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Directors Report of Chemfab Alkalies Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the Annual Report of your Company together with the Audited Statement of Accounts and the Auditors'' Report for the Financial Year ended 31 March, 2015. The summarized financial results for the Financial Year are as under: Financial Summary:

Particulars For the Year Ended 31 Manh2015 31 March2014 Rs. in lakhs Rs. in lakhs

Profit Before Interest and Depreciation 2,626 3,116

Less: Interest 24 14

Profit Before Depreciation 2,602 3,102

Less: Depreciation 1,015 627

Profit Before Tax 1,586 2,475

Tax 298 736

Deferred Tax Liability 265 94

Net Profit For the Year 1,023 1,645

Balance Brought Forward from 9,235 7,929

Previous Year

Balance Available For Appropriation 10,258 9,574

Appropriations:

Transferred to General Reserve 0 165

Interim Dividend Paid 0 0

Proposed Dividend 115 115

Dividend Tax 23 19

Balance Carried to Balance Sheet 10,120 9,275

State of Company''s Affairs:

During the year under review, the Company achieved net revenue from operations of Rs.11,039/- Lakhs, as against Rs.11,266/- Lakhs in the previous year and made Profit Before Tax (PBT) of Rs. 1,586/- Lakhs as against Rs.2,475/- Lakhs in the previous year. The fall in PBT was mainly due to the steep increase in the cost of power, coupled with the reduction in sales realization, following the fall in international prices of Caustic Soda which made the imports cheaper and led to lower product realizations on the domestic front. The Company is taking steps to control its manufacturing costs and improve margins.

Directors & Key Managerial Personnel:

The details of Directors and Key Managerial Personnel (KMP) as on 31.03.2015 were as follows:

S. Name of Directors Desig- Date of Date of No nation appointment resignation

1 Mr. Ganga Ram Nilacanta Iyer Director 04.07.2009 -

2 Mr. Chittur Sundar Rao Ramesh Director 16.06.1983 -

3 Mr. Suresh Krishnamurthi Rao Director 30.09.1996 -

4 Mr. Tyagarajan Ramabadran Director 23.08.2006 -

5 Mr. J. Venkataraman* Director 01.10.2008 25.07.2014

6 Mrs. Sujatha Jayarajan** Director 30.03.2015 -

S. Date of Date of No Name of KMP Designation appointment resignation

1 Mr. Nitin S Cowlagi CFO 11.04.2014 -

2 Mr. K. Mohamed Ibrahim CS 11.04.2014 14.11.2014

3 Mr. V.M. Srinivasan*** CEO 30.03.2015 -

* Mr. J. Venkataraman resigned during the year on 25* July 2014 ** Mrs. Sujatha Jayarajan was appointed as Director (Independent) on 30th March 2015.

*** Mr. V M Srinivasan, has joined duty w.e.f. 03.04.2015 Director, Mr. C.S. Ramesh retires by rotation and being eligible, offers himself for re-appointment. The Directors recommend Mr. C.S. Ramesh for re-appointment.

Mr. Ramabadran and Mr. Ganga Ram are serving Independent Directors of the Company. The Ministry of Corporate Affairs in its Circular dated 9th June 2014 has clarified that if it is intended to appoint the existing Independent Directors under the new Companies Act, 2013 ("the Act"), it needs to be made expressly under Section 149 (10) and (11) of the Act within one year from the commencement of the Act (1 April 2014). Accordingly, the Board of Directors of the Company at their meeting held on 30 March, 2015 expressly appointed Mr. Ramabadran and Mr. Ganga Ram under the said provisions, as recommended by the Nomination and Remuneration Committee, as Non-Executive Independent Directors for a term of five consecutive years from 30 March, 2015, without being liable to retirement by rotation.

Pursuant to the provisions of Section 149 of the Companies Act, 2013 ("Act") and Clause 49 of the Listing Agreement with the Stock Exchanges, Listed Companies are required to appoint at least one Woman Director on the Board, within one year from the commencement of the Act i.e., 1 April 2014. In compliance with the aforesaid provisions, the Board of Directors of your Company at their meeting held on 30 March, 2015 appointed Mrs. Sujatha Jayarajan as a Non-Executive Independent Woman Director of the Company, as recommended by the Nomination and Remuneration Committee, for a period of five consecutive years from 30 March, 2015, subject to the approval of the Members at the Annual General Meeting.

Subsidiaries, Joint Ventures or Associate Companies:

Your Company had no Subsidiaries, Joint Venture or Associates during the year 2014-15.

Fixed Deposits:

During the year under review, the Company did not raise funds by way of fixed deposits from the public.

Dividend:

Your Directors recommend payment of Dividend of Rs.1.25 per share (25%) for the year ended 31 March, 2015, absorbing a sum of Rs. 1,14,64,621/- , subject to the approval of the Members at the ensuing Annual General Meeting.

Development and implementation of a Risk Management Policy:

The main objective of Risk Management is risk reduction and avoidance as also identification of the risks faced by the business and optimize the risk management strategies. The Company has put in place a well- defined Risk Management framework.

The Company has constituted a Risk Management Committee which assists the Board in drawing up, implementing, monitoring and reviewing the Risk Management Plan. The Committee lays down the Risk Assessment and Minimization Procedures and it reviews the Procedures periodically to ensure that the Executive Management controls the risks through properly defined framework.

