Your Directors have pleasure in presenting the 33rd Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2020.
Your Company's performance during the year as compared with that during the previousyear is summarized below:
|Particulars || |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Total Income (including Other Income) ||102239 ||89121 ||102238 ||89119 |
|Profit/(Loss) before Finance Cost Depreciation and Tax ||7609 ||3947 ||7607 ||3941 |
|Finance Charges ||2916 ||3398 ||2916 ||3398 |
|Depreciation and Amortization ||2397 ||2035 ||2397 ||2035 |
|Profit/(Loss) before exceptional items and tax ||2296 ||(1486) ||2294 ||(1492) |
|Share of profit from associate ||95 ||137 ||- ||- |
|Profit/(Loss) before tax ||2391 ||(1349) ||2294 ||(1492) |
|Current Tax ||423 ||- ||423 ||- |
|Deferred Tax ||294 ||(654) ||294 ||(654) |
|Profit/(Loss) for the year ||1674 ||(695) ||1577 ||(838) |
|Other Comprehensive Income ||(134) ||1 ||(132) ||3 |
|Total Comprehensive Income ||1540 ||(694) ||1445 ||(835) |
|Balance of profit brought forward from previous year ||17459 ||18389 ||16927 ||17998 |
|TOTAL ||18999 ||17695 ||18372 ||17163 |
|Appropriation || || || || |
|Dividend on equity shares ||192 ||196 ||192 ||196 |
|Dividend distribution tax ||40 ||40 ||40 ||40 |
|Impact on account of adoption of Ind AS 116 Leases ||84 ||- ||84 ||- |
|Balance profit carried forward to balance sheet ||18683 ||17459 ||18056 ||16927 |
The Company achieved highest ever consolidated revenues of Rs.102239 lakhs during theyear under review as against Rs.89121 lakhs achieved in the previous year an increase of15%. The Company's profit before exceptional item and tax is Rs.2391 lakhs during theyear under review against loss of Rs.1349 lakhs during the previous year an increase of277%. The Company earned a profit after tax of Rs.1674 lakhs against the loss of Rs.695lakhs in the previous year an increase of 341%. The growth in revenue has been mainlyattributable to growth in the Exports by 15% and in Domestic by 18% and proactiveinitiation taken by the B2B business segment.
Dividend and Reserves:
During the year under review the Board of Directors in its meeting held on 26thMarch 2020 has declared an interim dividend @ of 10% i.e. Re.0.10 (Ten paisa) per equityshare on 192605261 Equity Shares of Re. 1/- each of the Company for the Financial Year2019-20. The total outflow (including dividend distribution tax) towards payment ofinterim dividend on equity shares was Rs.232 lakhs.
To fund various green field projects and growth plans of the Company your Directors isnot recommending any final dividend for the year under review. No amount is beingtransferred to the General Reserves.
The World Health Organization (WHO) declared the COVID-19 outbreak as a pandemic on11th March 2020. In the wake of the outbreak across the globe and in the country theCentral Government declared nationwide lock down with effect from 24th March 2020.Keeping in view the implementation of the lockdown the Company temporarily shut down itsManufacturing and R&D facilities Registered / Regional offices Warehouses and otherestablishments located in various States in the Country. Subsequent to the Governmentnotification deeming manufacturing of pesticides as an essential activity the Companyresumed its operations at the said facilities and establishments following the necessaryGovernment directive with respect to safety guidelines and percentage of deployment ofstaff at each such location and taking due care of all preventive measures like socialdistancing safety & security sanitization etc.
The Srikakulam technical plant has achieved annual production of 5617 MT as comparedto 5533 MT in the previousyear.Theplantcouldachievethedesiredresults due to growth in theexport segment and introduction of New Products. With the improved productivity andavailable resources the plant production aligned to the demand and satisfied the marketrequirement. The plant has continued to take various initiatives for energy conservationcost savings. Zero Liquid Discharge facility operated efficiently during the year. Thecontinued focus on areas of improving flexibility enhancing capacities increasedproductivity de-bottlenecking quality control etc. are yielding results. Ethakotaformulation unit has been able to satisfactorily meet the market demand. It achievedproduction of 16606 MT/KL during the year under review compared to the previous yearproduction of 18639 MT/KL. The production was effected due to non-availability of certaininput materials mainly the supply of sand required for granules during the period fromApril 2019 to September 2019. This unit has been continuously taking various initiativedebottlenecking safety and quality control initiatives etc. in order to handle anymarket demand both in terms of flexibility in product mix and demand in higher volumes. Anamiable working environment in both units has enabled to maintain cordial relationshipwith workers Unions and other Stakeholders.
