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Tanfac Industries Ltd.

BSE: 506854 Sector: Industrials
NSE: TANFACIND ISIN Code: INE639B01015
BSE 00:00 | 14 Aug 216.30 19.00
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NSE 05:30 | 01 Jan Tanfac Industries Ltd
OPEN 217.00
PREVIOUS CLOSE 197.30
VOLUME 347814
52-Week high 217.00
52-Week low 54.95
P/E 10.58
Mkt Cap.(Rs cr) 216
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 217.00
CLOSE 197.30
VOLUME 347814
52-Week high 217.00
52-Week low 54.95
P/E 10.58
Mkt Cap.(Rs cr) 216
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tanfac Industries Ltd. (TANFACIND) - Director Report

Company director report

BOARD'S REPORT

To

The Members

Your Directors are pleased to present the report on the Company's business operationstogether with the audited statement of accounts for the financial year ended 31st March2017 for your review.

FINANCIAL RESULTS

Rs. in Crores

Details Year ended 31st March 2017 year ended 31st March 2016
Net sales/Income from Business operations 118.81 129.01
Other Income 5.22 4.67
Total Income 124.03 133.68
Gross Profit/ [Loss] before finance Cost Depreciation and Taxation 14.50 8.55
Less: finance Cost 6.03 7.13
Less: Depreciation / Impairment / Amortisation 4.73 4.77
Profit/[Loss] before Taxation 3.74 (3.35)
Exceptional items/Excess Income Tax provision - (3.72)
Profit/(Loss) after Exceptional items 3.74 0.38
Less: Deferred Tax / (Reversal) - (0.03)
Profit/(Loss) after Tax 3.74 0.40
Net profit/[Loss] for the period 3.74 0.40
Add: Balance brought forward (48.49) (48.89)
Profit/(Loss) available for appropriation (44.76) (48.49)
Transferred from General Reserves - -
Balance Carried forward to Balance Sheet (44.76) (48.49)

OPERATIONS AND OVERALL PERFORMANCE:

The Company's sales performance had decreased by 9% at '118.81 crores against '129.01crores in the previous year due to lower sales volume of Aluminium Fluoride and lowersales realization of ALF3 and Hydro fluoric Acid (HF). Lower sales realization was onaccount of pass through of part of the gains from fall in prices of main raw materialsviz. Spar and Sulphur. Other operating income during the year had doubled at '0.75 croresagainst '0.36 crores during the previous year due to increase in conversion charges fromtoll manufacturing of IBAP and Poly Aluminium Chloride (PAC).

Steeper fall in input costs compared to reduction in sales realization resulted insignificant improvement in the profit margin of the main products. This along with theongoing initiatives and steps taken by the company during the last two years as discussedunder Management Discussion and Analysis have helped in significant improvement in theoperational performance of the company. Profit before Depreciation Finance Cost andTaxation (EBIDTA) was significantly higher at '14.50 crores during the year compared to'8.55 crores in the previous year. Company continues to face stiff competition from Chinawhich affects the sales realization and margin in HF from both domestic and overseasmarkets. H owever these were offset by judicious choice of customer mix new marketpenetration gains from reduction in input cost of main raw materials and reduction inenergy and fuel oil cost.

Tight control on Working Capital and increased Cash Flow from Operations due toimproved operational performance and reduction in Interest Rate helped in reducing theFinance Cost to '6.03 crores during the current financial year compared to '7.13 croresduring the previous financial year.

Net Profit: Profit after Tax for the year was higher at '3.74 crores during the yearcompared to '0.40 crores during the previous year which was after exceptional item '3.72crores profit from sale of vacant freehold land.

DIVIDEND:

Your Directors have not recommended any dividend for the year 201 6-17 on account ofaccumulated losses and inadequacy of profits during the current year.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Companies Act 201 3 NO unclaimed or unpaid Dividend isdue for remittance to the Investor Education and Protection Fund established by theCentral Government during the financial year 2017-18.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS:

As briefed under Management Discussion and Analysis section the ongoing initiativesand steps taken by the company during the past two years to turn around the operationshave started yielding results and helped the company to post significant improvement inthe operational performance during the current financial year.

Your company has made further penetration in the market for its new products which hadresulted in significant contribution to the revenue and bottom line of the currentfinancial year. The company aims to further increase the market penetration of theseproducts during the next financial year.

