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Tanfac Industries Ltd.

BSE: 506854 Sector: Industrials
NSE: TANFACIND ISIN Code: INE639B01015
BSE 00:00 | 27 Oct 506.05 -25.65
(-4.82%)
OPEN

517.50

HIGH

531.70

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505.15

NSE 05:30 | 01 Jan Tanfac Industries Ltd
OPEN 517.50
PREVIOUS CLOSE 531.70
VOLUME 86427
52-Week high 779.00
52-Week low 163.00
P/E 12.19
Mkt Cap.(Rs cr) 505
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 517.50
CLOSE 531.70
VOLUME 86427
52-Week high 779.00
52-Week low 163.00
P/E 12.19
Mkt Cap.(Rs cr) 505
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

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 31stMarch 2019 for your review.

FINANCIAL RESULTS

[Rs. in Crores]

Particulars Financial Year Financial Year
2018 - 19 2017 – 18
Sales 221.71 165.42
Other Income (including operating income) 0.94 0.33
Operating Expenditure 169.96 145.03
Profit before Depreciation Finance Cost and Taxation (PBDIT) 52.69 20.72
Finance Cost 3.04 5.98
Depreciation/Impairment/Amortization 8.02 4.94
Profit before Tax (PBT) 41.63 9.80
Current Tax / Deferred Tax (Net of MAT Credit Entitle ent) 5.66 0.12
Profit After Tax (PAT) 35.97 9.68
Other Comprehensive Income / (Loss) 0.10 (0.30)
Total Comprehensive Income 36.07 9.38
Add: Balance brought forward (35.92) (45.30)
Profit/(Loss) available for appropriation (0.53) (35.92)
Transferred from General Reserves - -
Balance Carried forward to Balance Sheet (0.53) (35.92)

OPERATIONS AND OVERALL PERFORMANCE:

During the year under review enabled by both head and tail winds your Company hadregistered an all-time high performance both in terms of revenue and profitability.

The Company's sales performance had increased by 34% due to increase in sales volumeand also increase in prices of main products viz. HF and Sulphuric Acid. Significantincrease in Sulphuric Acid price was due to sudden change in market dynamics and supplyconstraints. Higher sales realization in HF acid was possible due to continuous focus onniche / value added segments and also partial pass through of increase in spar price.

Apart from significant increase in realizations mentioned above profitability hasincreased significantly during the year due to process optimization better marketpenetration resulting in further optimization of product / customer mix and the combinedeffects of lower increase in input costs compared to increase in sales realization.

Though the prices of main raw materials - Fluorspar & Sulphur had increased steeplyduring the year the Company managed to significantly improve the profitability throughoptimization of product mix and judicious choice of customers new market penetration andcontinuous improvements in reducing the fuel and energy consumptions. The Companycontinued its strategy of sourcing

Fluorspar from diverse sources / geography. These along with the ongoing initiativesand steps taken by the company during the past 5 years as discussed under ManagementDiscussion and Analysis have helped in significant improvement in the operationalperformance of the company. Profit before depreciation finance cost and taxation(PBDIT/EBIDTA) was significantly higher at Rs.52.69 Crores during the year an increase of154% compared to Rs.20.72 crores in the previous year. Company continues to face stiffcompetition from China which affects the sales realization and margin of HF from bothdomestic and overseas markets. However these were offset by the steps taken by thecompany as explained above.

Tight control on Working Capital availing cheaper financing avenues and increased cashflow from operations due to improved operational performance helped in significantlyreducing the debt by Rs.30.57 crores during the year. This has helped in reducing theoverall finance cost to Rs.3.04 crores during the year from Rs.5.98 crores during theprevious financial year. The Company expects further reduction in the debt and FinanceCost during next financial year.

Total Comprehensive Income (TCI): Total Comprehensive Income for the year wassignificantly higher at Rs.36.07 crores during the year compared to Rs.9.38 crores duringthe previous year registering nearly fourfold increase.

DIVIDEND:

Though the financial performance and reserve position of the company had improvedsignificantly during the year your Directors have not recommended any dividend on equityshares for the year 2018-19 considering the capital expenditures planned during the comingyears.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act 2013 unclaimed or unpaid Dividendpertaining to financial year 2010-11 has been transferred to the Investor Education andProtection Fund established by the Central Government.

