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Orient Refractories Ltd.

BSE: 534076 Sector: Engineering
BSE 00:00 | 15 Feb 186.15 -12.25






NSE 00:00 | 15 Feb 185.95 -13.60






OPEN 198.00
VOLUME 11636
52-Week high 280.10
52-Week low 152.25
P/E 23.87
Mkt Cap.(Rs cr) 2,236
Buy Price 186.15
Buy Qty 21.00
Sell Price 186.15
Sell Qty 14.00
OPEN 198.00
CLOSE 198.40
VOLUME 11636
52-Week high 280.10
52-Week low 152.25
P/E 23.87
Mkt Cap.(Rs cr) 2,236
Buy Price 186.15
Buy Qty 21.00
Sell Price 186.15
Sell Qty 14.00

Orient Refractories Ltd. (ORIENTREF) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the 8th Annual Report of Orient RefractoriesLimited (the "Company") along with the audited financial statements for thefinancial year ended 31 March 2018.


(Amount in Rs. Lacs)

Particulars 2017-18 2016-17
Gross revenue from operations 63559.30 55620.32
Total expenditure before finance cost and depreciation 50854.31 45284.23
Operating Profit 12704.99 10336.09
Add: Other income 1062.23 826.28
Profit before finance cost depreciation exceptional items and taxes 13767.22 11162.37
Less: Finance costs 0.00 0.00
Profit before depreciation exceptional items and taxes 13767.22 11162.37
Less: Depreciation 682.69 630.74
Profit/(Loss) before exceptional items & tax 13084.53 10531.63
Add/(Less): Exceptional Items 0.00 0.00
Profit before taxes 13084.53 10531.63
Less: Tax Expense 4501.21 3640.74
(A) Profit/(Loss) after taxes 8583.32 6890.89
(B) Total other comprehensive income (14.43) (29.08)
(C) Total comprehensive income for the period [ A + B ] 8568.89 6861.81
Retained Earnings: Balance brought forward from the previous year 26125.87 21360.71
Add: Profit for the period 8583.32 6890.89
Add: Other Comprehensive Income recognised in Retained Earnings (14.43) (29.08)
Balance Which the Directors have apportioned as under to: 34694.76 28222.52
(i) Dividend on Ordinary Shares 3003.48 1742.02
(ii) Tax on dividends 611.44 354.63
Total Appropriations 3614.92 2096.65
Retained Earnings: Balance to be carried forward 31079.84 26125.87


The Company has adopted Indian Accounting Standard (‘Ind AS') with effect from 1April 2017 and accordingly these financial results along with the comparatives have beenprepared in accordance with the recognition and measurement principles stated thereinprescribed under Section 133 of the Companies Act 2013 read with the relevant rulesissued thereunder and the other accounting principles generally accepted in India.


The Company has shown significant growth during the year 2017-18. The revenue duringthe year was Rs. 62678.77 lacs (net of excise duty) as compared to Rs. 51938.77 lacs(net of excise duty) in 2016-17 growth of 20.67%. Profit before tax increased by 24.24%as compared to previous year 2016-17.Profit before tax is Rs. 13084.53 lacs in currentyear (Previous year Rs. 10531.63 lacs).



Your Company is in the business of manufacturing and marketing special refractoryproducts systems and services to the steel industry with global presence. ORL is marketleader for special refractories in India and has many global partners for itsinternational quality products. ORL produces more than 40000 tons of refractory per annumcustomized products and system solutions. A refractory material is a material that retainsits strength at high temperatures. Refractories are made of natural and manmade materialsusually non-metallic or combinations of other compound and minerals. Refractories materialcan resist high temperature without undergoing physical and chemical changes whileremaining in contact with molten slag metal and gases. The refractory material is mainlyused in iron & steel industry metal smelters cement glass industries etc. Demandof refractory product is primary driven by the growing prosperity the level of industrialproduction and infrastructure projects. The growth of refractory industry primarilydepends on the growth of iron & steel industry. The steel industry accounts about 75%of consumption of refractory materials with cement (12%) non-ferrous (6%) petrochemicals(4-5%) and glass (3%) making up the remainder. ORL supplies only to steel industries.

