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Zuari Agro Chemicals Ltd.

BSE: 534742 Sector: Agri and agri inputs
NSE: ZUARI ISIN Code: INE840M01016
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VOLUME 18401
52-Week high 158.90
52-Week low 83.30
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Mkt Cap.(Rs cr) 454
Buy Price 0.00
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Zuari Agro Chemicals Ltd. (ZUARI) - Director Report

Company director report

To the Members

1. Your Directors place before you the Eleventh Annual Report of theCompany together with Statement of Accounts for the accounting year ended 31stMarch 2020.

2. Financial Highlights:

Standalone

Consolidated

Particulars Current Year Previous Year Current Year Previous Year
2019-20 2018-19 2019-20 2018-19
(Loss) for the year before depreciation exceptional item and taxation from continuing operations (80482.63) (21876.92) (70724.60) (12775.34)
Less : Depreciation for the year 5038.62 4279.24 11061.60 8745.89
Exceptional Expenses (69896.74) 10617.61 - 1061760
Share of Profit / (Loss) of an associate and a joint venture - - 8218.25 5534.66
Profit/(loss) before tax from continuing operations (15624.51) (36773.77) (73567.95) (26604.18)
Less : Provision for taxation - Current Tax - - 1614.61 139717
Income Tax Credit of earlier years - (1493.31) (1493.31)
Deferred Tax Charges (Credit) 3023.23 (700.21) 2045.73 785.12
(Loss) after tax from continuing operations (18647.74) (34580.25) (77228.29) (27293.17)
(Loss)/ Profit before Tax for the year from discontinued operations (336.16) 2713.21
Tax Income / (Expense) of discontinued operations 83.00 (1027.22)
(Loss) after tax for the year from discontinued operations (253.16) 1685.99
(Loss)for the year (18900.90) (32894.26)
Other Comprehensive (Loss) for the year net of tax (982.47) (2903.65) (1091.53) (2340.31)
Total Comprehensive (Loss) for the year net of tax (19883.37) (3579791) (78319.82) (26633.48)
Proposed Dividend : NIL (PY NIL) (in case of a subsidiary Re. 0.50 (PY Re. 1)) 592.58 1185.15
Tax on dividend (Including Surcharge) - - - 243.61
Basic and diluted from continuing operations (44.34) (82.22) - -
Basic and diluted from discontinued operations (0.60) 4.01 - -
(Loss) per equity shares (nominal value of share Rs 10/-) (31st March 2019 - Rs 10/-)
Basic and diluted from continuing and discontinued operations (44.94) (78.21) (190.68) (68.57)

A. Review of Operations:

The revenue from operations (Standalone) for the year ended 31stMarch 2020 was Rs 201262.23 lakhs as compared to Rs 473095.81 lakhs for the previousyear ended 31st March 2019.

The loss before tax from continuing operations for the year ended 31stMarch 2020 was Rs 15624.51 lakhs as compared to Loss of Rs 36773.77 lakhs for the yearended 31st March 2019. The loss after Tax from continuing operations stood atRs 18647.74 lakhs for the year ended 31st March 2020 as compared to loss ofRs 34580.25 lakhs for the previous year.

The loss before tax from discontinued operations for the year ended 31stMarch 2020 was Rs 336.16 lakhs as compared to profit of Rs 2713.21 lakhs for the yearended 31st March 2019. The loss after tax from discontinued operations stood atRs 253.16 lakhs for the year ended 31st March 2020 as compared to profit of1685.99 lakhs for the previous year.

The Gross revenue from operations (Consolidated) for the year ended 31stMarch 2020 was Rs 5 01078.59 lakhs as compared to Rs 810290.01 lakhs for the previousyear.

The Consolidated loss before tax for the year ended 31stMarch 2020 was Rs 73567.95 lakhs as compared to loss before tax of Rs 26604.17 lakhsfor the year ended 31st March 2019. The loss after tax adjustment stood at Rs77228.29 lakhs for the year ended 31st March 2020 as compared to a loss aftertax of Rs 27293.17 lakhs for the previous year.