With the help of the ongoing and fresh initiatives proposed by the company your Boardof Directors is optimistic of further improvements in the operational performance of thecompany in the coming

years.

ALUMINIUM FLUORIDE:

Sale of Aluminium Fluoride had reduced during the financial year compared to previousyear. Your company has strategically reduced its focus on Aluminium Fluoride due to itslower contribution. However your company will continue to serve its long term customers.

HF ACID:

The higher gap between supply and demand continues on the entire value chain of HFAcid. Chinese manufacturers take advantage of 1 0% reduction on export duty on HFimpacting the India's export market. however taking advantage of reduction in main rawmaterials and the oil prices the company is continuously working on improving theoperational efficiency to improve its competitiveness.

PV GRADE HF:

With the emphasis on solar energy there is significant growth opportunities in Photovoltaic Grade HF sector. your company made significant strides in the sale of PV grade HFduring the current financial year. Taking advantage of the growth opportunities yourcompany plans to make further penetration into the market for this segment through variouscustomer centric initiatives and significantly increase the sale of PV grade HF during thenext financial year.

EXPORTS:

Export turnover was marginally lower by 4 % at '18.45 crores as compared to '19.27crores in the previous year on account of reduction in selling price due to pass throughof part of gains from reduction in input cost and also stiff competition from China.

your Company endeavors continuously to increase export revenues in the coming years byexpanding the customer base in the current market and penetrating to new markets.

ISOBUTYL ACETOPHENONE (IBAP):

Your Company has successfully revived the IBAP project during the previous financialyear by adding values to the by-product generated from the process thus significantlyimproving the overall returns from the product. The company made further strides in saleof these value added products during the current financial years and have plans to furtherpenetrate into the market for these products in the coming years.

Besides the Company has also improved the IBAP process further and achieved targetedinput norms of main raw materials and utilities.

MATERIAL CHANGES AND COMMITMENT IF ANY:

No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year and the date of this report.

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 furnished as Annexure- A to the Board's Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013:

Your Company has not provided any loan(s) guarantee(s) to any person or body corporateand has not made any investment(s) during the year under Section 186 of the CompaniesAct2013.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public within the meaning of Section73(1) of The Companies Act 2013 during the year under review.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

In line with the requirements of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 your Company has formulated a Policy onRelated Party Transactions which is available on Company's website www.tanfac.com . ThePolicy intends to ensure that proper reporting approval and disclosure processes are inplace for all transactions between the Company and the Related Parties.

The Company has obtained necessary prior omnibus approval from the Board pertaining toRelated Party Transactions which were in the ordinary course of business and on an arm'slength basis. All such transactions which are of repetitive nature and / or entered in theOrdinary Course of Business and are at Arm's Length are placed before the Audit Committeeon a quarterly basis for its review and approval.

AUDITORS & AUDITORS' REPORT:

M/s. Khimji Kunverji & Co. Chartered Accountants Mumbai (Firm RegistrationNo.105146W) were appointed as Statutory Auditors of the Company by the Members at theirAnnual General Meeting held on 28th September 2016 for a term of five years and beratified at every Annual General Meeting till completion of their tenure.

The Report given by the Auditors on the financial statements of the Company forms partof the Annual Report. There were no qualifications reservations or adverse remarks madeby the Auditors in their report.

The Company has received a letter from the above auditors to the effect that theratification for their re-appointment if made would be within the prescribed limitsunder Section 141(3)(g) of The Companies Act 2013 and that they are not disqualified forratification of their re-appointment.

The Audit Committee and the Board of Directors of the Company have recommendedratification of appointment of M/s.Khimji Kunverji & Co. as Statutory Auditors of theCompany to hold office till the conclusion of the Annual General Meeting to be held duringthe financial year 2020-21 subject to approval of Members at this Annual General Meeting.

The necessary resolution for item of business to be transacted is set out in the Noticefor the Members' approval.

AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Compliance Certificate on Corporate Governance given by the Statutory Auditorsviz. M/s.Khimji Kunverji & Co. is forming part of the Annual Report.

COST AUDITOR

The Board of Directors of the Company has on recommendation of the Audit Committeeapproved the appointment of Mr N. Krishna Kumar Cost Accountant Cuddalore (MembershipNo.27885) for conducting the audit of cost records of the Company pertaining to Inorganicand Organic products manufactured by the Company covered under Central Excise TariffHeading Chapter Nos.28 and 29 respectively in compliance with The Companies (Cost Recordsand Audit) Rules 2014.