ORL has continual programs for improving efficiency and effectiveness in manufacturingprocesses raw material cost energy conservation control over working capital toproduce special refractories at low cost so as to add maximum value to the customers. Themost valuable asset of ORL is the very experienced team of technical personnel and otherexperts having intense knowledge of the market and products. Their innovative ideas andcommitment is very important factor for securing the Company's success in the long run.The Company's export is a fair share of its output to various overseas customers. TheCompany export has grown by 35.43 % during the year 2017-18. ORL products are widelyaccepted throughout the world because of high quality at competitive prices. In Year 2016ORL parent Company RHI AG reached an agreement with controlling shareholding of anotherglobal refractory company M/s. Magnesita GP & Rohne. The combined Company will beable to offer ORL customers even more comprehensive range of products and services.


RHI Magnesita N.V. is global leader in refractories with largest number of locationsaround the world. RHI Magnesita N.V. has a talented team of 14000 employees across 40countries control the shipment of refractory products in more than 180 countriesworldwide. RHI Magnesita N.V. provided its customers with a broad range of customizedsolutions and comprehensive packages for steel production consisting of refractoriesmachinery flow control system and full line solution.

RHI Magnesita N.V. produces and sells refractory products used in high-temperatureindustrial processes worldwide. RHI Magnesita N.V. operates through steel industrial andraw materials segments. The company also provides magnesia spinal dolomite-magnesiamagnesia-chrome alumina alumina silicate mortars for the cement industry shapedproducts based on silicon carbide magnesia zirconium fireclay unshaped refractorieshigh-temperature insulation ceramic and metallic anchoring systems unshaped products andceramically bonded bricks used in glass melting process. In addition it offers bricks andmixes prefab components as well as special machinery repair systems and technicalequipment for refractory products products and services for the steel industry processes.Shares of RHI Magnesita N.V. is listed on London Stock Exchange and has annual sales ofEuro 2.67 billion as at 31 December 2017 and is the largest vertically integratedmanufacturer of refractory products world-wide. RHI Magnesita has technological leadershipwith close to market R&D facilities and tailor made products for steel cement andglass industries. RHI AG had acquired Magnesita in year 2016. RHI Magnesita is the globalleader in the refractory business in terms of revenue. The merger had enabled RHI toexpand its geographical footprint thus giving access to global mining network byproviding access to the mines in America. RHI Magnesita group has three flagship companiesin India RHI Clasil

Private Limited RHI India Private Limited and Orient Refractories Limited.


i. Global Economy

According to World Steel Association steel output in 2017 was 1.69 billion tonnes upto 5.3% for 2016. Steel output in European Region increase by 4.1% as compared to 2016. InAmericas the steel output growth was 4.6% year to year basis. After few years of declinethe US steel industry recovered on the back of higher demand stronger economy activity.CIS country output was flat in the year. Market environment in Asia Pacific is dominatedby China India steel output increased by 6.2% from 2016.

The global refractories market size was USD 28.72 billion in 2016 and is projected toreach USD 36.17 billion by 2022 at a CAGR of 3.89% between 2017 and 2022. By volume itsmarket size is estimated to grow from 46.28 MN tons in 2016 to 56.83 MN tons by 2022 at aCAGR of 3.45% between 2017 and 2022. Asia-Pacific is the global forerunner in refractoriesmarket in terms of value and volume and the trend is expected to continue till 2020. Thecountries in this region such as China and India are the fastest-growing markets forrefractories due to increasing usage of refractories in iron & steel cement glassnon-ferrous metals and other industries. China is a major supplier for inputs torefractory material and has been imposing heavy taxes on mining and export of refractoryproducts and raw materials including magnesium used in production of refractory products.The new environment tax policy in China has forced raw material suppliers there to scaledown production which has affected even the availability of finished goods. India'srefractory industry sources almost half of its raw material from China. This has led to aslump in the import of raw material from China leaving domestic refractory makersstruggling to meet demand from key user industries such as steel glass cement andaluminum.

This has resulted in sharp increase in imported raw material costs and consequentlyincrease in the refractory material prices thus increasing product prices and the marketsize and growth stated above.

ii. Indian Economy

India's GDP growth was 6.5% in 2017-18. The expected growth in 2019 is >7%.Industrial growth was strong this was driven by growth in capital goods infrastructureand construction and FMCG products. Consumption in rural sector is growing mainly growthof tractor sales. Together these trends point to an economic recovery that is steady andbroad based.

