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Tamil Nadu Petro Products Ltd.

BSE: 500777 Sector: Consumer
NSE: TNPETRO ISIN Code: INE148A01019
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OPEN 39.85
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VOLUME 27314
52-Week high 84.00
52-Week low 29.50
P/E 8.45
Mkt Cap.(Rs cr) 353
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 39.85
CLOSE 39.10
VOLUME 27314
52-Week high 84.00
52-Week low 29.50
P/E 8.45
Mkt Cap.(Rs cr) 353
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tamil Nadu Petro Products Ltd. (TNPETRO) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Thirty Third Annual Report together withthe Audited Financial Statements for the year ended 31st March 2018. TheManagement Discussion & Analysis Report which is required to be furnished as per SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (the ListingRegulations) is also presented as part of the Directors' Report.

Economic overview:

India has emerged as the fastest growing major economy in the world in the recent past.Though the GDP growth slowed down during the year under review to 6.5 percent lower thanthe previous year's 7.1 percent it is expected to grow at 7.3 percent in 2018-19.Reports suggest that in the long run the overall consumption in India is expected to befour trillion $ by 2025 due to shift in consumer behavior and expenditure pattern.

With the effects of demonetization in 2016-17 and implementation of GST in 2017-18having subsided the growth prospects in the coming years appear to be bright. Further thefocus on the rural economy in the budget for 2018-19 promises to increase the availabilityof disposable surplus in the hands of the consumers which augurs well for fast movingconsumer goods.

Company Performance:

During the year under review the net revenue from operations was Rs 1048.90 crore Vis aVis Rs 888.85 crore in the previous year. Linear Alkyl Benzene (LAB) production washighest in the history of TPL and combined with improved performance of Heavy

Chemicals Division (HCD) your Company could record better sales and profits.

FINANCIAL SUMMARY (STANDALONE OPERATIONS):

During the year under review your Company has prepared the financial statements underthe Ind AS and the summary of the results are as shown below:

(Rs In crore)
Description 2017- 2018 2016-2017
Earnings Before Interest and 95.12 66.82
Depreciation
Interest 10.21 34.35
Depreciation 22.22 15.76
Exceptional Item 9.22 25.00
Profit Before Tax 71.91 41.71
Tax expenses 25.20 32.41
Profit after tax 46.71 9.30

From the above table it could be seen that the profitability improved significantly onaccount of the improved operational parameters.

Though crude prices continued to remain volatile ranging between USD 52 and USD 69 perbarrel through better strategy and inventory management the Company could achieve highermargins.

The Chlor Alkali Division producing Caustic Soda and Chlorine achieved a turnaroundduring the year mainly on account of increased demand for both Caustic soda and chlorine.This coupled with higher realizations and improved plant efficiency helped in betterperformance.

The ECH plant remains shutdown since April 2013 on account of continuous lossesincurred and the proposal for converting the facility for manufacture of Propylene Oxide(PO) is under implementation.

FINANCIAL REVIEW

Through prudent deployment of funds and optimum utilization of working capital limitsyour Company could bring down the finance cost from Rs 8.85 crore in 2016-17 to Rs 4.87crore in 2017-18. The figures reflected here exclude interest on tax demands which aregrouped under Finance Costs as per Accounting Standards. At present your Company has nolong term debt and all the capex requirements are met from internal accruals. Based on theimproved performance CARE the credit rating agency has improved the Company's creditrating to BBB with outlook stable from BBB- (minus).

DIVIDEND

Your Company's performance has improved significantly during the year 2017-18 and it isviewed that it would be desirable to restart dividend to fulfill the expectations of theshareholders. Hence your Directors have recommended a dividend of 5% i.e fifty paise perequity share of Rs10/- each fully paid up for the year 2017-18 aggregating to Rs4.50 crore excluding dividend distribution tax.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Linear Alkyl Benzene (LAB) belongs to family of organic compounds used in themanufacture of household and industrial cleaning agents. LAB the material used to produceLinear Alkyl Benzene Sulfonate (LAS) and other applications is produced exclusively fromvarious petroleum derivatives. LAB is a compound that has significant commercialimportance and enjoys a good demand from the detergent industry. The applications for LAShave been further segmented on the basis of end use viz. heavy duty laundry liquidslight duty dishwashing liquids laundry powders industrial and household cleaners.Detergent industry is expected to grow at a fast pace due to both population increase andlifestyle changes. The Asian region is both the largest LAB producing and consuming regionin the world.