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 few years to turn around the operationshave helped in continuous improvements in the operations of the company across allspheres. These steps have helped the company to post record performance during the currentfinancial year.

Your company has made penetration in the market for some of 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.

The tail winds that facilitated your Company during 2018-19 may not continue in thenext financial year. However with the help of the ongoing and fresh initiatives proposedby the company your Board of Directors is optimistic of continuous improvements in theoperational performance of the company in the coming years.

ALUMINIUM FLUORIDE:

Though sale of Aluminium Fluoride had increased during the year your company continueswith its strategy of reduced focus on Aluminium Fluoride due to its lower contribution.However your company will continue to serve its long-term customers while keeping an eyeon the overall bottomline.

HYDROFLUORIC ACID & SPECIALTY FLUORIDES:

Your company continues to widen the Customer base and has also made significantprogress in stringent specialty applications while maintaining the volume during FY'19.The markets remain oversupplied and your company will embark upon identification of valueadded downstream products. This will also reduce over dependence on traditional marketswhich are getting increasingly competitive

SULPHURIC ACID:

Your company had robust performance in Sulphuric Acid. The sales and contributions weremuch higher than budget. Though the spurt in realization due to demand – supply gaparisen out of external environment may not continue the efforts made to improve theproductivity and overall operational efficiencies will lead to better performance in thecoming years

EXPORTS:

Export turnover had gone up by 7% to Rs.20.15 Crores against Rs.18.85 crores in theprevious year. Your Company endeavors continuously to increase export revenues in thecoming years by expanding the customer base in the current market and penetrating to newmarkets.

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 Annual 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 Companies Act2013.

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.

There are no materially significant transactions with any Related Party as definedunder Section 188 of the Companies Act 2013 read with the Companies (Meeting of Boardand its Powers) Rules 2014. Please refer to Annexure ‘B' to the board's report andNotes to the Financial Statements for details of contracts and arrangement with RelatedParties as on 31st March 2019.

AUDITORS & AUDITORS' REPORT:

Khimji Kunverji & Co LLP Chartered Accountants Mumbai were appointed as StatutoryAuditors of the Company by the Members at their Annual General Meeting held on 28thSeptember 2016 for a term of five years and be ratified at every Annual GeneralMeeting 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.

Section 40 of the Companies Amendment Act 2017 (amending Section 139 of the CompaniesAct 2013) was notified on May 7 2018 whereby ratification of Statutory Auditor'sappointment is not required at every Annual General Meeting. Accordingly resolution forratification of appointment of Statutory Auditors is not proposed.

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 Shri 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 22nd May 2019 haveappointed Shri N. Krishna Kumar Cost Accountant as cost auditor for the FinancialYear 2019-20 and necessary 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 Year2018-19 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 comprising of itssenior executives defined its roles and responsibilities and laid down the procedure toassess the risk and minimization procedures. The Risk Management includes identifyingtypes of risks and its assessment risk handling & monitoring and reporting. The Boardshall also be responsible for framing implementing and monitoring the risk managementplan for the company. The details of identified risk and mitigation plan would be reviewedby the Committee every quarter and forwarded to the Board with their recommendation ifany and the same will be reviewed 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 2015 mandatedthe formulation of certain policies for all listed entities. The policies are reviewed periodicallyby the Board and updated based on need and new compliance requirements and are availablein 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 determi-nation 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

DIRECTOR RETIRING BY ROTATION:

No directors are due to retire by rotation during the ensuing Annual General Meeting.

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 Independents Directors in line with the provisionsof Schedule IV of the Companies Act 2013 are available in the Company's official websitelink 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 2013 read with Schedule IV under Chapter VIII were done throughselected 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 function of the Board of Directors includes –

• 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 performances of Non-Independent Directors SeniorManagement including Key Managerial Persons and the Board as a whole. They have alsoreviewed the quality quantity and timeliness of the flow of information between theCompany management and the Board for effective and reasonable performance of their dutiesto comply with Schedule IV of The Companies Act 2013. Performance Evaluation ofIndependent Directors was done by the entire board excluding the independent directorsbeing evaluated. Suggestions made by the independent directors were discussed at the BoardMeetings and are being implemented.

