Nagarjuna Oil Refinery Ltd.
|BSE: 534184||Sector: Oil & Gas|
|NSE: NAGAROIL||ISIN Code: INE453M01018|
|BSE 00:00 | 24 Dec||Nagarjuna Oil Refinery Ltd|
|NSE 05:30 | 01 Jan||Nagarjuna Oil Refinery Ltd|
|BSE: 534184||Sector: Oil & Gas|
|NSE: NAGAROIL||ISIN Code: INE453M01018|
|BSE 00:00 | 24 Dec||Nagarjuna Oil Refinery Ltd|
|NSE 05:30 | 01 Jan||Nagarjuna Oil Refinery Ltd|
Your Directors have pleasure in presenting before you the 8th Annual Report of theCompany for the year ended March 31 2018.
The Financial Results of the company for the year ended March 31 2018 are as under:
A. BUSINESS AND FINANCIAL HIGHLIGHTS
Standalone Financial Results:
Rs. In Lakhs
The Loss after tax for the year was Rs.14297.20 Lakhs against loss after tax ofRs.23988.87 Lakhs for the previous year.
The main contributor to the loss was on account of exceptional item representing aprovision of Rs.14000 lakhs towards diminution in the value of investment in NagarjunaOil Corporation Limited (NOCL) in addition to Rs.40000 Lakhs and Rs.23622 Lakhs providedin the year 2014-15 and 2016-17 respectively. Considering the Corporate InsolvencyResolution Process (CIRP) initiated against NOCL under the Insolvency and BankruptcyCode 2016 the management as a prudent measure made an additional provision of Rs.14000Lakhs during the Current Financial Year ended March 31 2018.
Status of the Oil Refinery Project
Your company holds 46.78% of equity share capital of Nagarjuna Oil Corporation Limited(NOCL) which is involved in setting-up a 6 MMTPA refinery project at Cuddalore TamilNadu.
National Company Law Tribunal (NCLT) Chennai Bench has admitted the applications ofthe corporate creditors and initiated the Corporate Insolvency Resolution Process (CIRP)under the Insolvency and Bankruptcy Code 2016. NCLT has appointed an InsolvencyResolution Professional (RP) for NOCL on July 26 2017. The RP of NOCL has receivedResolution Plan from Resolution Applicants and discussions with Committee of Creditors(CoC) are in process.
Consolidated Financial Statements
The Company in terms of Section 129(3) of the Companies Act 2013 is required toprepare Consolidated Financial Statements incorporating the Financial Statements of itsAssociate Company Nagarjuna Oil Corporation Limited (NOCL) in addition to StandaloneFinancial Statements for the year ended March 31 2018.
The Company had been perusing with NOCL for the Audited Financial Statements for theyear ended March 31 2018. NOCL has informed the Company that in view of the initiation ofCorporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code 2016by National Company Law Tribunal (NCLT) Chennai Bench NOCL is not in a position to drawup the Financial Statements for the period 2017-18 and accordingly expressed its inabilityto furnish the Financial Statements for the year ended March 31 2018.
In view of the Financial Statements of NOCL not being available the Company could notproceed with the preparation of Consolidation Financial Statements for the F.Y 2017-18 asmandated by Companies Act 2013.
Accordingly the Company in order to meet the statutory requirements under CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 hasconvened the 8th Annual General Meeting of the Members and is presenting the StandaloneFinancial Statements without incorporating the Consolidated Financial Statements for theyear ended March 31 2018 for the approval of the Members.
The paid-up equity capital of the company as on March 31 2018 is Rs.428181821/-consisting of 428181821 equity shares of Re.1/- each.
Subsidiaries Joint Ventures or Associate Companies:
There has been no change in relation to any subsidiary joint venture or associatecompany during the year.
Accounts of Associates
Please refer Note on Consolidated Financial Statements above. The Details of Investmentof the company in Nagarjuna Oil Corporation Limited (NOCL) an Associate Company isenclosed as Annexure-I.
B. DIRECTORS BOARD COMMITTEES KEY MANAGERIAL PERSONNEL AND REMUNERATION
Directors Retiring by Rotation
In accordance with Section 152 of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Chandra Pal Singh Yadav who is liable to retire byrotation and being eligible offers himself for re-appointment as Director of the Companysubject to retirement by rotation.
Resignation of Director
During the year under review Mr. S R Ramakrishnan resigned from the office of Directorof the company with effect from November 15 2017.
Further Mr. K Rahul Raju resigned from the office of Director with effect from April20 2018
The Board placed on record its deep appreciation for the services rendered by themduring their tenure as Directors of the Company.
Declaration by Independent Directors
The Independent Directors have submitted their disclosure to the Board that theyfulfill all the requirements as to qualify as an Independent Director under Section 149(6)of the Companies Act 2013 as well as SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
Key Managerial Personnel
There are no changes in relation to Key Managerial Personnel of the Company for theyear ended March 31 2018.