In the year 2019 the annual rainfall over the country was 109 % of long period average(LPA). The rainfall over the country as a whole during the South West monsoon season(June-September) which is the principal rainy season of the country was normal (110 % ofLPA). During this season among the four large geographical regions of the countryCentral India and South Peninsular India received 129% and 116% of its LPA rainfallrespectively while Northwest India received 98% and East & Northeast India received88% of its LPA rainfall.
The 2019 northeast monsoon season (October-December) rainfall over the country as awhole was above normal (129% of LPA). The seasonal rainfall during the northeast monsoonseason over the core region of the south peninsula (comprising of 5 subdivisions viz.Coastal Andhra Pradesh Rayalaseema Tamil Nadu & Puducherry South Interior Karnatakaand Kerala) was normal (109% of LPA). All the five subdivisions of the core regionreceived excess/normal rainfall. (source: India Meteorological Department) Havingwitnessed better monsoon during the year under review the Wheat acreages saw an increaseof about 6% over previous year and 2% over normal acreage. Rabi rice acreages saw anincrease of about 7% over last year and 5% over normal. However the Maize acreagedeclined by 8% over last year and Moong and Black acreages were down by 10% and 20%respectively over last year.
Despite the competitive market conditions and taking the advantage of the good monsoonyour Company achieved domestic sales of Rs.74593 lakhs (out of which domestic retailsales is Rs.44055 lakhs) for the year under review against Rs.63389 lakhs (out of whichdomestic retail sales is Rs.39650 lakhs) in the previous year an increase by ~18%.
The global crop protection market has witnessed a dip of 0.8% over 2018 accounting forUS $ 58927 million (at ex-manufacturer level) in 2019 according to a report by PhillipsMcDougall. The decrease was more i.e. 5.8% over 2018 on real terms by excluding theinflation and currency fluctuations. In spite of various measures taken across the globethe industry has seen a downward trend since last four years and there was only oneinstance of increase in real terms as per the report.
Crop Protection market is majorly influenced by climatic conditions. The extremeweather conditions in 2019 viz severe flooding in North America to dry conditions anddrought in Europe and Asia Pacific have affected the demand for crop protection products.The rise in the regulatory insistence leading to the ban of notable chemistries in Europehas limited the growth potential. The geopolitical issues like the trade tensions betweenUS and China led to the shift in global trade patterns especially soybeans being replacedwith the produce from Latin American countries. There are certain factors which havecounteracted the negative impacts like continued high prices for generic productsnormalized inventory levels in Latin America particularly Brazil shift in the demandfrom Glyphosate to new and more expensive herbicides the report stated.
Despite of the challenges in the global market your company's exports business haswitnessed a positive growth and increased by more than 15% when compared to that of thelast year. The exports sales were Rs.25743 lakhs in the year under review as compared toRs.22362 lakhs in the previous year. An increased demand for one insecticide and onefungicide from a MNCs increased requirement for a fungicide under contract manufacturingfrom a Japanese company stable contract manufacturing campaigns for one insecticide andone herbicide from another MNC have contributed the growth.
During the year under review the Credit Analysis and Research Limited (CARE) hasreaffirmed the rating for the Long Term Bank facilities and Short Term Bank facilities ofthe Company: a) Long-term Bank facilities: CARE A-; Negative (Single A Minus Outlook:Negative); and b) Short-term Bank facilities: CARE A2 (A two).