During the year 2019-20 the Company's plants were shut down on accountof non-availability of gas and nonavailability of raw materials which resulted indecrease in production which had an adverse effect to the cash flow and financialflexibility of our Company. The Nationwide total lockdown announced from 25thMarch 2020 due to COVID 19 pandemic was gradually lifted based on the impact of outbreak.The agriculture and fertilizer sector remain relatively unaffected on demand side. TheCompany operations have not been affected significantly despite some issues relating tonon-availability of labour and supply chain disruptions. The proactive support andrelaxations extended by Central and respective State Governments helped Company'sproduction distribution and sale of fertilizers unaffected. The Company has been able tooperate its plants by mobilizing critical workforce and adopting stringent socialdistancing safety measures and guidelines issued in this regard.

During the year the Company has purchased all the equity shares ofZuari Farmhub Limited (ZFHL) pursuant to which ZFHL has become wholly owned subsidiary ofthe Company w.e.f. 23rd March 2020. Pursuant to Board approval obtained on 5thFebruary 2020 and vide Business Transfer Agreement dated 31st March 2020 theCompany has sold its retail Specialty Nutrients Business" (SPN) & allied CropProtection & Care business (CPC) seeds and blended businesses to ZFHL on goingconcern basis under a slump sale arrangement at a consideration of Rs 78556.00 lakhs.

The Board granted approval for participation of OCP in the sharecapital of ZFHL by an investment of US$ 46.5 Million in one or more tranches to acquirein aggregate a stake up to 30% in ZFHL post which the shareholding of the Company andOCP will be 70% and 30% respectively in ZFHL.

B. Reserves:

The net deficit in the statement of Profit and loss and GeneralReserves as on 31st March 2020 is Rs 53979.75 lakhs as against Rs 35065.53lakhs net deficit in the statement of profit and loss as on 31st March 2019.

C. Material changes and commitments affecting financial positionbetween the end of the financial year and date of the report

In relation to MCA Phosphate Pte Limited (MCAP) a joint venture inwhich our Company had a 30% shareholding and which in turn holds 30% equity stake inFosfatos del Pacifico S.A. ("FDP") a company involved in a phosphatemining project in Peru our Company was engaged in an ongoing dispute with Mitsubishiwhich holds the balance equity stake in MCAP. The subject matter of the dispute relates tocertain impairments to the value of the investments in relation to the Peruvian phosphatemining asset recorded in the books of MCAP and our Company's stake in MCAP and allegedbreach by Mitsubishi and MCAP of the Shareholder's agreement entered into between ourCompany MCAP and Mitsubishi.

On account of the ongoing dispute our Company has been unable toreceive requisite information including financial information of MCAP in a timely mannerwhich has resulted in our statutory auditors adding certain qualifications to theirprevious audit reports.

On February 11 2020 an Arbitral Tribunal declared a partial award inthis dispute. The Arbitral Tribunal (by majority) agreed that approval of MCAP's financialstatements for FY 2016 & 2017 was in violation of Company's Super Majority Rights; itrefused to grant any other reliefs claimed by the Company including the Company's prayerfor a buy-out for an amount of USD 37 million in exchange of its 21690000 ordinaryshares in MCAP.

Consequently the impairment and the dilution in our Company'sshareholding in MCAP has a negative impact in the profit and loss account. Basis thepartial award of the arbitral tribunal our investment in MCAP has been impaired and ourshareholding has been reduced to 0.17% of the total paid up capital of MCAP.

The Company and Mitsubishi through their lawyers had entered into astipulation and agreement on 27th March 2020 in respect of allocation ofcosts of arbitration proceedings and transfer its 21690000 shares in MCAP to Mitsubishifor USD 216900 in response to Mitsubishi's exercise of its Call Option under theShareholders' Agreement. The Phosphate Purchase Agreement between the Company andMitsubishi will stand terminated. The Company and Mitsubishi have also requested theArbitral Tribunal to pass the Final Award in terms of the above stipulation and agreementwhich is yet to passed.

The Company was accorded In-Principle approval for sale of Company'sfertilizer plant at Goa to Paradeep Phosphates Limited subject to necessary approvalsconsents permissions and/or sanctions of the appropriate regulatory and statutoryauthorities as may be required approval of the shareholders of the Company and financialdue diligence.

Except above there were no material changes and commitments affectingthe financial position of the Company between the end of the financial year to which thefinancial statements relates and the date of the approval of the Directors Report.

3. Dividend:

The Directors do not recommend any dividend in view of loss during thecurrent year.

4. Capital Projects:

In order to comply with the revised energy norms set forth in NUP-2015Policy notified by Department of Fertilizers Government of India the Company hadconceptualized an Energy Savings Project (ESP) with target Specific Energy Consumption ofUrea at 6.1 GCal/MT. The ESP was to be executed over a period of two years at anapproximate CAPEX outlay of Rs 380 crores (including the costs of schemes alreadyimplemented in October 2018 and a couple of schemes under implementation).

