Mar 31, 2022
Your Directors have pleasure in presenting the 46th Annual Report of the business and operations of the Company along with the Audited Standalone and Consolidated Financial Statements for the financial year ended on March 31, 2022.
1. FINANCIAL RESULTS
The financial performance of the Company for the year ended March 31, 2022 is summarised below:
('' In lakh) |
||||
Particulars |
Consolidated* |
Standalone |
||
2021-2022 |
2020-2021 |
2021-2022 |
2020-2021 |
|
Revenue from Operations and Other Income |
93439 |
68001 |
93129 |
67736 |
Earnings before Interest, Depreciation & Tax & Exceptional item (EBIDTA) |
14062 |
9733 |
13908 |
9529 |
Depreciation / Amortisation |
1667 |
1486 |
1667 |
1486 |
Finance Cost |
1234 |
1346 |
1199 |
1232 |
Profit / (Loss) before Tax & Exceptional item |
11161 |
6901 |
11042 |
6811 |
Profit / (Loss) before Tax (PBT) |
11161 |
6901 |
11042 |
6811 |
Income Tax Expenses: |
||||
Current Tax |
2695 |
1551 |
2840 |
1315 |
Deferred Tax |
120 |
442 |
120 |
442 |
Total Income Tax Expenses |
2815 |
1993 |
2960 |
1757 |
Profit / (Loss) after Tax (PAT) |
8346 |
4908 |
8082 |
5054 |
Other Comprehensive income / (expense) for the year (net of tax) |
8 |
(46) |
(47) |
57 |
Total comprehensive income for the year |
8354 |
4862 |
8035 |
5111 |
Earnings per share (EPS) Basic and diluted (in H) |
68.07 |
40.03 |
65.92 |
41.22 |
Reserves (excluding Revaluation reserve) |
21336 |
13227 |
22941 |
15151 |
Your Directors are pleased to state that the year under review ended with the total income of the Company on standalone basis at H 931 crore with a highest ever Profit before Tax (PBT) of H 110 crore against the income of H 677 crore and Profit before Tax of H 68 crore in the previous year.
Your Company has been successful in increasing profitability by optimizing the product mix and improving production efficiency. This has resulted in an increase of PBT by 62%. As in the past, the maximum sales was from AgroChemicals Division, Derabassi with net revenue of H 664 crore against H 501 crore of previous year which is 71% of the total revenue. The revenue of Specialty and Other Chemicals Division, Lalru was at H 156 crore against H 124 crore of previous year. Industrial Chemical Division Pune recorded a revenue of H 111 crore against H 52 crore of previous year. The Company is planning to increase market share in Agrochemicals and also plans to manufacture Agrochemicals at the Lalru unit. Process of approval for bifurcating
the site to accommodate agrochemicals has been initiated. This will make full use of the available infrastructure there.
The Export of the Company was H 487 crore against H 421 crore of the last year, which is up by 16%. It is a matter of satisfaction that the Company continues to meet the requirement of all the customers as per their satisfaction.
3. SUBSIDIARY COMPANIES / ASSOCIATE COMPANIES
As on March 31, 2022, the Company has only one wholly owned overseas subsidiary namely SD AgChem (Europe) NV, Belgium. The total income of SD Agchem (Europe) NV was H 12.58 crore with profit before tax of H 1.45 crore as compared to the Income of H 11.36 crore with net profit of H 0.81 crore in the previous year.
In compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operation of the subsidiary in Form AOC-1 forms part of this Report.
4. CONSOLIDATED FINANCIAL STATEMENT
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022 include the consolidated financial statements and related information of the Company. The audited statement of accounts of the subsidiary Company alongwith above information are available on the website of the Company i.e. www.punjabchemicals.com.
These documents will also be available for inspection during business hours at the Registered Office of the Company.
The Policy for determining material subsidiaries, adopted by the Board of Directors, pursuant to Regulation 16 of the SEBI (LODR) Regulations, 2015 (hereinafter called as "Listing Regulationsâ) can be accessed on the Company''s website at http://www.punjabchemicals.com/wp-content/ uploads/2018/07/Policy-for-determining-Material-Subsidiary.pdf.
The consolidated financial statements of the Company for the year ended on March 31, 2022 comprises the standalone financial statements of Company and its subsidiary (together referred to as "the Groupâ).
The consolidated revenue of the Company during the year under review was H 934 crore with a profit before tax of H 112 crore against H 680 crore and profit before tax of H 69 crore in the previous year.
The Board of Directors are pleased to recommend a dividend of H 3 per equity share (30%) for the financial year under review against a dividend of H 2 per equity shares (20%) in the previous year.
The total dividend amount to be paid for the financial year 2021-2022 shall be H 367.87 Lakh.
The dividend on equity shares is subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company. The dividend once approved by the Shareholders will be payable to those members whose name appear in the Register of members as on the record date.
The Register of Members and Share Transfer Books of the Company will remain closed from Wednesday, the 3rd August, 2022 to Wednesday, the 10th August, 2022 (both days inclusive) and the record date will be 3rd August, 2022 for the purpose of payment of dividend for the financial year 2021- 2022.
The dividend recommended is in line with the dividend distribution policy of the Company and the
policy is available on the website of the Company at https://www.puniabchemicals.com/wp-content/ uploads/2021/05/Dividend-Distribution-Policy. pdf.
6. OUTLOOK
The Chemical sector, including Performance Chemicals, Agrochemicals and Speciality Chemicals, is poised for exponential growth over next few years. Demand is growing and new applications are emerging. This coupled with rebalancing of global supply chain offers a unique opportunity for India as a country and several global MNCs are looking to expand their presence in India.
As your Company has a long and proven history for manufacturing and exporting various Performance Chemicals (Agro and Speciality), -it stands the chance to increase the volume and add new products under CRAMS or for outright sale. Your company has started discussions with several big companies to explore such options and are also working to strengthen R&D technical capabilities to cater to these new business opportunities. The Company has long association with several leading global players and is working to strengthen this relationship with new products and increased business.
The Company is in constructive efforts with a wide range of companies, products and new manufacturing techniques. The management has a positive outlook, is putting together processes and systems in place for future growth and building new team with a high level of confidence.
7. FINANCE
a. Share Capital
The paid up Equity Share Capital as at March 31, 2022 stood at H 12.26 crore consisting of 1,22,62,185 equity shares of H 10 each. During the year under review, the Company did not issue any type of shares or convertible securities or shares with differential voting rights. The Company also did not allot /grant any stock options or sweat equity or warrants to the employees. As on March 31, 2022. The Company has not issued or outstanding any instrument convertible into Equity Shares of the Company during the Financial year.
b. Public Deposits
The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and
The Companies (Acceptance of Deposits) Rules, 2014.
c. Particulars of Loans, Guarantees or Investments Pursuant to Section 186 of the Companies Act, 2013
Particulars relating to loans and guarantees or investments under section 186 of the Companies Act, 2013 are provided at Note no. 47 and 46 to the Standalone and Consolidated Financial Statements respectively.
d. Transfer to Reserves
The Board of Directors has decided to retain the entire amount of profits in the profit and loss account and not to transfer any amount to the general reserve.
e. Credit Rating
As on March 31, 2022, your Company has received CARE BBB (Triple B Plus; Outlook: Stable) for Long Term Bank Facilities and A2 for Short Term Bank Facilities.
8. ENVIRONMENT, SUSTAINABILITY, HEALTH AND SAFETY
A clean environment and safe operations has always been top priority of the management. Safety of all employees, compliances of environmental regulations and preservation of natural resources are regularly monitored.
The effluent and emissions from the plants are regularly monitored and treated. The Company has an approved Effluent Treatment Plant with an incinerator to treat the waste materials in Derabassi and Lalru units. In addition to this, for the solid waste, the Company has tied up with Common Effluent Treatment Plants set up in the nearby area of the manufacturing sites. Derabassi and Lalru units of the Company have been declared as Zero Liquid Discharge (ZLD) facilities.
9. RESEARCH & DEVELOPMENT AND QUALITY CONTROL
The activities of R&D consists of improvement in the processes of existing products, reduction of effluent load and to develop new products and by- products.
Quality Control is the strength of the Company. All raw materials and finished products as well as
the materials at various stages of processing pass through stringent quality checks for ensuring quality and product meeting stringent specifications.
10. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 forms part of this Report.
11. WELFARE ACTIVITIES AND CORPORATE SOCIAL RESPONSIBILITY
i) Welfare Activities
The Company through SDS Memorial Trust has taken up various social works for the betterment of the society.
The Company continues to organise a ''Blood Donation Camp'' in the memory of Late Mr. S.D. Shroff on 18th December every year. 118 employees donated blood this year.
ii) Corporate Social Responsibility
Company undertakes various CSR activities in and around the Derabassi and Lalru area as well as other cities. Company''s Corporate Social Responsibility (CSR) Policy has been posted on the website at http://www.pu njabchemicals. com/wp- content/uploads/2019/04/CSR-Policy.pdf in compliance with the disclosure about CSR Policy Rules, 2014.
During the year under review, the Company was required to spend H 75.67 lakh on CSR activities. The Company has spent H 75.94 lakh in the financial year 2021-2022. The amounts have been spent on upgradation of infrastructure of schools and on public utilities.
The detailed report as per Section 135 of the Companies Act, 2013 read with the Companies (CSR Policy) Rules, 2014 forms part of this Report.
For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this Report.
12. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Regulation 22 of the Listing Regulations & Subsection (9 & 10) of Section 177 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, interalia, provides, for all listed companies to establish a vigil mechanism called "Whistle Blower Policyâ for Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy.
As a conscious and vigilant organisation, the Company believes in the conduct of the affairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In its endeavour to provide its employees a secure and fearless working environment, the Company has established the "Whistle Blower Policyâ. The same can be viewed at http://www.punjabchemicals. com/wp-content/uploads/2018/07/Whistle-Blower- Policy-PCCPL.pdf
The Whistle Blower Policy and establishment of Vigil Mechanism have been appropriately communicated within the Company. The Whistle Blower Policy is also posted on the website of the Company. The purpose of the policy is to create a fearless environment for the Directors and employees to report any instance of unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy. It protects Directors and employees wishing to raise a concern about serious irregularities within the Company.
During the year, the Company has not received any complaint under Vigil Mechanism / Whistle Blower Policy and no person was denied access to the Audit Committee.
13. INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.
The internal financial controls of the Company are constantly assessed and strengthened with proper standard operating procedures (SOP). They are reviewed in routine and required modifications in the SOP are carried out as per the requirement. The
controls in the system are commensurate with size, scale and complexities of the business operations.
Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Auditor has access to the Chairman of the Audit Committee.
The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Management Information System of the Company is an integral part of the control mechanism.
The Audit Committee, Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and the corrective actions taken.
14. RISK MANAGEMENT
Pursuant to Schedule V of SEBI (LODR) Regulation, 2015, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, forming part of the Board''s Report.
The Company has formulated Risk Management Policy which is posted on the website of the Company at www.punjabchemicals.com. The Audit Committee also oversees the area of financial risks and controls.
The Management is fully aware of its responsibility and review various risks viz. Business, Environmental, manpower, financial and take corrective or appropriate actions as and when required for smooth functioning.
The key features include building an organisationwide awareness of risks across businesses and corporate functions; developing formal reporting and monitoring processes; developing risk management plans to keep the information updated and refreshed; and deploying an ERM framework in key business areas and corporate functions.
15. RELATED PARTY TRANSACTIONS
All related party transactions entered into during the year were on arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company which may have a potential conflict with the interest of the Company at large. Accordingly,
the disclosure of related party transactions in Form AOC-2 is not applicable.
Prior omnibus approval of the Audit Committee is obtained for related party transactions which are repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.
Detailed disclosure on related party transactions as per Ind AS-24 containing name of the related party and details of the transactions entered with such related party have been provided under Notes to financial statements.
Disclosure on related party transactions on half year basis is also submitted to the stock exchanges. The policy on related party transactions as approved by the Board is available on the website of the Company at http://www.punjabchemicals.com/ wp-content/uploads/2019/08/Related-Party-policy.pdf.
All the properties and operations of the Company, to its best judgment have been adequately insured.
The Company has also taken Directors and Officers Liability insurance policy.
17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators or Courts which impacts the Company''s ability to continue as a going concern.
18. AUDIT REPORTS AND AUDITORS
Under Section 139(2) of the Companies Act, 2013 and the Rules made thereunder, it is mandatory to rotate the statutory auditors on completion of two terms of five consecutive years and each such term would require approval of the shareholders. In line with the requirements of the Companies Act, 2013, M/s. B S R & Co. LLP Chartered Accountants, (Firm Registration No. 101248W/W- 100022), were appointed as the Statutory Auditors of the Company at the 41st AGM held on 14th September, 2017 to hold office from the conclusion of the said meeting till the conclusion of the 46th AGM to be held in the year 2022. The term of office of M/s. B S R & Co. LLP Chartered Accountants, (Firm Registration No. 101248W/W- 100022), as
the Statutory Auditors of the Company will conclude from the close of the forthcoming AGM of the Company.
The Board of Directors of the Company, based on the recommendation of the audit committee, at its meeting held on May 5, 2022, have recommended the reappointed M/s B S R & Co. LLP Chartered Accountants, (Firm Registration No. 101248W/W- 100022), as the Statutory Auditors of the Company to hold office for a second term of five consecutive years from the conclusion of the 46th AGM till the conclusion of the 51st AGM and will be placed for the approval of the shareholders at the ensuing AGM. The Statutory Auditors have confirmed that they satisfy the independence criteria required under the Companies Act, 2013.
The Board recommends their reappointment to the shareholders. The notice convening the 46th AGM to be held on August 10, 2022 sets out the details.
There are no instances of any fraud reported by the statutory auditor to the Audit Committee or the Board pursuant to section 143(12) of the Act. The Auditor''s Report on standalone and consolidated financial statements forms part of the Annual Report and contains an Unmodified Opinion without any qualification, reservation or adverse remark.
Pursuant to section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. P.S. Dua & Associates, Company Secretaries (CP No. 3934), to conduct secretarial audit for the financial year 2021-22. The report of the Secretarial Auditor for the financial year 2021-22 is unmodified and does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report for the financial year 2021-2022 forms part of this Report.
As per the requirements of Section 148 of the Companies Act,2013 (the Act) read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company is required to maintain cost records and accordingly, the same have been maintained.
The Board of Directors upon recommendation of the Audit Committee appointed M/s Khushwinder Kumar & Co. Cost Accountant, Jalandhar (Firm Registration No.100123) as the Cost Auditor of the Company to conduct audit of the cost accounts of all the Divisions of the Company for the financial year 2021-2022. They have submitted a certificate of eligibility for the re-appointment.
I n accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company. Accordingly, the required resolution for ratification of the remuneration to be paid to the Cost Auditor has been proposed at the ensuing Annual General Meeting.
The Cost Audit Report for the financial year 2020-2021 was filed with the Ministry of Corporate Affairs and the Cost Audit Report for the financial year 2021-2022 will be filed before the due date.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL
As on March 31, 2022, the Company has four Independent Directors on its Board, including a Woman Independent Director. Mr. Mukesh D Patel (DIN:00009605), Mr. Vijay D Rai (DIN:00075837), Mr. Sheo Prasad Singh (DIN:06493455) and Ms. Aruna R Bhinge (DIN:07474950), The Independent Directors have given the required undertaking for meeting the criteria of independence as laid down in Section 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015. They have also given declaration for compliance with the Code for Independent Directors prescribed in Schedule IV to the Act. During the year there is no change in the Independent Directors.