At present the major suppliers are from India and China but new capacities are comingup in Middle East region.

In India the LAB industry dates back to 1978 with the commissioning of first LAB plantby IPCL at Vadodara. IPCL was later acquired by Reliance Industries Limited (RIL). Yearslater TPL RIL and Nirma set up facilities across India as import substitution. Howeverin the recent years the industry is facing stiff competition from imports mainly fromChina and Middle East due to globalization and changed import regulations. As mentionedearlier LAB is used extensively in detergent production though it is also usable assolvent and binder in speciality applications such as cable oil ink paint andinsulating and electricity fields.

All the major manufacturers of LAB in India including TPL have adopted the technologyfrom UOP USA which is considered superior to the other processes involving chlorination.The cost of production of LAB in India had been relatively higher than the internationalstandards mainly on account of higher cost of kerosene and quality issues relating to thefeedstock.

The domestic players always find it difficult to compete with the overseas supplierswho have modern facilities with large capacity which helps them in achieving lower cost ofproduction. caustic Soda a most commonly used industrial chemical finds wideapplications in textile pulp & paper aluminum and soaps & detergents industries.The annual increase in demand is expected to be around 5%. As the process is powerintensive the national level capacity utilization is about 70% of the aggregate capacityof around 3.5 million tons. Plants all around the globe are currently converting to newermembrane technology which your Company has already embraced. chlorine a co-product ofCaustic Soda is widely used in sectors like Vinyl chloride Chlorinated paraffin wax(CPW) pulp and paper water purification chlorinated solvents etc. Chlorine demand willbe a major driver for Chlor-alkali capacity utilisation.

Lack of integrated plants and downstream chlorine utilization projects are majorimpediments to dispose off chlorine which also in turn restricts the caustic production.

OPPORTUNITIES AND THREATS

Concern about hygiene and improved standard of living has helped in considerableimprovement of market conditions for detergents and other cleaning materials. With thehelp of visual advertisements the detergent manufacturers have found it easier to reachremote areas. Moreover consumers have the privilege of choosing from a wide variety ofproduct range and hence the companies are constantly upgrading their products and makingevery effort to maximize their market share through innovative advertising campaigns.Since these companies target the bottom of the pyramid market there is a huge potentialfor the LAB industry to grow. However India being an attractive market it is targeted bythe overseas LAB players which has resulted in increased imports to India. Addition of newplants in the Middle East is a big threat to the LAB market in India. Also a new plantset up in Bangkok about a year ago could be a major threat to the Company in the form ofincreased imports. Though there have been no significant increase in supplies to theSouth this could continue to be a factor in pricing and margins. continues to be animportant industrial intermediary finding application in many industries. With the demandfor textiles and apparels increasing on account of urbanization and larger spending onpersonal effects the market for Caustic Soda is expected to grow further. In EuropeanUnion phasing out of mercury cell technology has been mandated and so many old chloralkali plants are being shut down resulting in curtailed supplies. This brought down theotherwise higher imports into India and so the Company could increase its production tooptimum levels and earn better margins. This trend is expected to continue atleast for ayear till the new plants come up in the EU and other places. As explained earlierCaustic manufacturing is highly power intensive and so the ever increasing cost of poweris limiting the ability of the domestic producers to face competition from overseasproducers. Further due to erratic weather conditions salt prices are unpredictablewhich further affects the viability of the domestic products.

OUTLOOK LAB

TPL has established itself as a major player in the LAB market despite stiffcompetition from overseas suppliers. Through exemplary services TPL has managed to keepthe customer base intact over the years. TPL has been able to sustain its market shareacross India with a predominant role in southern part of India. Demand for detergents isexpected to go up in the coming years with more rural and semi-urban households moving tohigher use of detergents which would help the Company in further improving its LABbusiness.