India's refractory industry has been growing faster over the couple of years due toincrease in steel production and demand after slowdown in year 2013-15. India's steelindustry consumes nearly 70% of the country's refractories output. In India theinfrastructure push is expected to drive steel growth and the government's proactiveapproach to confer infrastructure status to housing augurs well for steel industry andtherefore the refractory industry as such. Refractories constitute around 2~3% of thetotal steel manufacturing cost. Typically the demand for refractories is directlycorrelated to steel production. Steel production in India is forecast to double by 2031with growth rate expected to go above 10 per cent in financial year 2018. Steelmanufacturing output of India is expected to increase to 128.6 MT by 2021 acceleratingthe country's share of global steel production from 5.4 % in 2017 to 7.7 % by 2021.Barring misfortunes within the banking system the recapitalisation initiative should spurlending especially to small and medium enterprises that rarely have access to other formsof funding specifically the equity and bond markets. We believe that this momentum willbe sustained in the coming year and expect GDP growth to rise >7% . Oil prices thatsurged last year have begun to moderate and with new shale supplies kicking in shouldhopefully soften over the coming months. Infrastructure oil and gas and automotives woulddrive the growth of the industry. Ministry of Steel plans to set up Steel Research andTechnology Mission in India to promote R&D activities in the sector.


India's steel output is expected to grow at a CAGR of 8.9 per cent during 2017-21 andIndia is expected to become top global steel producer The Union Cabinet Government ofIndia has approved the National Steel Policy (NSP) 2017 as it seeks to create a globallycompetitive steel industry in India. NSP 2017 targets 300 million tons (MT) steelmakingcapacity and 160 kgs per capita steel consumption by 2030. As per Ministry of Steel'sforecast 3.2 Million Tons refractories raw material will be needed by 2030-31 to fulfillsteel production requirements. With steel industry being one of the most significantconsumers of refractories the demand for refractories to rise with increasing productionof steel. Despite being a small portion of the total steel manufacturing costsrefractories are critical to get the desired size shape and quality of the final product.Overall the refectories industry is dependent on import for key raw materials i.e.alumina magnesia bauxite magnetite binders zirconia etc. As per Euromonitor reportsteel production is expected to grow at CAGR of 7.5% during the period 2016 to 2021.Further as per Euromonitor report cement production is expected to grow at CAGR of 5%during the period 2016-2021.

The reduction in supplies from China had immediate consequences for the market pricesof a number of refractory minerals including fused alumina bauxite and graphite.

So far in June' 2018 the prices for graphite and WFA have remained largely stablewhile bauxite and BFA prices have shown a slight decline on the spot market recentlybecause financially-tight sellers sought to move material to secure much-needed cash flow.Most refractory raw materials such as magnesia and graphite have kept firm this year oncontinued environmental regulations restricting operations in China.


Some of the other recent government initiatives in this sector are as follows:

Government of India's focus on infrastructure and restarting road projects is aidingthe boost in demand for steel. Also further likely acceleration in rural economy andinfrastructure is expected to lead to growth in demand for steel.

The Union Cabinet Government of India has approved the National Steel Policy (NSP)2017 as it seeks to create a globally competitive steel industry in India. NSP 2017targets 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steelconsumption by 2030.

The Ministry of Steel is facilitating setting up of an industry driven Steel Researchand Technology Mission of India (SRTMI) in association with the public and private sectorsteel companies to spearhead research and development activities in the iron and steelindustry at an initial corpus of Rs 200 crore (US$ 30 million).


India is expected to overtake Japan to become the world's second largest steel producersoon and has envisaged achieving 300 MT of annual steel production capacity by 2030.Indiais expected to become the second largest steel producer in the world by 2018 based onincreased capacity addition in anticipation of upcoming demand and the new steel policythat has been approved by the Union Cabinet in May 2017 is expected to boost India'ssteel production. Huge scope for growth is offered by India's comparatively low per capitasteel consumption and the expected rise in consumption due to increased infrastructureconstruction and the thriving automobile and railways sectors.

All these factors are monitored on continuous basis by ORL and necessary actions willbe taken in time. Your directors are keeping close watch on overall economy and give inputwhenever required. With the positive support of RHI Magnesita N.V. we see good prospectsand strong competitive advantage for ORL India going ahead.

Your Directors are hopeful to sustain the same growth in year 2018-19.