As per the provisions of the Companies Act, 2013, Mr. Avtar Singh (DIN No. 00063569), the Non-Executive and Non-Independent Director, whose office is liable to retire at the ensuing AGM, being eligible, seeks reappointment. Based on performance evaluation and the recommendation of the Nomination and Remuneration Committee, the Board recommends his reappointment. The notice
convening the 46th AGM, to be held on August 10, 2022, sets out the details.
The Directors of the Company had no pecuniary relationship or transactions with the Company except as mentioned in Note no. 42 of the Standalone and Consolidated Financial Statements.
Details and brief resume of the Director seeking reappointment required by prevailing regulations and rules are furnished in the Notice convening the Annual General Meeting forming part of the Annual Report.
Other details of all the Directors have been given in the Corporate Governance Report attached to this Report.
The Board meetings are planned normally in advance in consultation with the Directors. During the Financial Year 2021-2022, the Board met 5 times within the prescribed intervening time gap as provided in the Companies Act, 2013. The details of the Board meetings are given in the Corporate Governance Report that forms part of this Annual Report.
Pursuant to the provisions of Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, the evaluation process for performance of the Board, its various committees, individual directors and the Chairman of the Board was carried out during the year.
Each director was provided a questionnaire to be filled up providing feedback on the overall functioning of the Board, its Committees and contribution of individual directors. The questionnaire covered various parameters such as structure of the Board/Committees, board meeting practices, overall board effectiveness, attendance/ participation of directors in the meetings, etc. The directors were also asked to provide their suggestions for areas of improvement to ensure higher degree of engagement with the management.
The Independent Directors during the year, completed evaluation of Non-independent/ Non-promoter Directors and the entire Board including the Chairman. The Independent Directors expressed satisfaction on overall functioning of the Board, various committees
as well as the directors of the Company. They appreciated the knowledge and expertise of the Chairman and his exemplary leadership qualities which demonstrate positive attributes in following the highest standards of corporate values and culture of the Company.
The Board also discussed the report of performance evaluation and its outcome.
The details of the programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business model and related matters are posted on the website of the Company at https://www.punjabchemicals. com/wp-content/uploads/2022/03/ Familiarization-Programme-2021-2022.pdf
Pursuant to the requirements under the Companies Act and the Listing Regulations, the Board has constituted the following committees:
a. Audit Committee
b. Stakeholders Relationship Committee
c. Nomination & Remuneration Committee
d. Corporate Social Responsibility (CSR) Committee
e. Risk Management Committee
The details of the Committees viz. Composition number of meetings held and attendance of the Committee Members in the meetings are given in the Corporate Governance Report forming part of this Annual Report.
During the year, Mr. Punit K Abrol, superannuated from his position of Company Secretary & Compliance Officer with effect from December 31, 2021. Mr. V Srinivas was appointed as Company Secretary & Compliance Officer of the Company with effect from January 27, 2022.
As on March 31, 2022, the Company has the following Key Managerial Personnel as per section 2(51) of the Act:
⢠Mr. Shalil S Shroff, Managing Director
⢠Mr. Vinod K Gupta, Chief Executive Officer
⢠Dr. Sriram Swaminathan, Chief Financial Officer
⢠Mr. V Srinivas, Company Secretary and Compliance Officer
⢠Mr. Jain Parkash, Sr. V.P. (Works)
20. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
The Company''s Board is fully balanced with required numbers of Executive and Independent Directors. As on March 31 2022, the Board consists of 8 Members, 1 of whom is Executive Director,
3 Non Executive Non Independent Directors,
4 Independent Directors. The requirement of reconstitution of the Board is evaluated from time to time. The Nomination and Remuneration Committee has formulated a Nomination and Remuneration Policy under Section 178 (3) of the Companies Act, 2013 which lays down criteria for determining qualifications, positive attributes and independence of a Director and remuneration for the Directors, Key Managerial Personnel and senior management level including the appointment of personnel one level below the Key Managerial Personnel.
The same can be viewed on our site http:// www.punjabchemicals.com/wp-content/ uploads/2018/07/Nomination-and-Remuneration-Policy.pdf.
21. EMPLOYEES AND INDUSTRIAL RELATIONS
The Board of Directors and the Management are extremely thankful to all the employees for their commitment, competence and dedication in the affairs of the Company. The relation between the management and employees is transparent, healthy and cordial.
The Welfare Schemes viz. preventive health check up, medical facilities in the factory premises, are used extensively by all categories of the employees. The Company organises sports events for the employees for a healthy environment and developing the quality of sportsmanship among them.
The Board of Directors are pleased and place on record its appreciation for all categories of employees for their sincere efforts and the sense of belongingness and commitment towards the Company. Their support and sacrifices during COVID-19 had helped the Company to continue its operations. The management took all required efforts to keep them safe and educated.
The disclosure in terms of the provisions of Section 197(12) of the Act read with Rules 5(1), 5(2) and 5(3)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and the name and details of employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and other details of the concerned employees forms part of this report.
22. POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE
The Company has created and maintaining a secured work environment for the employees. The endeavour of the Company is to give a free and cordial atmosphere without harassment, exploitation and intimidation to all business associates of the Company. To empower women and protect women against sexual harassment, a policy for prevention of sexual harassment is in place and Internal Complaint Committee as per legal guidelines had been set up. This policy allows employees to report sexual harassment instances if any at the workplace to the Committee. The Internal Committee is empowered to look into all complaints of sexual harassment and facilitate free and fair inquiry process with clear time lines. The Policy on Prevention of Sexual Harassment is also posted on the website http://www.punjabchemicals.com/wp-content/uploads/2018/07/Prevention-of-Sexual-Harrasment.pdf.
During the year ended March 31 2022, no complaints pertaining to sexual harassment was received by the Company.
23. DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirement under sub section 3 (c) of Section 134 of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
a) i n preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation / disclosure relating to material departures, if any;
b) the Directors have selected such accounting policies, 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 affairs of the Company as at
March 31, 2022 and of the profit and loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts of the Company on a ''going concern'' basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
f) t he Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
24. MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE REPORT, BUSINESS RESPONSIBILITY REPORT
(i) Management Discussion and Analysis
i n terms of Regulation 34 (2) (e) of the SEBI (LODR) Regulations, 2015 read with other applicable provisions, the detailed review of the operations, performance and future outlook of the Company and its business is given in the Management''s Discussion and Analysis Report which forms part of this Annual Report.
The Company has complied with the Corporate Governance Code as stipulated under the Listing Regulations. The Report on Corporate Governance in accordance with Rules 34(3) read with para C of Schedule V of SEBI (LODR) Regulations, 2015 forms an integral part of this Report.
The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance is attached to the Report on Corporate Governance.
Pursuant to Regulation 34(2)(f) of the SEBI (LODR) Regulations, 2015, "Business Responsibility Reportâ (BRR) forms part of this Report.
25. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India relating to the meetings of the Board and General Meetings.
Pursuant to section 92(3) of the Companies Act, 2013, a copy of the draft Annual Return as on March 31, 2022 has been placed on the website of the Company and the web link of such Annual Return is https://www.punjabchemicals.com/wp-content/ uploads/2022/06/AnnualReturnPCCPL2022.pdf.
27. EVENTS AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this Report.
1. There was no change in the nature of business of the Company as stipulated under sub-rule 5(ii) of Rule 8 of Companies (Accounts) Rules, 2014.
2. There is no application made or proceedings pending under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22.
3. There was no instance of one-time settlement with any Bank or Financial Institution.
4. There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and /
or Board under Section 143(12) of Act and Rules framed thereunder.
29. STATE OF AFFAIRS OF THE COMPANY
The State of Affairs of the Company is presented as part of the Management Discussion and Analysis Report in a separate section forming part of this Report, as required under the SEBI (LODR) Regulations, 2015.
The Board of Directors wish to place on record its deep sense of appreciation for the committed services by all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and cooperation received from the financial institutions, Banks, Government authorities, customers, vendors and members during the year under review.
Statements in the Board''s Report and the Management Discussion and Analysis describing the Company''s objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include: global and domestic demand and supply conditions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company.
Date: 5th May, 2022 Chairman
Place: Mumbai DIN: 00009605
Mar 31, 2018
TO THE MEMBERS,
1. The Directors are pleased to present the 42nd Annual Report of the business and operations alongwith the Audited Standalone and Consolidated Financial Statements of the Company for the financial year ended on March 31, 2018.
2. FINANCIAL RESULTS:
The financial performance of the Company for the year ended March 31, 2018 is summarized below:
(Rs. In lac)
Particulars |
Consolidated* |
Standalone |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Revenue from Operations and Other Income |
50692 |
54858 |
50219 |
45215 |
Earnings before Interest, Depreciation & Tax & Exceptional item (EBIDTA) |
5262 |
2754 |
4567 |
3468 |
Depreciation/Amortisation |
1394 |
1606 |
1394 |
1431 |
Finance Cost |
1768 |
3068 |
1751 |
2174 |
Profit / (Loss) before Tax & Exceptional item |
2100 |
(1920) |
1422 |
(137) |
Exceptional (Expenses) / Income |
326 |
- |
326 |
- |
Profit / (Loss) before Tax (PBT) |
2426 |
(1920) |
1748 |
(137) |
Income Tax Expenses: |
||||
Current Tax |
297 |
- |
297 |
- |
Adjustment of tax pertaining to earlier periods |
(51) |
- |
(51) |
- |
Deferred Tax |
462 |
73 |
462 |
73 |
Total Income Tax Expenses |
708 |
73 |
708 |
73 |
Profit / (Loss) after Tax (PAT) |
1718 |
(1993) |
1040 |
(210) |
Other Comprehensive income / expense not to be reclassified to |
(336) |
373 |
(14) |
13 |
profit or loss in subsequent period |
||||
Total comprehensive income for the period |
1382 |
(1620) |
1026 |
(197) |
Earning per share (EPS) |
||||
Basic and diluted (in Rs.) (not annualized) |
14.01 |
(16.25) |
8.48 |
(1.71) |
Notes:
a) *Consolidated accounts consist of standalone and overseas subsidiary Companies.
b) Figures for the previous period have been regrouped to the extent necessary.
3. ADOPTION OF IND-AS:
The Company adopted Indian Accounting Standards (Ind-AS) from 01 April, 2017 with the transition date of 01 April 2016 and accordingly these financial results have been prepared in accordance with the recognition and measurement principles laid down in the Indian Accounting Standard (Ind-AS) 34-Interim Financial Reporting and other accounting principles generally accepted in India. Consequently, erstwhile Indian Generally Accepted Accounting Principles (IGAAP) results for the year ended 31 March 2017 has been restated to make them comparable. Reconciliation of net profit and equity as reported under erstwhile IGAAP and as restated now under Ind-AS is as under:
Standalone: (Rs. in lac)
Particulars |
Equity |
Net Profit |
|
As at |
Quarter ended |
Year ended |
|
31-Mar |
31-Mar |
31-Mar |
|
(Audited) |
(Audited) |
(Audited) |
|
2017 |
2017 |
2017 |
|
Net profit / (loss) as reported under erstwhile IGAAP |
5,665 |
(402) |
213 |
a) Actuarial gain on defined benefit plans reclassified to Other Comprehensive Income |
- |
13 |
(8) |
b) Finance cost adjustment on account of Fair valuation of borrowings |
532 |
(89) |
(367) |
c) Fair value of investments |
(136) |
- |
- |
d) Others |
169 |
25 |
25 |
e) Tax* |
957 |
150 |
(73) |
Net Profit / (loss) now reported under Ind-AS |
7,187 |
(303) |
(210) |
* Includes tax effect of above mentioned items and adjustment for reassessment of probability of realization of unrecognized deferred tax asset
Consolidated: (Rs. in lac)
Particulars |
Equity |
Net Profit |
As at |
Year ended |
|
31-Mar |
31-Mar |
|
(Audited) |
(Audited) |
|
2017 |
2017 |
|
Net profit / (loss) as reported under erstwhile IGAAP |
4,178 |
(1570) |
a) Actuarial gain on defined benefit plans reclassified to Other Comprehensive Income |
- |
(8) |
b) Finance cost adjustment on account of Fair valuation of borrowings |
532 |
(367) |
c) Fair value of investments |
107 |
- |
d) Others |
65 |
25 |
e) Tax* |
957 |
(73) |
Net Profit / (loss) now reported under Ind-AS |
5,839 |
(1993) |
* Includes tax effect of above mentioned items and adjustment for reassessment of probability of realization of unrecognized deferred tax asset
4. STANDALONE RESULTS:
The Directors are happy to share that the revival steps taken by the Companyâs Management have yielded results. It is satisfying that accumulated losses of the earlier years have been recouped in the year under review. The performance of all the divisions have improved and accordingly, on standalone basis, the Revenue from Operations increased to Rs. 502 crore and Profit before Tax increased to Rs. 17.48 crore against the revenue of Rs. 452 crore and loss of Rs. 1.37 crore in the previous year as per Ind AS.
The Agrochemicals Division Derabassi, which contributes almost 75% of the revenue, continues to strengthen its activities by adding new products and taking cost effective measures, wherever possible. Its revenue has increased by 22% from the revenue of previous year. The operations of the Specialty and Other Chemicals Division, Lalru and Industrial Chemical Division, Pune have also shown improved results compared to the previous year. There has been a substantial increase in the job work income, contributing to better results.
5. OVERSEAS SUBSIDIARY COMPANY RESULTS:
The Company adopted the strategy to divest its nonperforming assets and non-profitable businesses. The results of Sintesis Quimica were affecting the consolidated results of the Company, therefore, as approved by the members, the entire shareholding in the Company was sold by the overseas wholly owned subsidiaries of the Company vide Agreement dated 28th September 2017 to an unrelated party. Sintesis Quimica is therefore no longer a step-down subsidiary of the Company. The Financial Results up to the date of agreement were not available due to administrative reasons, therefore, the same could not be consolidated with the accounts of the year under review. However, the losses of investment and other related expenses have been taken into the books of account.
On 31st March, 2018, the Company had two overseas subsidiaries namely - SD AgChem (Europe) NV and STS Chemicals (UK) Ltd. During the year under review, the operational results were as follows:
(i) SD Agchem (Europe) NV:
The total income was Rs. 16.14 crore with net profit of Rs. 3.70 crore, compared to the Income of Rs. 5.66 crore and Profit of Rs. 1.29 crore in the previous year.
(ii) STS Chemicals (UK) Limited (STS):
There was no commercial activity in the Company. Therefore, there was a loss of Rs. 1 lac against loss of Rs. 24 lac during the previous year. The Company has taken steps to dissolve this Company because there was no business activity and also no further plans for doing business in this Company. The required approval of dissolution from the concerned authorities has been received.
In compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operation of all the subsidiaries in Form AOC-1 is annexed to the report as Annexure 1.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of the subsidiaries are available on the website of the Company www.punjabchemicals.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.