Accordingly the services of M/s CASALE had been engaged to carry outthe Process Design Package (PDP) for the ESP schemes and their integration. However dueto financial liquidity issues faced by the Company the PDP development had not proceededas envisaged but is expected to resume by 2nd quarter of FY 2021.

Two schemes viz. VAM based Chiller and Membrane type PGRU were underexecution. However again due to financial constraints both the projects have been put onhold effective October 2019 and is expected to resume by Q4 of FY 2020-21.

The major features of the ESP are Revamp of the 2 nos. AmmoniaSynthesis Converters and the Revamp of the CO2 Removal Section of the AmmoniaPlant for lower CO2 Regeneration Energy. The Project will also include Revamp/Replacement of the Driver Steam Turbine(s) of the Syngas Compressor by Indigenous supply.These schemes are expected to be re-initiated and implemented in the next two financialyears viz. 2021-22 and 2022-23.

The project for replacement of the pressurized storage of LiquidAmmonia in Horton Spheres with the Atmospheric Ammonia Storage Tank (AAST) is beingdeferred and shall be re-initiated at an appropriate time in future.

As a matter of Sustenance Plan in order to ensure reliability of theAmmonia plant in particular Capital Projects for Replacement of Critical Heat Exchangerssuch as Process Gas Reboiler (A-EA 301) and Process Gas Heat Exchanger (A-EA 201) havebeen initiated for execution in CY 2021 and CY 2022 respectively.

5. Conservation of Energy/Technology Absorption/Foreign Exchange Earnings and Outgo:

A. Conservation of Energy:

No energy savings/conservation schemes implemented during the year2019-20.

B. Technology Absorption:

(i) The efforts made towards technology absorption : Not Applicable
(ii) The benefits derived like product improvement cost reduction product development or import substitution : Not Applicable
(iii) Imported technology (imported during the last 3 years reckoned from the beginning of the financial year) : Not Applicable
(iv) The expenditure incurred on Research and Development : Not Applicable

No new technology was absorbed during the year 2019-20.

C. Foreign Exchange and Outgo:

The expenditure in foreign currency for the year ended 31stMarch 2020 was Rs 1330 lakhs as compared to Rs 695 lakhs during the previous year. Theforeign exchange earnings for the year ended 31st March 2020 was Rs 220 lakhsas compared to Rs 494 lakhs during the previous year.

6. Environment and Safety:

The company as a part of its continuous upgradation of its Environmentstandards has now completed the transition of ISO 14001:2004 to ISO 14001:2015 and inorder to upgrade the Safety standards has migrated from OHSAS 18001:2007 to ISO45001:2018. Both the certification were completed in May 2019 through TUV Nord.

The Company continues to be certified for excellence certification of"Protect & Sustain" stewardship from International Fertiliser Association.The audit for the recertification was carried out by M/s SGS India Private Limited.

The company conducted various activities related to Safety Health& Environment during National Safety Week National Road Safety Week WorldEnvironment Day National Fire Service Day and Chemical Disaster Prevention Day.

The Green Triangle Society Goa in association with the Inspectorate ofFactories & Boilers Government of Goa have awarded "Gomant Ucchha SurakshaPuraskar" to the Company for the Outstanding Safety Performance in OccupationalSafety Health & Environment.

7. Industrial Relations:

Cordial and conducive working conditions prevailed amongst the Companyemployees and the contract workmen. Wage settlement is under negotiation with companyemployees. Wage Settlements for Contract workers expired in 2019 other than onecontractor. Charter of Demands from Contract worker union awaited to follow furtherprocess of negotiation.

8. Annual Return :

Annual Return referred to in Section 92(3) of the Companies Act 2013is available on the website of the Company at www.zuari.in

9. Related Party Transactions:

All related party transactions that were entered into during thefinancial year u/s 188 of the Companies Act 2013 were on an arm's length basis. Allrelated party transactions are approved by the Audit Committee and the Board of Directors.There were no materially significant related party transactions entered into by theCompany with the Promoters Directors Key Managerial Personnel which may have a potentialconflict with the interest of the Company at large. The details of related partytransactions as per Form AOC-2 is enclosed as Annexure - Rs K'.