Fire Insurance Claim:
Further to the arbitration proceeding initiated against the Oriental Insurance CompanyLimited ("Insurance Company") with respect to deductions made by in theassessment and settlement of the insurance claim pertaining to the fire accident occurredat the Company's Srikakulam plant on 30th June 2012 the Hon'ble Arbitrator haspronounced the following two awards in favor of the Company with an aggregate amount ofRs. 2400 lakhs plus interest @ 13% from the date of award till the date of payment:
1) Material Damage and Interest for delayed settlement of claim: Award amounting toRs.1048 lakhs;
2) Loss of Profit (LOP) claim: Award amounting to
Rs. 1352 lakhs.
The Insurance Company has filed an appeal against the above award before the Hon'bleHigh Court of Delhi which is pending for the final resolution.
The Board has approved two new Greenfield Projects in Dahej Gujarat and PydibimavaramAndhra Pradesh through its two new Wholly Owned Subsidiary (WoS)
Companies incorporated namely M/s.NACL Spec-Chem Limited and M/s.NACL Multichem PrivateLimited respectively. The Board has also approved a capex plan of Rs.150 crores (includingCompany's infusion of equity and debt capital to an extent of Rs.52 crores). The Companyhas successfully commercialized manufacturing of two new Technical / Active Ingredientsnamely Lambda Cyhalothrin and Bispyribac Sodium and also introduced the followingformulated products during the year under review.
|S. No Product Name ||Composition |
|a) DXTAR FS ||Thiamethoxam - 30% FS (for Seed Treatment) |
|b) CAIRO ||Lambda Cyhalothrin - 4.9% CS |
|c) SUBTLE ||Tebuconazole - 10% + Sulphur - 65% WP |
|d) SENIOR ||24 - D - Amine Slat - 58% SL |
|e) TWOFOUR ||24 - D - Sodium Slat - 80% WP |
|f) CAMBIUM ||Quizalafop Ethyl 10% EC |
|g) STATUS ||Thiamethoxam 12.6% + Lambda Cyhalothrin 9.5 % - ZC |
In the direction focusing on cost efficiencies and innovation the Company's R&DCentre at Shadnagar near Hyderabad continues to develop cost effective processes formanufacture of Active Ingredients (AIs)/ Technical and Intermediates for HerbicidesInsecticides and Fungicides. To take advantage of the Make in India manufacturinginitiative processes for many generic products are under various stages of developmentfor manufacturing by NACL. Your Directors are pleased to inform that the R&D Centrehas received the Certificate of Accreditation from the National Accreditation Board forTesting and Calibration of Laboratories (NABL) Registration of the active ingredients andthe final products is a major activity. This Department works on applying for registrationin India as well as in Countries in Africa and SE Asia to enable marketing of theproducts. The total number of registrations NACL has is 369 in India and 94 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 and Ethakota.Srikakulam manufacturing 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 thecertifications ISO:9001:2015 ISO:14001:2015 and ISO 45001:2018 accredited for its provenstandards covering in the areas of Quality Environment Safety and Health ManagementSystems respectively.
During the year under review your Company has allotted 185001 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 25000000 fullypaid equity shares upon conversion of 25000000 (Two Crores Fifty Lakhs) Warrants issuedon preferential basis at a ratio of 1:1 to Investors (i.e. M/s. Krishi Rasayan ExportsPrivate Limited and Mr. Rajesh Kumar Agarwal and Mr. Atul Churiwal jointly representingM/s. Agro Life Science Corporation a registered Partnership Firm) and Mrs.K.Lakshmi RajuPromoter of the Company. Such infusion of equity capital through the aforesaidpreferential issue of shares and warrants has strengthened the capital structure of theCompany. Subsequent to the above allotments the paid up capital of your Company standincreased from Rs.167420260/- (comprising of 167420260 fully paid up equity sharesof Rs.1/- per equity share) to Rs.192605261/- (comprising of 192605261 fully paid upequity shares of Rs.1/- per equity share).
Employee Stock Option Scheme:
A) ESOS-2015: During the year under review the Company has granted 20000 (TwentyThousand) stock options under "Nagarjuna Agrichem Ltd. Employee Stock OptionScheme 2015" (hereinafter referred to as "ESOS-2015") to theEligible Employees with a vesting period spread over a period of five years. Each optionwould entitle the holders of the option to apply for one equity share of the Company. Uponexercise of the vested stock options by eligible Employees under the ESOS-2015 185001equity shares were allotted during the year under review. Applicable disclosures relatingto Employees Stock Options as at 31st March 2020 pursuant to Regulation 14 and otherapplicable Regulations of SEBI (Share Based Employee Benefits) Regulations 2014 asamended from time to time are set out in the Annexure-I to this Report. It wasinformed that there has been no material change in the said Scheme i.e. ESOS-2015 duringthe year under review.