The Company to meet growing demand of refractory worldwide through its internal fundexpanded its existing production capacity of isostatic products from 9300 tons per yearto 11700 tons per year at Bhiwadi. The new plant has capacity to produce 2400 tons peryear which can be enhanced to 4800 tons per year in second phase. The plant wassuccessfully commissioned on 17 May 2018 and the commercial production was started fromJune'2018. The actual project cost was Rs. 1760 lacs.


Your Company enjoys the status of "One Star Export House".


The Board recommended a dividend of Rs. 2.50 per equity share on 120139200 equityshares of Re. 1.00 each for the year ended 31 March 2018 (previous year Rs. 2.50 perequity share). The dividend on equity share is subject to the approval of the shareholdersat the Annual General Meeting (‘AGM') scheduled to be held on 10 September 2018. Thedividend will be paid by 30 September 2018.

The Register of Members and Share Transfer Books will remain closed from Tuesday 28August 2018 to Tuesday 4 September 2018 (both days inclusive) for the purpose of AGMand payment of the dividend for the financial year ended 31 March 2018.


The paid up equity share capital as on 31 March 2018 was Rs. 1201.39 lacs. During theyear under review the Company has not issued any shares. The Company has not issuedshares with differential voting rights. It has neither issued employee stock options norsweat equity shares and does not have any scheme to fund its employees to purchase theshares of the Company.


The Board of Directors has decided to retain the entire amount of profits in the profitand loss account.


In terms of Section 134(3)(l) of the Companies Act 2013 no material changes andcommitments affecting the financial position of your Company have occurred between the endof the financial year of the Company to which the financial statements relate and on thedate of this report.


The Company has adequate internal control systems in place and also has reasonableassurance on authorizing recording and reporting transactions of its operations. TheCompany has a well-placed proper and adequate internal controls environment commensuratewith its size scale and complexities of its operations. The Company had already developedand implemented a framework for ensuring internal controls over financial reporting. Thisframework includes entity level policies processes and operating level standard operatingprocedures. Internal control systems are an integral part of your Company's corporategovernance structure. These have been designed to provide reasonable assurance with regardto inter-alia (a) recording and providing reliable financial and operational information;(b) complying with the applicable statutes; (c) safeguarding assets from unauthorized use;(d) executing transactions with proper authorization and ensuring compliance withcorporate policies; (e) Prevention and detection of frauds / errors and (f) Continuousupdating of IT systems. The Company's management has assessed the effectiveness of theCompany's internal control over financial reporting as of 31 March 2018.

The Audit Committee reviewed the reports submitted by the Management Internal Auditorsand Statutory Auditors. Based on their evaluation (as defined in section 177 of theCompanies Act 2013 and Regulation 18 of Listing Regulations 2015) the Company's AuditCommittee has concluded that as of 31 March 2018 the Company's internal financialcontrols were adequate and operating effectively.


Employees being prime force the Company give equal emphasis on employees' developmentand their engagement. Our people are the most important resource we have. The Companybelieves in enhancing the competencies of employees to create a high performing andinnovative organization. Employees are facilitated to participate in training programs inhouse and at outside institutes. Equal emphasis is given on technical & soft skills.We are creating numerous opportunities for our employees to develop includinginternational development paths and special initiatives for the future management of ourcompany. Last year our main focus of in-house trainings was on interpersonal skillsbehavioural attributes customer focused culture lean implementation and 5's at shopfloor. The Company endeavours to keep the employees motivation high level by providingcongenial & respectful work atmosphere and rewarding/remunerating effectively. 100%safety of our employees is one of the important operative targets for ORL. Variousinitiatives have been launched to engage employees. Communicating and reaching out toemployees at all levels is being done by using various mass media techniques. Celebratingfestivals and achievements on various occasions is part of ORL culture. There are cordialrelations between the Management and the employees of the Company.


The Company does not have any subsidiary.


RHI Ag (ultimate holding company) entered into a share purchase agreement with a groupof shareholders controlling Magnesita Refratrios S.A. a corporation incorporated underthe laws of Brazil ("Magnesita") pursuant to which RHI Ag agreed to purchase50% plus one share of the issued and outstanding share capital of Magnesita (the"Acquisition of Control"). The merger of Magnesita Refratrios S.A. and RHI Agwas implemented in two steps of internal reorganization.

As a first step of reorganization substantially all of RHI's assets rights andpermits obligations and legal relations were transferred to RHI Feuerfest GmbH throughuniversal succession by way of a de-merger for absorption. This means that all legalrelations with RHI Ag were transferred to RHI Feuerfest GmbH through universal successionas of the date of legal effectiveness of the demerger on 17 October 2017.