Ms. Ankita Mathur Company Secretary and Key Managerial Personnel resigned from theposition with effect from May 4 2018.
Meetings of the Board
The Board of Directors of your company during the period under review met five timeson May 26 2017 August 09 2017 November 08 2017 December 26 2017 and February 092018.
Remuneration and other particulars of the Directors/ Key Managerial Personnel /Employees
The information relating to remuneration and other particulars of the Directors/ KeyManagerial Personnel/Employees as required under Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 appears as Annexure II.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules appearsas
Committees Audit Committee:
In compliance with the provisions of Section 177 of the Companies Act 2013 andRegulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the company had constituted an Audit Committee consisting of qualified and experiencedmembers from various fields. The Committee consists of two Independent Directors and onenon-executive Director. The Chairman of the Committee is Dr. N C B Nath an IndependentDirector. The Committee meets periodically to review the internal audit report quarterlyFinancial Results and Annual Financial Statements and recommends its decisions to theBoard apart from taking action independently whenever required. The Statutory Auditors andCompany Secretary attend the Audit Committee Meetings.
Nomination and Remuneration Committee:
The Nomination and Remuneration Committee was constituted in compliance with theprovisions of the Companies Act and Regulation 19 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
The Company has adopted a Nomination and Remuneration Policy for determininginter-alia qualifications positive attributes and independence of a Director mattersrelating to the remuneration appointment removal and evaluation of performance of theDirectors Key Managerial Personnel Senior Management and other employees.
Stakeholders Relationship Committee:
The Stakeholders Relationship Committee was constituted in compliance with theprovisions of the Companies Act 2013 and Regulation 20 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
Company Policy Matters
Your company's endeavor has always been to maintain transparency and accountability toits stakeholders. In this direction various policies mentioned in the CorporateGovernance Report have been implemented to enable the stakeholders to appreciate thevarious interventions the company has taken.
The implementation of these policies are reviewed periodically by the Board ofDirectors and updated regularly.
Risk Management Policy
The Board has put in place the Risk Management Policy for the company to addressvarious risks impacting the company.
The company has setup an Enterprise Risk Management System to manage and mitigaterisks.
Policy on Board Evaluation
The Company has a Policy on Board Evaluation in compliance of Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The purpose of the policy is to assess the effectiveness of the Board as a wholeCommittees of the Board and Individual Directors (Independent and Non-Independent) onregular basis and to take necessary steps for improving the effectiveness of the Board.The Nomination and Remuneration Committee has devised the methodology identified sampletools for evaluation and also laid down the parameters for evaluation of Non-ExecutiveDirectors Independent Directors Chairman Board of Directors and Committees of theBoard.
The Nomination and Remuneration Committee have based on the responses received fromDirectors evaluated the Directors conveyed the opinion of the Committee to theDirectors Committees and the Board.
In view of the evaluation not linked to payment of remuneration the company has optedonly for payment of sitting fees the evaluation has no financial implications on thecompany.
Whistle Blower Policy/Vigil Mechanism
The company has formulated the policy on Whistle Blower/Vigil Mechanism in compliancewith the Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Section 177(9) of the Companies Act 2013.
The Policy aims to prohibit managerial personnel from taking adverse personnel actionagainst employees disclosing in good faith alleged wrongful conduct on matters of publicconcern involving violation of any law mismanagement misappropriation of public fundsamong others.
Employees aware of any alleged wrongful conduct are encouraged to make a disclosure tothe Audit Committee.
No personnel of the company were denied access to the Audit Committee.
Corporate Social Responsibility
The provisions relating to Corporate Social Responsibility does not apply to theCompany.
Your company firmly believes that building a culture of compliance is more than meetingregulations and standards. Your company is always proactive in meeting mandated standardsand practicing Corporate Governance in spirit and not just the letter of the law.
As Mandated by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015a report on Corporate Governance along with a Certificate from Practicing CompanySecretary on the compliance of conditions of Corporate Governance is annexed hereto. Yourcompany is happy to inform you that there were no adverse remarks/ qualifications/reservations raised in the Corporate Governance Report.
Related Party Transactions
There are no contracts or arrangements entered into by the company with related partiesin accordance with the provisions of Section 188(1) of the Companies Act 2013 other thanthe transaction entered into with Nagarjuna Fertilizers and Chemicals Limited pursuant tothe order of the jurisdictional High Courts in relation to the Composite Scheme ofArrangement and Amalgamation between Ikisan Limited Kakinada Fertilizers LimitedNagarjuna Fertilizers and Chemicals Limited and Nagarjuna Oil Refinery Limited.