The Board of Directors at their meeting held on 23th May 2017 have appointed Mr N.Krishna kumar Cost Accountant as cost auditor for the Financial Year 2017-18 andnecessary filing has been made with the Central Government.

SECRETARIAL AUDIT REPORT

The Board has appointed Ms. Kalyani Srinivasan (Practicing Company Secretary Chennai(C.P. No.3109 & FCS No.5854) to conduct Secretarial Audit for the financial year2016-17 which inter alia includes audit of compliance with the Companies Act 2013 andthe Rules made under the Act Listing Agreement and Regulations and Guidelines prescribedby the Securities and Exchange Board of India.

The Secretarial Audit Report as required under Section 204 of The Companies Act 2013read with Rule 9 of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is furnished under Annexure - C does not contain any qualificationreservation or adverse remark.

RISK MANAGEMENT POLICY

The Company has internally constituted a Risk Management Committee to define its rolesand responsibilities and laid down the procedure to assess the risk and minimizationprocedures. The Risk Management includes identifying types of risks and its assessmentrisk handling & monitoring and reporting. The Board shall also be responsible forframing implementing and monitoring the risk management plan for the company. The detailsof identified risk and mitigation plan would be reviewed by the Committee every quarterand forwarded to the Board with their recommendation if any and the same will bereviewed and discussed by the Board in their meeting.

The details of Risk Management as practiced by the Company are provided as part ofManagement Discussion and Analysis Report.

POLICIES

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 201 5 mandatedthe formulation of certain policies for all listed entities. The policies are reviewedperiodically by the Board and updated based on need and new compliance requirements andare available in the Company's official website viz. www.tanfac.com .

Name of Policy Brief description Web URL
Related Party Transaction The Policy to regulate all transactions between the Company and its Related Parties in compliance with various applicable laws including under The Companies Act 2013/SEBI (LODR) Regulations 2015 http://www.tanfac . com/documents/policy_ Materiality Of Related Party Transactions.pdf
SEBI (Prohibition of Insider Trading) Regulations 2015 The Policy provides for fair disclosure of unpublished price sensitive information in dealing with securities of the Company. http://www.tanfac . com/documents/policy_ sebi.pdf
Whistle Blower Policy (vigil mechanism) The Company has established a vigil mechanism for its Directors and Employees to report their genuine concerns or grievances or violation of the Company's code of conducts and ethics which will be monitored by the Audit Committee http://www.tanfac . com/documents/policy_ Whistle Blower.PDF
Criteria for making payment to Non Executive Directors Except sitting fee for attending Board Audit Committee and Stakeholders Relationship Committee meetings NO other remuneration paid to Directors. http://www.tanfac . com/documents/ who non executive directors.pdf
Policy for determination of materiality of information or event This Policy facilitating prompt disclosure of material price sensitive information to the listed Stock Exchange(s) prepared in terms of SEBI (LODR) Regulations 2015. http://www.tanfac . com/documents/policy_ matrl_event.pdf
Policy on Archival of documents The policy framed for archival of the Company's records as required under SEBI (LODR) Regulations 2015 http://www.tanfac . com/documents/policy_ archival policy.pdf
Policy on preservation of documents The policy deals with retention of documents in permanent nature and not less than eight years after completion of the relevant transactions. http://www.tanfac . com/documents/policy_ preservation Doc.pdf

RELATED PARTY TRANSACTIONS

All related party transactions entered into during the year were in the ordinary courseof business and on arm's length basis. There have been NO materially significant relatedparty transactions. None of the directors have any material pecuniary relationships ortransactions with the company. Details of related party transactions are disclosed underAnnexure 'B' to the Board's Report.

INTIMATION TO BIFR

The net worth of the Company for the Financial Year 2015-16 had eroded by more than 50%of its peak net worth during the immediately preceding four financial years. The Companyhad made necessary intimation to the BIFR in the prescribed form under erstwhile SICA Act.

The Ministry of Finance Department of Financial Services vide its NotificationS.O.3568(E) dated

25th November 2016 had notified Sick Industrial Companies (Special Provision) RepealAct 2003 (SICSPRA) which had repealed The Sick Industrial Companies (Special Provisions)Act 1985 (SICA) effective from 1st December 2016 and to comply with NCLT.