Having stabilized the first phase of the Normal Paraffin (NP) de-bottlenecking projectduring the year under review the next phase of the project would be taken up during2018-19 and would be made fully operational in 2019-20. With the demand for LAB lookingup options to further increase the existing capacity and/ or look at setting up newfacilities in other locations including overseas are also explored. During the yearAnti-Dumping Duty (ADD) was imposed on import of LAB from China Qatar and Iran which isexpected to provide the domestic LAB manufacturers a level playing field. However theimport volumes from Saudi Arabia are still a concern though it is not expected to have anysignificant impact in South India as they mainly come to the west coast.

CAUSTIC SODA / CHLOR ALKALI

As explained earlier the EU moving out of mercury cell technology is expected tosustain the demand-supply mismatch for a year or two curtailing the imports intoIndia. During this period the Company would strive to regain its position in the marketand enlarge the customer base.

Sustenance and growth of the Caustic Soda business depends on the opportunities forChlorine disposal. Since there are no major projects in Chlorine-consuming downstreamindustry the domestic players have to explore other options. As regards TPL once the newPropylene Oxide facility is commissioned the prospects for further in-house consumptionof chlorine would open-up paving way for higher caustic manufacture. Also the Company hasrecommenced supply of chlorine in cylinders which would further expand the chlorinedisposal.

CONVERSION OF ECH FACILITY TO PRODUCE PROPYLENE OXIDE

The ECH facility had to be shutdown due to huge losses and remained dormant since April2013. As reported in the previous year the Company is implementing the project forconversion of the dormant facilities to produce Propylene Oxide which is the raw materialfor manufacture of petrochemical derivatives such as

Propylene Glycol and Polyol. It may be noted that TPL will be the second producer of POin the country. To start with the Company has made arrangements for sale of the entirequantity of PO to be produced but in future options for setting up derivative plantswould also be looked at. The project is expected to be operational during the year 2018-19upon which the caustic production would also be augmented for optimizing the earnings ofthe Company.

RISKS CONCERNS AND RISK MANAGEMENT

As explained earlier import of LAB Caustic Soda and Chlorine in indirect form intothe country continues to be a major risk faced by TPL. Though the Company along with theother domestic players succeeded in imposing Anti-Dumping Duty on LAB imports from Chinaso far no major impact has been seen in the pricing. Thus product pricing and pressure onmargins would be the major issues to be tackled by the Company to sustain and grow itsoperations.

At present the Company's in-house Normal Paraffin capacity is not adequate to meet theentire requirement of the LAB plant and so the uncertainty emanating from the normalparaffin imports is another major risk faced by the Company. However this has beenmitigated to some extent through completion of the first phase of the debottlenecking ofthe NP plant and further relief is expected once the 2nd phase is alsocompleted.

The inconsistent Total Normal Paraffin (TNP) content in Kerosene and issues faced byrefineries in evacuation of kerosene due to fall in consumption of PDS kerosene across theCountry could affect the feed-stock availability and so would be a concern in future.

The additional commitment arising from renewable energy purchase obligation couldfurther increase the power cost impacting the profitability of the chlor alkali division.Apart from the above petitions have been filed against the marine disposal of the treatedeffluent before the National Green Tribunal which are defended by the Company. It may benoted that the Company is complying with all the parameters fixed for such disposal and sois confident of facing the challenges in this regard.

RISK MANAGEMENT PROCESS

The Company has a structured methodology to effectively monitor and manage the risks bysetting up two employee level and one Board level committees to identify the riskssuggest mitigation actions and monitor implementation. The employee-levelsub-committee comprise of senior personnel from each function and the Apex Committee isheaded by the WTD (Operations) with functional heads as other Members.

As on 31st March 2018 the Risk Management Committee of the Board comprisedMs. Sashikala Srikanth as the Chairperson and Mr. D Senthikumar as Member. Duringthe year the Committee met four times viz. 16th May 2017 5thSeptember 2017 6th December 2017 and 6th February 2018.

In the opinion of the Directors unabated import of LAB into India is a major risk forthe Company that could affect its profitability. High cost of power coupled with policyinterpretations related to power cost are yet another concern for the Company especiallyfor the Chlor Alkali Division.

SAFETY HEALTH & ENVIRONMENT

Adequate safety standards have been prescribed and being followed by the Companywithout any compromise. Prime importance is given to protection of the employees plantand machinery and environment at all times. National Safety Day was celebrated as a monthlong event with a great sprit to enhance awareness amongst the employees and contractors.As part of this celebrations various competitions were conducted for employees and otherstakeholders to reiterate our commitment towards safety.