In compliance with the SEBI (Share Based Employee Benefits) Regulations 2014(SEBI SBEB') a certificate from the Auditors of the Company confirming that theESOS-2015 are been implemented in accordance with the SEBI SBEB and the resolutions passedby the members will be placed at the ensuing Annual General Meeting. B) ESOS-2020: TheBoard in its meeting held on 12th August 2020 has approved NACL Employee StockOption Scheme-2020' in accordance with the provisions of the Companies Act 2013 read withSEBI (Share Based Employee Benefits) Regulations 2014 which is subject to the approvalof shareholders.
During the year under review the Company has allotted 25000000 equity shares on24th March 2020 to the following Investors and Promoter ("Warrant Holders")upon receipt of necessary Warrant Conversion form/ application from the Warrant Holdersfor exercising the rights for conversion of 25000000 convertible warrants issued underpreferential basis along with the balance consideration of Rs.24/- per warrant (i.e. 75%of the issue price) aggregating to Rs.600000000 (Rupees Six Thousand Lakhs Only)Further the Board in its meeting held on 12th August 2020 has approved the raising offunds for an amount of Rs.1950 lakhs by way of issuing 5000000 Convertible Warrants atan issue price of Rs.39/- on a preferential basis to Mrs.K.Lakshmi Raju Promoter of theCompany in accordance with the provisions of the Companies Act 2013 read with SEBI(Issue of Capital and Disclosure Requirements) Regulations 2018 ("SEBI ICDRRegulations") which is further subject to the approval of the shareholders.
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 Companies 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 31st March 2020 are provided in this Annual Report. TheCompany has prepared consolidated financial statements by incorporating the financialstatements of its Wholly Owned Subsidiaries M/s.LR Research Laboratories Private Limitedand M/s.Nagarjuna Agrichem (Australia) Pty. Ltd. with its financial statements on line byline basis. The investments of the Company in M/s.Nasense Labs Private Limited anAssociate Company have been accounted for in these consolidated financial statementsunder the equity method in accordance with Ind AS 28 "Investments inAssociates 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 - II (Form AOC-1) to this Directors' Report.
No other Company has become/ceased to be subsidiary or joint venture or associateCompany during the financial year. There has been no material change in the nature of thebusiness of the aforesaid Subsidiaries and Associate.
The Company has incorporated following two new Wholly Owned Subsidiary Companies: a)NACL Spec-Chem Limited (vide the certificate of incorporation dated 27th April 2020); andb) NACL Multichem Private Limited (vide the certificate of incorporation dated 18th May2020). 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 2019-20.
Auditors: a) Statutory Auditor and Audit Reports:
M/s. Deloitte Haskins & Sells LLP (Deloitte) Chartered Accountants Madhapur (FirmRegistration No.117366W/W100018) Chartered Accountants were appointed as StatutoryAuditors of the Company at the 30th Annual General Meeting held on 05th August 2017 fora period of 5 years commencing form the conclusion of 30th Annual General Meeting till theconclusion of 35th Annual General Meeting to be held in the year 2022. The firm hasconsented and confirmed that the appointment is within the limit specified under section141(3)(g) of the Companies Act 2013. The statutory auditors have also confirmed that theyare not disqualified to be appointed as such in terms of the proviso to section 139(1)141(2) and 141(3) of the Companies Act 2013 and the Companies (Audit and Auditors) Rules2014.
The Audit Report of Deloitte on the Financial Statements of the Company for theFinancial Year 2019-20 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 have appointed M/s. M.Bhaskara Rao & Co.Chartered Accountants Hyderabad as Internal Auditors to conduct internal audit of theCompany for the financial year ended 31st March 2020 and their reports are reviewed bythe Audit 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 31st March 2021.