The Policy for determining material subsidiaries, adopted by the Board of Directors, pursuant to Regulation 16 of the SEBI (LODR) Regulations, 2015 (hereinafter called as âListing Regulationsâ) can be accessed on the Companyâs website www.punjabchemicals.com.
6. CONSOLIDATED RESULTS:
Your Company has prepared the Consolidated Financial Statements in accordance with Section 133 of the Companies Act 2013 read with Indian Accounting Standard IND AS 27 (Consolidated and Separate Financial Statements), IND AS 28 -(Accounting for Investments in Associates in Consolidated Financial Statements) and IND AS 31 (Financial Reporting of Interest in Joint Ventures) notified by the Companies (Accounts) Rules, 2014 and Companies (Accounting Standard) Amendment Rules 2016 except Sintesis Quimica, Argentina which was sold on 28th September, 2017 and the results upto the said period were not available as not shared by the buyer.
The audited consolidated financial statements of other subsidiary Companies together with Auditorsâ Report form part of the Annual Report.
The consolidated accounts during the period under review show that the total revenue of Rs. 507 crore with a net profit before tax of Rs. 24 crore against the total income of Rs. 549 crore and net loss of Rs. 19.20 crore (including Sintesis Quimica) in the previous year.
7. RESERVES:
Your Directors do not propose to transfer any amount to the general reserve and entire amount of profit for the year forms part of the âRetained Earningsâ.
8. DIVIDEND:
Your Directors after due consideration regret their inability to recommend any dividend for the financial year under review in view of the commitment towards Banks for alignment of debts.
9. KEY DEVELOPMENTS:
Prepayment of outstanding debts of the lenders:
As informed in the last Annual Report, the Company had entered into One Time Settlement with the Central Bank of India for the outstanding dues. The necessary adjustments in the books of account have been carried out after the payment of entire OTS amount in the accounts of the financial year under review. Union Bank of India, EXIM Bank and Allahabad Bank have accepted the proposal for prepayment of debts of the Company. The Company is in the process of completing all formalities in this regard.
Change of the Registered office:
As approved by the Members of the Company and other Regulatory Authorities, Registered Office of the Company was shifted from the Union Territory of Chandigarh to the State of Punjab at Milestone 18, Ambala Kalka Road, Village & P.O Bhankharpur, Derabassi, Distt. SAS Nagar, Mohali (Punjab)- 140201, India. The required information has been placed on the website of the Company, National Stock Exchange of India Limited and BSE Limited.
Re-Classification of Excel Industries Limited from Promoter Group to Public Category:
The shareholders of the Company, on February 2, 2018 by means of special resolution passed through Postal Ballot, have given their approval for reclassification of Excel Industries Limited from Promoter Group to Public Category, as they were neither involved in the management nor holding any controlling stake in the Company. BSE and NSE have given approval for the re-classification of Promoter under Regulation 31A of SEBI (LODR) Regulations, 2015.
Presently, Shri Shalil Shashikumar Shroff along with his family and relatives collectively as âShalil Shroff groupâ are the only Promoters of the Company.
10. STATE OF AFFAIRS OF THE COMPANY:
The State of Affairs of the Company is presented as part of Management Discussion and Analysis Report forming part of this Report.
11. OUTLOOK:
The main business of your Company is manufacturing Performance chemicals which includes Agro Chemicals and other specialty chemicals. We are present in both domestic and export markets. The Company has also an arrangement with few multinational Companies for contract manufacturing and sale of its products.
In view of the scenario described in the management discussions your Company is expected to grow with wide range of products and manufacturing expertise barring unforeseen circumstances.
12. FINANCE:
As stated in the Annual Report of last year, the Management has taken various steps to improve the liquidity position of the Company. The steps viz. sale of non performing assets and non profitable business, taking up toll manufacturing in a large scale and tie up with major customers to minimise the credit period have helped in running the business.
During the year the Company has not raised any additional borrowings except a few Inter Corporate Deposits for meeting part of the working capital requirements and taken few assets on lease.
13. PUBLIC DEPOSITS:
Your Company had not accepted any Public Deposits under Chapter V of the Companies Act, 2013.
14. DIRECTORS AND KEY MANAGERIAL PERSONNEL
a) Changes in the composition of the Board of Directors:
Smt. Sindhu Seth (DIN: 00109298), a Non-Executive Non Independent Director resigned from the Board due to personal reasons and the same was accepted by the Board of Directors in their meeting held on 29th May, 2018. The Board has expressed its gratitude and placed on record its appreciation for her contribution as a Director.
The Nomination and Remuneration Committee in its meeting held on 29th May, 2018 assessed the profile of Smt. Aruna R. Bhinge, Company Director, Consultant and Coach and recommended her appointment as Non Executive Non Independent Woman Director, liable to retire by rotation, to the Board of Directors of the Company. Pursuant to Section 161(1) read with section 149 of the Companies Act, 2013 and the Articles of Association of the Company, Smt. Aruna R. Bhinge (DIN: 07474950) was appointed as an Additional Director designated as Woman Director w.e.f. 29th May, 2018 by the Board of the Company, who shall hold office up to the date of the ensuing Annual General Meeting. In terms of Section 160 of the Act, the Company has received a notice in writing from a Member signifying her intention to propose the candidature of Smt. Aruna R. Bhinge for the office of a Director.
b) Independent Directors:
As required under the Companies Act, 2013, the Company has three Independent Directors on the Board of the Company namely Shri Mukesh Dahyabhai Patel (DIN:00009605), Shri Vijay Dilbagh Rai (DIN:00075837) and Shri Sheo Prasad Singh (DIN: 06493455).
The Independent Directors have given the required undertaking for compliance of the criteria of independence laid down in Section 149 (7) of the Companies Act, 2013. The same has been received and placed before the Board in its meeting held on 29th May, 2018.
c) Retirement by rotation:
In terms of Section 152 of the Companies Act, 2013 and the provisions of the Articles of Association of the Company, Shri Shivshankar Shripal Tiwari (DIN: 00019058), Director of the Company retires by rotation at the forthcoming Annual General Meeting. He being eligible, has offered himself for re-appointment. The Board of Directors has recommended his reappointment as Director of the Company, liable to retire by rotation.
d) Re-appointment of Managing Director and Whole Time Director:
The shareholders of the Company, on February 2, 2018 by means of special resolution passed through Postal Ballot, have given their approval for:
1. Re-appointment of Shri Avtar Singh (DIN: 00063569) as the Whole Time Director of the Company for a period of three (3) years from 14.11.2017 to 13.11.2020 on the terms and conditions including remuneration for the mentioned period.
2. Re-appointment of Shri Shalil Shashikumar Shroff (DIN: 00015621) as the Managing Director of the Company for a period of three (3) years from 15.01.2018 to 14.01.2021 on the terms and conditions including remuneration for the mentioned period.
e) The Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them to attend meetings of the Company.
Details and brief resume of the Directors seeking re-appointment/appointmentas required by Regulation 26 (4) and 36 (3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and as required under Secretarial Standards - 2 on General Meetings issued by The Institute of Company Secretaries of India are, are furnished in the Notice convening the Annual General Meeting forming part of the Annual Report.
Other details of the Directors have been given in the Corporate Governance Report attached to this Report.
f) Committees of the Board:
The Companyâs Board has constituted the required Committees prescribed under the Companies Act and the Listing Regulations.
The details of Composition of the Committees and Attendance of the Committee Members in the meetings is given in the Corporate Governance Report forming part of this Annual Report.
g) Key Managerial Personnel (âKMPâ)
In terms of the provisions of Section 2(51) and Section 203 of the Act, the Board of Directors has nominated following as KMP of the Company:
- Mr. Shalil Shashikumar Shroff, Managing Director
- Mr. Avtar Singh, Executive Director
- Mr. Vipul Joshi, Chief Financial Officer
- Mr. Punit K Abrol, Sr. V.P. (Finance) & Company Secretary
- Mr. Jain Parkash, Sr. V.P. (Works)
15. LISTING WITH STOCK EXCHANGES:
The Companyâs shares continue to be listed at the National Stock Exchange of India Limited and BSE Limited. The Annual Listing fee for the fiscal year 2017-18 has been paid to these Exchanges.
16. ENVIRONMENT AND POLLUTION CONTROL:
The effluent and emissions generated from the plants are regularly monitored and treated. The Company has an Effluent Treatment Plant with incinerator to treat the waste materials. In addition to this, the Company has also tied up with Common Effluent Treatment Plants set up in the nearby areas of the manufacturing sites. The Company commits for the clean and healthy environment in and around of its manufacturing sites.
17. WELFARE ACTIVITIES AND CORPORATE SOCIAL RESPONSIBILITY:
i) Welfare Activities:
The Company through SDS Memorial Trust has taken up various social works for the betterment of the society.
The Company continues to organize a âBlood Donation Campâ in the memory of Late Shri S.D. Shroff on 18th December every year. Around 92 employees donated blood this year.
ii) Corporate Social Responsibility:
Companyâs Corporate Social Responsibility (CSR) Policy has been posted on the website at www.punjabchemicals.com in compliance with the disclosure about CSR Policy Rules, 2014.
During the year under review, the Company was to spend Rs. 38.06 lac based on the average net profit of the last three years on various activities for social welfare. Accordingly, the amount was spent on activities like upgradation of infrastructure of schools, preventive healthcare by way of medical camps in villages including eye operations, providing sanitation and drinking water facilities to neighboring institutions.
The detailed report as per Section 135 of the Companies Act, 2013 read with the Companies (CSR Policy) Rules, 2014 has been attached as Annexure 2.
For other details regarding the CSR Committee, please refer to Corporate Governance Report, which forms part of this Report.
18. RESEARCH & DEVELOPMENT AND QUALITY CONTROL:
The activities of R&D consists of improvement in the processes of existing products, decrease of effluent load and to develop new products and by-products.
The Quality Control is the strength of the Company. All raw materials and finished products pass through stringent quality checks for better results.
19. INSURANCE:
The Company has taken adequate insurance policies for its assets against the possible risks like fire, flood, public liability, marine, etc.
The Company has also taken Directors and Officers Liability insurance policy.
20. EMPLOYEES AND INDUSTRIAL RELATIONS:
The relation between the management and employees are healthy and cordial. There is a transparency in the dealings. The Welfare Schemes viz. preventive health check up, medical facilities in the campus, Co-operative stores, etc.are used extensively by the employees. Sports activities keep the employees fit and healthy.
The Board of Directors placed on record their appreciation for the sincere efforts and commitment of the employees. Their faith and confidence in the working are largely responsible for bringing turnaround in the Company. Their sense of belongingness is noteworthy and appreciated.
21. REGISTRAR AND SHARE TRANSFER AGENT:
M/s Alankit Assignments Ltd., Alankit Heights, 1E/13, Jhandewalan Extension, New Delhi, are the Registrar and Share Transfer Agent of the Company for the Physical as well as Demat shares. The members are requested to contact the Registrar directly for any of their requirements.
22. EXTRACT OF THE ANNUAL RETURN:
The information required under Section 134 (3) (a) of the Companies Act, 2013 (the Act) read together with Section 92 (3) of the Act regarding extract of the Annual Return is appended hereto as Annexure 3 and forms part of this Report.
23. NUMBER OF MEETINGS OF THE BOARD:
The Board met five (5) times during the Financial Year 2017-18, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.
24. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION:
The current policy is to have an appropriate mix of Executive and Independent directors to maintain the independence of the Board and separate its function of governance and management. As on March 31, 2018, the Board consists of 8 Members, 2 of whom are Executive Directors, 2 Non Executive Non Independent Directors, 3 Independent Directors and 1 Woman Director. The Board periodically evaluates the need for change in its composition and size.
The Nomination and Remuneration Committee has formulated a Nomination and Remuneration Policy under Section 178 (3) of the Companies Act, 2013 which lays down criteria for determining qualifications, positive attributes and independence of a Director and remuneration for the Directors, Key Managerial Personnel and senior management level including the appointment of personnel one level below the Key Managerial Personnel. The same is appended as Annexure 4 and can be assessed at www.punjabchemicals.com.
25. AUDITORSâ REPORTS:
a. Statutory Auditor Report:
The Auditors Report on Standalone Financial Statements does not contain any qualification, reservation or adverse remarks.
However, the Statutory Auditors have âDisclaimer of Opinionâ in the Auditorâs Report of Consolidated Financial Statements as follows:
âWe draw attention to note 4 of the annual consolidated financial statements which explains that after completion of necessary legal formalities in India and Argentina, the Holding company has during the current year sold its entire stake in a overseas step down subsidiary to a unrelated third party on 28th September, 2017. The Holding Company is unable to obtain the relevant financial information relating to the period till the date of disposal from Sintesis Quimica and consequently, it is not in a position to consolidate in accordance with Indian Accounting Standard âConsolidated Financial Statement.â
In addition, as explained in note (i), the group has transitioned to Ind AS in the current year. It has except for the Ind AS adjustments as may be related to the aforesaid subsidiary, adjusted the comparative financial information for the differences in the accounting principles adopted by the Group on transition to the Ind AS, which have been audited by us.
On the basis of above, we were unable to determine whether any adjustments are necessary, in relation to the aforesaid subsidiary in the annual consolidated financial results for the year ended 31 March 2018, comparative period ended 31 March 2017 and as on the transition date of 1 April 2016.
Consequentially other relevant assertions in the Audit Report on the Consolidated Financial Statements and report on adequacy of the internal financial controls with reference to those consolidated financial statements have been also modified.â
The Board after consideration has given the following explanations and comment on the âDisclaimer of Opinionâ:
âSince Sintesis Quimica (SQ) has been sold, we have not been able to get financial information for the period upto the date of disposal. Hence, we have not been able to consolidate SQ for the partial period in accordance with Indian Accounting Standard 110-âConsolidated Financial Statements.â It may be noted that the modification has no impact on consolidated net profit and other comprehensive income for the year ended 31st March, 2018.â
b. Secretarial Audit Report:
The Secretarial Audit Report for the financial year 2017-18 is annexed to this Report as Annexure 5 and forms part of this Report.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
26. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:
Particulars relating to loans and guarantees or investments under section 186 of the Companies Act, 2013 are provided in the Note 6 to the standalone financial statement.
27. RELATED PARTY TRANSACTIONS:
There are no material related party transactions made by the Company with Promoters, Directors, Key Managerial Personnelor other designated persons which may have a potential conflict with the interest of the Company at large. All related party transactions that were entered into during the financial year were on an armâs length basis and were in the ordinary course of business. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors on a quarterly basis. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of repetitive nature. The transactions entered into pursuant to the omnibus and specific approval are reviewed periodically by the Audit Committee. As required under SEBI (LODR), detailed related party disclosures as per Accounting Standards, please refer Note 43 of the Standalone and Consolidated Financial statements.
The policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website at www.punjabchemicals.com.
None of the Directors has any material pecuniary relationships or transactions vis-a-vis the Company.
Form AOC-2 pursuant to clause (h) of sub-section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure 6 and forms part of this Report.
28. MATERIAL CHANGES AND COMMITMENTS, IF ANY:
No material changes and commitments have occurred between the end of the financial year and the date of the Report which has effect on the Financial Statements.
29. PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC.:
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 7 and forms part of this Report.
30. RISK MANAGEMENT:
Pursuant to Schedule V of SEBI (LODR) Regulation, 2015, the Company has voluntarily constituted a Risk Assessment Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, forming part of the Boardâs Report.