Presently there is no provision with regard to potentially sick companies forcompliance with NCLT.

DIRECTOR RETIRING BY ROTATION:

In terms of Articles of Association of the Company Mr A.K. Agarwala Director retiresby rotation and being eligible offers himself for re-appointment.

DECLARATION BY INDEPENDENT DIRECTORS:

The Independent Directors of your Company have given their Certificate of Independenceto your Company stating that they meet the criteria of independence as mentioned underSection 149 (6) of the Companies Act 2013. The details of the training andfamiliarization programmes and the Annual Board Evaluation process for Directors have beenprovided in the Corporate Governance Report.

The terms and conditions of appointment of Independent Directors in line with theprovisions of Schedule IV of the Companies Act 2013 are available in the Company'sofficial website link viz.. http://www.tanfac.com/documents/who_appointment_independent_directors.pdf

BOARD EVALUATION:

The evaluation of Board of Directors and the Board as required under Section 149(8) ofThe Companies Act 201 3 read with Schedule IV under Chapter VIII were done throughselect parameters related to their roles responsibilities and obligations of the Boardand functioning of the Committee.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the key functions of the Board of Directors include -

• To review and guide Corporate Strategy major Plan of Action Risk PolicyAnnual Budgets & Business Plans setting Performance Objectives.

• Monitoring the effectiveness of the Company's governance practices

• Ensuring the integrity of the Company's Accounting and Financial ReportingSystems including the Independent Audit

• To provide strategic guidance

• To maintain high ethical standards in the interest of the stakeholders.

• To exercise objective independent judgement on corporate affairs.

Accordingly the performance of the Board was evaluated by the Board after seekinginputs from all the directors on the basis of the criteria such as the Board compositionand structure effectiveness of Board processes information and functioning etc. Similarevaluation was carried out by the Committee of the Board of Directors after seeking theirinputs.

SEPARATE INDEPENDENT DIRECTORS' MEETINGS:

The Independent Directors met during the year in the absence of Non-IndependentDirector and discussed inter alia the performance of NonIndependent Directors and theBoard as a whole and the quality quantity and timeliness of the flow of informationbetween the Company management and the Board for effective and reasonable performance oftheir duties to comply with Schedule IV of The Companies Act 2013. Performance evaluationof independent directors was done by the entire board excluding the independent directorsbeing evaluated. Suggestions made by the independent directors were discussed at the BoardMeeting and are being implemented.

FAMILIRISATION PROGRAMME :

The Familiarization Programme as required under SEBI (LODR) Regulations 2015 aims atproviding insights to the Company to enable Independent Directors to understand theirroles rights responsibilities as Directors of the Company the nature of the industry inwhich the Company operates business model of the Company. The details of trainingprogramme are provided in the Company's website under URL - http:// www.tanfac.com/documents/who_directors_familiarization_programme.pdf

NUMBER OF MEETINGS OF THE BOARD

During the Financial Year 2016-17 the Board met four times the details of which aregiven in the Report on Corporate Governance that forms part of this Annual Report. Thetime gap between two meetings as required under the listing agreement was well within theperiod.

BOARD COMMITTEES

Presently the Board has three Committees viz. Audit Committee Nomination andRemuneration Committee and Stakeholders' Relationship Committee comprising of therequired combination of Non Independent and Independent Directors. Committee-wise detailsare furnished in the Report on Corporate Governance section of the Annual Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extracts of Annual Return under Form MGT-9 pursuant tothe provisions of Section 92 Read with Rule 12 of the Companies (Management andAdministration) Rules 2014 is furnished in the Annexure - D.

INTERNAL FINANCIAL CONTROL (IFC) :

The Internal Financial Control (IFC) stipulates a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles.

The observations by the Internal Auditors and corrective actions thereon are presentedat the Audit Committee which also oversees and evaluates the IFC periodically.

The Directors Responsibility Statement required under Section 13(3)(c) of The CompaniesAct 201 3 are available elsewhere in the Directors' Report.

CORPORATE GOVERNANCE:

Your Company is strongly committed towards its philosophy of Corporate Governance. TheCorporate Governance Report along with the Auditors certificate regarding compliance ofthe conditions of the Corporate Governance as stipulated in Schedule V of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 read with listing agreementwith BSE Limited is forming part of the Annual Report.