10. Particulars of Loans Guarantees orInvestments:

The details of Loans Corporate Guarantees and Investments made by theCompany under the provisions of Section 186 of the Companies Act 2013 are given in NoteNo. 39 of the financial statements.

11. Nomination & Remuneration Policy andDisclosures on Remuneration:

The Board on the recommendation of the Nomination & RemunerationCommittee has framed a policy for selection appointment and remuneration of DirectorsKey Managerial Personnel and employees in the Senior Management. More details of the sameincluding the composition of the Committee are given in the Report on Corporate Governanceenclosed as Annexure Rs A' to this report.

The nomination and remuneration policy is displayed on the Company'swebsite. The weblink for the same is: http://www.zuari.in/investor/corporate governance.

The disclosure related to the employees under Section 197 read withRule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is enclosed as Annexure Rs I' to this Report.

The information required pursuant to Section 197 (12) of the CompaniesAct 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company is enclosed as AnnexureRs J'.

12. Risk Management:

The Company has constituted a Risk Management Committee with theobjective to monitor and review the risk management plan for the Company includingidentification therein of elements of risks if any which may threaten the existence ofthe Company and such other functions. During the year under review 1 meeting of theCommittee was held on 5th February 2020.

The Risk Management Committee consists of the following members:

• Mr. Sunil Sethy

• Mr. N. Suresh Krishnan

• Mr. Marco Wadia

• Mr. Madan Pandey

• Mr. R.K. Gupta

13. Vigil Mechanism/Whistle Blower Policy:

The Company in accordance with the provisions of Section 177(9) of theCompanies Act 2013 and Regulation 22 of SEBI (LODR) Regulations 2015 has established avigil mechanism for directors and employees to report genuine concerns to the managementviz. instances of unethical behavior actual or suspected fraud or violation of theCompany's Code of Conduct or Ethics Policy. The Company has also formulated a WhistleBlower Policy (" Policy") which provides for adequate safeguard againstvictimization of persons and has a provision for direct access to the Chairperson of theAudit Committee. The Company has not denied any person from having access to the Chairmanof the Audit Committee.

14. Corporate Social Responsibility (‘CSR'):

The Board of Directors has constituted a CSR Committee and alsoapproved the CSR Policy. CSR Committee comprises of one Independent Director oneExecutive Director and one Non-Executive Director. The Board has designated Mr.Vijayamahantesh Khannur Company Secretary as Secretary of the Committee. During the yearunder review 1 meeting of the Committee was held on 15th May 2019.

The Composition of Committee & their attendance at the meetings areas follows:

Names of Members Status Nature of Directorships No of meetings attended
Gopal Krishna Pillai* Chairman Non-Executive Independent Director -
J. N. Godbole ** Member Non-Executive Independent Director 1
Sunil Sethy Member Managing Director 1
Akshay Poddar Member Non-Executive Director 1
Kiran Dhingra*** Chairperson Non-Executive Independent Director -

* upto 5th February 2020 ** upto 5th February2020 ***w.e.f. 5th February 2020

The policy is displayed on the Company's website. The weblink for thesame is:. http://www.zuari.in/investor/corporate governance

The CSR Committee formulates and recommends to the Board a CSR Policywhich shall indicate the activities to be undertaken by the Company as specified inSchedule VII of the Companies Act 2013. The Committee also recommends the amount ofexpenditure to be incurred on the CSR activities and monitors the CSR Policy of theCompany from time to time.

The detailed report on CSR activities as required under The Companies(Corporate Social Responsibility Policy) Rules 2014 is attached as Annexure Rs H' tothis report.

15. Directors and Key Managerial Personnel:

All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of SEBI (LODR) Regulations 2015.

In accordance with the provisions of Regulation 25(7) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the company organizesfamiliarization programme for Independent Directors as and when required.

Mr. Akshay Poddar retires by rotation at the forthcoming Annual GeneralMeeting and is eligible for re-appointment. A brief profile and details of otherdirectorships of Mr. Akshay Poddar are given in the Report on Corporate Governanceattached as Annexure Rs A' to this report.

Mr. J. N. Godbole and Mr. Gopal Krishna Pillai ceased to be IndependentDirectors of the Company w.e.f. 18th February 2020 and 1st April2020 respectively upon completion of their term.

Mr. Dipankar Chatterji has been appointed as an Additional/ IndependentDirector of the Company for a period of 3 years w.e.f. 14th February 2020.