The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has formulated Risk Management Policy which is posted at the website of the Company at www.punjabchemicals.com.
The Audit Committee also oversee the area of financial risks and controls.
31. BOARD EVALUATION:
The Board has carried out an annual performance evaluation of the directors individually, of the Chairman and of the Board as a whole, pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI (LODR) Regulations, 2015,. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
32. DETAILS OF FAMILIARIZATION PROGRAMME:
The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are posted on the website of the Company at www.punjabchemicals.com.
33. PARTICULARS OF EMPLOYEES:
The employees of the Company contributed significantly in achieving the results. In terms of the provisions of Section 197(12) of the Act read with Rules 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the disclosures pertaining to remuneration and other details of the concerned employees is annexed as Annexure 8.
34. WHISTLE BLOWER POLICY:
Regulation 22 of the Listing Regulations & Sub-section (9 & 10) of Section 177 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, interalia, provides, for all listed companies to establish a vigil mechanism called âWhistle Blower Policyâ for directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Companyâs code of conduct or ethics policy.
As a conscious and vigilant organization, the Company believes in the conduct of the affairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In its endeavour to provide its employee a secure and a fearless working environment, the Company has established the âWhistle Blower Policyâ.
The Whistle Blower policy and establishment of Vigil Mechanism have been appropriately communicated within the Company. The Whistle Blower Policy is also posted on the website of the Company. The purpose of the policy is to create a fearless environment for the directors and employees to report any instance of unethical behaviour, actual or suspected fraud or violation of the Companyâs code of conduct or Ethics Policy. It protects directors and employees wishing to raise a concern about serious irregularities within the Company.
During the year, the Company has not received any complaint under Vigil Mechanism / Whistle Blower Policy.
35. INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.
The Company has appointed Internal Auditor to periodically audit and report of any deviation in depicting in the implementation of control. The management takes immediate corrective actions, if required.
36. POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company is committed in creating and maintaining a secure work environment where its employees, agents, vendors and partners can work and pursue business together in anatmosphere free of harassment, exploitation and intimidation. To empower women and protect women against sexual harassment, a policy for prevention of sexual harassment had been rolled out and Internal Complaints Committee as per legal guidelines had been set up. This policy allows employees to report sexual harassment at the workplace. The Internal Committee is empowered to look into all complaints of sexual harassment and facilitate free and fair inquiry process with clear time lines. The Policy on Prevention of Sexual Harassment is also posted on the website of the Company.
During the year ended 31st March, 2018, no complaints pertaining to sexual harassment was received by the Company.
37. CEO/CFO CERTIFICATION:
In terms of the Listing Regulations., the Certificate duly signed by Shri Shalil Shashikumar Shroff, Managing Director (CEO) and Shri Vipul Joshi, Chief Financial Officer (CFO) of the Company was placed before the Board of Directors along with the annual financial statements for the year ended on March 31, 2018, at its meeting held on May 29, 2018. The said Certificate is also annexed to the Corporate Governance Report.
38. AUDITORS:
a) STATUTORY AUDITORS:
M/s. B S R & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 101248W/W-100022), Statutory Auditors of the Company were appointed as Auditors of the Company, for a term of 5 (five) consecutive years, at the Annual General Meeting held on September 14, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company The requirement to place the matter relating to appointment of Auditors for ratification by members at every Annual General Meeting has been done away with vide notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, New Delhi. Accordingly, no resolution is proposed for ratification of appointment of Auditors, who were appointed in the Annual General Meeting held on September 14, 2017.
b) SECRETARIAL AUDITORS:
The Board upon recommendation of the Audit Committee has reappointed M/s. P.S. Dua & Associates, Company Secretaries (CP No. 3934), as the Secretarial Auditor of the Company for the financial year 2018-19, in terms of Section 204 of the Companies Act, 2013 and Rules thereunder.
c) COST AUDITORS:
The Board of Directors upon recommendation of the Audit Committee appointed M/s Khushwinder Kumar & Co. Cost Accountant, Jalandhar (Firm Registration No.100123) as the Cost Auditor of the Company to conduct audit of the cost accounts of all the Divisions of the Company for the financial year 2018-19. They have submitted a certificate of eligibility for the appointment.
In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company. Accordingly, consent of the members is sought in the ensuing Annual General Meeting.
The Cost Audit Report for the financial year 2016-17 has been filed and the report for the year under review will be filed before the due date.
39. TRANSFER OF EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND:
Pursuant to the provisions of Section 124 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended (âIEPF Rulesâ), all the shares on which dividends remain unpaid /unclaimed for a period of 7 (seven) consecutive years or more has to be transferred to the demat account of the IEPF Authority as notified by the Ministry of Corporate Affairs. Accordingly, the Company has transferred 1,09,179 Ordinary Shares of the face value of Rs. 10 per share to the demat account of the IEPF Authority during the financial year 2017-18.
The Company had sent individual notice to all the shareholders whose shares were due to be transferred to the IEPF Authority and has also published newspaper advertisement in this regard. The details of such dividends/ shares transferred to IEPF are uploaded on the website of the Company at www.punjabchemicals.com.
The members/claimants whose shares and unclaimed dividend have been transferred to the IEPF Authority can claim the same by making an application to the IEPF Authority in Form IEPF- 5 along with requisite documents (available on www.iepf.gov.in) and sending duly signed physical copy of the same to the Company along with requisite documents prescribed in Form IEPF-5. Member/ claimant can file only one consolidated claim in a financial year as per the IEPF Rules. No claims shall lie against the Company in respect of the dividend/shares so transferred.
40. MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE REPORT:
(i) MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report on Companyâs performance, industry trend and other material changes with respect to the Company and subsidiaries have been given separately in the Annual Report as required under para B of Schedule V of SEBI (LODR) Regulations, 2015.
(ii) CORPORATE GOVERNANCE REPORT:
The Company strives to maintain the required standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has complied with the Corporate Governance Code as stipulated under the Listing Regulations. The Report on Corporate Governance in accordance with para C of Schedule V of SEBI (LODR) Regulations, 2015 forms integral part of this Report.
The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance is attached to the Report on Corporate Governance
41. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company its future operations.
42. CHANGE IN THE NATURE OF BUSINESS:
There is no change in the nature of business of the Company.
43. DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to the requirement under sub section 3 (c) of Section 134 of the Companies Act, 2013, with respect to Directorsâ Responsibility Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any;
b) the Directors have 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 affairs of the Company as at March 31, 2018 and of the profit and loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts of the Company on a âgoing concernâ basis;
e) the Directors has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
44. ACKNOWLEDGEMENT:
The Directors express their gratitude to Banks, and various other agencies for the co-operation extended to the Company. The Directors also take this opportunity to thank the shareholders, customers, suppliers, lenders, distributors and other stakeholders for the confidence reposed by them in the Company.
For and on behalf of the Board of Directors
MUKESH DAHYABHAI PATEL
Place: Mumbai CHAIRMAN
Date: May 29, 2018 DIN:00009605
Mar 31, 2015
Dear Members,
1. The Directors have pleasure in presenting the Thirty Ninth (39th)
Annual Report, on the business and operations of the Company. The
Annual Report includes Audited standalone and consolidated financial
statements for the financial year ended on March 31,2015.
2. FINANCIAL HIGHLIGHTS :
The summarized financial statement for the year under review is given
below:
(Rupees in Lacs)
Consolidated*
Particulars 2014-15 2013-14
Sale of Products & Other Income (Net) 58804 53232
Profit / (Loss) before Interest,
Depreciation & Tax & Exceptional item 7053 5851
Less: Depreciation/ Amortisation 1917 1616
Less: Finance Cost 3472 3465
Profit / (Loss) before Tax &
Exceptional item 1664 770
Less : Exceptional item 217 338
Profit / (Loss) before Tax 1447 432
Less: Provision for Taxation
Current tax 63 -
Deferred Tax - -
Profit / (Loss) after Tax 1384 432
Share of profits in associate
for current year 36 110
Share of losses of associate
for earlier years - (446)
Net Profit / (Loss) 1420 96
Carried Forward to next year 1420 96
Standalone
Particulars 2014-15 2013-14
Sale of Products & Other Income (Net) 42028 43314
Profit / (Loss) before Interest,
Depreciation & Tax & Exceptional item 5501 5188
Less: Depreciation/ Amortisation 1758 1484
Less: Finance Cost 3170 3248
Profit / (Loss) before Tax &
Exceptional item 573 456
Less : Exceptional item 217 338
Profit / (Loss) before Tax 356 118
Less: Provision for Taxation
Current tax - -
Deferred Tax - -
Profit / (Loss) after Tax 356 118
Share of profits in associate
for current year - -
Share of losses of associate
for earlier years - -
Net Profit / (Loss) 356 118
Carried Forward to next year 356 118
* Consolidated accounts consist of standalone and overseas subsidiary
Companies.
Notes:
a) Previous year figures under different heads have been regrouped to
the extent necessary.
3. DIVIDEND:
In view of accumulated losses, the Directors regret their inability to
recommend any dividend.
4. TRANSFER TO RESERVES:
The profit in the standalone results have been carried over to next
year in view of accumulated losses of the earlier years. Therefore, no
amount could be transferred to General Reserve Account.
5. STANDALONE OPERATIONS:
The operational results for the year under review have improved. The
efforts of the company to correct the situation, proved meaningful but
because of the losses which have to be absorbed due to the correction,
the difference was marginal.
The disposal of non-profitable businesses and non-core assets reduced
the operational and fixed expenses, reduced the debt burden and made
the working capital more relevant to the remaining businesses. The
Company is now focused on its core business of manufacturing technical
agrochemicals.
Better operations due to improved raw material efficiencies,
implementation of cost saving measures and better working capital
management in the Agro Chemicals Division have nurtured the Company
back to a positive cash flow situation.
The outcome of the efforts of the Management is evident from the
results of the financial year 2014-15. The total income on standalone
basis during period under review increased to Rs. 420.28 crores against
the total income of Rs. 391.89crores (excluding income of sold out
business and leased unit) in the previous year. The net profit has
risen to Rs. 3.56 crores from a marginal profit of Rs. 1.18 crores in
the previous year.
It may be noted that to restructure the manpower in the Agrochemicals
unit at Derabassi, the company offered "Voluntary Retirement Scheme"
(VRS) to the employees. 36 employees voluntarily opted for retirement
and this reduced the operation costs. The expense on this account has
been booked under exceptional item and the result of this onetime cost
will be evident in the savings in the years to come.
6. OPERATIONS OF OVERSEAS SUBSIDIARIES:
Your Company has three overseas subsidiaries namely-SD AgChem (Europe)
NV, Sintesis Quimica, S.A.I.C, Argentina, and STS Chemicals (UK) Ltd.
During the year under review, the operations of the overseas
subsidiaries were as follows:
(i) The performance of SD Agchem (Europe) NV has improved due to the
improved business environment. The total income of this subsidiary was
Rs. 25.93 crores with net profit of Rs. 6.52 crores, in the period
under review.
SD Agchem (Europe) NV, the wholly owned subsidiary of the Company in
Belgium disposed off its 20% shareholding in Source Dynamics, LLC to
Yongnong Biosciences Co. Ltd., China to reduce part of its long term
liability.
(ii) Sintesis Quimica, S.A.I.C, Argentina (SQ) have shown slightly
improved performance due to initiation of the job work of various
multinational companies. This arrangement has reduced working capital
requirement. The matters of concern in this subsidiary Company is old
debt and challenge to meet the requirement of funds to pay installment
under the debt restructuring arrangement of Chapter XI.
In the period under review, the total revenue of this subsidiary stands
at Rs. 148.02 crores with a net profit of Rs. 1.73 crores.
(iii) STS Chemicals (UK) Limited does not have any operations, hence
not considered for the purpose of preparation of the Consolidated
Financial Statements. The non-inclusion of the same in the Consolidated
Financial Statements has no significant impact on the financial
position and on the operating results of the group.
The salient features of financial statements of subsidiaries/
associates/ joint ventures as per Section 129 of the Companies Act,
2013 forms part of the Annual Report.
The Company will make available separate audited financial statements
of the subsidiaries to any Member upon request. These financials are
however, posted on the website of the Company and will also be
available for inspection by any Member at the Registered Office.
The Company has also formulated a policy for determining material
subsidiaries as approved by the Board of Directors and may be accessed
on the Company's weblink http:// punjabchemicals.com/companypolicy.html
7. CONSOLIDATED RESULTS:
The consolidated accounts during the period under review show that the
total income has increased to Rs. 588.04 crores with a net profit of Rs.
14.20 crores as against the total income of Rs. 532.32 crores and net
profit of Rs. 0.96 crores in the previous period.
In accordance with the Companies Act, 2013 ("the Act") and Accounting
Standard (AS) - 21 on Consolidated Financial Statements read with AS -
23 on Accounting for Investments in Associates and AS - 27 on Financial
Reporting of Interests in Joint Ventures, the audited consolidated
financial statement is provided in the Annual Report.
8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
The Management Discussion and Analysis Report on Company's performance,
industry trend and other material changes with respect to the Company
and subsidiaries have been given separately in the Annual Report.
9. STATE OF AFFAIRS OF THE COMPANY:
The State of Affairs of the Company is presented as part of Management
Discussion and Analysis Report forming part of this Annual Report.
10. OUTLOOK:
The global economic environment in recent years has been challenging
with uncertainty. It is believed that the growth engine for the global
economy would be shifted from west to China and India, the emerging
manufacturing and consumption hubs. However, any significant change
will be a long drawn process.
Therefore, in the given scenario, barring the uncertainties that loom
over the industry, the Company expects a good business performance in
the agrochemicals sector in the next year. The steps being taken by the
government to give more impetus to agriculture sector and promoting the
manufacturing sector through "Make in India" programme should further
help the Company.
The new opportunities of toll manufacturing of Pharma intermediates and
other specialized and general chemicals are being explored for both the
divisions in Punjab.
The Management of the Company is optimistic about the current business
prospects and will take requisite steps as and when required.
11. FINANCE:
As explained earlier, the Company has taken several measures to prune
the overall debt burden by entering into Corporate Debt Restructuring
Scheme, disposing off the non-profitable business and non-core assets
and putting back the cash from the inflows into making the operations
of the Company more viable.
The Company, during the period under review has paid the installments
and interest which was due to the Banks, except Working Capital Demand
Loan, which is partially paid from the sale of few non-core assets. The
Company has not raised any additional borrowing during the year.
The Company's proposal for One Time Settlement (OTS) with State Bank of
India (SBI) has been accepted by the bank. As per the terms of OTS, the
Company has to pay Rs. 4,550 lacs and sale proceeds from 1,50,000
shares of the Company, pledged exclusively with SBI by one of the
promoters against total outstanding dues of Rs. 9,485 lacs (including
interest). Out of the said amount, Rs. 1,138 lacs has been paid by the
Company before March 31, 2015. The said OTS is subject to fulfilment of
conditions. The necessary adjustment in the books of account will be
carried out after compliance of all conditions as specified in said
OTS.
12. PUBLIC DEPOSITS:
The Company has not accepted or renewed any fixed deposits from the
public since the last two financial years.