A Certificate of the President and CFO of the Company in terms of Regulation 17(8) asspecified in Part B of Schedule II read with SEBI (LODR) Regulations 2015 confirming thecorrectness of the Financial Statements adequacy of the Internal Control measures andreporting of matters to the Audit Committee is annexed.

Your Directors are pleased to report that the Company has fully complied with the SEBIguidelines on corporate governance as on Financial Year ended 31st March 2017 and willcontinue to comply with the same.

INSURANCE

The Company's properties Fixed Assets (including Building Plant and MachineryInsurable Assets) and Currents Assets (including stock of Raw Materials Finished GoodsStores and Spares etc.) are adequately insured.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2)(e) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 read with the listing agreement with the stock exchangesthe Management's Discussion and Analysis Report for the year under review has been madeand forms part of the Annual Report.

PERSONNEL:

Except sitting fees for attending the Board Audit Committee and Stakeholders GrievanceCommittee meetings no other remuneration is being paid to the Directors. Mr Lalit NaikManaging Director who has resigned with effect from 23rd November 2016 did not draw anyremuneration including sitting fee for attending the Board/Committee meetings during histenure.

Pursuant to Section 197(12) of The Companies Act 2013 read with Rule 5(2) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the detailsof disclosure of remuneration paid to employee(s) are covered under the specified ceilingof drawing remuneration of '5 Lakhs per month are furnished in Annexure - D.

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) and Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are furnished in Annexure-D.

INDUSTRIAL RELATIONS:

Employee relations continued to be cordial throughout the year. The whole-heartedsupport of employees in the implementation of WCM ISO-9002 systems and ISO 14001 amplydemonstrate the high level of team work sense of belonging to the organization andsolidarity with the Management.

PUBLIC DEPOSIT

The Company has not accepted any deposits from the public during the year and there wasno outstanding towards unclaimed deposit payable to depositors as on 31st March 2017.

RESEARCH AND DEVELOPMENT :

Your company has made the following efforts in Research & Development.

• Continuous R&D efforts are ongoing to improve Quality of HF Acid for highend application

• Innovative technology improvements done in Sulphuric Acid Plant to increaseproductivity and Power Generation.

• Process improvements were done to reduce consumption norms of Raw Materials inSpecialty Fluorides

• Your company is working on improving productivity of IBAP.

• Scaling up of the in house developed technology for purifying the by-product ofIBAP process.

• Worked on Product Quality improvement of Specialty Fluorides.

• Worked on product stability studies and improved on stability of SpecialtyChemical which was developed in-house in previous year.

SAFETY HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to Safety Health and Environmental Management System andprocesses. Implemented various best practices and initiatives during this year whichhelped to maintain good safety performance statistics.

Your Company is an Integrated Management System(IMS) Certified. This comprises ISO9001-2008 for Quality Management System (QMS) ISO14001-2004 for Environmental ManagementSystem(EMS) & OHSAS18001:2007 for Occupational Health and Safety Assessment Series forSafety Management System by Intertek Certification Limited UK.

Your Company ensures stringent implementation of Safety and Environment Protectionmeasures and the Board has mandated accordingly. Safety visuals pictorials and signboards are implemented across the plant areas

Your Company Periodically Conducts Safety Audit and Risk Analysis to monitor risks andto have action plan for countering the risks. Your Directors also periodically visit thefactory to review the safety Performance.

Your Company periodically conducts onsite mock drills and actively coordinates with thelocal Government and other nearby companies.

Your company has entered in to an agreement with neighboring companies for mutualsharing of safety resources during mock drill and during emergencies.

Your Company motivates employees workers and contract workmen through training andretraining on safety aspects and also rewards best performers in Safety &Environmental aspects.

Your company maintains green belt inside and outside of factory premises

MANAGEMENT POLICY

We at Tanfac Industries Limited are committed to continual improvement of the processesof Management System affecting Quality Cost and Delivery along with Environmental Impactto prevent pollution and to comply with requirements of customers and interested partiesand public.

SUSTAINABLE DEVELOPMENT - COMMUNITY DEVELOPMENT INITIATIVES - CORPORATE SOCIALRESPONSIBILITY (CSR):

Your company has continued its commitment to CSR activities despite not falling underthe ambit of section 135 of the Companies act 2013. your Company's CSR initiatives are anintegral part of Business policy and aligned with business goals.