RHI Feuerfest GmbH is responsible for operative business. RPT limit approved by membersof the Company also transferred to RHI Feuerfest GmbH.

As a second step RHI Ag was merged with the Dutch Legal Entity i.e. RHIMagnesita N.V. by way of a cross-border merger whereby all assets rights and permitsobligations and legal relations of RHI Ag remaining after the de-merger were transferredto RHI Magnesita N.V. through universal succession by way of a merger by absorption. Aftermerger with RHI Magnesita N.V. RHI Ag ceased to exist as a legal entity. The merger andthe completion of the acquisition of control occurred in October' 2017.


The Board of Directors of the Company at its meeting held on 31 July 2018 granted itsin-principle approval to the scheme of amalgamation of RHI India Private Limited (RHIIndia) and RHI Clasil Private Limited (RHI Clasil) (together the MergingEntities) with and into the Company subject to approval of the shareholders andcreditors of the three companies the Stock Exchanges the Securities and Exchange Boardof India the National Company Law Tribunal and other regulatory authorities. In thisregard the Board of Directors has approved the share exchange ratio i.e. for every 100equity shares of face value of Rs. 10 each of RHI India issue of 7044 equity shares offace value of Re. 1 each of the Company and for every 1000 equity shares of face value ofRs. 10 each of RHI Clasil issue of 908 equity shares of face value of Re. 1 each of theCompany. The Board of Directors is of the opinion that the transaction is aligned with theCompany's best interests and would entail various benefits including: (a) simplificationof the corporate structure and consolidation of the India businesses of the RHI MagnesitaN.V. (the ultimate holding company) group; (b) establishing a comprehensive refractoryproduct portfolio; (c) realizing business efficiencies inter alia through optimumutilization of resources due to pooling of management expertise technologies and otherresources of the companies; (d) improved allocation of capital and optimisation of cashflows contributing to the overall growth prospects of the combined entity; (e) creation ofa larger asset base and facilitation of access to better financial resources and (f)enhanced shareholder value pursuant to economies of scale and business efficiencies.

The Company and the merging entities are involved in similar business activities whilethe Company has carved a niche in the refractory products market RHI Clasil manufacturesand markets other refractories and allied products and RHI India is predominantly engagedin trading and marketing of refractories and allied products. Accordingly the integrationof the businesses of the Company and the merging entities would further augment theCompany's leadership position in the Indian refractories market with presence at alllevels of the value chain including manufacture marketing and trading of refractoriesand allied products. The transaction is expected to enhance the Company's long-term growthprospects and competitiveness thereby benefitting all the stakeholders of the Companyparticularly its shareholders and employees. RHI India and RHI Clasil are related partiesof the Company. This envisaged transaction constitutes a related party transaction as allthe three companies are part of the RHI Magnesita N.V. group of companies. For the parentcompany RHI Magnesita N.V. the global leading supplier of refractory products systemsand services the merger of the Indian organisations is an important step towardsexecuting the strategic pillar "Markets" which focuses on achieving worldwidepresence with strong local organisations and solid market positions in all major markets.The envisaged amalgamation is a key measure to build one strong local organisation inIndia through consolidating and streamlining the local structures. This will enable RHIMagnesita N.V. to seize growth opportunities in the strategically important growth marketIndia even more effectively and efficiently in the future.


The Company had conducted postal ballot through notice dated 15 March 2018 for (a)Amendment in the Memorandum of Association of the Company and (b) Shifting of registeredoffice of the Company. The Company declared the result dated 26 April 2018 and both theresolutions were approved by the shareholders of the Company. The result of voting isprovided in the Corporate Governance Report.


The Regional Director Northern Region was pleased to pass an order dated 30 July2018 approving shifting of the registered office of the Company from National CapitalTerritory of Delhi to the State of Maharashtra. Accordingly the registered office of theCompany will be shifted to Mumbai. With effect from 1 August 2018 the address of newregistered office is C-604 Neelkanth Business Park Opposite Railway Station Vidhyavihar(West) Mumbai Maharashtra - 400 086.