As per the provisions of the new Companies Act, 2013, the Company has
repaid all the public deposits in time. Accordingly, there are no
outstanding deposits as on March 31,2015.
The management would like to sincerely thank all the depositors of the
Company for their faith and confidence in the Company for many years.
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL
a) Changes in the composition of the Board of Directors and other Key
Managerial Personnel:
i) During the year, Export Import Bank of India withdrew the nomination
of Shri Sheo Prasad Singh (DIN: 06493455) as a Director from the Board
of Directors of the Company and accordingly, he ceased to be the
Nominee Director of Export-Import Bank of India on the Board of the
Company w.e.f. December 1, 2014. The Board of Directors while taking
note of this withdrawal placed on record its deep sense of appreciation
for the services rendered by him during his tenure in the Company.
ii) Shri Ghattu Ramanna Narayan (DIN: 00020575) stepped down as the
Chairman during the meeting and as Director after the conclusion of the
Board Meeting held on May 28, 2015 due to his age and to spend time to
serve the people and society. The Board respected his decision. The
Board of Directors placed on record its deep sense of gratitude for his
vision, leadership and guidance during the long association of around
18 years with the Company. The Board acknowledged that his professional
guidance and insight on critical corporate strategies to manage the
Company was very valuable. The Board also appreciated his contribution
in the growth of the Company with his versatile experience, knowledge,
management leadership, advising the Board and the Managing Director
during the difficult time in the Company.
The Board of Directors took note of the recommendation of the
Nomination and Remuneration
Committee to seek his expert advice on a regular basis and appointed
him as "Chairman Emeritus".
All the Directors appreciated this recommendation and felt that he will
be an excellent guide to the PCCPL Family. Accordingly, the Directors
unanimously approved the said proposal.
iii) Acknowledging the contribution of Shri Mukesh Dahyabhai Patel
(DIN:00009605), Independent Director, in the working of the Board,
Committees and in the Company, his suggestions on various strategic
matters and active participation, the Board of Directors, at its
Meeting held on February 11, 2015 appointed him as the Vice Chairman of
the Company. The Board unanimously appointed Shri Mukesh Dahyabhai
Patel as the Chairman of the Board in its meeting held on May 28, 2015
after Shri Ghattu Ramanna Narayan stepped down as the Chairman of the
Board. All the Directors assured him full cooperation and congratulated
him on this elevation and wished him all the success during his tenure
as the Chairman in the Company. He thanked the Board Members for this
recognition and assured to fulfill his duties and discharge
responsibilities sincerely as the Chairman of the Company.
iv) Shri Shivshankar Shripal Tiwari (DIN: 00019058) resigned as a Whole
Time Director w.e.f. April 6, 2015 upon completing the term for which
his remuneration was approved by the Central Government and resigned as
a Director of the Company w.e.f. May 28, 2015 due to personal
engagements. The Board after consideration accepted his resignation in
its meeting held on May 28, 2015. The Board placed on record its deep
sense of appreciation and gratitude for the services and contribution
rendered by him during his tenure as a Whole Time Director and Director
since 2006 in the Company. The Board appreciated his extraordinary
contribution for the expansion of various businesses in the Company
during his long association with the Company.
v) The Nomination and Remuneration Committee keeping in view the
versatile experience and expertise in the banking matters, recommended
to the Board to appoint Shri Sheo Prasad Singh as an Additional
Director w.e.f. February 11, 2015. The Directors unanimously resolved
to appoint him as an additional Director on the Board of the Company.
Pursuant to Section 161(1) of the Companies Act, 2013 and the Articles
of Association of the Company, he shall hold office up to the date of
the ensuing Annual General Meeting. The Nomination and Remuneration
Committee and the Board of Directors also decided to recommend him as
Independent Director in place of Shri Ghattu Ramanna Narayan, who
resigned in the said meeting. Shri Sheo Prasad Singh fulfills the
criteria of Independence as prescribed in the Companies Act, 2013 and
the Listing Agreement. A requisite notice in writing alongwith deposit
from a member proposing him as a Non-Executive Independent Director has
been received and his appointment is being placed before the Members in
the ensuing Annual General Meeting. Your Board of Directors feel that
his specialized knowledge and experience will add value to the Company.
Therefore, recommended his appointment as an Independent Director for a
period (5) consecutive years upto the conclusion of the 44th Annual
General Meeting of the Company to be held in the calendar year 2020.
vi) The Nomination and Remuneration Committee recommended to the Board
to appoint Shri Shiv Shankar Shripal Tiwari as an Additional Director
w.e.f. May 28, 2015. The Board appreciated his services in the Company
and unanimously resolved to appoint him as an Additional Director in
the Company. Pursuant to Section 161(1) of the Companies Act, 2013 and
the Articles of Association of the Company, he shall hold office up to
the date of the ensuing Annual General Meeting. A requisite notice in
writing alongwith deposit from a member proposing him to appoint as a
Non-Executive Director has been received and his appointment is being
placed before the Members in the ensuing Annual General Meeting. Your
Board of Directors feels that his experience and versatile knowledge in
the business of the Company will be helpful to the Company, therefore,
recommends his appointment as Director liable to retire by rotation.
There was no other appointment or cessation of Key Managerial Personnel
during the financial year.
b) Independent Directors:
The Companies Act, 2013, provides for the appointment of Independent
Directors. Sub Section (10) of Section 149 provides that Independent
Directors shall hold office for a term of upto five (5) consecutive
years on the Board of a Company; and shall be eligible for
re-appointment on passing a special resolution by the shareholders of
the Company. Accordingly, three Independent Directors namely Shri
Ghattu Ramanna Narayan, Shri Mukesh Dahyabhai Patel and Shri Vijay
Dilbagh Rai were appointed by the shareholders in the last Annual
General Meeting. Further, Shri Ghattu Ramanna Narayan has resigned as
the Chairman and Director of the Company. Therefore, the Board of
Directors have decided to recommend at the Annual General Meeting to
appoint Shri Sheo Prasad Singh who meets with the criteria of
Independent Director to be appointed as the Independent Director of the
Company for a period of five years.
None of the Independent Directors will retire at the ensuing Annual
General Meeting.
c) Retirement by rotation:
In terms of Section 152 of the Companies Act, 2013 and the provisions
of the Articles of Association of the Company, Shri Avtar Singh (DIN:
00063569), Whole Time Director would retire by rotation at the
forthcoming Annual General Meeting. Shri Avtar Singh, being eligible,
has offered himself for re-appointment.
It may be noted that as per clause 173 (b) of the Articles of
Association of the Company, a Whole Time Director immediately on
retirement by rotation, shall continue to hold his office of Whole Time
Director and such reappointment as such Director shall not be deemed to
constitute a break in his appointment as Whole Time Director,
therefore, the Board recommends his appointment.
The Board of Directors recommends the appointment/ reappointment of
above mentioned Directors.
The brief resume and other details relating to the directors, who are
to be appointed/re-appointed, as stipulated under Clause 49 (VIII) (E)
of the Listing Agreement, are furnished in the Corporate Governance
Report forming part of the Annual Report.
Other details of all the Directors have been given in the Corporate
Governance Report attached to this Report.
d) Re-appointments / Approvals for Managing Director and Whole Time
Directors:
i) The Central Government vide its letter dated May 14, 2015 has
approved the re-appointment of Shri Shalil Shashi Kumar Shroff (DIN:
00015621) as the Managing Director for a period of three (3) years
w.e.f January 15, 2015 at a remuneration as approved by the
shareholders of the Company in their meeting held on September 23,
2014.
ii) The shareholders of the Company, on April 8, 2015 by means of
special resolution passed through Postal Ballot, have given their
approval for (a) increase in remuneration of Shri Avtar Singh, Whole
Time Director w.e.f. April 1,2015 to November 13, 2015 and (b) to fix
remuneration for the remaining period of his reappointment i.e. from
November 14, 2015 to November 13, 2017. The Company is in the process
of making an application to the Central government for its approval in
this regard.
e) Committees of the Board:
The Company's Board has constituted the required Committees prescribed
under the Companies Act and the Listing Agreement.
The composition of the Audit and Corporate Social Responsibility
Committees and Attendance in the meetings (wherever required) have been
provided in the Corporate Governance Report forming part of this Annual
Report.
14. LISTING WITH STOCK EXCHANGES:
The Company's shares continue to be listed at the National Stock
Exchange of India Limited and BSE Limited.
The Annual Listing fee for the financial year 2015-16 has been paid to
these Exchanges.
15. ENVIRONMENTAL MANAGEMENT AND POLLUTION CONTROL:
In pursuit of ensuring "No Pollution", the pollution control measures
remain the top priority in all units of the Company. The requisite
measures to adopt environmentally clean and for safe operations are
taken.
The local management of the factories continuously monitor operational
efficiencies, minimize consumption of natural resources and reduce
consumption of water. The initiatives to reduce waste and emissions
remain the main focus of the Production team. The employees are made to
aware about the need to sustain the environment on continuous basis.
Environment, Health and Safety (EHS) measures, as always, have been
given special emphasis.
16. WELFARE ACTIVITIES AND CORPORATE SOCIAL RESPONSIBILITY :
i) Welfare Activities :
The Company through SDS Memorial Trust has helped needy students and
donated to several charitable Institutions. These activities will be
increased with the improvement in the financial position of the
Company.
The Company continues to organize a 'Blood Donation Camp' in the memory
of Late Shri S.D. Shroff on 18th December every year. Around 51
employees donated blood this year.
ii) Corporate Social Responsibility :
The Board of Directors of the Company has on May 28, 2015 formulated
and approved a policy on "Corporate Social Responsibility" in
compliance with the provisions of Section 135 of the Companies Act ,
2013 and Schedule VII thereunder. The same is posted on the website of
the Company under weblink http://punjabchemicals.com/
companypolicy.html. This policy broadly defines the activities to be
undertaken by the Company to contribute to harmonious and suitable
development of the local areas near manufacturing sites and society at
large. The Committee comprises of Shri Shalil ShashiKumar Shroff, Shri
Mukesh Dahyabhai Patel, Capt. Surjit Singh Chopra (Retd.) and Smt.
Sindhu Seth. During the year under review, the Company has undertaken
certain activities as per the local requirement. As per one of the
interpretation on Rule 2 (f) of the Companies (Corporate Social
Responsibility Policy) Rules, 2014, the amount calculated to spend on
CSR activities amounts to Rs. 66,000/-. The Company will spend the said
amount in the current fiscal year as per the CSR Policy of the Company.
17. RESEARCH & DEVELOPMENT / QUALITY CONTROL:
Despite the shortage of funds, your Company continues to make need
based investment in R&D and quality control, to ensure its competitive
advantage.
The regular R&D activities continue in the laboratories of Agro
Chemicals and Pharma Division. The activities are undertaken to improve
upon the existing processes, decrease effluent load and to develop new
products and by-products.
18. INSURANCE:
The Company has taken adequate insurance policies for its assets
against the possible risks like fire, flood, public liability, marine,
etc.
19. EMPLOYEES AND INDUSTRIAL RELATIONS:
The Directors wish to place on record their appreciation for the
sincere and devoted efforts of the employees and the Management staff
during the difficult period in the Company. The Company maintained
healthy, cordial and harmonious industrial relations at all levels
through out the year.
20. DEPOSITORY SYSTEM:
M/s Alankit Assignments Ltd., Alankit Heights, 1E/13, Jhandewalan
Extension, New Delhi, are the Registrar and Share Transfer Agent of the
Company for the Physical as well as Demat shares. The members are
requested to contact the Registrar directly for any of their
requirements.
21. INFORMATION PURSUANT TO SECTION 134 OF THE COMPANIES ACT, 2013.
i) Extract of the Annual Return:
The information required under Section 134 (3) (a) of the Companies
Act, 2013 (the Act) read together with Section 92 (3) of the Act
regarding extract of the Annual Return is appended hereto as Annexure 1
and forms part of this Report.
ii) Number of Meetings of the Board:
The Board met five (5) times during the Financial Year 201415, the
details of which are given in the Corporate Governance Report that
forms part of this Annual Report. The intervening gap between any two
meetings was within the period prescribed by the Companies Act, 2013.
iii) Directors' responsibility statement:
Pursuant to the requirement under sub section 3 (c) of Section 134 of
the Companies Act, 2013, with respect to Directors' Responsibility
Statement, it is hereby confirmed that:
a) in the preparation of the annual accounts for the year ended March
31, 2015, the applicable accounting standards have been followed
alongwith proper explanation relating to material departures, if any;
b) the Directors have 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 affairs of
the Company as at March 31, 2015 and of the profit and loss of the
Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) the Directors have prepared the annual accounts of the Company on a
'going concern' basis;
e) the Directors has laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively; and
f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
iv) Declaration from Independent Directors:
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the Stock Exchanges. The same
has been received upon by the Company and placed before the Board in
its meeting held on May 28, 2015.
v) Policy on Directors' Appointment and Remuneration:
The current policy is to have an appropriate mix of executive and
independent directors to maintain the independence of the Board and
separate its function of governance and management. As on March
31,2015, the Board consists of 9 Members, 3 of whom are Executive
Directors and 3 are Independent Directors. The Board periodically
evaluated the need for change in its composition and size.
The Nomination and Remuneration Committee has formulated a Nomination
and Remuneration Policy under Section 178 (3) of the Companies Act,
2013 which lays down criteria for determining qualifications, positive
attributes and independence of a Director and remuneration for the
Directors, Key Managerial Personnel and senior management level
including the appointment of personnel one level below the Key
Managerial Personnel. The same is appended as Annexure2 and can be
assessed at the weblink http://punjabchemicals.com/ companypolicy.html.
vi) Auditors' Remarks:
a. Statutory Auditors:
The Company's Auditors have made the following qualifications in their
report on Consolidated
Financial Statements for the Financial Year ended March 31,2015;
- STS Chemicals (UK) Limited, 100% subsidiary of the Company has not
been considered for the purpose of preparation of the Consolidated
Financial Statements.
The Board of Directors are of the opinion that the aforesaid subsidiary
does not have any operations. Accordingly, the non-inclusion of the
same in the Consolidated Financial Statements has no significant impact
on the financial position and on the operating results of the Group.
There are few remarks given in the Annexure to the Auditors' Report
which are self-explanatory. Necessary actions are being taken on those
remarks and points wherever required.
b. Secretarial Auditor:
The Secretarial Audit Report for the financial year 2014-15 is annexed
to this Report as Annexure 3. The Secretarial Audit Report does not
contain any qualification, reservation or adverse remark.
vii) Particulars of loans, guarantees or investments under section 186:
Particulars relating to loans and guarantees or investments under
section 186 of the Companies Act, 2013 is provided in the Note 34 to
the standalone financial statement.
viii) Related Party Transactions:
All related party transactions that were entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business. During the year, the Company had not entered into
any contract / arrangement / transaction with related parties which
could be considered material in accordance with the policy of the
Company on materiality of related party transactions.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company's website at weblink
http://punjabchemicals.com/companypolicy. html.
Your Directors draw attention of the Members to Note no. 32 to the
standalone financial statements which sets out related party
disclosure.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a yearly basis for the transactions which are
of foreseen and repetitive nature. The transactions entered into
pursuant to the omnibus approval so granted are audited and a statement
giving details of all related party transactions is placed before the
Audit Committee and the Board of Directors for their approval on a
quarterly basis.