The composition of the Risk Management Committee as on 31 March 2015 was as under:

S.No. Name of the Member Category

1 Mr. T. Ramabadran Chairman, Non executive Independent Director

2 Mr. C.S. Ramesh Member, Non executive, non independent Director

3 Mr. N. Ganga Ram Member, Non executive, Independent Director

4 Mr. V.R. Raguraman Member, Executive

5 Mr. N .Kalyanasundaram Member, Executive

The Company has obtained certification for ISO 14001 and OHSAS 18001 systems to take care of critical operational areas. It also utilizes the services of professional bodies like Central Leather Research Institute (CLRI) / The Energy and Resources Institute (TERI) / National Environmental Engineering Research Institute (NEERI) as also Consultants to continuously analyze and upgrade its operations.

Details of significant and material orders passed by the regula- tors/ courts/ tribunals impacting the going concern status and company''s operations in future:

During the year, there were no instances of significant and material orders passed by the regulators, courts or tribunals on the Company.

Internal Financial Control:

Your Company has well defined and adequate internal controls and procedures, commensurate with its size and nature of its operations. This is further strengthened by the Internal Audit done concurrently. During the year, the Company got its internal controls over financial reporting and risk management process evaluated by independent Consultants.

Besides, the Company has an Audit Committee, comprising Non- Executive Directors, which monitors systems, control, financial management and operations of the Company.

The Audit committee at its meeting held on 27.04.2015 has evaluated the internal financial controls and risk management system accordingly.

Extract of the Annual Return:

An extract of the Annual Return as prescribed under sub-section (3) of Section 92 of the Companies Act, 2013 ("Act") is given in Annexure 1 forming part of this Report.

Number of Board Meetings held during the year along with the dates of the meetings:

During the Financial Year 2014-2015, the Board met six times as under:

No of Total Dates of directors no of S meeting ot the Quarter on the date directors Remarks No. Board of meeting attended

1. 11/04/2014 First 5 5

2. 25/07/2014 Second 4 4 3. 12/11/2014 Third 4 4 4. 10/02/2015 Fourth 4 4

5. 23/02/2015 Fourth 4 3

6. 30/03/2015 Fourth 4 4

The meetings of the Board were held periodically, with not more than one hundred twenty days intervening between two consecutive meetings of the Board, as prescribed under Section 173(1) of the Act. Directors'' Responsibility Statement:

As required under Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm:-

(i) That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the profit of the Company for that Financial Year;

(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors had prepared the Annual Accounts on a going-concern basis;

(v) That the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Particulars of contracts or arrangements with related parties:

The contracts or arrangements entered into with related parties along with justification for entering into such contract or arrangement, referred to in sub-section (1) of section 188 in the prescribed form no. AOC 2 is as per Annexure 2.

Technology absorption, Conservation of energy and Research and development:

The Company has an in-house Research Development Department, where the main areas of focus are Energy Conservation, Process Upgradation and Environmental Preservation. The Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India, has recognized the Company''s in- house R & D facilities, which is valid upto 31 March, 2017. The Company has a sophisticated Quality Assurance (QA) Laboratory

recognized by DuPont, USA for the analysis of Chlor- Alkali brine. The Brine from various Chlor- Alkali Industries in India is being analyzed at CAL-QA Laboratory.

The Company continues to take all possible steps to conserve energy in every area of its operations. Brief details on Conservation of Energy and Technology Absorption are given in Annexure 3

Foreign Exchange Earnings and Outgo:

The foreign exchange earned and outgoes in terms of actual inflows/ outflows during the year are as below:

Foreign Exchange Earnings Rs. 1,57,23,945/-

Foreign Exchange Outgo Rs. 1,61,26,307/-

Power and Fuel Consumption:

31 MARCH, 31 MARCH, PARTICULARS 2015 2014

I. ELECTRICITY

PURCHASED:

- Units 9,10,00,650 9,47,03,550

- Total amount / Rs in Lakhs. 5,275 5,047

Rate per Unit [Gross] Rs. 5.80 5.33

II. FURNACE OIL

[a] PURCHASED:

- Quantity [KL] 582 580

- Total Amount / Rs in Lakhs. 204 253

- Average Rate per KL / Rs. 35,152 43,642

[b] CONSUMPTION:

- Furnace Oil [KL] 587 586

- Amount / Rs in Lakhs. 209 255

- Amount per KL / Rs. 35,676 43,485

Annual Evaluation made by the Board of its own performance and that of its Committees and Individual Directors

The Board of Directors at its meeting held on 27.04.2015 has evaluated the performance of the Board, its Committees and the Individual Directors as per the Nomination and Remuneration Policy disclosed in Annexure 1 to Corporate Governance Report. Declaration by Independent Directors as required under Section 149(7) of the Companies Act, 2013 Mr. T. Ramabadran, Mr. N. Ganga Ram, and Mrs. Sujatha Jayarajan Independent Directors of the Company have given their statement of declaration under Section 149(7) of the Companies Act, 2013 ("the Act") that they meet the criteria of independence as provided in Section 149(6) of the Act, and their Declarations have been taken on record.

Familiarisation programmes for Board Members

The Board members are provided with necessary documents/ brochures, reports and internal policies to enable them to familiarise with the Company''s procedures and practices. The details of such familiarisation programmes for the Independent Directors are posted on the website of the Company (For details, please visit www.chemfabalkalis.com).

Prevention of Insider trading:

Your Company has adopted a code of conduct for prevention of

''Insider Trading'' as mandated by SEBI and the same is available on the website of the company (For details, please visit www. chemfabalkalis.com).