Pursuant to Regulation 17(1A) of SEBI Listing Obligation and DisclosureRequirement) Regulations 2015 approval of the shareholders is sought at the ensuingAnnual General Meeting of the Company for continuation of Directorship of Mr. Saroj KumarPoddar.

Mr. Sandeep Agrawal ceased to be Chief Financial Officer and KeyManagerial Personnel w.e.f. 12th April 2019.

Mr. Samrat Sen was appointed as Chief Financial Officer w.e.f. 12thApril 2019. He ceased to be Chief Financial Officer and Key Managerial Personnel w.e.f.15th December 2019.

Mr. R. K. Gupta has been appointed as Chief Financial Officer and KeyManagerial Personnel w.e.f. 5th February 2020.

Mr. R. Y. Patil Vice President & Company Secretary ceased to be aCompany Secretary and Key Managerial Personnel w.e.f. 1st April 2020.

Mr. Vijayamahantesh Khannur has been appointed as Company Secretary andKey Managerial Personnel w.e.f. 1st April 2020.

Brief profile along with other particulars of Mr. Dipankar ChatterjiMr. Akshay Poddar and Mr. Saroj Kumar Poddar as required under Regulation 36(3) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are disclosed in the11th Annual General Meeting Notice.

Mr. Sunil Sethy Managing Director Mr. Vijayamahantesh KhannurCompany Secretary and Mr. R. K. Gupta - Chief Financial Officer have been designated asKey Managerial Personnel in accordance with provisions of Section 203 (1) of the CompaniesAct 2013.

16. Performance Evaluation:

Pursuant to the Provisions of Section 134 178 and Schedule IV of theCompanies Act 2013 and Regulation 17 of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the following performance evaluations were carried out;a. Performance evaluation of the Board Chairman and NonIndependent Directors by theIndependent Directors;

b. Performance evaluation of the Board its committees and IndependentDirectors by the Board of Directors; and

c. Performance evaluation of every director by the Nomination andRemuneration Committee.

The details of Annual Performance evaluation carried out are given inthe Corporate Governance Report attached as Annexure Rs A' to this report.

17. a. Board Meetings:

During the year nine Board Meetings were held on 12thApril 2019 15th May 2019 12th August 2019 06thSeptember 2019 25th October 2019 08th November 2019 14thNovember 2019 05th February 2020 and 14th February 2020. Thedetails of the composition of the Board and attendance of the Directors at the BoardMeetings are provided in the Corporate Governance Report.

b. Audit Committee:

During the year under review eight Audit Committee Meetings were heldand all the recommendations of the Audit Committee were accepted by the Board. The detailsof the composition of the Audit Committee and details of committee meetings are given inthe Corporate Governance Report.

18. Fixed Deposits:

The Company has not accepted fixed deposits in the past or during theyear.

19. Details of significant and material orderspassed by the Regulators or Courts:

There are no significant material orders passed by the Courts/Regulators or Tribunals impacting the going concern status and Company's operations infuture. The details pertaining to various demand notices from various statutoryauthorities are disclosed in Note No. 32 A of financial statements under the heading -Contingent Liabilities.

20. Adequacy of internal financial controls withreference to financial statements:

The company has adequate systems of internal control in place which iscommensurate with its size and the nature of its operations. The Company has designed andput in place adequate Standard Operating Procedures and Limits of Authority Manuals forconduct of its business including adherence to Company's policies safeguarding itsassets prevention and detection of fraud and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information.

These documents are reviewed and updated on an ongoing basis to improvethe internal control systems and operational efficiency. The Company uses astate-of-the-art ERP (SAP) system to record data for accounting and managing informationwith adequate security procedure and controls.

21. Disclosure Requirement:

Your Company has complied with all the mandatory requirements ofSchedule V of SEBI (LODR) Regulations 2015. The Report on Corporate Governance isenclosed as Annexure Rs A' to this report. A Certificate on Compliance of CorporateGovernance by a Practicing Company Secretary is enclosed as Annexure Rs B'.Declaration by the Managing Director is enclosed as Annexure Rs C' the ManagementDiscussion and Analysis is enclosed as Annexure Rs E' the Business ResponsibilityReport is enclosed as Annexure Rs F' to this report and Secretarial Audit Report isenclosed as Annexure Rs G' to this report.