Form AOC-2 pursuant to clause (h) of sub-section 134 of the Companies
Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 is
enclosed as Annexure 4.
ix) Material changes and commitments, if any:
No event occurred between the end of the financial year and the date of
the Report which has the affect on the Financial Statements. However,
One Time Settlement (OTS) with State Bank of India (SBI) may affect the
Financial Statements upon fulfillment of conditions. Necessary
adjustment in the books of account will be carried out after compliance
of all conditions as specified in OTS.
x) Particulars regarding conservation of energy, etc.:
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo as stipulated under Section
134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies
(Accounts) Rules, 2014, is annexed herewith as Annexure 5 and forms
part of this Report.
xi) Risk Management:
Pursuant to Clause 49 of the Listing Agreement, the Company has
constituted a Risk Assessment Committee. The details of the Committee
and its terms of reference are set out in the Corporate Governance
Report, forming part of the Board's Report.
The Company manages, monitors and reports on the principal risks and
uncertainties that can impact its ability to achieve its strategic
objectives. The Company has formulated Risk Management Policy which is
posted at the website of the Company under weblink http://
punjabchemicals.com/companypolicy.html.
xii) Board Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of the directors individually, of the Chairman and of the
Board as a whole. The manner in which the evaluation has been carried
out has been explained in the Corporate Governance Report.
22. PARTICULARS OF EMPLOYEES:
In terms of the provisions of Section 197(12) of the Act read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, there is no employee of the Company
who draws remuneration in excess of the limits set out in the said
rules.
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is
annexed as Annexure 6.
23. WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy to report genuine concerns or
grievances. The Whistle Blower Policy has been posted on the website of
the Company and can be assessed at weblink
http://punjabchemicals.com/companypolicy.html. No such case has been
reported during the year under review.
24. INTERNAL FINANCIAL CONTROLS
The Company has built a mechanism to prevent frauds and a robust
internal controls with reference to the financial statements. These
controls were got tested from an Independent Agency in addition to the
Internal Auditor and no material weakness in the design of the system
or operations were observed. As a practice, the robust Internal
Financial Control environment will be maintained in the Company.
25. POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has set in place an Anti harassment policy in line with the
requirements of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 named as Policy on
'Prevention of Sexual Harassment at Workplace. Under this policy, an
appropriate complaint mechanism in the form of "Complaint Redressal
Committee" has been created in the Company for time-bound redressal of
the sexual harassment complaint made by the victim.
26. CEO/CFOCERTIFICATION:
In terms of Clause 49 (V) of the Listing Agreement, the Certificate
duly signed by Shri Shalil Shashikumar Shroff, Managing Director (CEO)
and Shri Vipul Joshi, Chief Financial Officer (CFO) of the Company was
placed before the Board of Directors along with the annual financial
statements for the year ended on March 31,2015, at its meeting held on
May 28, 2015. The said Certificate is also annexed to the Corporate
Governance Report.
27. AUDITORS:
At the Annual General Meeting (AGM) held on September 23, 2014, M/s S R
B C & Co. LLP., Chartered Accountants, Mumbai, (Membership No.: 49365)
were appointed as the Statutory Auditor of the Company to hold office
till the conclusion of the AGM to be held in the calendar year 2017. In
terms of the first proviso to Section 139 of the Companies Act, 2013,
the appointment of the auditors shall be placed for ratification at the
AGM of coming year. Accordingly, the appointment of M/s S R B C & Co.
LLP., Chartered Accountants, Mumbai, (Membership No.: 49365), as
Statutory Auditors of the Company, is placed for ratification by the
Shareholders. In this regard, the Company has received a certificate
from the auditors to the effect that if they are re-appointed, it would
be in accordance with the provisions of Section 141 of the Companies
Act, 2013.
Members are requested to consider their appointment on a remuneration
to be decided by the Board for the ensuing Financial Year i.e. 2015-16.
28. SECRETARIAL AUDITORS:
On the recommendation of the Audit Committee, the Board of Directors of
the Company had appointed M/s. P.S. Dua & Associates, Company
Secretaries (CP No. 3934) as the Secretarial Auditor of the Company for
the financial year 2014-2015, in terms of Section 204 of the Companies
Act, 2013 and Rules thereunder.
The Board upon recommendation of the Audit Committee has reappointed
M/s. P.S. Dua& Associates, Company Secretaries (CP No. 3934), as the
Secretarial Auditor of the Company for the financial year 2015-16.
29. COST AUDITORS:
The Board of Directors upon recommendation of the Audit Committee
appointed Mrs. Pushpa Khanna, Cost Accountant, Chandigarh and M/s
Khushwinder Kumar & Co. Cost Accountant, Jalandhar as Cost Auditors of
the Company for conducting audit of the cost accounts maintained by the
Company for the financial year 2015-16. They have submitted a
certificate of eligibility for the appointment.
The Audit Committee has nominated Mrs. Pushpa Khanna, Cost Accountant,
Chandigarh as the Lead Auditor of the Company.
In accordance with the provisions of Section 148 of the Act read with
the Companies (Audit and Auditors) Rules, 2014, the remuneration
payable to the Cost Auditors has to be ratified by the shareholders of
the Company. Accordingly, consent of the members is sought in the
ensuing Annual General Meeting.
For the year 2014-15, the due date for filing the Cost Audit Report is
September 27, 2015 and the same will be filed in due course. The Cost
Audit Report for the year 2013-14 was filed on September 24, 2014.
30. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:
Pursuant to the provisions of Section 125 of the Companies Act, 2013,
relevant amount which remained unclaimed and unpaid for a period of
seven years from the date it became due for payment, has to be
transferred to the Investor Education and Protection Fund (IEPF) by the
Company. No claim shall lie against the IEPF or the Company for the
amount so transferred prior to March 31, 2014, nor shall any payment to
be made in respect of such claims.
Pursuant to the provisions of Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying
with companies) Rules, 2012, the Company has uploaded the details of
unpaid and unclaimed amount lying with the Company as on September 23,
2014 (date of last Annual General Meeting) on the Company's website of
the Company at weblink http:// punjabchemicals.com/
unclaimedunpaidamount.html, as also on the Ministry of Corporate
Affairs' website.
31. CORPORATE GOVERNANCE:
The Company strives to maintain the required standards of corporate
governance and adhere to the corporate governance requirements set out
by SEBI. The Company has complied with the corporate governance code as
stipulated under the Listing Agreement with the stock exchanges. The
Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms integral part of this Report.
The requisite certificate from the Practicing Company Secretary
confirming compliance with the conditions of corporate governance is
attached to the Report on Corporate Governance
32. GENERAL:
Your Directors state that:
a) No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company's
operations in future.
b) There is no change in the nature of business of the Company.
33. ACKNOWLEDGEMENT:
The Directors wish to place on record their appreciation for the
efficient and loyal services rendered by each and every employee of the
Company. The Directors would also like to thank the employee unions,
shareholders, fixed deposit holders, customers, dealers, suppliers,
bankers, and all other business associates for their faith reposed in
the Company even at the difficult times.
For and on behalf of the Board of Directors
MUKESH D PATEL SHALIL S SHROFF
Place: Mumbai Vice Chairman Managing Director
Date: May 28, 2015 DIN : 00009605 DIN : 00015621
Mar 31, 2014
Dear Members,
The Directors are pleased to present to you, the Thirty Eighth (38th)
Annual Report, on the business and operations of the Company along with
the Audited standalone and the consolidated financial statements for
the financial year ended on 31st March, 2014.
FINANCIAL HIGHLIGHTS:
The performance of the Company for the financial year under review is
summarized below:
(Rupees in Lacs)
Consolidated*
Particulars 2013-14 2012-13
Sale of Products & Other Income (Net) 53232 24915
Profit / (Loss)before Interest,
Depreciation & Tax & Exceptional item 5851 733
Less: Depreciation/Amortisation 1616 804
Less: Finance Cost 3465 1929
Profit / (Loss) before Tax &
Exceptional item 770 (2000)
Less: Exceptional income/ (expense) (338) 737
Profit / (Loss) before Tax 432 (1263)
Less: Provision for Taxation
Current tax - -
Deferred Tax - -
Profit / (Loss) after Tax 432 (1263)
Share of profits in associate for
current year 110 -
Share of losses of associate for
earlier years (446) -
Net Profit / (Loss) 96 (1263)
Carried forward to next year 96 (1263)
(Rupees in Lacs)
Standalone
Particulars 2013-14 2012-13
Sale of Products & Other Income (Net) 43314 20441
Profit / (Loss)before Interest,
Depreciation & Tax & Exceptional item 5188 1509
Less: Depreciation/Amortisation 1484 717
Less: Finance Cost 3248 1736
Profit / (Loss) before Tax &
Exceptional item 456 (944)
Less: Exceptional income/ (expense) (338) 737
Profit / (Loss) before Tax 118 (207)
Less: Provision for Taxation
Current tax - -
Deferred Tax - -
Profit / (Loss) after Tax 118 (207)
Share of profits in associate for
current year - -
Share of losses of associate for
earlier years - -
Net Profit / (Loss) 118 (207)
Carried forward to next year 118 (207)
* Consolidated financial statements for the financial year ended 31st
March, 2014 form part of the Annual Report and Accounts of its
Subsidiary Companies.
Notes:
a) Current period figures are not comparable with the previous year, as
the current period is for 12 months as against the previous period of 6
months.
b) Previous period figures under different heads have been regrouped to
the extent necessary.
OPERATIONS:
The year under review was very eventful for the Company. The Management
took several steps to stop the losses and nurture back the operations
to a positive cash flow situation. This was achieved largely by selling
of losing businesses. The focus during the year was on the Agro
Chemicals Division at Derabassi. The new strategic alliances with elite
customers and successful commissioning of fungicide plant has boosted
the morale of the Company and vastly improved the added value. Further,
the results were possible by better efficiencies, cost saving measures
taken, improved supply chain and working capital management in the Agro
Chemicals Division. The allocation of working capital to Pharma and
Industrial Chemicals Division was limited, which had an impact on the
overall performance of the Company.
The Corporate Debt Restructuring (CDR) scheme approved by the Corporate
Debt Restructuring Empowered Group has been implemented and
security/charge has been created over all the assets, immovable as well
as movable, of the Company in the interest of the Lenders in accordance
with the CDR scheme. Also as informed earlier, the Management was
reviewing its entire business portfolio and exploring to dispose off
non-core assets or less performing assets and businesses to focus on
the core business of manufacturing of agrochemicals technical and
channelize the funds for producing profitable products. These steps
will increase the viability of the Company in the long term and help to
retire part of its debt obligations under the CDR Mechanism.
In this endeavor, during the year, the Company sold its Agro
Formulation Division alongwith all its assets situated at Ratnagiri and
Baroda, which was facing challenges of limited expansion opportunities
and growth prospects due to severe competition and shortage of working
capital. The Company leased out its Tarapur Unit of Industrial
Chemicals Division which was operating below breakeven level due to
working capital shortage and slack in demand for its finished products.
The Management has also accelerated negotiations with Potential Buyers
of Pune Unit of Industrial Chemicals Division and Office building
situated at Mumbai. The approvals of the shareholders and CDR Cell have
already been obtained for these transactions.
In view of the above scenario, the total income of the Indian
Operations during period under review was at Rs. 433.14 crores with a
meagre net profit of Rs. 1.18 crores as against the total income of Rs.
204.41crores and a net loss of Rs. 2.07 crores in the corresponding
previous year of six months. The Management of the Company expects that
the disinvestment of non-profitable businesses and non-core assets will
help the Company to reduce its operational fixed expenses, prune its
debt burden and plough back the additional cash flow into the main
operations of the Company. The impact of the same should be visible in
the current financial year.
The Company has offered Voluntary Retirement Scheme (VRS) to the
employees of its Tarapur Unit, which has been given on lease to UPL
Limited. All the employees have voluntary opted to seek the retirement.
The total expense of compensation of Rs. 388 Lacs has been provided in
the accounts as an exceptional item.
OVERSEAS BUSINESS AND CONSOLIDATED RESULTS:
The working of the overseas subsidiaries of the Company did not improve
as envisaged by the Management. Sintesis Quimica, Argentina (SQ)
continued to make losses in the period under review due to shortage of
working capital and local environment. As informed earlier that this
Company filed an application of Reorganization of Debt with the
Argentinean authority. We are now informed that the Argentinean Court
has approved the scheme of reorganization of debt. The Management feels
that SQ will now work smoothly after these orders subject to the
availability of the required Working capital.
In the period under review, the total revenue of this subsidiary stood
at Rs. 92.25 crores with a net loss of Rs. 7.63 crores.
During the period under review, SD Agchem (Europe) NV also approached
its local Banks for approval of the Debt Restructuring Scheme. The
Company has remitted Rs. 39 lacs to SD Agchem (Europe) as Promoters''
contribution for debt restructuring as per the requirement of local
Banks. The total income of this subsidiary stood at Rs. 15.86 crores
with net loss of Rs. 0.48 crores.
The Management of the Company is exploring ways to reduce losses in
these subsidiaries and preparing a strategy for their revival.
The total income of the Company in the consolidated accounts during the
period under review was Rs. 532.32 crores with net profit of Rs. 0.96
crores as against the income of Rs. 249.15 crores and net loss of Rs.
12.63 crores in the previous period of 6 months.
DIVIDEND:
In view of accumulated losses of the previous years, the Directors
regret their inability to recommend any dividend.
OUTLOOK:
Your Company has a specialized product portfolio of agrochemicals which
are covered by strategic alliances with a few elite customers. Barring
the uncertainties that loom over the Agrochemical industry, the Company
expects strong business performance in this sector.
In addition, new opportunities in Pharma, Industrial Chemicals and
specialized bio-products businesses will improve the prospects of the
Company.
The Management is optimistic about the business prospects and taking
requisite steps as and when the situation arises.
SUBSIDIARY COMPANIES:
As on 31st March, 2014, your Company has only three subsidiaries
namely- STS Chemicals (UK) Ltd.; Sintesis Quimica, Argentina, S.A.I.C
and SD AgChem (Europe) NV.
The consolidated financial results of the Company include the financial
results of the Subsidiary Companies as mentioned in the Notes to
Accounts of the Consolidated Financial Statements.
Pursuant to the provision of Section 212 (8) of the Companies Act,
1956, the Ministry of Corporate Affairs vide its General Circular No.
2/2011 dated 8th February, 2011, has granted general exemption from
attaching the Balance Sheet, Statement of Profit and Loss and other
documents of the subsidiary companies with the Balance Sheet of the
Company. The Board of Directors in its meeting held on 29th May, 2014
has given its consent for not attaching the Annual Accounts of its
subsidiaries with the accounts of the Company. The statement containing
brief financial details of the Company''s subsidiaries for the financial
year ended 31st March, 2014 is included in the Annual Report. The
Company will provide a copy of separate annual accounts in respect of
each of its subsidiary to any shareholder of the Company who asks for
it and the said annual accounts will also be kept open for inspection
at the Registered Office of the Company and that of the respective
Subsidiary Companies during business hours.
The consolidated Financial Statements prepared in accordance with
Accounting Standard 21 of the Institute of Chartered Accountants of
India presented in this Annual Report includes the financial
information of the Subsidiary Companies. The statement pursuant to
Section 212 of the Companies Act, 1956 relating to the Subsidiary
Companies is also included in this Annual Report.