Statutory Auditors:

The current Statutory Auditors of the Company, M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the ensuing Annual General Meeting of the Company. They were first appointed as Statutory Auditors for the year 2005-06 and under the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, which came into effect from 1 April, 2014, it is proposed to appoint M/s Deloitte Haskins & Sells as Auditors of the Company, as recommended by the Audit Committee, for two consecutive Financial Years, 2015-16 and 2016-17, from the conclusion of the ensuing Annual General Meeting to the conclusion of the Annual General Meeting to be held in the calendar year 2017, subject to ratification by the Members at the Annual General Meeting to be held in the calendar year, 2016, on the terms of remuneration to be fixed by the Board of Directors. The consent of M/s Deloitte Haskins & Sells and their confirmation that their appointment, if made, will be in accordance with the prescribed conditions, have been received by the Company. The Directors recommend the re-appointment of M/s. Deloitte Haskins & Sells as the Statutory Auditors of the Company for the two years period ending on 31st March, 2017.

Cost Auditor:

In conformity with the provisions of The Companies Act, 2013, the Company has appointed Mr. A. Madhavan, Cost Accountant, Chennai, as the Cost Auditor, for the audit of cost accounts for the

st

chemicals manufactured by the Company for the year ending 31 March 2016. The remuneration paid to him is being ratified at this Annual General meeting.

Secretarial Audit Report:

Mr. B. Ravi, Company Secretary, has been appointed as Secretarial Auditor of your company in the meeting of the Board. The Secretarial Audit Report as required under section 204 of the Act, for the period 2014-15 is attached to the Annual Report.

Auditors'' Report:

a) Auditors Report

The Statutory Auditors have observed that they are unable to comment on the recoverability of the ICDs, details of which are referred to in note no 33.

In this regard, the Board of Directors state that the relevant note forming part of the Financial Statements is self-explanatory. As indicated therein, based on the discussions with TCL and considering certain other developments, the Board believes that no provisioning is required to be made for the outstanding ICDs as at this stage.

b) Secretarial Audit Report

Pursuant to requirements of section 204 of the Act a secretarial audit report is annexed to the Board report. As regards certain observations made in the said report, Board of Directors wish to clarify that certain delays in filing the forms in question was due to technical snag at the time of filing the documents.

Particulars of loans, guarantees and investments u/s 186 of the Companies Act, 2013:

Particulars of investments made by the Company during the Financial Year 2014-15 are given below and they are within the prescribed limits under Section 186 of the Companies Act, 2013:

S. Loans, Guarantees Amount 60% of Paid Remarks No & Investments (In Rs) up capital made in and Free Reserves

1. Teamec Chlorates Inter Limited 14, 70,45,171 72,67,03,114 Corporate Deposit given

2. Titanium Equipment and Anode. 1,15,00,000 72,67,03,114 Guarantees Manufacturing given Company Limited

Vigil Mechanism:

The Company has established a vigil mechanism, also called the Whistle Blower Policy, which is adopted by the Board for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy. It provides for adequate safeguards against victimization of persons who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. Confidentiality of Whistle Blower shall be maintained to the greatest extent possible. Details of the vigil mechanism are posted in the Company''s website (For details, please visit www.chemfabalkalis.com).

Audit Committee:

The composition of the Audit Committee constituted by the Board in terms of Section 177 of the Companies Act, 2013 and Clause 49 (HI) of the Listing Agreement with the Stock Exchanges is as under:

S. Name of the Category No Member

1 Mr. T. Ramabadran Chairman, Non-Executive Independent Director

2 Mr. C.S. Ramesh Member, Non-Executive, Non-Independent Director

3 Mr. N. Ganga Ram Member, Non-Executive, Independent Director

The Audit Committee acts in accordance with the terms of reference specified by the Board of Directors in terms of Section 177(4) of the Act and Clause 49 (HI) (D) of the Listing Agreement. It also oversees the vigil mechanism and is obliged to take suitable action against the Directors or employees concerned, when necessary.

Nomination and Remuneration Committee:

In terms of Section 178 of the Companies Act, 2013 and the Rules prescribed thereunder, your Company is mandatorily required to constitute a Nomination and Remuneration Committee. Accordingly, the Company has set up a Nomination and Remuneration Committee which has formulated criteria for determining qualifications, positive attributes and independence of a Director and for ensuring that:

1) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully;

2) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

3) Remuneration to Directors, key managerial personnel and senior management involves a balance between fixed and initiative pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

The Nomination and Remuneration Policy of your Company is set out in Annexure 1 to the Report on Corporate Governance forming part of this Report.

Corporate Social Responsibility (CSR):

According to Section 135 of the Companies Act, 2013 ("the Act"), a Company having Net Worth of Rs. 500 Crores or more, or Turnover of Rs. 1,000 Crores or more, or Net Profit of Rs. 5 Crores or more during any financial year shall constitute a Corporate Social Responsibility (CSR) Committee of the Board consisting of three or more directors, of which at least one shall be an Independent Director.

As your Company''s Net Profit is more than Rs 5 Crores, the Board has constituted Corporate Social Responsibility Committee in accordance with Section 135 of the Act. The Company is committed to operating in a socially responsible manner in terms of protecting the environment and conserving water resources and energy. Details of the CSR Policy drawn up by the Company and of CSR expenditure and initiatives taken during the year 2014-15 are given in Annexure 4 to this Report. (For details, please visit www.chemfabalkalis.com)

Remuneration details of Directors and Employees:

The details of remuneration paid to the Directors and employees of your Company are set out in Annexure 5

Shares issued under Employee Stock Option Scheme (ESOS): Nil

Acknowledgement

The Directors thank all the Shareholders, customers, dealers, suppliers, bankers, financial institutions and all the other business associates for their continued support to the Company and the confidence reposed in its Management. The Directors also thank the Government authorities for their understanding and co-operation. The Directors wish to record their sincere appreciation of the significant contribution made by the employees of the Company at all levels to its profitable and successful operations.