Safety Exhibition was organised and all safety & fire equipment demo on ‘FireSafety' ‘Chemical protective suit' and ‘Sprinkler system' were displayed.

World Environment Day is also celebrated every year and tree plantation programs areorganized for planting saplings towards green initiative to promote carbon offset.

SUBSIDIARIES

As at the year end your Company had one Wholly Owned Subsidiary (WOS) and two Stepdown Subsidiaries (SDS) all of which are incorporated outside India. The financials ofall these subsidiaries have been consolidated and the salient features of financial andother information have been furnished in the Consolidated Financial Statement (CFS)attached to this Report.

CERTUS INVESTMENT AND TRADING LTD

Certus Investment and Trading Ltd. (CITL) Mauritius was promoted as a Special PurposeVehicle (SPV) to set up LAB and NP projects in the Middle East and South East Asia.However due to changed business environment the projects could not be taken up. Atpresent the WOS is not carrying on any major activity though options for setting up LABPlants abroad are being explored.

CERTUS INVESTMENT AND TRADING SINGAPORE PRIVATE LIMITED

In the past TPL was exporting a large quantity of LAB and also importing variousmaterials such as NP Benzene etc. Therefore CITL Mauritius set up CITL Singapore as aWOS in order to function as a coordinator for TPL's overseas procurement and marketingactivities. At present there are no significant exports or imports and so the above StepDown Subsidiary (SDS) is not engaged in any activities.

PROTEUS PETROCHEMICAL PRIVATE LTD.

Proteus Petrochemical Private Ltd. (Proteus) is another WOS of CITL formed for settingup a Normal Paraffin (NP) plant in Singapore. The proposal was to establish a green-fieldNP project plant along with associated utilities and off-sites. However after initialengineering the project encountered certain problems and so the implementation could notcommence. At present the SDS is not carrying on any activities.

Human resources

Management strongly believes that the strength of your Company is directly proportionalto the strength of its employees in terms of the knowledge experience analytical anddecision making skills. Your Company has been practising various HR initiatives such asrecognition empowerment personality development decentralization of delegation ofpowers etc. to retain the talents and to enhance their capabilities. A balanced staffingsystem has been adopted in your Company wherein competent fresh talents have been infusedinto the stream of experienced hands.

The training needs of employees have been identified at regular intervals throughperformance appraisal systems and necessary training is being imparted through in-houseand external programmes.

The manpower strength as on 31st March 2018 was 367.

Details of loans guarantees or investments

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to financial statements provided in this Annual Report.

Fixed Deposits

Your Company has not accepted any deposits from the public during the year underreport.

Related Party Transactions

During the year under review there were no transactions not at arms' length within themeaning of Section 188 of the Companies Act 2013 ("the Act") or any materialtransactions with the related parties in terms of the policy framed by the Audit Committeeof the Company as published in the website of the Company viz.http://tnpetro.com/corporate-governance-policies/.

Audit committee

The details are furnished under the Corporate Governance Report (CGR) annexed to thisReport. All the recommendations of the Committee were accepted by the Board.

Vigil mechanism

As required under Section 177 of the Act and Regulation 22 of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Company has established avigil mechanism for directors and employees to report genuine concerns through the WhistleBlower Policy of the Company as published in the website of the Company. As prescribedunder the Act and the Listing Regulations provision has been made for direct access tothe Chairperson of the Audit Committee in appropriate or exceptional cases.

Board of directors and related disclosures

As at the year end the Board comprised of ten directors of whom five were independentincluding a woman director. All the

Independent Directors have furnished necessary declarations under Section 149 (7) ofthe Act and as per the declarations they meet the criteria of independence as provided inSection 149 (6) of the Act.

The Board met four times during the year under review and the relevant details arefurnished in the CGR.

The Board has approved the Remuneration Policy as recommended by the Nomination andRemuneration Committee (NRC) which inter alia contains the criteria for determining thepositive attributes and independence of a director as formulated by the NRC. The policy onremuneration is available in the website of the Company viz.http://tnpetro.com/corporate-governance-policies/.

The following changes took place in the constitution of the Board since the last AnnualGeneral Meeting (AGM)

- Mr T K Arun (DIN: 02163427) and Mr R. Karthikeyan (DIN: 00824621) nominees ofTIDCO resigned on 9th November 2017 and 3rd January 2018respectively.