FINANCE:
Inadequacy of working capital continued to be a great concern for the
Management of the Company. The Management has taken various steps, as
detailed in the foregoing paragraphs and also in the Management
Analysis Report to improve the liquidity position of the Company by way
of disposing of non-core assets and non profitable businesses.
As informed in the last year Annual Report that the Company had
restructured its secured term loans and working capital loans under the
scheme of CDR. However, no additional funds were sanctioned to the
Company for operational purposes or to fund the working capital
required to run the operations. Therefore, during the period under
review, the Company continued to plough back its cash inflows generated
from the operations into the working of the Company.
The payment of interest & instalments under the CDR scheme has also
been started from June, 2013. This has posed additional stress on the
financials of the Company. The Management expects that this situation
should improve in the next financial year.
FIXED DEPOSITS:
The Company has not accepted or renewed any fixed deposits from the
public since the last financial year. The Company has repaid all the
fixed deposits matured and due during the period in time. The total
outstanding deposits as on 31st March, 2014 amounts to Rs. 27.95 lacs.
As on 31st March, 2014, the deposits amounting to Rs. 1.00 lacs
remained unclaimed by 2 depositors (previous year Rs. 3.16 lacs by 4
depositors). The Company has sent reminders to these depositors to
complete the procedural formalities for repayment.
The management would like to thank all the depositors for their faith
and confidence reposed in the Company.
LISTING WITH STOCK EXCHANGES:
The Company''s shares continue to be listed at the National Stock
Exchange of India Limited and Bombay Stock Exchange Limited.
The Annual Listing fee for the financial year 2014-15 has been paid to
these Exchanges.
INSURANCE:
The Company has taken adequate insurance policies for its assets
against the possible risks like fire, flood, public liability, marine,
etc.
ENVIRONMENTAL MANAGEMENT AND POLLUTION CONTROL:
The environment management and pollution control are the foremost
priority in all the units of the Company. Due importance is also given
on adopting environmentally clean and safe operations.
The Management of the Company is very conscious and takes adequate
steps to reduce waste generation and re-processing of the waste
material, wherever possible. Multi effect evaporators have been
installed in both the units in Punjab.
EMPLOYEES AND INDUSTRIAL RELATIONS:
Directors wish to place on record their appreciation for the sincere
and devoted efforts of the employees and the Management staff at all
levels.
The industrial relations at all sites of the Company remained cordial
throughout the year.
CORPORATE SOCIAL RESPONSIBILITY:
The Company continues to organize a ''Blood Donation Camp'' in the memory
of Late Shri S.D. Shroff on 18th December every year. Around 62
employees donated blood this year. SDS Memorial Trust has also helped
few of the needy students, gave donations for religious places and
other Charitable Institutes. These activities will be increased upon
improvement in the financial position of the Company.
RESEARCH & DEVELOPMENT/QUALITY CONTROL:
Inspite of shortage of funds, your Company continues to make need base
investment in R&D considering it as a source of competitive advantage.
The regular R&D activities are carried out in the laboratories of Agro
Chemicals Division and Pharma Division. The activities are taken to
improve upon the existing processes, decrease effluent load and to
develop new products and by-products. Environment, Health and Safety
(EHS) considerations have been given special emphasis in the process
improvement activities.
DIRECTORS:
Section 161(1) read with section 149 of the Companies Act, 2013 and the
Articles of Association of the Company, Smt. Sindhu Seth was appointed
as an Additional Director designated as a Woman Director w.e.f. 29th
May, 2014 and she shall hold office up to the date of the ensuing
Annual General Meeting. The Company has received requisite notice in
writing from a member proposing Smt. Sindhu Seth for appointment as a
Woman Director, liable to retire by rotation, at the ensuing Annual
General Meeting of the Company.
In terms of the Articles of Association of the Company, Capt. S.S
Chopra (Retd.) Director will retire by rotation at the ensuing Annual
General Meeting of the Company and being eligible, offer himself for
re-appointment.
The Board of Directors recommends the appointment/re- appointment of
above mentioned Directors.
Further, in compliance with the provisions of Clause 49 of the Listing
Agreement entered into with the Stock Exchanges and the Companies Act,
1956, Shri G. Narayana, Shri M.D Patel and Shri Vijay Rai were
designated as Independent Directors of the Company. Now, pursuant to
the new provisions of Section 149 of the Companies Act, 2013, which
came into effect from 1st April, 2014, every listed public Company is
required to have atleast one-third of the total number of Directors as
Independent Directors, who are not liable to retire by rotation and
shall hold office for a term upto five (5) consecutive years on the
Board of a Company and shall be eligible for re-appointment for another
term of upto five (5) consecutive years on passing of a special
resolution by the Company. Therefore in view of the new provisions, the
Board recommends the appointment of Shri G. Narayana, Shri M.D Patel
and Shri Vijay Rai as Independent Directors of the Company at the
ensuing Annual General Meeting for a term of five (5) consecutive years
effective from the date of the ensuing Annual General Meeting till 43rd
Annual General Meeting to be held in the calender year 2019. The
Company has received notices from members in writing pursuant to
Section 160 of the Companies Act, 2013 signifying their intention to
propose the candidature of Shri G. Narayana, Shri M.D Patel and Shri
Vijay Rai.
The Company has received declarations from these Directors confirming
that they meet with the criteria of independence as prescribed both
under sub-section (6) of Section 149 of the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the Stock Exchanges. In the
opinion of the Board, each of these Directors fulfil the conditions
specified in the Act and the Rules framed thereunder for appointment as
Independent Director.
The brief resume and other details relating to the directors, who are
to be re-appointed, as stipulated under Clause 49 (IV) (G) of the
Listing Agreement, are furnished in the Corporate Governance Report
forming part of the Annual Report.
DEPOSITORY SYSTEM:
M/s Alankit Assignments Ltd., 2E/21, Anarkali Market, Jhandewalan
Extension, New Delhi, are the Registrar and Share Transfer Agent of the
Company for the Physical as well as Demat shares. The members are
requested to contact the Registrar directly for any of their
requirements.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.
i) PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC.
The information required under Section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 with respect to energy
conservation is appended hereto and forms part of this Report.
ii) PARTICULARS OF EMPLOYEES
The information under Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Amendment Rules, 2011 is
not required to be attached with this report, as none of the employees
is covered under these rules.
iii) RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
a) in the preparation of the annual accounts for the year ended March
31, 2014, the applicable accounting standards read with requirements
set out under Schedule VI to the Companies Act, 1956, have been
followed and there are no material departures from the same;
b) the Directors have 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 affairs
of the Company as at March 31, 2014 and of the profit of the Company
for the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts of the Company on a
''going concern'' basis
iv) CEO/CFO CERTIFICATION:
In terms of Clause 49 (V) of the Listing Agreement, the Certificate
duly signed by Shri Shalil Shroff, Managing Director (CEO) and Shri
Vipul Joshi, Chief Financial Officer (CFO) of the Company was placed
before the Board of Directors along with the annual financial
statements for the year ended on 31st March, 2014, at its meeting held
on 29th May, 2014. The said Certificate is also annexed to the
Corporate Governance Report.
COST AUDIT:
The Board of Directors upon recommendation of the Audit Committee
appointed Mrs. Pushpa Khanna, Cost Accountant, Chandigarh and M/s
Khushwinder Kumar & Co., Cost Accountant, Jalandhar as Cost Auditors of
the Company for conducting audit of the cost accounts maintained by the
Company for the financial year 2014-15. They have submitted a
certificate of eligibility for the appointment.
The Audit Committee has nominated Mrs. Pushpa Khanna, Cost Accountant,
Chandigarh as the Lead Auditor of the Company.
In accordance with the provisions of Section 148 of the Act read with
the Companies (Audit and Auditors) Rules, 2014, the remuneration
payable to the Cost Auditors has to be ratified by the shareholders of
the Company. Accordingly, consent of the members is sought for passing
an Ordinary Resolution as set out at in the Notice for ratification of
the remuneration payable to the Cost Auditors for the financial year
ending March 31, 2015.
For the year 2013-14, the due date for filing the Cost Audit Report is
30th September, 2014 and the same will be filed in due course. The Cost
Audit Report for the year 2012-13 was filed on 28th September, 2013.
AUDITORS'' REPORT:
The Company''s Auditors have made the following qualifications in their
report on Consolidated Financial Statements for the Financial Year
ended March 31, 2014;
i) STS Chemicals (UK) Limited, 100% subsidiary of the Company, has not
been considered for the purpose of preparation of the Consolidated
Financial Statements.
ii) Effect of investment in associate company on the financial position
and operating results of the group, as required by Accounting Standard
(AS) 23, ''Accounting for Investment in Associates in Consolidated
Financial Statements'' has been considered in the Consolidated Financial
Statements based on the unaudited management certified financial
statements.
The Board of Directors are of the opinion that the aforesaid subsidiary
does not have any significant operations. Accordingly, the non-
inclusion of the same in the Consolidated Financial Statements has no
significant impact on the financial position and on the operating
results of the Group. The management believes that there would not be
any material impact on the consolidated financial statements based on
management certified accounts of the associate concern.
The Auditors have also given ''emphasis of matter'', and not
qualification, in their report in Standalone and Consolidated financial
statements. The Company is taking required steps in this regard.
There are few remarks given in the Annexure to the Auditors'' Report
which are self explanatory. Necessary actions are being taken on those
remarks and points wherever required.
AUDITORS:
The term of M/s S.R. Batliboi & Company LLP, Chartered Accountants, as
the Statutory Auditors of the Company will expire at the conclusion of
the ensuing Annual General Meeting of the Company. However, due to
certain internal restructuring in their LLP, M/s S.R. Batliboi &
Company LLP, Chartered Accountants have given a notice in writing of
their un-willingness to continue as the Statutory Auditors upon the
conclusion of the ensuing Annual General Meeting.
Therefore, upon recommendation from the Audit Committee, the Board has
proposed the appointment of S R B C & Co. LLP as Statutory Auditors of
the Company for a period of three (3) years. Accordingly, the
appointment of Statutory Auditors is proposed to the Members in the
Notice of the forthcoming AGM for a period of three (3) years
commencing from the conclusion of the forthcoming AGM till the
conclusion of 41st AGM, subject to ratification of their appointment at
every AGM by the Members.
The Company has received letter from S R B C & Co. LLP, Chartered
Accountants, confirming their eligibility to be appointed as Auditors
under the relevant provisions of Chapter X of the Companies Act, 2013
read with the Companies (Audit and Auditors) Rules, 2014. Further the
proposed appointment will be within the limits under Section 141(3)(g)
of the Companies Act, 2013 and that they are not disqualified for
appointment.
Members are requested to consider their appointment on a remuneration
to be decided by the Board for the ensuing Financial Year i.e. 2014-15.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:
Pursuant to the provisions of Section 205A(5) and 205C of the Companies
Act, 1956, relevant amounts which remained unpaid or unclaimed for a
period of seven years have been transferred by the Company, from to
time to time on due dates, to the Investor Education and Protection
Fund (IEPF). No claim shall lie against the IEPF or the Company for the
amounts so transferred prior to 31st March, 2014, nor shall any payment
to be made in respect of such claims.
Pursuant to the provisions of Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying
with companies) Rules, 2012, the Company has uploaded the details of
unpaid and unclaimed amount lying with the Company as on 4th September,
2013 (date of last Annual General Meeting) on the Company''s website
(www.punjabchemicals.com).
CORPORATE GOVERNANCE:
The Company strives to maintain the required standards of corporate
governance and adhere to the corporate governance requirements set out
by SEBI. The Company has complied with the Corporate Governance code as
stipulated under the Listing Agreement with the stock exchanges. The
Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms part of the Annual Report.
The requisite certificate from the Practicing Company Secretary
confirming compliance with the conditions of corporate governance as
stipulated under the aforesaid Clause 49, is attached to the Report on
corporate governance The Management Discussion and Analysis Report as
required under the Listing agreements with the Stock Exchange is
annexed and forms an integral part of the Director''s Report.
ACKNOWLEDGEMENT:
The Directors wish to convey their appreciation to all of the Company''s
employees for their enormous personal efforts as well as their
collective contribution to the Company''s performance. The Directors
would also like to thank the employee unions, shareholders, fixed
deposit holders, customers, dealers, suppliers, bankers, and all the
other business associates for their continuous support given to the
Company and their confidence in its management.
For and on behalf of the Bord of Directors
G.NARAYANA
Chairman
Place:Mumbai
Date:May 29,2014
Mar 31, 2013
Dear Members,
The Board of Directors hereby presents the 37th Annual Report on the
business and operations of your Company along with the standalone and
consolidated financial statements for the financial year ended on 31st
March, 2013 (comprising of 6 months period from 1st October, 2012 to
31st March, 2013).
FINANCIAL HIGHLIGHTS :
The performance of the Company for the financial year under review is
summarized below:
(Rupees in Lacs)
Consolidated* Standalone
Particulars 2012-13 2011-12 2012-13 2011-12
Sale of Products &
Other Income (Net) 24915 101524 20441 54894
Profit / (Loss)
before Depreciation
& Tax & Exceptional
item (1196) 460 (227) (4618)
Depreciation /
Amortisation 804 8460 717 1991
Profit /
(Loss) before
Tax & Exceptional item (2000) (8000) (944) (6609)
Exceptional income/
(expense) 737 (1956) 737 (2362)
Profit / (Loss) before Tax (1263) (9956) (207) (8971)
Less: Provision
for Taxation
Current tax 757
Deferred Tax
Profit / (Loss) after Tax (1263) (10713) (207) (8971)
Adjustment of tax
relating to earlier years (1) 16
Net Profit / (Loss) (1263) (10712) (207) (8987)
Profit available
for Appropriation (1263) (10712) (207) (8987)
Carried forward
to next year (1263) (10712) (207) (8987)
* Consolidated financial statements for the financial year ended 31st
March, 2013 form part of the Annual Report and Accounts of its
subsidiary Companies.
Notes:
a) Current period figures are not comparable with the previous year, as
the current period is for 6 months as against the previous year of 18
months.
b) Previous period figures under different heads have been regrouped to
the extent necessary.
OPERATIONS:
It may be noted that various initiatives taken by the management,
detailed in the previous Annual Report, have produced results. The
Company during the year continued to focus on better efficiencies, cost
saving measures, improved supply chain and working capital management.
The management also brought the focus back on Agro-chemicals technical
manufacture, the backbone of the Company''s business. The Company was
able to increase revenues by new strategic alliances with elite
customers and optimum utilization of the production capacity of Agro
Chemicals Division. However, the working capital constraints still
continued to cast its shadow in the year under review.
Amid various constraints, the Company has successfully commissioned
another ''Fungicide plant'' in Agro Chemicals Division of the Company
with the technical support and buy back arrangement from one of the
renowned Multinational Company in the month of March, 2013. The first
lot of the finished product from this plant has been dispatched in May,
2013. The Company has projected a business of around Rs. 180 crores
from this contract in the next three years. The successful
implementation of this plant is a major morale booster for the Company.
The total income of the Indian Operations in the six months period
under review was at Rs. 204.41crores with a net loss of Rs. 2.07 crores
as against the total income of Rs. 548.94 crores and a net loss of Rs.