Pursuant to the requirement under Section 134(3)(c) and 134(5) of the Companies Act2013 your Directors to the best of their knowledge confirm that: i. that in thepreparation of the annual accounts for the year ended 31 March 2018 the applicableaccounting standards have been followed and there are no material departures from thesame; ii. the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31 March 2018 andof the Profit of the Company for that period; iii. the Directors have taken proper andsufficient care for maintenance of adequate accounting records in accordance withprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; iv. the Directors have preparedthe annual accounts of the Company on a "going concern" basis; v. the Directorshave laid down internal financial controls to be followed by the Company and the suchinternal financial controls are adequate and are operating effectively and vi. theDirectors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that systems are adequate and operating effectively.


All contracts /arrangements / transactions entered by the Company during the financialyear with related parties were in ordinary course of business and on an arm's lengthbasis. During the year the Company has not entered into any contracts /arrangements /transactions with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions.

Accordingly the disclosure of related party transactions as required under Section134(3)(h) of the Companies Act 2013 in Form AOC - 2 is not applicable to your Company.

The policy on materiality of related party transactions and dealing with related partytransactions are approved by the Board and can be accessed on the Company's website at thelink: Members can refer Note no. 30 to thefinancial statements which set out related party disclosures.

The Board of Directors of the Company has approved the criteria for making the omnibusapproval by the Audit Committee within the overall framework of the policy on relatedparty transactions. Prior omnibus approval is obtained for related party transactionswhich are of repetitive nature and proposed to be entered in the ordinary course ofbusiness and at arm's length during the financial year. All related party transactions areplaced before the Audit Committee for review and approval.


The Board of Directors of the Company has approved a Corporate Social Responsibility(CSR) Policy based on the recommendation of the CSR Committee. The Board has formed acommittee on CSR in accordance with Companies Act 2013. The composition of the same hasbeen given in Corporate Governance Report. The CSR policy of the Company is available onthe Company's website and can be accessed on the Company's website at the link:http://www. In the year 2017-18 the Company wasrequired to spend Rs. 212.23 lacs (including unspent amount of Rs. 30.13 lacs for thefinancial year 2016-17) towards CSR activities however the Company spent Rs. 184.06 lacstowards the CSR activities. During the year the Company has kept the provision forspending fund on skill development programme as recommended by CSR Committee but due todelay in project the programme could not be started. However the Company spent more thanthe prescribed amount for this year towards CSR activities. The initiatives undertaken bythe Company on CSR activities during the year is set out in Annexure - I.


The Company's Board of Directors has overall responsibility for the establishment andoversight of the Company risk management framework. The Company has framed a RiskManagement Policy to identify and access the key business risk areas and a risk mitigationprocess. The policy aims to ensure resilience for sustainable growth and sound corporategovernance by having an identified process of risk identification and management incompliance with the provisions of the Companies Act 2013. Risk management policies andsystems are reviewed regularly to reflect changes in market conditions and the Company'sActivities. The Company through its training and management standards and proceduresaims to maintain a disciplined and constructive control environment.

The Risk Management Committee oversees how management monitors compliance with theCompany's risk management policies and procedures and reviews the adequacy of the riskmanagement framework in relation to the risks faced by the Company. There are no riskswhich in the opinion of the Board threaten the existence of the Company.


Ms. Barbara Potisk Eibensteiner resigned as the member of the Board effective 8 August2017. The Board places on record their deep appreciation for the contribution during hertenure.

The shareholders of the Company in their 7th Annual General Meeting hold on 25September 2017 appointed

- Ms. Buzzi as director of the Company and

- Mr. Parmod Sagar as Managing Director and Chief Executive Office of the Company fora fresh term of 5 years effective from 4 March 2018.

In accordance with provisions of the Companies Act 2013 and Articles of Association ofthe Company Mr. Parmod Sagar Whole Time Director designated as Managing Director &CEO of the Company retires by rotation at the ensuing AGM and being eligible seeksre-appointment. The Board recommends his re-appointment.

Brief profile of the Director being re-appointed as required under Regulations 36(3) ofListing Regulations 2015 and Secretarial Standard on General Meetings are provided in thenotice for the forthcoming AGM of the Company.

The Company has received declaration from all Independent Directors of the Companyconfirming that they meet with the criteria of independence as laid down under Section149(6) of the Companies Act 2013 confirming that they meet the criteria of independenceas prescribed thereunder as well as Regulation 16(1)(b) of the Listing Regulations 2015.The Company has complied with the requirements of corporate governance as stipulated underthe Listing Regulations 2015 and accordingly the Report on Corporate Governance formingpart of this Annual Report.