FAMILIRISATION PROGRAMME :

The Familiarization Programme as required under SEBI (LODR) Regulations 2015 aims atproviding insights into 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 2018 - 19 the Board met four times and the details of whichare given 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 four Committees viz. Audit Committee Nomination andRemuneration Committee Stakeholders' Relationship Committee and CSR Committee comprisingof the required combination of Non-Independent and Independent Directors. Committee-wisedetails are 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 and administration)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 2013 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 CEO 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 and corporate governance as on Financial Year ended 31st March 2019and will continue to comply with the same.

INSURANCE

The Company's properties Fixed Assets (including Building Plant and Machinery &other insurable assets) and Currents Assets (including stock of Raw Materials FinishedGoods Stores 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 made& forming 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.

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 8.50 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 31stMarch 2019.

RESEARCH AND DEVELOPMENT:

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

• Out of box thinking approach by the Team improved productivity in Sulphuric acidPlant and enhanced power generation reducing average Unit Power Cost.

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

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

• Working on Product Quality improvement of Specialty Fluorides.

• Working on development of New Specialty fluorides.

SAFETY HEALTH AND ENVIRONMENT PROTECTION (SHE):

Your Company is committed to Safety Health and Environmental Management System andprocesses.

Your Company in line with ABG Sustainability Frame work implements various Technicaland Management standards related to Safety Health and Environment through EnablonSoftware. Your Company has established Training Gallery to conduct Training and enhanceSafety awareness among the employees.

Your Company is an Integrated Management System (IMS) Certified by IntertekCertification Limited UK and has upgraded the Systems to ISO 9001–2015 for QualityManagement System(QMS) and ISO14001-2015 for Environmental Management System(EMS). YourCompany is in the process of upgrading OHSAS18001:2007 to ISO 45001:2018 for OccupationalHealth and Safety Management Systems.

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 SafetyAudit and Risk Assessment to monitor risks and to have action plan for countering therisks. Your Directors also periodically visit the factory to review the safetyPerformance.

Your Company periodically conducts onsite mock drills and actively coordinates with thelocal Government and other nearby companies. Your company has entered in to an agreementwith neighbouring companies for mutual sharing of safety resources during mock drill andduring 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 factorypremises.

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 – CORPORATESOCIAL RESPONSIBILITY (CSR):

Your company has continued its commitment to CSR activities despite not falling underthe ambit of section 135 of the Companies Act 2013 for spending on CSR activities duringthe year. Your Company's CSR initiatives are an integral part of Business policy andaligned with business goals. Since your company will come under the ambit of mandatory CSRspending for the first time during the next financial year the Board of directors haveduly constituted the CSR Committee in their meeting on 9th August 2018. Thecomposition of the committee is given under Corporate Governance Report.

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 catering to their basicneeds. After the participatory appraisal process and based on consensus and discussionwith the Village Panchayats 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 the Social and Economic Development of the communities inwhich we operate. In doing so build a better sustainable way of life for weaker sectionsof society and raise the country's Human Development Index." Your company focuses onthe 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 NGO's and other partners

Implementing activities for upliftment of communities involving Governmentdepartments Village Panchayats so as to benefit the society in the specific areas ofEducation Health Sustainable Livelihood and cater to the needs of Children women oldaged 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.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

Your Company has zero tolerance for sexual harassment at workplace. The Company hasadopted a Policy on Prevention Prohibition and Redressal of Sexual Harassment atworkplace in line with the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 (POSH Act) and the Rules framedthereunder. Your Company has complied with provisions relating to the constitution ofInternal Complaints Committee under the POSH Act. During the year under review yourCompany did not receive any complaint of sexual harassment.

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. Your Company's consistently high Employee Engagement Scorereflects high engagement of its employees and their pride in being part of theorganization.

The Group's Corporate Human Resources plays a critical role in your Company's talentmanagement process. Initiatives like robust talent reviews career developmentconversations and best-in-class development opportunities will help enhance the employeeexperience at your Company Your Company is engaged in a constructive relationship withemployees with an emphasis on productivity and efficiency and underlining safe workingpractices. As on 31st March 2019 your Company's employee strength was 139employees (previous year 149 employees).

AWARDS AND ACCOLADES:

Your Company received the following awards during the year:

‘Asia's Most Trusted Company' Award from IBC Info Media USA

Best Supplier Award "Vikreta Puraskar" from NALCO.

