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Southern Magnesium & Chemicals Ltd.

BSE: 513498 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE308N01012
BSE 00:00 | 02 Dec 17.25 -0.85
(-4.70%)
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NSE 05:30 | 01 Jan Southern Magnesium & Chemicals Ltd
OPEN 17.25
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VOLUME 110
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OPEN 17.25
CLOSE 18.10
VOLUME 110
52-Week high 35.20
52-Week low 9.51
P/E
Mkt Cap.(Rs cr) 5
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Southern Magnesium & Chemicals Ltd. (SOUTHMAGNESIUM) - Director Report

Company director report

To

The Members

SOUTHERN MAGNESIUM AND CHEMICALS LIMITED

Your Directors hereby present the 35th Annual Report of your Companytogether with the Audited Financial Statements and the Auditors' Report of your Companyfor the financial year ended 31st March 2021. The summarized financialresults for the year ended 31st March 2021 are as under:

FINANCIAL REPORT / OPERATIONS:

(Rs. In Lakhs)

Particulars Current Year As on 31.03.2021 Previous Year As on 31.03.2020
Net Sales / Income from Operations 201.24 158.56
Other income 2.58 2.77
Expenses 215.47 195.73
Exceptional items 0 0
Net Profit (+) / (Loss) before Tax for the Period (11.65) (34.39)
Tax Expenses/Deferred Tax (2.41) (11.30)
Net Profit (+) / (Loss) for the Period (9.24) (23.09)

REVIEW OF OPERATIONS:

During the period revenue of the Company has increased to Rs.201.24 Lakhs as comparedfrom Rs. 158.56 Lakhs of the previous year. The Company has suffered a loss of Rs.9.24Lakhs in the current year against loss of Rs.23.09 lakhs in the previous year.

The unpredicted outbreak of Corona Virus (COVID-19) resulted into a sudden announcementof the nationwide lockdown effective from 23rd March 2020. The region where thefactory is situated had minimal impact of COVID -19. The operations of the company w.r.tproduction and sales are not affected materially. We have taken all necessary action tosafeguard the health of workers by following the guidelines as issued from time to time bythe Government of India and the State Government. There is no major impact on receivablesand overall business operations of the company. Company has been paying salaries to allemployees and no deductions were made. Even during lockdown period the company was able toexecute/ fulfill orders and was supplying its products as and when orders were placed withthe company.

So the impact of COVID-19 is minimal over the Company's performance Financialsinternal control system and demand for our products continues to be same as in past.

Meanwhile since the situation is continuously evolving the impact assessed may bedifferent from the current situation today and the Management will continue to monitor anymaterial changes arising due to the impact of this pandemic on financial and operationalperformance of the Company and take necessary measures to address the situation.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors hereby confirms and declares that:

(a) In the preparation of the annual accounts for the year ended 31st March2021 the applicable accounting standards had been followed.

(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 statement of 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 for the year ended 31stMarch 2021 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 have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT 2013

1. State of affairs of the company:

The Company deals in the business of Magnesium Metal and related goods. During theyear the Company has seen increase in terms of the Sales. However the Company hassuffered a loss of Rs.9.24 Lakhs which is reflected in the financial results of theCompany.

2. Amounts if any carried to reserves:

The Board of Directors of your Company has decided not to transfer any amount to theReserves for the year under review.

3. Dividend:

The Company has not declared any dividend during the year under review.

4. Inter - Corporate deposits:

(i) The details relating to deposits are as follows: The Company has Inter CorporateDeposits the details of which are given below.

(a) Accepted during the year - Nil

(b) Remained unpaid or unclaimed as at the end of the year - Nil

(c) Whether there has been any default in repayment of deposits or payment of interestthereon during the year and if so number of such cases and the total amount involved atthe beginning of the year; - Nil

Maximum outstanding during the year; Rs.2390000/- Outstanding at the end of the year;- Rs.2198000/-

(ii) The details of deposits which are not in compliance with the requirements of theAct- Nil

5. Share Capital:

The authorised share capital of the Company consists of 4000000 equity shares ofRs.10 each and 1000000 - 5% redeemable cumulative preference shares of Rs.10 eachaggregating to Rs.5 crores.

The paid-up share capital of the Company is Rs.30000000 divided into 3000000equity shares of Face Value Rs. 10 each. During the year under review the Company has notissued any shares with differential voting rights nor granted stock options nor sweatequity.

