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Tuticorin Alkali Chemicals & Fertilizers Ltd.

BSE: 506808 Sector: Industrials
NSE: TUTICORALK ISIN Code: INE400A01014
BSE 00:00 | 19 Mar 3.97 0.18
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NSE 05:30 | 01 Jan Tuticorin Alkali Chemicals & Fertilizers Ltd
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Sell Qty 10.00
OPEN 3.97
CLOSE 3.79
VOLUME 100
52-Week high 10.52
52-Week low 3.21
P/E
Mkt Cap.(Rs cr) 6
Buy Price 3.97
Buy Qty 705.00
Sell Price 4.01
Sell Qty 10.00

Tuticorin Alkali Chemicals & Fertilizers Ltd. (TUTICORALK) - Director Report

Company director report

To The Members

Your Directors present the 45th Annual Report together with the Audited Accounts of theCompany for the year ended 31st March 2018.

FINANCIAL RESULTS

(Rs. In Crores)

DESCRIPTION 2017-18 2016-17
Sales Turnover (Net of Excise Duty and Trade Discount) 133.59 132.76
Gross Loss after meeting all expenses but before providing depreciation and interest 39.21 29.58
Add: Interest 3.21 3.19
Cash Loss 42.42 32.77
Add: Depreciation for the year 2.33 2.47
Extraordinary Items -- --
Net Profit / (Loss) for the year (44.75) (35.24)
Accumulated Loss 264.88 220.13
EPS & Diluted EPS (30.51) (24.25)

Throughout the financial year the CO2 plant operation could not bestabilized due to frequent breakdown in the boiler and receipt of inferior quality coal.The contaminants in the flue gas which were identified subsequently attacked the primaryamines of the solvent which resulted in reduction of the capability to absorb CO2.Hence fresh change of solvent was initiated and at the same time recovered the balancesolvent present in the displaced batch. With the above fresh solvent the plant capacityutilization improved significantly but again the bad performance due to poor quality ofcoal resulted in the reduction of CO2 production since November ‘17. Theproblem was identified and the balancing equipments were added to ensure removal of theunwanted salts in the circulating solvents. This resulted in improvement of CO2plant and Soda Ash plant since February 2018.

TWAD resumed water supply at 50% capacity from October 2017. They have steeply raisedthe cost of water to Rs.45 per M3. The Company has commissioned the programmeto enrich the water to the salt pans with the help of "RO" which incidentallycan produce enough water for meeting your Company's internal requirements. The saltproduction has gone up significantly since then. The Company also suspended purchase ofwater from outside sources. The purchase of water during the first 3 quarter for the yearresulted in expenditure of approximately Rs.11 crores which went to add to the losses.

The production and sales during the year ended 31st March 2018 compared to theprevious year are given below;

(In Tonnes)

Product

Production

Sales

(Includes internal Consumption)

2017-18 2016-17

2017-18 2016-17

Soda Ash (Light) 48492 44395 48454 46018
Soda Ash (Dense) 10 1047 3 1235
Ammonium Chloride (Fertilizer) 41940 40795 39054 41613
Sodium Bicarbonate 153 565 166 576

DIVIDEND

Your Directors were not able to recommend any dividend in view of the accumulatedlosses.

MARKET SCENARIO

The international market prices were more or less same like last financial year andhence the Company's selling price of Soda Ash didn't undergo any significant change. Sincethe production was less the Company could cater to the requirement of 1 or 2 majorcustomers and generally market sale was low.

Due to the falling Ammonia prices the Ammonium Chloride prices came down during thelast financial year and it continued to be so in the current year also. The prices inIndia also have fallen and the imposition of GST has made the product costlier at thehands of the farmer and has made it difficult to penetrate the Indian market in comparisonto open subsidized nitrogenous fertilizers. It is noted that the current selling prices inIndia is more or less same like export to South East Asia and hence the Company couldprobably sell the material without accumulation due to slow down of indigenous sale.

FUTURE OUTLOOK

The sale of Soda Ash in the Southern market continues to be good. It is felt that whenthe Company ramp up the production in the current year it should be possible to marketthe entire production in Southern India itself. The sale of Ammonium Chloride to fartherNorthern and Central market of India also improved and it should be possible to curtailexports in future. The Company is also looking into the possibility of converting it intoNPK complex fertiliser for better marketability and profitability.

OPPORTUNITIES AND THREATS

The opportunity to replace the imported products is always available to the company inthe Southern Mid and Eastern states of India.

The major threat had always been single source for CO2 gas a major rawmaterial from SPIC which has been overcome significantly with the commissioning of thecaptive CO2 plant. The availability of Ammonia is through the single bulkstorage tank at Tuticorin Port. Green Star are implementing a second storage tank whichwill ensure continuous availability of Ammonia.