ACKNOWLEDGMENT:

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)
5th August 2019. Director

ANNEXURE – A TO BOARD'S REPORT

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 Year2018-19 at its manufacturing facility at Cuddalore viz. Hydrofluoric Acid SulphuricAcid and Specialty Fluorides plants.

(b) Major Energy Conservation initiatives taken during the Financial Year 2018 -19 :

• Steam consumption per ton of Sulphuric acid has significantly reduced due to useof Molten Sulphur and various initiatives like use of Flash Steam to De-Aerator andreduction in number of Sulphur melting pits.

• Utilisation of waste heat from Acid Absorption to pre-heat the Boiler Feed waterby Installation of Plate Heat Exchanger.

• Improvements done in Refrigeration section helped to reduce power cost in HFplant

• Various initiatives taken in improving productivity in Sulphuric acid Plantenabled availability of more Waste Heat to Turbine resulting in increased Renewable EnergyGeneration and reducing average power cost.

• Heat recovered from Turbine Auxiliaries resulting in energy conservation andwater recycling

• Installation of High Energy efficient Motors (IE-3) improved the MotorEfficiency.

• Installation of LED lightings in phased manner helped in energy conservation.

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

• Your Company continues to work on various energy conservation measures in PowerPlant and all process plants.

The Company has achieved significant cost savings through these initiatives

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

No alternate sources of energy were utilized in the process carried out in the productmentioned in Sl.No1 (b) above. However your company is exploring the use of RenewableSolar Power energy towards cost economics and environment conservation.

(d) The capital investment on energy conservation equipment

- NIL -

RESEARCH AND DEVELOPMENT AND TECHNOLOGY ABSORPTION :

Your Company –

• Is working very closely with an interested party for collaborative manufacturingof Specialty Organic Fluorides.

• Continues to put efforts for possible Collaboration with Research Institutionsleading consultants in Fluorine field prospective customers for diversification projectsand working on techno economic feasibility.

• Has successfully developed ecofriendly & economical process by usingby-product Fluoride of a customer to manufacture a specialty fluoride.

• Has successfully developed the process to make one of the products out ofcustomer's waste.

• Works on various water reduction schemes and continues to operate the schemeimplemented for reducing water consumption and the effluent discharge by effectiverecycling in the plant.

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

• Has successfully implemented schemes to consistently achieve increased captivepower generation.

TECHNOLOGY ABSORPTION

• Your Company forms cross functional teams to implement projects for new productdevelopment and to improve the process to increase the self-dependency on development oftechnology

• Continuous implementation of Sustainable Business practices rewarding of ideasrecognizing the work performance through issue of Spot Awards and Shabbash cards invarious categories have motivated young Engineers / Scientists to come up with creativeideas to improve efficiency in areas of Production Energy Savings Water ConservationWaste Minimization Safety and System Improvements.

A. FOREIGN EXCHANGE EARNING AND OUTGO :

 

(Rs. in Lakhs)

Details 2018-19 2017-18
Forex Earned 2020.53 1842.93
Forex used 6414.19 4222.21

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 2018 - 19 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 fullconformity with the requirement of the Act. They believe that the Financial Statementsreflect fairly the form and substance of transactions carried out during the year andreasonably present the Company's financial conditions and results of operations.

Your Directors further confirm that

(a) in the preparation of the annual accounts for the year ended March 31 2019 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 2019 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) the 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 2013 and 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 2019 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
09.08.2018
12.11.2018
TANFAC Employees Gratuity Trust Fund Employees' Gratuity Trust 01-04-2018 to 31-03-2019 Contribution towards TANFAC Employees' Gratuity Trust Fund 05.02.2019 44.95
22.05.2019
Cuddalore Sipcot Industries Common Utilities Ltd. Joint Venture for common Effluent Utilities 01-04-2018 to 31-03-2019 Deposit for commissioning of Effluent discharge system 09.08.2018 1.98
12.11.2018
05.02.2019
22.05.2019
09.08.2018
Charges for 12.11.2018 18.42
Effluent Discharge 05.02.2019
22.05.2019
For and on behalf of the Board of Directors
Place: Chennai (R.KARTHIKEYAN)
Date: 5th August 2019 DIRECTOR

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