For and on behalf of Board of Directors of CHEMFAB ALKALIS LIMITED

Place: Chennai Suresh Krishnamurthi Rao Date: 27th April 2015 Chairman

DIN: 00127809


Mar 31, 2014

The Directors are pleased to present the Annual Report of your Company together with the Audited Statement of Accounts and the Auditors'' Report for the financial year ended 31 March, 2014. The summarized financial results for the Financial Year are as under:

FINANCIAL RESULTS

Particulars For the Year Ended 31st March 2014 31st March 2013 Rs. in lakhs Rs. in lakhs

Profit before Interest and Depreciation 3,116 4,151

Less: Interest 14 0

Profit Before Depreciation 3,102 4,151

Less: Depreciation 627 668

Profit before Tax 2,475 3,483

Tax 736 1,212

Deferred Tax 94 -77

Net Profit For the Year 1,645 2,348

Balance brought forward from Previous Year 7,929 6,354

Balance available for Appropriation 9,574 8,702

Appropriations:

Transferred to General Reserve 165 240

Interim Dividend Paid 0 459

Proposed Dividend 115 0

Dividend Tax 19 74

Balance carried to Balance Sheet 9,275 7,929

OPERATIONS

During the year under review, the Company achieved net sales of Rs.l 1,206/- Lakhs, as against Rs. 11,524/- Lakhs in the previous year and made Profit Before Tax (PBT) of Rs.2,475/- Lakhs as against Rs.3,483/- Lakhs in the previous year. The fall in PBT was mainly due to the steep increase in the cost of power, coupled with the rise in the cost of other raw materials. The Company is taking all possible steps to control its manufacturing costs.

DIVIDEND

Your Directors recommend payment of Dividend of Rs.l.25 per share (25%) for the year ended 31 March, 2014, absorbing a sum of Rs. 1,14,64,621/-, subject to the approval of the Members at the ensuing Annual General Meeting. MODERNIZATION

The Company has taken up a Project for improving process technology and modernizing its Plant. A sum of Rs. 61,84,36,060/- net of Convert credit was incurred on the Project during the current Financial Year, out of which Rs. 5,40,12,393/- is capitalised and Rs. 56,44,73,667/- is shown in the Balance Sheet as part of Capital Work in Progress. The completion and commissioning of the Project is pending subject to the requisite regulatory clearances.

EXPANSION

The Company had proposed expansion of its existing manufacturing capacity and in this connection has filed an appeal with the National Green Tribunal for grant of the necessary NOC. The directions from the Hon''ble Bench in this regard are awaited. In the meantime, a Public Interest Litigation was initiated against the Company by the Puducherry Environment Protection Association (PEPA), a Non-Government Organization, before the National Green Tribunal (NGT), on the plea that the Company was carrying on its operations even after the expiry of the period of consent issued by the Puducherry Pollution Control Committee (PPCC). The PEPA obtained an ex parte Order from the NGT, restraining the Company from carrying on any construction activities and expansion of production capacity. In response, the Company objected to the baseless allegations, and placed all the attendant facts before the NGT, including the information that the Company had applied for the renewal of the consent order well in time and this application was under the active consideration of the PPCC. Therefore, the Company submitted to the NGT that the question of carrying on any activity without the Consent Order did not arise. Subsequently, upon the Company receiving the Consent Order from PPCC, the NGT was so informed and at the hearing held on the 2 April, 2014, the ex parte Interim Stay was vacated.

FIXED DEPOSITS

During the year under review, the Company did not raise funds by way of fixed deposits from the public.

DIRECTORS

In accordance with Sections 255 and 256 of the Companies Act, 1956 and the Company''s Articles of Association, the following Directors retire by rotation and, being eligible, offer themselves for re-appointment at the ensuing General Meeting.

1. Shri J. Venkataraman

2. Shri Suresh Krishnamurthi Rao

The details as required under Clause 49 of the Listing Agreement regarding the above Directors are set out in the Corporate Governance Report forming part of this Annual Report. AUDITORS

The current Statutory Auditors of the Company, M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the ensuing Annual General Meeting. They were first appointed as Statutory Auditors for the year 2005-06 and as such, the year ended 31 March, 2014 is their Ninth year as Auditors of the Company. Under the provisions of Section 139 of the Companies Act, 2013 and the Rules framed there under, which came into effect from 1 April, 2014, it is proposed to appoint M/s Deloitte Haskins & Sells as Auditors of the Company for one more year, that is, for the year ending 31 March, 2015. The consent of M/s Deloitte Haskins & Sells and their consent confirming that their appointment, if made, will be in accordance with the prescribed conditions, have been received by the Company. The Directors recommend the re-appointment of M/s.Deloitte Haskins & Sells as the Statutory Auditors of the Company for the year ending 31 March, 2015.