ENVIRONMENT AND SAFETY

The periodic audits as required under ISO 9001 have been carried out. WIND MILL

During the year 0.55 Lakh units were generated from Wind Turbine Power Generators atGudimangalam Tirupur District as against 0.67 Lakh units generated in the previous year.The aging windmills are being refurbished for better results.

POWER PURCHASE

About 60% of the power was purchased from Group Captive Scheme during the financialyear.

CAPTIVE SALT WORKS

During the financial year 11550 Tonnes of salt could be produced as against 15150Tonnes produced last year. We have repaired some portions of the salt pans and it isexpected that with the implementation of the RO plant and the repairs during the nextfinancial year the salt production would be higher next year.

NCLT/SEBI

Based on the application to NCLT the Company applied to SEBI for granting necessaryexemption for converting the funds bought in by the promoters into equity. The approval ofthe shareholders was obtained vide EGM held on 10th April 2018 to enable this. Thefurther directions of NCLT is awaited.

FIXED DEPOSIT

There was no outstanding deposit as at 31st March 2018. The Company has neitheraccepted nor renewed any deposits during the year under review.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared and paid last year theprovisions of Section 125 of the Companies Act 2013 do not apply.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATESAND THE DATE OF THE REPORT No material changes and commitments affecting the financialposition of the Company occurred between the end of the financial year to which thisfinancial statement relates on the date of this report.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THECOMPANY

The Statement was showing the details regarding the development and implementation ofRisk Management Policy of the Company is furnished in Annexure 1 and attached to thisreport. The risk

management includes identifying types of risks and its assessment risk handling andmonitoring and reporting.

Your Company is dependent primarily on SPIC for the supply of CO2 and forreceiving the imported Ammonia through their storage system. Your Company has nowimplemented an independent CO2 Recovery facility which is operational fromNovember 2016. This has reduced the risk considerably. The Board does not envisage anyother major risks.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES

The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable as on date in view of theaccumulated losses the Company has incurred.

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

There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provision is notapplicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The transactions entered into during the financial year with related party as definedunder the Companies Act 2013 were in the ordinary course of business and at arm's lengthbasis. There were no materially significant transactions during the financial year 2017-18which were in conflict with the interests of the Company.

COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES

The Company's Policy relating to appointment of Directors payment of Managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 isfurnished in Annexure 2 and is attached to this report

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

The Company had four Board meetings during the financial year under review. Fulldetails are given in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submits its responsibility Statement:-

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

e. the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively. Internal financial control means the policies and procedures adopted by theCompany for ensuring the orderly and efficient conduct of its business including adherenceto Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.

f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary Joint venture or Associate Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. G. Ramachandran Managing Director who got re-elected during last Annual GeneralMeeting held on 28th July 2017 again retires at the forthcoming Annual General Meetingand being eligible offers himself for re-election.

There is no change among the Independent Directors and key managerial personnel duringthe year under review.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves for the continuance / appointment as Independent Directors underthe provisions of the Companies Act 2013 and the relevant rules.

BOARD EVALUATION

Pursuant to the provisions of Section 149 read with Schedule IV of the Companies Act2013 and conditions of the SEBI (LODR) Regulations 2015 the Independent Directors intheir separate meeting held on 5th 8

February 2018 had reviewed the performance of Non-Independent Director and the Boardas a whole.

STATUTORY AUDITORS

M/S. MSKA & Associates (formerly known as MZSK & Associates) CharteredAccountants Chennai (Registration No.105047W) have been appointed as Statutory Auditorsof the Company in 44th Annual General meeting for a term of five years from the Financialyear 201718 till the conclusion of the Annual General Meeting of the Company to be held inthe year 2022.

SECRETARIAL AUDITOR

Mr. R Kannan has been appointed by the Board of Directors to carry out the SecretarialAudit for the year ended 31st March 2018. Secretarial Auditor's Report is annexed whichforms part of this report.

COST AUDIT

As per the Government of India's directive the Company's Cost Reports in respect ofFertilizer - Ammonium Chloride and Chemical - Soda Ash for the year ended 31st March 2018are being audited by the Cost Auditor Mr P R Tantri who was appointed by the Board withthe approval of the Government of India.

EXPLANATIONS OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There was no qualification reservations or adverse remarks made by the StatutoryAuditors M/s. MSKA & Associates and Secretarial Auditor Mr. R. Kannan PracticingCompany Secretary in their reports.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM/WHISTLEBLOWER POLICY

The Audit Committee consists of M/s.B. Narendran S. Shankar and S. Asokan all of whomare Independent Directors. During the year Dr. RM Krishnan has been co-opted as a Memberof the Audit Committee with effect from 12.05.2017.