CSR is a continuing commitment by business to behave ethically and contribute toeconomic development of the local community and society at large. Creating value for thesociety is one of the major initiatives of CSR.

Projects are identified in consultation with the community and arriving their basicneeds. Then take to the participatory appraisal process and based on consensus anddiscussion with the village panchayat projects are implemented.

Focused areas are Education Health Sustainable livelihood Infrastructure developmentand social empowerment. All our CSR activities are carried out under the support andguidelines of Aditya Birla Centre for Community Initiatives and Rural Development. yourcompany is carrying out its community welfare activities in and around Cuddalore for morethan a decade to underserved communities.

Aditya Birla Group's vision:

"To actively contribute to the social and economic development of the communitiesin which we operate. In doing so build a better sustainable way of life for weakersections of society and raise the country's human development index."

your company focuses on the specific initiatives which include -

• Girl Child education.

• Education support to nearby schools.

• Downtrodden women empowerment projects

• Health Management including family welfare

• Linking with Government agencies NGOs and other partners

• Implementing activities for upliftment of communities involving governmentdepartmentsVillage panchayats so as to benefit for the society in the specific areas ofEducation health sustainable livelihood and health cater the needs of children womenold aged and physically challenged to the overall development of communities.

your company motivates and encourages its employees to actively participate in thevarious community development and CSR activities.

HUMAN RESOURCES DEVELOPMENT:

Human resources play a significant role in your Company's growth strategy. your Companybelieves that its knowledge capital will drive growth and profitability. The ongoing focusis on attracting retaining and engaging talent with the objective of creating a robusttalent pipeline at all levels. Initiatives like hiring freeze at some levels robusttalent reviews career development conversations and best-in-class developmentopportunities will help enhance the employee experience at your Company your Company isengaged in a constructive relationship with employees with an emphasis on productivity andefficiency and underlining safe working practices.

As on 31st March 2017 your Company's employee strength was 153 employees (previousyear 162 employees).

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the continued assistance andcooperation of the consortium banks Government authorities customers vendors andmembers during the year under review.

On behalf of the Directors and all shareholders I would like to place on record mysincere appreciation of the committed services by the entire TANFAC family comprisingofficers staff and workers.

Finally I look forward to your continued understanding and support in taking yourCompany forward in these challenging times.

for and on behalf of the Board
Chennai (R. Karthikeyan)
3rd August 2017. DIRECTOR

Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo required under The Companies (Accounts) Rules 2014

1. CONSERVATION OF ENERGY

(a) Steps taken for conservation of Energy

Your Company has adopted various Energy Conservation measures during the Financial Year2016-17 at its manufacturing facility at Cuddalore viz. Hydrofluoric Acid SulphuricAcid and Specialty Fluorides plants.

(b) Major Energy Conservation initiatives taken during the Financial Year 2016 - 17 :

• Integration of Chilling Systems and modification in routing of Chilling Mediumhad resulted in considerable power savings and also resulted in increased availability ofRefrigeration System

• Close monitoring of Turbine operations and implementation of ideas have helpedin improving average power generation during this year.

• Improving the Motor Efficiency optimizing the Air Conditioners and LightingSystems.

• Energy savings activities like Fanless Cooling Towers incorporation of energysavers in Lighting Systems and HRC fuses and reduction in lube oil consumption in TG/DGsets resulting in cost savings are being continuously implemented.

• Frequency Optimization of Turbine Generator with HFO genset continues to yieldgood results.

• Alternate fuel for HFO genset during startup is yet another initiative towardscost reduction

• The Company has achieved significant cost savings through these initiatives.

(c) Steps taken by the Company for utilising alternate sources of energy

No alternate sources of energy were utilized in the process carried out in the productmentioned in Sl.No1 (b) above.

(d) The capital investment on energy conservation equipment

-NIL-

RESEARCH AND DEVELOPMENT AND

TECHNOLOGY ABSORPTION :

Your Company-

• Continues to put efforts for possible Collaboration with prospective customersfor forward integration products and working on techno economic feasibility.

• Continued its R&D efforts to improve quality and reduce production costparticularly energy cost of Isobutyl Acetophenone (IBAP)

• Has successfully developed the in house technology on improving the quality ofthe by product and further scaled up the process in commercial scale.