COST AUDITOR

In conformity with the directives of the Central Government, the Company has appointed Shri.A.Madhavan, Cost Accountant, Chennai, as the Cost Auditor, for the audit of cost accounts for the chemicals manufactured by the Company for the year ending 31st March 2015. PERSONNEL

The Company has no employees, attracting the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 [2AA] of the Companies Act, 1956, the Board of Directors hereby confirm:-

(i) That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the profit of the Company for that year; (iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) That the Directors had prepared the Annual Accounts on a going-concern basis.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND CONSERVATION OF ENERGY

The Company has an in-house Research Development Department, where the main areas of focus are Energy Conservation, Process Upgradation and Environmental Preservation. The Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India, has recognized the Company''s in- house R&D facilities, which is valid up to 31 March, 2017. The Company has a sophisticated Quality Assurance (QA) Laboratory recognised by DuPont, USA for the analysis of Chlor- Alkali brine. The Brine from various Chlor- Alkali Industries in India is being analysed at CAL-QA Laboratory.

The Company continues to take all possible steps to conserve energy in every area of its operations.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, the Company has been following the Corporate Governance norms prescribed by the Securities and Exchange Board of India [SEBI]. The Report on the status of the Compliance of Corporate Governance Guidelines of SEBI, together with the Auditors'' Certificate, is attached as an Annexure to this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis Report is attached in terms of Clause 49 of the Listing Agreement entered into with the Stock Exchanges and it forms part of this Annual Report.

SECRETARIAL COMPLIANCE CERTIFICATE

The Compliance Certificate issued by a Practicing Company Secretary is attached.

INDUSTRIAL RELATIONS

Industrial relations continue to remain cordial.

ACKNOWLEDGEMENT

The Directors thank all the Shareholders, customers, dealers, suppliers, bankers, financial institutions and all the other business associates for their continued support to the Company and the confidence reposed in its Management. The Directors also thank the Government authorities for their understanding and co-operation. The Directors wish to record their sincere appreciation of the significant contribution made by the employees of the Company at all levels to its profitable and successful operations.

For and on behalf of Board of Directors of

CHEMFAB ALKALIS LIMITED

Place : Chennai Suresh Krishnamurthi Rao

Dated : 11th April, 2014 Chairman


Mar 31, 2013

The Directors are pleased to present Annual Report of your Company together with the Audited Statement of Accounts and the Auditors'' Report of your Company for the financial year ended 31'' March, 2013. The summarized financial results for the year ended 31" March, 2013, are as under: .

FINANCIAL RESULTS

Particulars Current Year Previous Year 31-03-2013 31-03-2012 Rs. in lakhs Rs. in lakhs

Profit before Interest and Depreciation 4,151 1,866

Less: Interest 0 0

Profit Before Depreciation 4.151 1,866

Less: Depreciation 668 681

Profit before Tax 3,483 1,185

Tax 1,212 792

Deferred Tax Liability -77 -354

Net Profit after Tax 2,348 747

Balance brought forward from previous year 6,354 5,607

Balance available for appropriation 8,702 6,354

Appropriations:

Interim Dividend paid 459 0

Dividend Tax 74 0

General Reserve 240 0

Balance to be carried forward 7,929 6,354

OPERATIONS

During the year under review, the Company achieved normalcy in operations after the Chlorine Gas leak which had adversely affected it in the previous year. Thus, production of Caustic Soda Lye in 2012-13 was higher at 36,151 MT as against 27,661 MT during the previous year, an increase of 30.69%. Consequently, there was an increase in the volume of sales achieved to 34,695 MT, up by 32.35%, as compared to 26,214 MT in 2011-12.This, along with the overall favourable market conditions, enabled the Company to achieve an all-time high PBT of Rs.34.83 crores in the year under review.

DIVIDEND

During the year under review, your Board of Directors had declared an interim dividend of Rs.5 per equity share (being 100 %) for the financial year 2012-13. Having regard to the substantial interim dividend paid, your Board do not recommend any final dividend for the year. The total amount of dividend paid for the year ended 31"'' March, 2013 amounts to Rs.4,58,58,485.

FIXED DEPOSITS

During the year under review, the Company did not raise funds by way of fixed deposits from the public and hence, no amount of principal or interest was outstanding as on the balance sheet date.

DIRECTORS

In accordance with Sections 255 and 256 of Companies Act, 1956 and the Company''s Articles of Association, the following Directors retire by rotation and being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting: l.Shri N. Ganga Ram 2.Shri T. Ramabadran

AUDITORS

The present Auditors of the Company, M/s. Deloitte Haskins & Sells, hold office until the conclusion of the ensuing Annual General Meeting and are eligible, to be reappointed. A Certificate has been received from the Auditors to the effect that their re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act. The Directors accordingly recommend the re-appointment of M/s Deloitte Haskins & Sells as Auditors of the Company for the year 2013-14.

COST AUDITOR

In conformity with the directives of the Central Government, the Company has appointed Shri A. Madhavan, Cost Accountant, No: 9. Dr. Ranga Road, Mylapore, Chennai - 600 004, as the Cost Auditor under Section 233B of the Companies Act, 1956, for the audit of cost accounts in respect of the chemicals manufactured by the Company for the year ended 31 '' March 2013.

The Cost Audit report for the previous year ended 31 '' March 2012 was to be filed on or before 30 September 2012 and subsequently, the due date was extended till 28 February 2013. The Company has duly filed the Cost Audit Report for the year, before the extended due date, on 15 January 2013.

PERSONNEL

The Company has no employees, attracting the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 [2AA] of the Companies Act, 1956, the Board of Directors hereby confirm:-

(i) That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That the Directors had prepared the Annual Accounts on a going-concem basis.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND CONSERVATION OF ENERGY

As per Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, every Company shall disclose particulars about Conservation of energy, Technological absorption etc. In compliance with the said Rule, the Company has an in-house Research Development Department, where the main areas of focus are Energy Conservation, Process Upgradation and Environmental Preservation. The Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India, has recognized the Company''s in-house R & D facilities, and the Ministry''s renewal permission is valid upto 31st March 2014.