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 31st March 2021. 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 remunerationpayable to M/s. K. Narasimha Murthy & Co. Cost Accountants Hyderabad for thefinancial year 2020-21. As a matter of record relevant cost audit report for financialyear ended 2019 were filed with the Central Government within a stipulated timeline.
d) Secretarial Auditor and Secretarial Audit Report:
Pursuant to Section 204 of the Act read with the 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 2019-20. The secretarial audit report issued byMr.K.V.Chalama Reddy Practicing Company Secretary in form MR-3 is enclosed to this reportas Annexure - III. The Secretarial Auditors have not expressed any qualification orreservation in their report and the report is self-explanatory.
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 by rotation:
In accordance with the provisions of Section 152 of the Act and Articles ofAssociation of the Company Mrs.K.Lakshmi Raju Director (DIN: 00545776) of the Companyretires by rotation at the forthcoming Annual General Meeting of the Company and beingeligible offer herself for reappointment.
b) Key Managerial Personnel:
In terms of Section 203 of the Companies Act 2013 the following are the Key ManagerialPersonnel of the Company: i) Mr.V.Vijay Shankar Managing Director (upto 31st May 2019)ii) Mr. M. Pavan Kumar Managing Director & CEO (with effect from 01st June 2019)iii) Mr.R.K.S Prasad Chief Financial Officer iv) Mr.Satish Kumar Subudhi CompanySecretary & Head-Legal.
During the year under review Mr.V.Vijay Shankar vide its letter dated 28th May 2019to the Board has stepped down from the position of Managing Director as well as Directorof the Company with effect from 01st June 2019. The Board in its meeting held on 29thMay 2019 has accepted the said letter and took note of the sincere appreciation ofMr.V.Vijay Shankar for the notable contribution and valuable guidance to the Companyduring his association of the Company for more than 8 years. Further the Board in itsmeeting held on 29th May 2019 on recommendation of Nomination and RemunerationCommittee has appointed Mr. M. Pavan Kumar (DIN:01514557) as an Additional Director andManaging Director & CEO of the Company for a period of three years with effect from01st June 2019 subject to the approval of the members at the Annual General Meeting.Accordingly the members of the Company at the 32nd Annual General Meeting held on 14thAugust 2019 has approved the appointment of Mr.M.Pavan Kumar as the Director of theCompany (in the category of Executive Director) and also as the Managing Director and CEOof the 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 including Additional Independent Director have givendeclaration that they meet the criteria of independence laid down under Section 149(6) ofthe Act read with Regulation 16(b) of Listing Regulations.
During the year under review Mr.K.Raghuraman who has been appointed as an IndependentDirector of the Company for a period of 5 years effective from 09th August 2014 till andto hold office upto 08th August 2019 and being eligible for re-appointment vide its maildated 01st July 2019 has communicated his desire for not seeking re-appointment for thesecond term due to personal reasons. The Board in its meeting held on 03rd July 2019 hasduly considered and noted his retirement with effect from 09th August 2019 andaccordingly not recommended his reappointment for shareholders approval.
Mr.R.S.Nanda has tendered his resignation from the Directorship of the Companyeffective from 26th February 2020. Consequent to the resignation of Mr.R.S.Nanda fromthe directorship he ceased to be the member as well as Chairperson of various committeesof the
Board. The Board of Directors places on record his valuable and constructivecontribution to the Company during his long association with the Company.
The Board based on the recommendation of the Nomination and Remuneration Committeehas appointed
a) Mr.Ramkrishna Mudholkar as an Additional Directors under Independent Category onthe Board of the Company who shall holds office upto the ensuing Annual General Meeting(AGM) and also an Independent Director for a period of 5 years with effect from 04thNovember 2019 subject to the approval of members at the ensuing AGM.
b) Mr.N.Sambasiva Rao as an Additional Directors under Independent Category on theBoard of the Company who shall holds office upto the ensuing Annual General Meeting (AGM)and also an Independent Director for a period of 5 years with effect from 14th February2020 subject to the approval of members at the ensuing AGM.
c) Ms.Veni Mocherla as an Additional Directors under Independent Category on theBoard of the Company who shall holds office upto the ensuing Annual General Meeting (AGM)and also an Independent Director for a period of 5 years with effect from 26th March2020 subject to the approval of members at the ensuing AGM.