6. Deposits

The Company has not accepted any deposits covered under Chapter V of the Companies Act2013.

7. Number of meetings of the Board

Secretarial Standards as applicable have been complied with. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligation and Disclosure Requirements)Regulations 2015 as amended from time to time. Further 5 (Five) meetings of the boardwere held during the year as per the details given below:

S. No. Date of meeting Total No. of Directors on the Date of Meeting No. of Directors attended % of Attendance
1 27.06.2020 6 6 100
2 31.08.2020 6 5 83.33
3 14.09.2020 6 5 83.33
4 10.11.2020 6 5 83.33
5 11.02.2021 6 6 100
S. No. Name of the Director Number of meetings Which director was entitled to attend No. of meetings attended % of Attendance
1 Mr. N. Ravi Prasad 5 5 100
2 Mr. N. Rajender Prasad 5 5 100
3 Mr. G. Raghavendra Rao 5 5 100
4. Mr. V. S. S. Prakash 5 5 100
5. Mr. K. Eshwaraih 5 5 100
6. Mrs. Padmavathi Kollipara 5 2 40

8. Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of financial year of the company to which thefinancial statements relate and the date of the report:

There are no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which these financialstatements relate and the date of this report.

9. Board Evaluation:

The board of directors has carried out an annual evaluation of its own performanceBoard Committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements to the extent applicable as prescribed by Securities andExchange Board of India ("SEBI").

The performance was evaluated by the Board after seeking inputs from all the directorson the basis of the criteria such as the Board composition and structure effectiveness ofboard processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the board and committee meetings likepreparedness of the issues to be discussed meaningful and constructive contribution andinputs in meetings etc.

In a separate meeting of Independent Directors performance of Non- Independentdirectors performance of the Board as a whole taking into account the views of ExecutiveDirectors and NonExecutive Directors was considered. The same was discussed in the boardmeeting that followed the meeting of the Independent Directors at which the performanceof Board its committee and individual directors was also discussed.

10. Policy on Directors' appointment and remuneration and others details:

The company's policy on Directors appointment and remuneration and other mattersprovided in section 178 of the Companies Act are as under:

Nomination and Remuneration Policy of Southern Magnesium and Chemicals Limited is asunder. INTRODUCTION

The Remuneration Policy of Southern Magnesium and Chemicals Limited (the"Company") is aligned with the compensation philosophy of its competitors whichis to pay competitively and reward performance. To achieve this philosophy totalcompensation is based on employee's role market value of job and employees contributions.

This Policy is designed to attract motivate and retain talent by creating a congenialwork environment encouraging initiatives personal growth and team work and inculcatinga sense of belonging and involvement besides offering appropriate remuneration packagesand retirement benefits.

The policy reflects the Company's objectives for good corporate governance as well assustained long term value creation for shareholders.

This Remuneration Policy applies to Directors and senior management including its KeyManagerial Personnel (KMP) of the Company.

1. DEFINITIONS

Act means the Companies Act 2013 and Rules framed there under as amended fromtime to time. "Board" means Board of Directors of the Company.

"Committee" means Nomination and Remuneration Committee constituted bythe Board "Directors" mean Directors of the Company.

"Key Managerial Personnel" means

• Chief Executive Officer or the Managing Director or Manager or Whole-timedirector;

• Chief Financial Officer;

• Company Secretary; and such other officer as may be prescribed by the CompaniesAct 2013.

"Executive Directors" mean Managing Director/ Joint Managing Director andWhole Time Director if any.

"Senior Management" means personnel of the company who are members ofsenior leadership typically vice presidents or equivalent and higher position levels.

2. GUIDING PRINCIPLE

The guiding principle is that the remuneration and the other terms of employment shouldeffectively help in attracting and retaining talented employees.

While designing remuneration packages industry‘s best practices cost of livingand potential of employees are also taken into consideration.

3. POLICY RELATING TO THE REMUNERATION FOR THE WHOLE-TIME DIRECTOR KMP AND SENIORMANAGEMENT PERSONNEL

General:

a) The remuneration package of KMP will be determined by the Committee andrecommended to Board for approval. In addition the approval of the shareholders of theCompany and Central Government wherever required will be obtained for the remunerationpackage of Executive Directors. The remuneration package of other senior managementpersonnel will be recommended by Managing Director and Jt. Managing Director and besubmitted to Committee for approval.

b) The remuneration package of Executive Directors shall be in accordance with thepercentage / slabs / conditions laid down in the Act.

c) Increments to the existing remuneration package of Executive Directors may berecommended by the Committee to the Board which should be within the slabs approved by theShareholders.