22. Statutory Auditors:

As per Section 139 of the Companies Act 2013 and Rules madethereunder M/s S.R. Batliboi & Co. LLP Chartered Accountants New Delhi wereappointed as Statutory Auditors from the conclusion of the Seventh Annual General Meetingtill the conclusion of the Twelfth Annual General Meeting.

The Auditors Report on standalone & consolidated financialstatements contained no qualification.

During the year under review there were no frauds reported by theAuditors to the Audit Committee or the Board under Section 143 (12) of the Companies Act2013.

23. Cost Records & Cost Audit:

The Company is required to maintain cost records as specified by theCentral Government under Section 148(1) of the Companies Act 2013 and accordingly suchaccounts are made and records are maintained. The Board has re-appointed Mr. IrudayamSavari Muthu Cost Accountant Membership No. 6716 as the Cost Auditor for the year2020-21 and has recommended the remuneration payable to the Cost Auditor for ratificationat the ensuing Annual General Meeting. The Cost Audit Report for the year ended 31stMarch 2019 was filed by the Company with the Ministry of Corporate Affairs on 5thOctober 2019.

24. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act 2013and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. Shivaram Bhat Practicing Company Secretary as SecretarialAuditor to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportfor the financial year 2019-20 is enclosed as Annexure Rs G' to this Directors'Report. The Report does not contain any qualification.

25. Disclosure as per Section 22 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013:

As per provisions of Section 4 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 your Company has constitutedan Internal Complaints Committee for redressal of complaints against sexual harassment.There was one complaint/case filed

with the Company during the financial year which has been closed.

26. Employees' Stock Option Scheme:

Though the Employees Stock Option Scheme (ESOPS) was approved by theshareholders in the Annual General Meeting held on 7th August 2012 no ESOPSwas issued pursuant to the same.

27. Raising of Funds through issue of Foreign Currency ConvertibleBonds (FCCBs) and Rights Issue of Compulsory Convertible Debentures (CCDs):

Your Company passed a resolution on 3rd August 2018 forraising of funds by way of Foreign Currency Convertible Bonds and rights issue ofCompulsory Convertible Debentures.

28. Consolidated Financial Statements under Section 129 of theCompanies Act 2013:

The Consolidated Financial Statements of the Group has been prepared inaccordance with Indian Accounting Standards (Ind AS) notified under the Companies (IndianAccounting Standards) Rules 2015 and Companies (Indian Accounting Standard) (Amendment)Rules 2016 which forms part of this Annual Report.

The Company will make available the financial statements ofsubsidiaries upon request by any member of the Company interested in receiving thisinformation. The Annual Accounts of the Subsidiary Companies will also be kept forinspection by any shareholders at the Registered Office of the Company and itsSubsidiaries.

29. Subsidiaries:

A brief review of the subsidiaries of the Company is given below:

(a) Mangalore Chemicals & Fertilizers Limited (MCFL):

Mangalore Chemicals & Fertilizers Limited (MCFL) is a subsidiary ofthe Company and the Company holds 54.03% total voting rights in MCFL.

MCFL has only one major business segment viz. Fertilizers. Itmanufactures both Nitrogenous and Phosphatic fertilizers and is the only manufacturer offertilizers in the state of Karnataka. About 64% of the Company's products are sold in thestate of Karnataka which meets about 17% of the needs of the farmers in the State. MCFLmaintains a good share of the market in Kerala and a modest share in the neighbouringstates of Tamil Nadu Andhra Pradesh Telangana and Maharashtra.

The revenue from operations for the year ended March 31 2020 was Rs271084.42 lakhs as compared to Rs 307363.76 lakhs for the year ended March 31 2019.

The profit before tax for the year ended March 31 2020 was Rs 7043.82lakhs as compared to Rs 5014.04 for the year ended March 31 2019. Total ComprehensiveIncome stood at Rs 6470.82 lakhs for the year ended March 31 2020 compared to Rs3212.37 lakhs for the previous year.

(b) Adventz Trading DMCC:

Adventz Trading DMCC subsidiary of your Company incorporated underDubai Multi Commodities Centre Authority (DMCC) which engaged in the business of tradingin chemical fertilizers seeds agricultural and veterinary pesticides and basicindustrial chemicals.

The primary objectives include:

• Achieving higher operating volumes.

• Meeting the import requirements of associate companies &other customers.

• Trading of fertilizer raw materials phosphatic potassicfertilizers and other agri inputs.

• Achieving higher returns/savings by managing and negotiatingbest commercial terms.