The brief resume/details regarding the Directors proposed to be appointed as above arefurnished in the notice of the AGM. There have been no changes in the Directors and KeyManagerial Personnel of the Company other than the above.
d) Evaluation of performance of the Board of Directors:
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 Chairman of the Board etc. Variousparameters including the guidance note issued by the Institute of Company Secretaries ofIndia were considered for evaluation and after receiving the inputs from the Directorsthe performance evaluation exercise was carried out. The parameters include attendance ofDirectors at Board and Committee meetings integrity credibility expertise andtrustworthiness of Directors Board's monitoring of various compliances laying down andeffective implementation of various policies level of engagement and contribution of theDirectors safeguarding the interest of all stakeholders etc. The performance evaluationof the Board as a whole was carried out by the Independent Directors. The performanceevaluation of each Independent Director was carried out by the Board. The Directorsexpressed 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 other Director.
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 Independent Directors:
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.
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 timegap between two meetings.
The Audit Committee comprising of Mr.Sudhakar Kudva as the Chairman and Mr.RaghavenderMateti Mr.N.Sambasiva Rao Mr.N.Vijayaraghavan as the members. During the year underreview Mr.R.S.Nanda consequent to the resignation from the position of the Directorshipof the Company ceased to be the member of the Audit Committee. Further the Board hasre-constituted the Audit Committee by inducting Mr.N.Sambasiva Rao as Member of theCommittee. The details about Audit Committee including the brief description of its termsof reference and number of meetings held during the year are mentioned in the CorporateGovernance Report. There have been no instances during the year when recommendations ofthe Audit Committee were not accepted by the 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 are available 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 annual accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures;
b) it has selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2020 and of the Profit/Loss ofthe Company for the year ended on that date;
c) it has taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) it has prepared the Annual Accounts of the Company on a going concern' basis;
e) it has laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and
f) it has devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate 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 ongoing drinking water supplies to villages andmaintenance of the Company installed RO plants in the neighboring villages contributionto Vidhya Volunteer Scheme street lightning and bore-well maintenance development ofschool facilities community centers and bus shelters in the surrounding villages of thefactories providing medical services and vocational courses and conducting variousmedical camps etc. These projects are largely covered under Schedule VII of the CompaniesAct 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 onCSR activities is annexed herewith as Annexure-IV and forming part of this Report.
Change in the nature of business:
There is no change in the nature of business of the
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 ended31st March 2020 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.
Extract of Annual Return:
The extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 ofthe Act read with Rule 12 of the Companies (Management and Administration) Rules 2014 hasbeen posted on the Company's website.
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 and are in compliancewith the applicable provisions of the Act and Regulation 23 of Listing Regulations. TheCompany has not entered into any contract arrangement or transactions with any relatedparty which could be considered as material within the meaning of Regulation 23 of theListing Regulations. Related Party Transactions (RPTs) under IndAS (Indian AccountingStandards) -24 are disclosed in the notes to the financial statement. As there are nomaterially significant related party transactions made by the Company with Promoters
Directors or Key Managerial Personnel's etc. which may have potential conflict withthe interest of the Company at large the disclosure in Form AOC-2 is not applicable.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 per 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 Regulations a separate report on Corporate Governance has beenincluded in this Annual Report together with the Auditor's Certificate confirmingcompliance of the Corporate Governance as stipulated under the said Regulations. All theBoard members and the senior management personnel have affirmed compliance with theCompanies "Code of Conduct for Board and Senior Management Personnel" for thefinancial year 2019-20.
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:
Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(3) read with Scheduled V of the Listing Regulations is presented in aseparate section forming part of this Annual Report.
Business Responsibility Report:
A Business Responsibility Report containing the requisite details under Regulation 34of the Listing Regulations has been posted on the Company'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 2019-20 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 continued to be 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 ||Raghavender Mateti |
|Managing Director & CEO ||Director |
|(DIN:01514557) ||(DIN:06826653) |
Date: 26th August 2020