Where any insurance is taken by the Company on behalf of its Directors ExecutiveDirectors Whole-time Director Chief Executive Officer Chief Financial Officer theCompany Secretary and any other employees for indemnifying them against any liability thepremium paid on such insurance shall not be treated as part of the remuneration payable tosuch personnel.

4. REMUNERATION TO EXECUTIVE DIRECTORS KMP AND SENIOR MANAGEMENT PERSONNEL: Pay andAllowances:

The Executive Directors KMP and Senior Management Personnel shall be eligible for amonthly remuneration as may be approved by the Committee or Board on the recommendation ofthe Committee. The remuneration comprises of basic pay and allowances in addition toperquisites such as contribution to Provident Fund Gratuity group life insurance groupmedical insurance etc.

Minimum Remuneration:

If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Executive Directors in accordance with theprovisions of Schedule V of the Act and other applicable provisions.

Provisions for excess remuneration:

If any Whole-time Director draws or receives directly or indirectly by way ofremuneration any such sums in excess of the limits prescribed under the Act or without thesanction of the Central Government where required he / she shall refund such sums to theCompany and until such sum is refunded hold it in trust for the Company. The Companyshall not waive recovery of such sum refundable to it unless permitted by the CentralGovernment.

5. Remuneration to Independent Directors:

Remuneration/Commission:

The remuneration/commission shall be fixed as per the slabs and conditions mentioned inthe Act.

a) Sitting Fees:

Independent Director may receive remuneration by way of fees for attending meetings ofBoard or Committee thereof. Provided that the amount of such fees shall not exceed theamount fixed by the Board from time to time.

b) Commission:

Commission may be paid within the monetary limit approved by shareholders subject tothe limit not exceeding 1% of the profits of the Company computed as per the applicableprovisions of the Act.

c) Stock Options:

An Independent Director shall not be entitled to any stock options of the Company.

d) Expenses for attending meetings

The expenses incurred by the Independent Directors for attending the meetings of Boardof Directors and Committees of the Board shall be reimbursed by the Company oralternatively the Company may provide air tickets lodging facility and conveyance to theIndependent Directors.

6. Disclosure of information

Information on the total remuneration of Board of Directors Whole time Directors andKMP/senior management personnel is disclosed in the annual financial statements/ AnnualReport as per statutory requirements.

7. Application of the Remuneration Policy

This Remuneration Policy shall continue to guide all future employment of DirectorsSenior Management including Key Managerial Personnel.

8. Performance evaluation criteria for Independent Directors:

The Board of Directors evaluates the performance of independent directors on yearlybasis.

a. All pecuniary relationship or transactions of the non-executive directors

The Company has paid Rs. 2500/- as fees for attending Board meetings to Mr. EshwariahKaparthi (Non-Executive- Independent Director) during the financial year ended on March31 2021.

9. Disclosure with respect to remuneration:

No other element of remuneration package is paid to the Non-Executive Directors exceptpayment of sitting fees to the Independent Non Executive Director as disclosed above.

The Company did not issue any stock options during the year.

11. Audit Committee:

The Composition of Audit Committee as on March 312021 is as follows:

Name Category Designation
Mr. G. Raghavendra Rao Independent Non- Executive Director Chairperson
Mr. V. S. S. Prakash Independent Non- Executive Director Member
Mr. K. Eshwaraih Independent Non- Executive Director Member
Mr. N. Rajender Prasad Jt. Managing Director and CFO Member

Five meetings of the committee were held during the year as per the details givenbelow:

S. No. Date of meeting Total No. of Directors on the Date of Meeting No. of Directors attended % of Attendance
1. 27.06.2020 4 4 100%
2. 31.08.2020 4 4 100%
3. 14.09.2020 4 4 100%
4. 10.11.2020 4 4 100%
5. 11.02.2021 4 4 100%

All members of Audit Committee are financially literate and have accounting and relatedfinancial management expertise.

All the recommendations made by the Committees of Board including the Audit Committeewere accepted and approved by the Board.