- Mr. Ramesh Chand Meena IAS (DIN: 08009394) was appointed as an Additional Directorof the Company representing TIDCO on 16th January 2018 and holds office tillthe ensuing AGM.

- Mr. Atulya Misra IAS (DIN: 02210369) resigned as Chairman and Director effective 2ndFebruary 2018.

- Mr. K Gnanadesikan IAS (DIN: 00111798) was appointed as an Additional Director andChairman effective 6th February 2018 and holds office till the ensuing AGM

- Mr. Kulbir Singh (DIN: 00204829) vacated office effective from 17thNovember 2017 due to operation of law.

- Mr. S Visakan IAS (DIN: 06578414) was appointed as an Additional Director of theCompany representing TIDCO on 5th June 2018 and holds office till the ensuingAGM.

The Board wishes to place on record its appreciation to Mr. Atulya Misra IASMr T K Arun Mr Kulbir Singh and Mr R Karthikeyan for their services during theirtenure as Directors of the Company.

Proposals have been received for the appointment of Mr. Ramesh Chand Meena IASMr. K Gnanadesikan IAS and Mr. S Visakan IAS as Directors under Sec.160 of the Act atthe ensuing AGM. Since their appointments have been recommended by the Nomination andRemuneration Committee there is no requirement of security deposit for the aboveproposals. Proposal for approving the increased remuneration to Mr. D Senthikumar theWhole-time Director (Operations) would be considered at the ensuing AGM for considerationand approval of the Members. Ms. K Priya was appointed as the Company Secretary in theplace of Mr. D. Hem Senthil Raj from 25th September 2017.

In accordance with the provisions of the Act and Articles of Association of theCompany Mr. Ashwin C Muthiah Director retires by rotation and being eligible offershimself for re-election at the ensuing Annual General Meeting of the Company.

Annual evaluation of the Board committees and Directors

The performance of the Board was evaluated taking the following aspects into accountviz. Structure Meetings Functions Risk Evaluation process adopted grievance redressalmechanism stakeholder value and responsibility corporate culture ethics and othermatters. Board also took into account facilitation of the Independent Directors tofunction independently and perform their roles as another important parameter for theevaluation.

The performance of each of the Committees was evaluated taking into account the clarityand disclosure of the composition mandate & working procedures effectivenessstructure and meetings independence and contribution in decision making process. Theevaluation of the two Executive Directors was carried out based on their assigned rolesand responsibilities. As regards the other Directors including the independent directorsthe evaluation was carried out taking into account the following parameters viz.qualification experience competency adequacy of knowledge about the Company and itssector of operation understanding about the strategic direction ethical behaviorparticipation in the risk evaluation process resolving conflict of interests attendanceand preparation of the meetings ability to work as a team player and voluntary sharing ofinformation for the larger benefit of the Company and the like.

In compliance with the requirements of Schedule VII to the Act and the Regulations aseparate meeting of the Independent Directors was held during the year at which theDirectors evaluated the performance of the Non Independent Directors the Chairman andalso the adequacy of flow of information to the Board and Committees. No adverse commentshave been made by the Independent Directors from the evaluation.

Directors' responsibility statement

Pursuant to the requirement of sub-sections 3 (c) and 5 of Section 134 of the CompaniesAct 2013 it is hereby confirmed that (a) in the preparation of the annual accounts forthe financial year ended 31st March 2018 the applicable Accounting Standardshad been followed along with proper explanation relating to material departures; (b) theDirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that were reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of the Company for the year under review;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the accounts for the financial year ended 31stMarch 2018 on a "going concern" basis;

(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; and

(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.

Corporate Governance

Your Company has complied with the requirements of Corporate Governance stipulatedunder Regulation 27 of the SEBI Listing Regulations. A Report on Corporate Governanceforms part of this Report and a Certificate from the Secretarial Auditors regardingcompliance with the requirements of Corporate Governance is given in Annexure i to thisreport.