The Policy on Related Party Transactions appears on the website of the Company atwww.norl.co.in
Particulars of Loans Guarantees or Investments
The company has not provided any loans guarantees or made investments pursuant toSection 186 of the Companies Act 2013 other than executing a Sponsored Undertaking infavor of the lenders of Nagarjuna Oil Corporation Limited.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
In relation to the information required to be furnished under the Companies Act 2013read with Companies (Accounts) Rules 2014 the company is not undertaking anymanufacturing activity and accordingly there is no information available pertaining toConservation of Energy and Technology Absorption. There is no Foreign Exchange Earningsand Outgo.
Extract of Annual Return
The Extract of the Annual Return for the year ended March 31 2018 appears as Annexure-IV to this report
Significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and company's operations in future
There were no orders passed by Regulators or Courts or Tribunals impacting the goingconcern status and future business operations of the Company.
Adequacy of Internal Financial Controls
The company has established and is maintaining internal controls and procedures basedon the internal control over financial reporting criteria established by the Company
The Board of Directors have evaluated the effectiveness of the company's internalfinancial controls and procedures and confirmed that they are adequate in all materialrespects based on the size and the nature of its business and such internal financialcontrols over financial reporting were operating effectively as at March 31 2018
The company has not accepted any deposits within the purview of the Companies Act 2013and the Rules made there under during the Financial Year 2017-18.
AUDITORS AND AUDIT REPORT
M/s. M Bhaskara Rao & Co. Chartered Accountants (Firm Registration No-000459S)Hyderabad were appointed as the Statutory Auditors' for a term of five (5) yearscommencing from the conclusion of the 4th Annual General Meeting up to the conclusion ofthe 9th Annual General Meeting subject to ratification by the members of the company everyyear at the Annual General Meeting.
M/s. M Bhaskara Rao & Co have signified their willingness to accept ratification ofappointment and have further confirmed their eligibility under Section 141 of theCompanies Act 2013.
The company's Statutory Auditors have also furnished a certificate from the Peer ReviewBoard of the ICAI confirming that they have undergone the process of peer review.
The Board of Directors commended the ratification of the appointment of StatutoryAuditors for the Financial Year 2018-19 for consideration of the members.
The Statutory Auditors' of the Company have qualified their opinion in the followingrespect:
The Accounts have been drawn up on Going Concern basis notwithstanding the 100%provisions in respect of investment in Associate Company Nagarjuna Oil Corporation Limitedfor the reasons stated in Note 4.1 indicating the existence of material uncertainity thatmay cast significant doubt about the company's ability to continue as a Going Concernpending finalization of future business plans by the Company.
Note 4.1 forming part of Financial Statements for the year ended March 31 2018:
The Project undertaken by Nagarjuna Oil Corporation Limited (NOCL) is in ConstructionStage. Project construction substantially slowed down from the year 2012-13 due to delayin tying up of equity for a re-assessed cost and effect of Thane Cyclone'.
National Company Law Tribunal (NCLT) Chennai Bench had admitted the applications ofthe corporate creditors of NOCL and initiated the corporate insolvency resolution processunder the Insolvency and Bankruptcy Code 2016 (IBC 2016). NCLT had appointed anInsolvency Resolution Professional (RP) for NOCL on July 26 2017. The ResolutionProfessional of NOCL has received Resolution Plan from Resolution Applicants anddiscussions with Committee of Creditors (CoC) is in process.
Considering the developments as stated above the management as a prudent measure madean additional provision of Rs.14000.00 Lakhs (Previous years Rs. 23622.00 Lakhs) towardsbalance of investment value Rs. 77622.00 lakhs (46.78%) of NOCL equity pending approvalof the resolution plan by NCLT.
Management explanation to Auditors Qualification
The resolution plan of NOCL is in process. The going concern aspect will beappropriately dealt with by the Company on approval of the resolution plan by NCLT.
The Board of Directors have appointed Mr. C S S Krishna Partner M/s KBG AssociatesCompany Secretaries Hyderabad as the Secretarial Auditor of the Company to undertakeSecretarial Audit for the Financial Year 2018-19.
Secretarial Audit Report
The Secretarial Audit Report for the Financial Year 2017-18 appears as Annexure V to this Report. There are no qualifications or adverse remarks in the report.
The company has a well-established system of Internal Audit which carries out audit onRisk Management framework covering all the functions.
An Internal Auditor of the company has been appointed by the Board of Directors incompliance with the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
D. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act 2013 the Board ofDirectors of the Company hereby report:-
(a) in the preparation of the annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures;
(b) the Directors had 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 had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors place on record their gratitude to the Government of India thefinancial institutions and company's bankers for their assistance and cooperation.
Further the company places on record its sincere appreciation for the continuingsupport and unstinting efforts of investors associates and all stakeholders.