the Listing Regulations forms part of this Annual Report.
Management Discussion and Analysis Report and Business Responsibility Report:
Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 16(b) of the Listing Regulations is presented in a separate sectionforming part of this Annual Report. A Business Responsibility Report containing therequisite details under Regulation 34 of the Listing Regulations is disclosed on theCompany's website www.naclind.com.
Policy on Sexual Harassment:
The Company has zero tolerance for sexual harassment at workplace and has adopted a"Policy on Sexual Harassment of Associates" in accordance with the provisions ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules made thereunder. The Policy aims to provide protection to employees atthe workplace and prevent and redress complaints of sexual harassment and for mattersconnected or incidental thereto and framed with the objective of providing a safe workingenvironment where employees feel secure. There were no cases reported during thefinancial year 2020-21 under the said Policy.
Your Company has taken appropriate actions against counterfeits fakes and other formsof unfair competitions/trade practices.
Your Company has not accepted any fixed deposits from the public during the year underreview and no such amount on account of principal or interest on public deposits wasoutstanding as on the date of the Balance Sheet.
The industrial relations at the Factories and Head Office of the Company continued tobe cordial.
All the assets and insurable interests of your Company including inventoriesbuildings plant and machinery enactments are adequately insured.
Particulars of Employees and Remuneration:
The information required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed asAnnexureV to this report.
Compliance with Secretarial Standards:
During the year under review your Company has complied with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo:
Disclosures required under the Section 134(3)(m) of the Act relating to Conservation ofEnergy Technology Absorption and Foreign Exchange Outgo and Earning in terms of Rule 8of the Companies (Accounts) Rules 2014 are set out in a separate statement attachedhereto as Annexure-VI and forms part of this report.
Your Directors thank the Company's Bankers and the Financial Institutions for theirhelp and co-operation extended throughout the year. Your Directors place on record theirappreciation for the support and co-operation that the Company received from itsStakeholders Customers Agents Suppliers Employees various Government/Non-GovernmentDepartments Associates and Community in the vicinity of the plants. Your Directors alsorecord their appreciation for the excellent operational performance of the staff of theCompany that contributed to the achievements of the Company. The Directors alsoacknowledge with much gratitude the continued trust and confidence reposed by theDealers/Customers of the Company. Your Directors look forward to the future withconfidence.
| ||For and on behalf of the Board |
|M.Pavan Kumar ||N.Vijayaraghavan |
|Managing Director & CEO ||Director |
|(DIN:01514557) ||(DIN: 02491073) |
|Place: Hyderabad || |
|Date: August 05 2021 || |