• Your company works on various water reduction schemes and continues to operatethe scheme implemented for reducing water consumption and the effluent discharge byeffective recycling in the plant.

• Continues to recycle the solid waste in Cement Industry through focus onenvironment conservation.

• Successfully implemented schemes to consistently achieve increased captive powergeneration.

TECHNOLOGY ABSORPTION

• In house development of Green Chemistry

Technology for IBAP Plant and continuous efforts to perfect the technology is aclassical example of Technology Adaptation and Innovation

• Your Company forms Cross Functional Teams to implement projects for new productdevelopment and to improve the process so as to improve self dependency on development oftechnology.

• Continuous implementation of WCM practices rewarding of Kaizens recognizingthe work performance through issue of Shabbash card has motivated young Engineers /Scientists to come up with creative ideas to improve efficiency in areas of ProductionEnergy Savings Water Conservation Waste Minimization Safety and System Improvements.

A. FOREIGN EXCHANGE EARNING AND OUTGO:

(Rs. in Lakhs)

Details 2016-17 2015-16
Forex Earned 1683.78 2262.90
Forex used 3517.35 4432.12

Details of technology imported during the past five years:

Year Technology imported Status
- NIL -

DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3)(C) OF THECOMPANIES ACT 2013.

Your Directors would like to inform members that the Financial Statements of theAudited Accounts for the financial year 201 6 - 17 are prepared in accordance withmandatory Accounting Standards as prescribed under Section 133 of The Companies Act 2013('the Act') read with

Rule 7 of The Companies (Accounts) Rules 2014 and are in full conformity with therequirement of the Act. They believe that the Financial Statements reflect fairly the formand substance of transactions carried out during the year and reasonably present theCompany's financial conditions and results of operations.

Your Directors further confirm that -

(a) i n the preparation of the Annual Accounts for the year ended March 31 2017 theapplicable Accounting Standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

(b) the Directors have selected such Accounting Policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2017 and of the profit ofthe Company for the year ended on that date;

(c) the Directors have 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 have prepared the annual accounts on a 'going concern' basis;

(e) the Directors have laid down Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and are operatingeffectively; and

(f) t he Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF CONTRACTS/ARRANGEMENTS MADE WITH RELATED PARTIES

FORM NO.AOC-2

{Pursuant to Clause (h) of sub-section (3) of Section 134 of The Companies Act 2013and Rule 8(2) of The Companies (Accounts) Rules 2014}

1. Details of contract or arrangements or transactions not at arm's length basis:

The Company has NOT entered into any contract(s) or arrangement(s) or transaction(s)during the financial year ended 31st March 2017 which were not under arm's length basis.

2. Details of material contracts or arrangements or transaction at arm's length basis :

Name of related party Nature of relationship Duration of contract Salient terms Date of approval Amount (Rs. in lakhs)
Nature of Contract : Inter Corporate Deposit
Aditya Birla Group 14.3.2016 to 09.9.2016 Acceptance of Inter Corporate 24.5.2016 3000.00
Finance Limited Company 24.5.2016 130.00
21.3.2016 to 16.9.2016 Deposit 24.5.2016 500.00
- do - 09.02.2017 500.00
29.3.2016 to 24.9.2016 - do -
Roll over of ICD
23.9.2016 to 20.3.2017
Bhubaneswari Coal Group 01.6.2016 to 29.8.2016 Acceptance of 09.8.2016 3000.00
Mining Limited Company Inter Corporate 05.11.2016 3000.00
30.8.2016 to 27.11.2016 Deposit 09.02.2017 3000.00
Roll over of ICD
28.1 1.2016 to 25.02.2017 - do -
Aditya Birla Epoxy Common 01.6.2016 to 29.8.2016 Acceptance of 09.8.2016 130.00
(India) Limited Director*/ Inter Corporate 05.11.2016 130.00
Group 30.8.2016 to 27.11.2016 Deposit 09.02.2017 130.00
Company Roll over of ICD
28.1 1.2016 to 25.02.2017 - do -
Thai Peroxide Group Purchase of raw 05.11.2016 USD 8848
Company limited Company material 09.02.2017 USD 7680
- do -

* resigned with effect from 23.11.2016 For and on behalf of the Board of Directors

(R. Karthikeyan)

DIRECTOR

Place: Chennai

Date : 3rd August 2017