The Company has a sophisticated laboratory qualified by DuPont, USA, for the analysis of Chlor-Alkali brine. Brine from the various Chlor -Alkali industries in India is being analysed at your CAL-QA Laboratory.

CORPORATE GOVERNANCE

Corporate Governance involves regulatory and market mechanisms, and the roles and relationships between a Company''s management, its Board, its shareholders and other stakeholders, and the goals for which the company is governed.

Pursuant to Clause 49 of the Listing Agreement, the Company has been conscientiously following the Corporate Governance norms prescribed by the Securities and Exchange Board of India [SEBI]. The Report on the status of the Compliance of Corporate Governance Guidelines of SEBI, together with the Auditors'' Certificate is attached as an Annexure to this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

The Compliance Certificate issued by a Practicing Company Secretary is attached.

INDUSTRIAL RELATIONS

Industrial relations continue to remain cordial.

ACKNOWLEDGEMENT

The Directors thank all the shareholders, customers, dealers, suppliers, bankers, financial institutions and all the other business associates for their continued support to the Company and the confidence reposed in its Management. The Directors also thank the Government authorities for their understanding and co-operation. The Directors wish to record their sincere appreciation of the significant contribution made by the employees of the Company at all levels to its profitable and successful operations.

For and on behalf of the Board of Directors

Place : Chennai C.S.Ramesh Suresh Krishnamurthi Rao

Dated : 11th April, 2013 Director Chairman


Mar 31, 2011

The Directors have pleasure in presenting the Twenty- Eighth Annual Report together with the Audited Statements of Accounts for the year ended 31st March, 2011.

FINANCIAL RESULTS

Particulars Current Year Previous Year 31-03-2011 31-03-2010 Rs. in lakhs Rs. in lakhs

Profit before Interest and Depreciation 1,977 1,886

Less: Interest 2 33

Profit Before Depreciation 1,975 1,853

Less: Depreciation 752 797

Profits before Tax 1,223 1,056

Tax 441 402

Deferred Tax Liability -185 -68

Net Profits after Tax 967 722

Balance brought forward from previous year 5,006 4,627

Balance available for appropriation

Appropriations: 5,973 5,349

Proposed Dividend 229 229

Dividend Tax 38 39

General Reserve 100 75

Balance to be carried forward 5,606 5,006

DEMERGER SCHEME

During the year under review, the Scheme of Arrangement (Demerger) between M/s .Titanium Equipment and Anode Manufacturing Company Limited and your Company was approved by the High Court of Madras vide its Order dated 14th March, 2011. The above financial results include the financials of the Demerged Undertaking upto 30th November, 2010.

CHLORINE GAS LEAK AND PLANT CLOSURE

As the share holders are aware, your Company has been practising celebrations of the national days - Republic day and Independence day, right from the day of inception, for the past 2.1/2 decades, offering breakfast and sweets to the participants. In line with this policy, on 26.01.2011, for the Republic Day, your Company had organised for the celebration, inviting about 200 people of staff & workers family members, children and the public. The function was scheduled at 0815 hours and from 0800 hrs, the people were moving towards the venue of the function. The flag mast is installed in the middle of the plant and is close to the chlorine filling unit.

At 0800 hrs some people had already arrived near the ceremony spot and other people were moving from the main gate towards the flag mast. At 0801 hrs, there was a minor chlorine leak in one of the filling bridges and immediately the DCS (Distribution Control System) raised an alarm as one of the chlorine sensors installed nearby sensed chlorine and the leak was promptly arrested within 2 minutes and this was duly recorded in the DCS. CAL had shut the filling section immediately after the incident for safety. On precautionary ground, the security was alerted and the people were stopped at the main gate and requested to wait for a few minutes and later they were allowed inside.

The ceremony was conducted as planned and all the 200 people who had participated in the flag hoisting function, took breakfast and sweets and left the spot.

Meantime, when the security had stopped the movement of the people for two minutes, and though leak was arrested within a gap of 2 minutes, some village people mis- understood it to be a major leak and spread the message in panic and groups from the neighborhood gathered at the main gate rushed to the Primary Health Centre and later to the General Hospital. At that time no one realised that the leak was already arrested within two minutes.

Media played its role of blowing up the incident out of proportion.

The very fact that the flag hoisting function went on smoothly and none was affected in the plant including the participants or public shows there was no pollution/ issue around.

As your plant has been fully equipped with instrumentation and totally automated, the minor leak was immediately detected, at the control room and conveyed promptly to the field staff and contained within 2 minutes. Due to the heavy wind towards the south east direction, the air carried some traces of chlorine which was also blocked by thick greenery around.

The plant was visited by two Ministers and various senior government officials and Tahsildar came and informed that factory is to be closed under the oral instructions from the Collector. Inspite of our explaining that this was only a part of a section of the whole plant, which was already shut down by CAL, as the instructions was from the Collector, the plant was closed forthwith.

At the end of the day, the Collector ordered closure of the factory and the closure order was pasted adjacent to the main gate of the Company. The Collector order clearly states about 25 villagers were affected on inhalation and admitted in the Government Hospital for treatment.

The same day evening, the Medical Superintendent of the Government Hospital issued a statement that "... none of the people admitted was in a serious condition and we will review their condition and discharge them later today..." which is self-explanatory on the nature of the incident.