Auditors

M/s. R.G.N. Price & Co. Chartered Accountants Chennai having Firm RegistrationNo. 002785S was appointed as the auditors of the Company. As per the extant provisions ofthe Act they will hold office for a period of five years till the conclusion of 37thAGM to be held in the year 2022. The Audit Committee has recommended a remuneration of Rs20.00 lakh plus reimbursement of out of pocket expenses and applicable taxes for the auditof the accounts and all other related services as the Auditors of the Company for the year2018-19 for approval of the Members at the ensuing AGM.

Secretarial audit report

As required under Section 204 of the Act read with Rule 9 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Secretarial Audit Report issuedby Ms. B Chandra (CP No.7859) Company Secretary in practice Chennai is given inAnnexure ii to this report.

The Report does not contain any qualification but a mention has been made about theCompany's view on transfer of shares to IEPF under Section 124 of the Act. The Auditoralso pointed out that there was a delay in remitting the unclaimed dividend for the year2009-10.

Since no dividend was declared for five out of the consecutive seven years it has beenadvised that the requirement to transfer of shares to IEPF under Section 124(6) of the Actis not applicable to the Company. The delay in transfer of unclaimed dividend to IEPF isattributable to the delay by the Bank in furnishing the requisite details of the dividendaccount for reconciliation and also in effecting the transfer. The Company has compliedwith the requirements of all the applicable Secretarial Standards.

Cost audit

Pursuant to the provisions of Section 148 of the Act the Board appointed M/s.Krishnaswamy & Co Cost Accountants the Cost Auditors of the Company for conductingthe audit of cost records for the financial year 2017-18 on a remuneration of Rs 2.00 lakhplus applicable taxes and reimbursement of out of pocket expenses. The Cost Auditor holdsoffice till 27th September 2018 or submission of his report for the year2017-18 whichever is earlier. As required under Section 148 of the Act read with therelevant ratification Rules of the remuneration to the Cost Auditor for the year 2017-18will be considered by the Members at the ensuing AGM of the Company.

Adequacy of internal Financial controls

Your Company has in place adequate internal financial control systems with periodicalreview of the process. The control system is also supported by ERP internal audits andmanagement reviews with documented policies and procedures. The system was also earlierreviewed by an external agency and no major weaknesses were reported. To ensure effectiveoperation of the system periodical reviews are made by the Internal Auditors and theirfindings discussed by the Audit Committee and with the Auditors. The Auditors of theCompany have also furnished certificates in this regard which are attached to theirReports.

Conservation of energy and other disclosures

As required under Section 134 of the Companies Act 2013 (‘the Act') read withRule 8 of the Companies (Accounts) Rules 2014 information on conservation of energytechnology absorption foreign exchange earnings and outgo to the extent applicable aregiven in Annexure - iii to this Report. extract of Annual Return

The extract of the Annual Return in Form MGT-9 is given in Annexure iV to thisReport.

Disclosure under the Sexual Harassment of Women at Workplace (prevention prohibitionand Redressal) Act 2013

The Company has in place a Committee for looking after the compliance under theprovisions of Sexual Harassment at the Workplace Act and Rules 2013. During the year underreview there were no cases filed under the above Act.

Particulars of employees and other disclosures

The disclosures prescribed under Section 197(12) of the Companies Act 2013 read withRule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are given in Annexure -V to this Report. It is herebyaffirmed that the remuneration to the employees are as per the remuneration policy of theCompany.

Csr Policy and related disclosures

The brief outline of CSR policy of the Company and such other details and disclosuresas per the prescribed format are furnished in Annexure Vi to this Report.

Acknowledgement

Your Directors are grateful to the Government of India the

Government of Tamilnadu financial institutions banks other lending institutionspromoters technical collaborators suppliers customers joint venture partners andmarketing agents for their assistance co-operation and support. The Directors thank theshareholders for their continued support.

The Directors also place on record their high appreciation for the contributions by allcadres of employees of the Company.

Disclaimer

The Management Discussion and Analysis contained herein is based on the informationavailable to the Company and assumptions based on experience in regard to domestic andglobal economy on which the Company's performance is dependent. It may be materiallyinfluenced by changes in economy government policies environment and the like on whichthe Company may not have any control which could impact the views perceived or expressedherein.

For and on behalf of the Board of Directors
D Senthikumar KT Vijayagopal
5th June 2018 DIN: 00202578 DIN: 02341353
Chennai – 600 068 Wholetime Director (Operations) Wholetime Director (Finance)