Pursuant to Section 203 of the Companies Act 2013 the Key Managerial Personnel of theCompany are- Mr. Parmod Sagar Managing Director & CEO Mr. Sanjeev Bhardwaj ChiefFinancial Officer and Mr. Sanjay Kumar Company Secretary. During the year there has beenno change in the Key Managerial Personnel.


The Company has devised the Nomination and Remuneration Policy for the selectionappointment and remuneration of the Directors and Key Managerial personnel and alsoremuneration of other employees who have the capacity and ability to lead the Companytowards achieving sustainable development. The Nomination and Remuneration Policy of theCompany is available on the Company's website and can be accessed on the Company's websiteat the link: http://www. The Criteria for appointmentand remuneration of Directors is as under:

(a) Criteria for Appointment of Managing Directors / Whole Time Director / Director:The Nomination and Remuneration Committee shall identify persons of integrity who possessrelevant expertise and experience particularly in refractory industry leadershipqualities required for the position and shall take into consideration recommendation ifany received from any member of the Board.

(b) Criteria for Appointment of Independent Director:

The Independent Director shall be of high integrity with relevant expertise andexperience so as to have as diverse Board with Directors having expertise in the fields ofmanufacturing marketing finance taxation law governance and general management.


The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to applicable provisions of the Act andthe corporate governance requirements as prescribed by Listing Regulations 2015.

The performance of the board was evaluated by the board after seeking inputs from allthe Directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc. The Nomination andRemuneration Committee had evaluated the performance of individual directors on the basisof criteria such as the contribution of the individual director to the board and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc.

Performance evaluation of independent directors was carried out by the entire boardexcluding the independent director being evaluated. A meeting of the independentdirectors with Dr. Vijay Sharma as the Chairman was held on 30 May 2017 to review theperformance of the non-independent directors the Board as a whole and the Chairman on theparameters of effectiveness and to assess the quality quantity and timeliness of the flowof information between the Management and the Board. The same was discussed in the boardmeeting that followed the meeting of the independent directors at which the performanceof the board its committees and individual directors was also discussed.

25. AUDITORS Statutory Auditor

M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No.012754N/N500016) were appointed as Statutory Auditors of the Company at the 7 AGM held on25 September 2017 for a period of 5 years for auditing the accounts of the Company fromthe conclusion of 7 AGM till the conclusion of 12 AGM of the Company (from financial year2017-18 to financial year 2021-22) subject to ratification of their appointment at everyannual general meeting in terms of the provisions of Companies Act 2013. However as perthe amended provisions of the Companies Act 2017 notified on 7 May 2018 Company is notrequired to ratify the appointment of auditors at every annual general meeting thereforeit is not proposed to ratify the appointment of auditors at the ensuing AGM.

Internal Auditor

The Board has appointed M/s. Chaturvedi & Partners as an Internal Auditors for thefinancial year 2017-18 under Section 138 of the Companies Act 2013 and they havecompleted the Internal Audit as per the scope as defined by the Audit Committee.

Secretarial Auditor

The Company has appointed M/s. Naresh Verma & Associates Company Secretaries inPractice to conduct Secretarial Audit for the financial year 2017-18 as required bySection 204 of the Companies Act 2013 and rules made thereunder. The Company provided allassistance and facilities to the Secretarial Auditors for conducting their audit. TheSecretarial Audit Report for the financial year ended 31 March 2018 is annexed herewithmarked as Annexure - II.

Cost Auditor

As per Section 148 of the Companies Act 2013 the Company is required to have theaudit of its cost records conducted by a Cost Accountant in practice. In this connectionthe Board of Directors of the Company has on the recommendation of the Audit Committeeapproved the appointment of M/s. K. G. Goyal & Associates as the cost auditors of theCompany for the year ending 31 March 2019.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditorsas recommended by the Audit Committee and approved by the Board has to be ratified by themembers of the Company. Accordingly appropriate resolution forms part of the Noticeconvening the AGM. The Board seeks your support in approving the proposed remuneration ofRs. 50000 plus out-of-pocket expenses and taxes payable to the Cost Auditors for theFinancial Year ending 31 March 2019.

M/s. K. G. Goyal & Associates have vast experience in the field of cost audit andhave conducted the audit of the cost records of the Company for the past several yearsunder the provisions of the erstwhile Companies Act 1956. The Cost Audit Report for theyear ended 31 March 2018 will be filled within statutory time limit.