Meantime, Pollution Control Board issued a notice of closure under section 5 of Environment Act asking for closure of the activities and reporting back, which was already done by your Company, under the first instructions received from the Collector, through Tahsildar.

Later the Minister for Health gave a press statement, in the Indian Express on January 27, 2011 after visiting the Hospital which is reproduced below. "...None is serious, in fact everyone is fine. There is no cause for worry. The factory will remain closed till the enquiry is completed and corrective measures are implemented..."

Factory inspector, Chief Inspector of Factories, Labour Commissioner, Special Secretary to Government, Deputy Collector, pollution control officials at various times, separately and severally, visited the plant many times and investigated.

As you are aware, your plant has been operating very successfully with utmost care and safety for over 25 years without a single incident with excellent results, complying with the pollution control norms well within the standards stipulated by the Government, which was monitored by the Pollution Control people by regular visits and surprise checks and the records are intact.

Various measures taken by your Company on the safety and environment front, lead to your Company being adjudged as the "Greenest Plant" in India, by Centre for Science and Environment, a reputed NGO organisation and the Award was presented by Dr. Manmohan Singh.

Pondicherry Pollution Control Board does not have the practice of renewing the Consent Order on time inspite of the applications being made well ahead of time. All the

Companies in Pondicherry, to the best of our knowledge are banking only upon "deemed renewal" for continuance, as the Pollution Control Board does not issue the order on time, as per the requirements.

Despite repeated requests and chasing of the Government officials, on a daily basis, by the Companys top officials, one day token fast undertaken by over 400 members on behalf of the Company followed by a rally to the Secretariat by the Union, with an appeal to the Chief Secretary, meeting the local MLA a few times for immediate opening of the plant, no tangible result was forthcoming. Your Company was confronted on a major issue of Safety of the finished goods under lock and key which should not be stored technically, for a longer time, from the safety point of view.

However, your Company, by pressuring the Government and convincing various officials, at last got the permission to dispose off the stock on hand to the customers, and the same was done to increase the safety of the closed plant.

Even here while transporting the products, villagers created a lot of problems and the Collector was kind enough to intervene and the problem was sorted out.

Meantime, as the election was announced, no one was willing to give time to meet either at the Ministerial level or the senior level people, as everyone was occupied in the election work.

As the Company was left with no other option to lift the closure and having exhausted all possible options filed a Writ petition with the Chennai High Court - Green Bench, claiming the fact the Government has no right to keep the factory closed this long under section 5 as they have been doing now. The Honourable High Court has immediately issued orders to the Government, returnable before 6th April, 2011. Meantime, another committee is appointed by the Pondicherry Government, to whom your Company will address.

DIVIDEND

The Directors recommend a Dividend of Rs.2.50 per Equity Share of Rs.5/- each (50%), for the year ended 31st March 2011, absorbing a sum of Rs.2,29,29,243 subject to the approval of the Members at the ensuing Annual General Meeting.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Earnings: Rs. 56,03,840/- Outgo : Rs. 5,73,58,289/-

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting.

1. Mr.T.Ramabadhran

2. Mr. J.Venkataraman

AUDITORS

The present Auditors of the Company, M/s. Deloitte Haskins & Sells, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

DRAFT AUDITORS REPORT

The auditors vide Para 5(d) of their draft report dated 5th April 2011 have observed that "in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with the this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except for non-disclosure of information required under Accounting Standard 24 "Discontinuing Operations" in respect of the Demerged Undertaking referred in Note No. 11(6) of Schedule 17 to the Financial Statements."

With reference to the above, the Board of Directors wish to clarify that Accounting Standard 24 does not apply in our case, since as per clause 10 of Accounting Standard 24, a reportable business segment or geographical segment is as defined in the Accounting Standard 17, Segment Reporting would normally satisfy the definition of Discontinuing Operations. As per the Accounting Standard 17, the business segment or geographical segment should be identified as a reportable segment if each of the segment revenue or result or the assets are 10% or more of the total revenue result or assets of all segments in each case. Since the demerged segments are less than 10% in each area, the Board is of the view that there is no non-compliance of Accounting Standard 24 calling for separate disclosure.

COST AUDITOR

The Company has re-appointed Mr. V Kalyanaraman, Cost Accountant, as the Cost Auditor of the Company for the year 2011-12, subject to the approval of the Central Government.

PERSONNEL

The Company has no employees, attracting the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

The Board wishes to express its appreciation of the contribution made by the employees at all levels to the operations of the Company during the year.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 [2AA] of the Companies Act, 1956, the Board of Directors hereby confirm -

(i) that the Annual Accounts had been prepared in line with the accounting standards and proper explanations have been given wherever there has been material departures;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the Profit of the Company for the year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

(iv) that the Directors had prepared the Annual Accounts on a going-concern basis.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND CONSERVATION OF ENERGY

The Company has an in-house Research Development Department, where the main areas of focus are, Energy Conservation, Process Upgradation and Environmental Preservation. The recognition of the Companys in-house R&D facilities by the Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India, is valid up to 31.03.2014.

CAL has a sophisticated laboratory qualified by DuPont, USA for the analysis of chloralkali brine. Brine from various chloralkali industries in India are being analysed at CAL-QA Laboratory.

CORPORATE GOVERNANCE

The Company has been scrupulously following the Corporate Governance norms prescribed by the Securities and Exchange Board of India [SEBI]. The Report on the status of the Compliance of Corporate Governance Guidelines of SEBI, is enclosed as an Annexure to this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

The Compliance Certificate issued by a Practicing Company Secretary is attached.