12. Stakeholder Relationship Committee:

The Composition of Stakeholder relationship committee as on March 312021 is asfollows:

Name Category Designation
Mr. G. Raghavendra Rao Independent Non- Executive Director Chairperson
Mr. V. S. S. Prakash Independent Non- Executive Director Member
Mr. K. Eshwaraih Independent Non- Executive Director Member
Mr. N. Rajender Prasad Jt. Managing Director and CFO Member

Two meetings of the committee were held during the year as per the details given below:

S. No. Date of meeting Total No. of Directors on the Date of Meeting No. of Directors attended % of Attendance
1. 14.08.2020 4 4 100
2. 11.02.2021 4 4 100

13. Nomination and remuneration Committee:

The Composition of Nomination and remuneration Committee as on March 312021 isas follows:

Name Category Designation
Mr. G. Raghavendra Rao Independent Non- Executive Director Chairperson
Mr. V. S. S. Prakash Independent Non- Executive Director Member
Mr. K. Eshwaraih Independent Non- Executive Director Member
Mr. N. Rajender Prasad Jt. Managing Director and CFO Member

One meetings of the committee were held during the year as per the details given below:

S. No. Date of meeting Total No. of Directors on the Date of Meeting No. of Directors attended % of Attendance
1. 14.08.2020 4 4 100

14. Internal Financial Control Systems and their Adequacy

The details in respect of internal financial control and their adequacy are included inthe Management Discussion and Analysis which forms part of this report.

15. Declaration by Independent Directors:

The Company has received necessary declaration from Independent Directors under Section149(7) of the Companies Act 2013 that they meets criteria of Independence laid down inSection 149(6) of the Companies Act 2013 and Regulation 16(1)(b) of the ListingRegulations and have complied with the Code for Independent Directors prescribed inSchedule IV to the Companies Act 2013.

16. Risk Management:

The Board of the company regularly reviewed and has adopted measures to frameimplement and monitor the risk management plan for the company. The Board is responsiblefor reviewing the risk management plan and ensuring its effectiveness. The audit committeehas additional oversight in the area of financial risks and controls. Major riskidentified if any by the business functions are systematically addressed throughmitigating actions on a continuing basis.

17. Particulars of Loans Guarantees or Investments under Section 186 of the CompaniesAct 2013:

There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review.

18. Particulars of contracts or arrangements made with related parties:

No transactions/contracts/arrangements of the nature as specified in Sec.188 (1) of theCompanies Act 2013 were entered by the company during the year under review with relatedparty/parties.

During the year the Company had not given Loans and Advances in the nature of Loans tofirm/ companies in which directors are interested.

19. The change in the nature of business if any:

There was no change in the nature of Business.

20. The details of directors or key managerial personnel who were appointed or haveresigned during the year:

There was no appointment or resignation of any director or Key Managerial Personnelduring the period under review.

21. The names of companies which have become or ceased to be its Subsidiaries jointventures or associate companies during the year:

The Company does not have any Subsidiary Joint venture or associate company which havebecome or ceased to be its Subsidiaries joint ventures or associate company during theyear.

22. The details of significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company's operations in future:

There are no significant material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company and its future operations.

23. Particulars of Employees:

The information required under section 197 of the act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a. The ratio of remuneration of each director to the median remuneration of theemployees of the company for the financial year:

Non Executive Directors Ratio to median remuneration
Mr. Raghavendra Rao Griddalur NA
Mr. Surya Sesha Prakash Valluru NA
Mr. Kaparthi Eshwaraih NA
Mrs. Padmavathi Kollipara NA
Executive Directors Ratio to median remuneration
Mr. N. Ravi Prasad 17.63 : 1
Mr. N. Rajender Prasad 17.29 : 1

b. The percentage increase or decrease in remuneration of each Director ChiefExecutive Officer Chief Financial Officer Company Secretary in the financial year:

Director chief executive officer chief financial officer company secretary % of increase in remuneration in the financial year
Mr. N. Ravi Prasad -MD and CEO 23.570
Mr. N. Rajender Prasad - Jt.MD and CFO 11.640
Ms. Sneha S Soni NA

c. The percentage increase in median remuneration of employees in the financial year:13.314%

d. The number of permanent employees on the rolls of the company: 23

e. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

Average increase in salaries of employees other than managerial personnel in 2020-21was 6.98%

Average increase in salaries of managerial personnel in 2020-21 is 17.362%

f. Affirmation that the remuneration is as per the remuneration policy of the company:

The Company affirms remuneration is as per the Remuneration policy of the company.

g. Further information required pursuant to Section 197 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company is available at the registered office of the company. If anyMember is interested in obtaining this information or a copy thereof such Member maywrite to the Company at the Registered Office in this regard.