There are no qualifications in the reports of the Statutory Auditor and SecretarialAuditor except one observation by Secretarial Auditor's regarding short fall in CorporateSocial Responsibility expenditure which is explained elsewhere in this report. There areno frauds reported in the reports of the Auditors as mentioned under sub-section (12) ofSection 143 of the Act.


The industrial relations with staff and workers during the year under review continueto be cordial.


There is no change in the nature of business of your Company during the year underreview.


i. Vigil Mechanism /Whistle Blower Policy

The Vigil Mechanism of the Company which also incorporate a whistle blower policy inthe terms of SEBI (Listing Obligations and Disclosure Requirements) 2015 deals withinstances of fraud and mismanagement if any. The Policy on vigil mechanism and whistleblower policy may be accessed on the Company's website at the link:

ii. Audit Committee

The Audit Committee comprised of two independent non-executive directors viz. Dr. VijaySharma (Chairman) & Mr. R. S. Bajoria and one non-executive director viz. Mr. ErwinJankovits. All the recommendations made by the Audit Committee were accepted by the Board.

iii. Number of Board Meeting

The Board of Directors of the Company met five times in the year the details of whichare provided in the Corporate Governance Report.

iv. Particulars of loans given investment made guarantees given and securitiesprovided The Company has not given any loans guarantee or investments covered under theprovisions of Section 186 of the Companies Act 2013.

v. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andoutgo The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 areprovided in Annexure - III.

vi. Extract of Annual Return Extract of annual return of the Company is annexedherewith as Annexure - IV to this report. vii. Particulars of Employees and relateddisclosures The information required under Section 197(12) of the Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is attached as Annexure - V.

vii. Corporate Governance Report Report on Corporate Governance is annexed herewith as Annexure- VI to this report.

viii. Transfer of amounts to Investor Education and Protection Fund

The Company did not have any fund lying unpaid or unclaimed for a period of sevenyears. Therefore there was no fund which was required to be transferred to InvestorEducation and Protection Fund (IEPF). Pursuant to the provisions of the Investor EducationProtection Fund (Uploading of information regarding unpaid and unclaimed amounts lyingwith companies) Rules 2012 the Company has already filed the necessary form and uploadedthe details of unpaid and unclaimed amounts lying with the Company as on the date of lastAnnual General Meeting (i.e. 25 September 2017) with the Ministry of Corporate Affairs.

ix. Listing with Stock Exchanges: The Company confirms that it has paid the annuallisting fees for the year 2018-19 to NSE and BSE where the Company's shares are listed.

x. Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal)Act 2013 The Company has formulated and implemented a policy of prevention of sexualharassment at the workplace with mechanism of loading/redressal complaints. During theyear under review there were no complaints reported to the Board. The Policy may beaccessed on the Company's website at the link:

xi. Compliance with the Institute of Company Secretaries of India ("ICSI")Secretarial Standards The relevant Secretarial Standards issued by the ICSI related to theBoard Meetings and General Meeting have been complied with by the Company.

xii. No disclosure or reporting is required in respect of the following items as therewere no transaction on these items during the year under review

a. Details relating to deposit and unclaimed deposits or interest thereon.

b. Issue of equity shares with differential rights as to dividend or voting.

c. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme ofthe Company under any scheme.

d. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern and Company's operation in future.


Certain statements in the "Director's Report & Management Discussion andAnalysis" describing the Company's views about the Industry expectations/predictions objectives etc. may be forward looking within the meaning of applicable lawsand regulations. Actual results may differ materially from those expressed in theStatement. Company's operations may inter-alia affect with the supply and demandstipulations input prices and their availability changes in Government regulationstaxes exchange fluctuations and other factors such as Industrial relations and economicdevelopments etc. Investors should bear the above in mind.


The Board of Directors would like to express their sincere appreciation for theassistance and co-operation received from the financial institutions banks Governmentauthorities customers vendors and members during the year under review. The Boards ofDirectors also wish to place on record its deep sense of appreciation for the committedservices by the Company's executives staff and workers.

Last but not least your Directors wish to place on record their warm appreciation toyou for your continuous support and encouragement.

For and on behalf of the Board of Directors
Dr. Vijay Sharma
Place : Gurugram Chairman
Date : 31 July 2018 (DIN: 00880113)