INDUSTRIAL RELATIONS

Overall, industrial relations remained cordial during the year under review.

For and on behalf of the Board of Directors

Suresh Krishnamurthi Rao C. S. Ramesh Director Director

Place : Chennai Date : 5th April, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Twenty Seventh Annual Report together with the Audited Statements of Accounts for the year ended 31 March, 2010.

FINANCIAL RESULTS

Particulars Current Year Previous Year 31-03-2010 31-03-2009 Rs. in lakhs Rs. in lakhs

Profit before Interest and Depreciation 1,886 2,201

Less: Interest 33 88

Profit Before Depreciation 1,853 2,113

Less: Depreciation 797 917

Profits before Tax 1,056 1,196

Tax 402 280

Deferred Tax Liability -68 132

Net Profits after Tax 722 784 Balance brought forward from previous year 4,627 3,843

Balance available for disposal which the Directors appropriate as follows: 5,349 4,627

Proposed Dividend 229 -

Dividend Tax 39 -

General Reserve 75 -

Balance to be carried forward 5,006 4,627

The operations of the Chlorates Division turned unviable due to frequent power problems and labour unrest. Hence, the Chlorates Division had to be closed down permanently from 3rd June 2009. The items of Plant and Machinery of this Division to the extent possible have been relocated to other Divisions of the Company and the remaining assets are being disposed at the best possible price.

The Salt Division produced 64,904 MT of Industrial Grade Salt. The performance of the Membrane Hitec Division and the Health Products Division are satisfactory.

SHIFTING OF THE REGISTERED OFFICE

During the year under review, the Registered Office of the Company was shifted from the Union Territory of Puducherry to the State of Tamilnadu, after obtaining the required confirmation from Chennai Bench of the Company Law Board. With effect from 23rd July, 2009, the Registered Office of the Company is functioning at Team House, GST Salai, Vandalur, Chennai 600048.

DIVIDEND

The year ended 31st March 2010 is the Silver Jubilee Year of the Company. The Directors recommend a dividend of Rs. 2.50 per Equity Share of Rs.5/- each (50 %), absorbing a sum of Rs. 229.29 Lakhs.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Earnings : Rs.73,36,362 /- Outgo : Rs. 3,99,26,094 /-

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting.

1. Mr. Suresh Krishnamurthi Rao

2. Mr. C S Ramesh

Your Directors co-opted Mr. N Ganga Ram as an Additional Director on the 4th July, 2009. Under the provisions of Section 260 of the Companies Act, 1956, Mr. N Ganga Ram would vacate his Office at the ensuing Annual General Meeting. However, a Notice under Section 257 of the Companies Act, 1956 has been received from a Member signifying his intention to propose the appointment of Mr. N Ganga Ram as a Director of the Company at the Annual General Meeting.

Mr. Umaid Singh Baid, Director of the Company attained heavenly abode, on 26th May, 2009 in his home city of Kolkatta. The Chairman, during the Board Meeting held on 4lh July 2009, referred to the sad demise of Mr. Baid and observed that Mr. Baid was appointed as a Director in April 2008 and during the short span of one year as Director, Mr. Baid had made significant contribution towards the Companys growth. The Board placed on record, its sincere gratitude to Mr. Baid.

AUDITORS

The present Auditors of the Company, M/s. Deloitte Haskins & Sells, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

COST AUDITOR

The Company has re-appointed Mr. V Kalyanaraman, Cost Accountant, as the Cost Auditor of the Company for the year 2010-11, subject to the approval of the Central Government.

PERSONNEL

The Company has no employees, attracting the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

The Board of Directors wishes to express its appreciation of the contribution made by the employees at all levels to the operations of the Company during the year.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 [2 A A] of the Companies Act, 1956, the Board of Directors hereby confirm -

(i) that the Annual Accounts had been prepared in line with the accounting standards and proper explanations have been given wherever there has been material departures.

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the Profit of the Company for the year.

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) that the Directors had prepared the Annual Accounts on a going concern basis.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND CONSERVATION OF ENERGY

CAL R & D: The Company has an in-house Research Development Department, where the main areas of focus are, Energy Conservation, Process Upgradation and Environmental Preservation. The recognition of the Companys in-house R&D facilities by the Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India, is valid up to 31.03.2010. The application for renewal has already been made.

CAL has a sophisticated laboratory qualified by DuPont, USA for the analysis of chlorakali brine. Brine from various chloralkali industry in India are being analysed at CAL- QA Laboratory.

The Membrane Hitec Division is carrying out the research activities to provide innovative and eco-friendly solutions to industrial and domestic customers requirements of water and effluent treatment.

CORPORATE GOVERNANCE

The Company has been scrupulously following the Corporate Governance norms prescribed by the Securities and Exchange Board of India [SEBI]. The Report on the status of the Compliance of Corporate Governance Guidelines of SEBI, is enclosed as an Annexure to this Report.

SECRETARIAL COMPLIANCE CERTIFICATE

The Compliance Certificate issued by a Practicing Company Secretary is attached.

INDUSTRIAL RELATIONS

Overall, industrial relations at the Chlor Alkali Division remained cordial during the year under review.

Consequent to the closure of the Chlorates Division, the final dues of the workers of the Division along with the compensation, were fully paid.

For and on behalf of the Board of Directors

Suresh Krishnamurthi Rao C S Ramesh Director Director

Place : Chennai

Date : 7th April, 2010

 
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