24. The details about the policy developed and implemented by the company on corporatesocial responsibility initiatives taken during the year:

The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.

25. Disclosure as per Sexual Harassment of Women at Work Place (Prevention Prohibitionand Redressal) Act 2013:

Your company has zero tolerance for sexual harassment at work place and has adopted apolicy on prevention prohibition and Redressal of sexual harassment at work place in linewith the provision of Sexual Harassment of Women at Work Place (Prevention Prohibitionand Redressal) Act 2013 and rules framed there under.

An Internal Complaints Committee ("ICC") has been set up by the seniormanagement (with women employees constituting the majority). The ICC is responsible forredressal of complaints related to sexual harassment and follows the guidelines providedin the Policy.

No complaints have been received by the company on sexual harassment during thefinancial year 2020-2021.

26. Disclosure Requirements:

As per Regulation 15 of SEBI (LODR) 2015 corporate governance report with certificatefrom Practicing Company Secretary thereon is not applicable to the company.Management Discussion and Analysis as required is attached hereunder and forms part ofthis report.

The company has formulated a whistle blower policy. A copy of the same is madeavailable at the registered office of the company and also at the website of the company.The provisions of this policy are in line with the provisions of section 177(9) of theAct.

Your Company has a vigil mechanism to deal with instances of fraud and mismanagementif any. The Whistle Blower Policy enables reporting of unethical behavior actual orsuspected fraud or violation of the Company's code of conduct or ethics policy to themanagement. The vigil mechanism also ensures strict confidentiality is maintained andprovides adequate safeguards against victimization of employees who avail of the mechanismand also provided for direct access to the Chairman of the Audit committee in exceptionalcases.

27. Details in respect of Frauds reported by Auditors under 143(12) of Companies Act2013

During the period under review there were no instances of Fraud reported by theAuditors in the Company.

28. Auditors:

Company has appointed M/s. Brahmayya & Co. Chartered Accountants (FirmRegistration No. 000513S) Hyderabad as Statutory Auditors of the Company at its AGM heldon 29.09.2017 to hold office as statutory auditor for a period of five years and beingeligible they continue to hold office.

29. Auditors Report:

During the period under review no qualification/reservations/adverse remarks have beenmade by the Statutory Auditor. The Report provided by them as attached isself-explanatory.

30. Secretarial Auditors' Report:

The company has appointed Mr. PA.P Murthy Practising Company Secretary Hyderabad asthe Secretarial Auditor of the company to undertake audit as per the provisions of section204 of the Companies Act 2013 and the report of the secretarial auditor is annexed tothis report. Management's reply to the observations comments and qualifications made bythe secretarial auditor are as under:

1. As required under Regulation 31(2) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 hundred percent ofthe shareholding of promoters and promoters group in not in dematerialized form.

The board of directors of the company is discussing the matter with the promoters andhas requested them from time to time to complete de-materialization of their share holdingimmediately.

31. Annual Return Web Link:

Pursuant to the provisions of Section 92 and Section 134 of the Companies Act 2013 asamended from time to time the Annual Return as on March 31 2021 in form MGT-7 isavailable on the Company's websitewww.http://southernmagnesium.com/images/Annual%20Reports/Annual%20Report%202020-21.pdf.

32. Conservation of energy technology absorption foreign exchange earnings and outgo:

The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is as under

(A) Conservation of energy : NIL
(B) Technology absorption : Not Applicable
(C) Foreign exchange earnings : NIL
(D) Foreign exchange outgo : NIL

33. Maintenance of Cost Records:

Maintenance of cost records is not specified by the Central Government undersub-section (1) of Section 148 of the Companies Act 2013 to our company.

34. Acknowledgement:

Your Directors wish to place on record their gratitude to shareholders and thank thecustomers bankers vendors State and Central Governments Authorities for their continuedsupport to your Company's growth. Your Directors also wish to place on record theirappreciation for the contribution made by the employees at all levels who through theircompetence sincerity hard work solidarity and dedicated support enabled your company tomake continued progress.

For and on behalf of the Board of Directors of Southern Magnesium and Chemicals Limited
N. Rajender prasad N. Ravi Prasad
Place: Hyderabad Jt. Managing Director & CFO Managing Director & CEO
Date : 1 1-08-2021 (DIN- 00145659) (DIN- 00319537)

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