The Company has established a vigil mechanism and oversees through a committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the chairman of the AuditCommittee on reporting issues concerning the interests of co-employees and the Company.Policy is given in Annexure 3.

SHARES

The Company has not bought back any of its shares during the year under review.

The Company has not issued any "Sweat Equity" Shares during the year underreview.

No Bonus Shares were issued during the year under review.

The Company has not provided any Stock Option Scheme to the employees.

ANNUAL RETURN

The extracts of Annual Return in Form MGT pursuant to the provisions of Section 92 readwith Rule 12 of the Companies (Management

Disclosures under Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

and Administration) Rules 2014 is furnished in Annexure 4 and is attached to thisReport.

PARTICULARS OF EMPLOYEES

The Company has no Employees whose salary exceeds Rupees Five lakhs per month.

Ratio of the Remuneration of each director to the median Remuneration of the employees of the company for the financial year 2017-18 Mr.G.Ramachandran - Managing Director 23.40%
Percentage increase in Remuneration of each Director Chief Financial Officer Company Secretary in the financial year 2017-18 Managing Director : 2% Chief Financial Officer : 11% Company Secretary : 6%
Percentage increase in the median Remuneration of employees in the financial year 2017-18 (3.53)
Number of Permanent Employees on the Rolls of the Company 209
Explanation on the relationship between average increase in remuneration and company performance During the year increase in sales turnover is due to more number of days the Plant was operated. Decrease in average remuneration is due to salary arrears included in the previous year.
Comparison of the Remuneration of the key Managerial Personnel against the performance of the company. The remuneration to the KMP are considered reasonable taking into account various parameters including the performance of the Company qualification experience and contribution of the respective KMPS
Variations in the market capitalization of the company price earnings ratio as at the closing date of the current financial year / previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of un-listed companies the variation in the net worth of the company as at the close of current / previous financial year Description 2017-18 2016-17
Market Cap (Rs. in lakhs) 1821.37 1975.24
Price - Earnings Ratio (0.40) (0.55)
Last Issue Price per share Rs.10.00
Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Average Managerial Remuneration other than managerial personnel remains more or less the same as that of previous year.
Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company. The remuneration to the KMP are considered reasonable taking into account the various parameters including the performance of the Company and the qualification experience contribution of the respective KMP.
The key parameters for any variable component of remuneration availed by the Directors. Sitting Fees.
The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year. The remuneration of an employee not being a Director but in receipt of remuneration in excess of the Director was 1.07 times of the remuneration of the highest paid director - viz- Managing Director

AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY

Company is adopting remuneration guidelines for fixing the remuneration as per thepolicies laid down by the Nomination and Remuneration Committee.

PARTICULARS AS REQUIRED UNDER RULE 3 OF THE COMPANIES (ACCOUNTS) RULES 2014

A. Conservation of Energy

1. Steps taken or impact on conservation of energy

Crystallizers insulation and operation are being optimized to reduce the energyconsumption. The CO2 production has enabled the Company to reduce the ventingof circulating gas which has improved the efficiency. Use of Centrifugal compressors isstill under evaluation.

2. Steps taken for utilizing alternative sources of energy

A Project jointly with Group Companies is under consideration for production andutilization of solar energy.

3. Capital investment in conservation energy

CO2 plant reduces the wastage of CO2 thereby saves energyindirectly. No direct investment have been made during the Financial Year.

B. Technology Absorption

a) The Company has fully utilized the imported Technology of Hitachi Zosen Japan whichwas imported in the year 1980.

b) Expenditure on Research & Development

i) Capital Nil

ii) Recurring Nil

iii) Total Nil

C Foreign Exchange Earnings and outgo:

a) Foreign Exchange inflow: Rs. 20.36 Crores
b) Foreign Exchange outflow: Rs. 2.80 Crores

ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to bankers business associatesconsultants and various Government Authorities for their continued support extended toyour Company's activities during the year under review. Your Directors also acknowledgegratefully the shareholders for their support and confidence reposed on your Company.

DISCLAIMER

Statements in the Management Discussion and Analysis describing the Company'sobjectives estimates projections expectations may be "forward-lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatwould make a difference to the Company's operations include economic conditions affectingdemand-supply and price conditions in the domestic and overseas markets in which theCompany operates raw material availability and its prices changes in the Governmentalregulations labour negotiations tax laws and other statutes and economic developmentwithin India

Declaration

No case of sexual harassment was reported during the year.

The Company has followed Indian Accounting Standard (Ind As) for this Financial Yearand the previous years figures were reclassified as per Ind As.

The Company has followed the applicable Secretarial Standards.

Chennai 16th May 2018

For and on behalf of the Board of Directors
B. NARENDRAN Director G.RAMACHANDRAN Managing Director