• The offshore trading company is based in a tax advantageousregion and the tax arbitrage is one of the sources of economic benefit besides smartbuying.

Adventz Trading DMCC through its established relationships withcommodities brokers and primary manufacturers will be able to amplify its returns throughefficient business operations and diverse customer base among fertilizer companies inIndian and rest of South East Asia.

The revenue from operations for the year ended March 31 2020 was AED908538 as compared to AED 3062682 for the year ended March 31 2019 mainly due to dropin agency commission by 80%.

The loss for the year ended March 31 2020 was AED 2556292 ascompared to AED 13933 for the year ended March 31 2019.

(c) Zuari Farmhub Limited:

Zuari Farmhub Limited (ZFHL) was incorporated on 11thNovember 2019 to carry on the business of fertilizers micronutrients manures seedscrop care products etc. and to provide crop and soil specific agri input productsservices and farm solutions to Indian Growers. ZFHL became wholly owned subsidiary of theCompany on 23rd March 2020.

Pursuant to execution of the Business Transfer Agreement (BTA) dated31-03-2020 between the Company and ZFHL the Company transferred its Retail SPN &allied CPC business and blended business by way of slump sale to ZFHL.

30. Joint Ventures:

A brief review of the joint ventures of the Company are given herebelow:

(a) Zuari Maroc Phosphates Private Limited:

Zuari Maroc Phosphates Private Limited (ZMPPL) a 50:50 joint venturewith Office Cherifien Des Phosphates

(OCP) S.A. was established as a Special Purpose Vehicle (SPV) foracquisition of stake in Paradeep Phosphates Limited (PPL). At present ZMPPL is holding80.45% of the equity stake in PPL.

ZMPPL's total revenue from operations for the year ended 31stMarch 2020 was Rs 4714.38 lakhs as against Rs 4742.29 lakhs during the previous year.

The profit before exceptional Items and tax for the year ended 31stMarch 2020 was Rs 4687.96 lakhs as against loss before exceptional Items and tax of Rs4704.83 lakhs during the previous year. Profit after tax for the year was Rs 4678.00lakhs as compared to profit after tax of Rs 4689.44 lakhs in the previous year.

PPL manufactures and markets Complex/Phosphatic fertilisers andintermediary products such as Phosphoric Acid and Sulphuric Acid which are crucial in themanufacture of Phosphatic fertilisers. All the products are marketed under the popular RsNavratna' brand. PPL's portfolio caters to almost all agricultural applications. PPL'splant is located in the port town of Paradeep in Odisha with an installed annual capacityof 720000 Metric Tonnes of DAP and other Phosphatic fertilisers.

PPL's total revenue from operation for the year ended 31stMarch 2020 was Rs 419286.45 lakhs as against Rs 435791.22 lakhs during the previousyear.

The consolidated profit before tax for the year ended 31st March 2020was Rs 22956.15 lakhs as against consolidated profit before tax of Rs 25139.68 lakhsduring the previous year. Consolidated Profit after tax for the year was Rs 19321.93lakhs as compared to consolidated profit after tax of Rs 15896.15 lakhs in the previousyear.

The statement containing salient features of the financial statement ofsubsidiaries/associates/joint ventures is attached as Annexure Rs L' to thisreport.

31. Business Responsibility Report:

Pursuant to Regulation 34 (2) (f) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Business Responsibility Report for thefinancial year 2019-20 describing the initiatives taken by the Company from environmentalsocial and governance perspective forms is enclosed as Annexure Rs F'.

32. Directors' Responsibility Statement:

To the best of our knowledge and belief and according to theinformation and explanation obtained by us your Directors make the following statementsin terms of provisions of Section 134 (5) of the Companies Act 2013 and hereby confirmthat:

(a) in the preparation of the annual accounts the applicableAccounting Standards have been followed along with proper explanation material departures;

(b) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;

(c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

(d) the Directors have prepared the annual accounts on a going concernbasis;

(e) the Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively; and

(f) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

33. Compliance of Secretarial Standards:

The Company has complied with all applicable mandatory BoardSecretarial Standards issued by the Institute of Company Secretaries of India.

34. Acknowledgements:

Your Directors wish to place on record their appreciation for thededication commitment and contribution of all stakeholders and employees of your Company.

For and on behalf of the Board
Sunil Sethy N. Suresh Krishnan
Managing Director Director
DIN:00244104 DIN: 00021965
Date : 19th June 2020

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