89.87 crores in the previous year of eighteen months (this is after
booking exceptional expenses and other provisions). The management of
the Company has been endeavouring to run all the plants situated at
different locations with more focus on Agro Chemicals Division. The new
fungicide and other profitable existing products in this division are
expected to strengthen the working of the Company and will add more
value to its business.
The Management is also looking for an opportunity to dispose off some
of the non-core assets or less performing assets or businesses in order
to reduce the debt of the Company. This will strengthen the revival of
the Company. l The Members will recall that in view of the poor
financial results of the previous year, the Company had filed a report
with the Board for Industrial and
Financial Restructuring (BIFR) under Section 23 of the Sick Industrial
Companies (Special Provisions) Act, 1985 informing about the erosion of
net worth and potential sickness of the Company. The Company has also
filed with BIFR a statement of causes of erosion of net worth and
remedial measures taken / to be taken for revival after seeking the
approval of the Members in the Extra-Ordinary General Meeting held on
29th December, 2012. As already mentioned, the Management of the
Company with all its diligence and resources is trying to streamline
the working of the Company.
OVERSEAS BUSINESS AND CONSOLIDATED RESULTS :
The operations of the overseas subsidiary companies were adversely
affected during the period. This was mainly due to financial
constraints and the geographical environment of the countries of
operations.
As the members were briefed in the last Annual Report that the
operations of Sintesis Quimica, Argentina (SQ), one of the overseas
subsidiary Company, had been seriously affected by unfavourable
government policies. The scenario has not changed in the six months
under review. In this period, the total revenue of this subsidiary
stood at Rs. 49.07 crores with a net loss of Rs. 9.77 crores.
During the period under review, the total revenue of SD Agchem (Europe)
NV stood at Rs. 2.07 crores with net loss of Rs. 1.18 crores.
The Company is weighing some of the strategic proposals to streamline
the working in these subsidiary Companies.
The total income of the Company in the consolidated accounts during the
period under review was Rs. 249.15 crores with net loss of Rs. 12.63
crores as against the income of Rs. 1015.24 crores and net loss of Rs.
107.12 crores in the previous 18 months period.
DIVIDEND :
In view of loss during the period under review and accumulated losses
of previous years, the Directors regret their inability to recommend a
dividend.
OUTLOOK :
The Company has the facilities of manufacturing technical and branded
formulations of agro chemicals business. In addition, Pharma,
Industrial
Chemicals and specialized bio-products add to its business prospects.
Further, the Company has a comprehensive portfolio with strong brand
and a wide distribution network.
As per one of the reports of ASSOCHAM, the agrochemicals sector in
India is likely to grow at 15 percent annually and cross Rs 25,000
crores mark by 2015. Therefore, India''s Agro-chemical industry has huge
potential and immense growth opportunities. Hence, we expect improved
performance in the local market in the coming year.
However, due to the subdued European market, exchange rate fluctuation
in Rupee vis-Ã -vis Euro and USD, increased prices of major raw
materials, adverse operating and financial position (shortage of
working capital) full recovery continues to be a matter of concern for
the Company. The Management however, is optimistic about the business
prospects and taking steps to capitalize the available opportunities.
CHANGE IN THE REGISTERED OFFICE :
The Registered Office of the Company has been shifted to S.C.O : 183,
First Floor, Sector - 26 (East), Madhya Marg, Chandigarh 160 019 we.f
1st April, 2013, as approved by the Board of Directors of the Company
in their meeting held on 11th February, 2013.
SUBSIDIARY COMPANIES :
The Company has only three subsidiaries as on 31st March, 2013 namely-
STS Chemicals (UK) Ltd.; Sintesis Quimica, Argentina, S.A.I.C and SD
AgChem (Europe) NV.
The consolidated financial results of the Company include the financial
results of the Subsidiary Companies as mentioned in the Notes to
Accounts of the
Consolidated Financial Statements.
Pursuant to the General Circular No. 2/2011 dated 8th February, 2011
issued by the Ministry of Corporate Affairs, general exemption has been
granted to the Companies for not attaching the Balance sheet, Profit &
Loss Account and other documents of subsidiary Companies, with the
Company''s accounts.
The Board of Directors in its meeting held on 29th May, 2013 has given
its consent for not attaching the Annual Accounts of its subsidiaries
with the accounts of the Company. Accordingly, Members of the Company
who are interested in obtaining annual accounts of the subsidiary
companies may write to the Company Secretary at the Registered Office
of the Company. This document will also be available for inspection by
the Members of the Company at the Company''s Registered Office and also
at the Registered Offices of the concerned subsidiary Companies during
business hours. The Consolidated Financial Statements prepared in
accordance with Accounting Standard 21 of the Institute of Chartered
Accountants of India presented in this Annual Report includes the
financial information of the subsidiary Companies. The statement
pursuant to Section 212 of the Companies Act, 1956 relating to the
subsidiary Companies is also included in this Annual Report.
FINANCE:
The debt recast of Secured Term Loans amounting to Rs. 123.33 crores
and Working Capital loans amounting to Rs. 201.30 crores, under the
Corporate Debt Restructuring route during the last year, saved interest
and gave some relief to cashflow due to the extended repayment
obligations on Term Loans along with two years moratorium on interest.
However, non availability of the required additional working capital
restricted Company''s operational activities.
The execution of the legal documents with respect to the revised limits
under the Corporate Debt Restructuring mechanism is at an advance
stage.
FIXED DEPOSITS :
The Company has not accepted or renewed any fixed deposits from the
public during the period under review. However, the Company has repaid
all the fixed deposits matured and due during the period, and hence,
the amount of Fixed Deposits as on 31st March, 2013 was reduced to Rs.
144.52 lacs (previous year Rs. 275 lacs). The Company will continue to
repay the matured deposits on timely basis to all the depositors. The
deposits amounting to Rs. 3.16 lacs remained unclaimed by 4 depositors
as on 31st March, 2013 (previous year Rs. 17.28 lacs by 25 depositors).
The Company has sent reminders to these depositors to complete the
procedural formalities for repayment. The management would like to
thank all the depositors for their faith and confidence reposed in the
Company.
LISTING WITH STOCK EXCHANGES :
The Company''s shares continue to be listed at the National Stock
Exchange of India Limited and Bombay Stock Exchange Limited. The
Annual Listing fee for the financial year 2013-14 has been paid to
these Exchanges.
INSURANCE:
The Company continues to carry adequate insurance cover for its assets
against the possible risks like fire, flood, public liability, marine,
etc.
ENVIRONMENTAL MANAGEMENT AND POLLUTION CONTROL:
Your Company is conscious of the importance of environmentally clean
and safe operations. The environment management and pollution control
are the foremost priority in all the units of the Company. Accordingly,
the efforts are made for the reduction of the waste generation and
re-processing of the waste material, wherever possible. Multi effect
evaporators have been installed in both the units in Punjab.
EMPLOYEES AND INDUSTRIAL RELATIONS:
Your Company would like to acknowledge the contributions of each and
every employee in helping the Company to attain its business goals. The
industrial relations at all sites of the Company remained cordial
throughout the year.
CORPORATE SOCIAL RESPONSIBILITY:
The Company continues to organize a ''Blood Donation Camp'' in the memory
of Late Shri S.D. Shroff on 18th December every year. This year around
61 people donated blood. SDS Memorial Trust has also helped few of the
needy students. The management and employees of the Company always give
due importance to Corporate Social Responsibility activities. These
activities will be increased upon improvement in the financial position
of the Company.
RESEARCH & DEVELOPMENT / QUALITY CONTROL:
Inspite of shortage of funds, your Company continues to make need based
investment in R&D considering it as a source of competitive advantage.
The regular R&D activities are carried out in the laboratories of Agro
Chemicals Division and Pharma Division. The activities are taken to
improve upon the existing processes, decrease effluent load and to
develop new products and by-products. Environment, Health and Safety
(EHS) considerations have been given special emphasis in the process
improvement activities.
DIRECTORS:
Shri Jagdish R Naik, Non Executive Director has resigned from the Board
we.f 30.04.2013 owing to his other pressing professional engagements.
The Board of Directors acknowledged his outstanding services and placed
on record his contribution in advancement of the Company, guidance on
critical financial and corporate matters and role played in formulating
financial restructuring strategies.
During the year under review, the Export- Import Bank of India withdrew
the nomination of Shri R.W. Khanna and nominated Shri S.P. Singh,
Advisor, EXIM Bank in his place on the Board of the Company we.f
11.02.2013. The Board of Directors expressed their deep sense of
appreciation and gratitude for the services rendered by Shri R. W.
Khanna during his tenure as a Nominee Director in the Company.
In accordance with Article 146 of the Articles of Association of the
Company, read with Section 255 and 256 of the Companies Act, 1956, Shri
Vijay Rai and Shri M.D. Patel will retire by rotation at the ensuing
Annual General Meeting of the Company and being eligible, offer
themselves for re-appointment. The Board of Directors recommends their
re-appointment.
The brief resume and other details relating to the directors, who are
to be re-appointed, as stipulated under Clause 49 (IV) (G) of the
Listing Agreement, are furnished in the Corporate Governance Report
forming part of the Annual Report. l The applications for approval to
the re-appointment and payment of remuneration to Shri Avtar Singh,
Director (Operations & Business Development) under Section 269 of the
Companies Act, 1956 has already been filed with the Central Government.
The same is pending for approval with the Central Government.
DEPOSITORY SYSTEM:
M/s Alankit Assignments Ltd., 2E/21, Anarkali Market, Jhandewalan
Extension, New Delhi, are the Registrar and Share Transfer Agent of the
Company for the Physical as well as Demat shares. The members are
requested to contact the Registrar directly for any of their
requirements.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956. i)
PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC.
The information required under Section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 with respect to energy
conservation is appended hereto and forms part of this Report.
ii) PARTICULARS OF EMPLOYEES
The information under Section 217 (2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Amendment Rules, 2011 is
not required to be attached with this report, as none of the employees
is covered under these rules.
iii) RESPONSIBILITY STATEMENT
In terms of Section 217 (2AA) of the Companies (Amendment) Act, 2000,
your Directors state that:
a) In the preparation of the Annual Accounts for the year ended 31st
March, 2013, the Company has followed the applicable Accounting
Standards along with proper explanations relating to material
departures, if any;
b) Appropriate Accounting Policies have been selected and applied
consistently and judgments and estimates are made prudently and
reasonably so as to give a true and fair view of the state of affairs
of the Company as at 31st March, 2013 and of the losses of the Company
for that year;
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the applicable
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) The Annual Accounts have been prepared on a going concern basis.
iv) CEO / CFO CERTIFICATION:
In terms of Clause 49 (V) of the Listing Agreement, the Certificate
duly signed by Shri Shalil Shroff, Managing Director (CEO) and Shri
Vipul Joshi, Chief Financial Officer of the Company was placed before
the Board of Directors along with the annual financial statements for
the year ended on 31st March, 2013, at its meeting held on 29th May,
2013. The said Certificate is also annexed to the Corporate Governance
Report.
COST AUDIT:
The Cost Audit Report and Compliance Report for the Financial year
2011-12 duly certified by the Lead Cost Auditor, Mrs. Pushpa Khanna,
Cost Accountant, Chandigarh, have been submitted to the Central
Government on 29th March, 2013, which was due to be filed on 29th
March, 2013.
Further, the Company has re-appointed Mrs. Pushpa Khanna, Cost
Accountant, Chandigarh and M/s Khushwinder Kumar & Co. Cost Accountant,
Jalandhar as Cost Auditors for the Financial Year 2013-14, subject to
the approval of the Central Government. It may be noted that Mrs.
Pushpa Khanna, Cost Accountant, Chandigarh has been nominated as the
Lead Cost Auditor of the Company.
AUDITORS'' REPORT:
In the Audit Report on the Consolidated Financial Statements for the
Financial Year ended 31st March, 2013, the Auditors'' have qualified as
under:
i) STS Chemicals (UK) Limited, 100% subsidiary of the Company, has not
been considered for the purpose of preparation of the Consolidated
Financial Statements. ii) Effect of investment in associate company
viz Source Dynamic LLC, on the financial position and the operating
results of the group, as required by
Accounting Standard (AS) 23, ''Accounting for Investment in Associates
in Consolidated Financial Statements'' have not been considered in the
Consolidated Financial Statements. The Board of Directors are of the
opinion that the aforesaid subsidiary and the associate company do not
have any significant operations. Accordingly, the non-inclusion of the
same in the Consolidated Financial Statements has no significant impact
on the financial position and operating results of the Company.
There are few remarks given in the Annexure to the Auditors'' Report
which are self explanatory. Necessary actions are being taken on those
remarks and points wherever required including tagging of fixed assets
and updation of the Fixed Assets register.
AUDITORS:
L M/s S.R. Batliboi & Company LLP Chartered Accountants (formerly known
as S.R Batliboi & Co., Chartered Accountants), whose term of office as
the Statutory Auditors of the Company will expire at the conclusion of
the ensuing Annual General Meeting of the Company, have given a notice
in writing to the Company expressing their willingness for
re-appointment. S.R Batliboi & Co. have intimated the Company vide
letter dated 1st April, 2013 about the change in the name of the firm
to ÂS.R. Batliboi & Co. LLP'' pursuant to its conversion as a Limited
Liability Partnership firm. The change in the name of the auditor firm
would not have any effect on the letters, agreements, instruments,
deeds, documents and writings executed by and between the Company and
the audit firm and the same would continue to be in full force and
effect in accordance with their terms, as if S.R Batliboi & Co. LLP
were a party to it instead of S.R Batliboi & Co.
They have also given a letter to the Company certifying that their
proposed appointment as Auditors would be within the limits prescribed
under section 224(1B) of the Companies Act, 1956. The Directors of the
Company have recommended their appointment.
CORPORATE GOVERNANCE:
The Company strives to maintain high standards of corporate governance
in interactions with all the stakeholders. The Company has complied
with the Corporate Governance code as stipulated under the listing
agreement with the stock exchanges. A separate section on corporate
governance along with a certificate from the Practicing Company
Secretary confirming the level of compliance is attached and forms a
part of this report. The Management Discussion and Analysis Report as
required under the Listing agreements with the Stock Exchange is
annexed and forms an integral part of the Directors'' Report.
ACKNOWLEDGEMENT:
The Directors also take this opportunity to thank all the financial
institutions, banks, customers, vendors and members for their support
and co- operation during the financial year.
For and on behalf of the Board of Directors
G. NARAYANA
Place: Mumbai Chairman
Date : May 29, 2013
Mar 31, 2011
TO THE MEMBERS,
The Directors are pleased to present the 35th Annual Report of the
Company, together with the Audited Statement of Accounts for the year
ended 31st March, 2011.
FINANCIAL RESULTS
The performance of the Company during the year as compared to the
previous year is summarized below:
(Rs. in Lacs)
Consolidated* Standalone
2010-11 2009-10 2010-11 2009-10
Sale of Products & Other
Income (Net) 68054 58302 36856 32473
Profit / (Loss)before Depreci
-ation & Tax & Exceptional
item 2202 (4015) (1279) (4441)
Less: Depreciation/Amortisation 3159 3419 694 1059
Profit/(Loss) before Tax &
Exceptional item (957) (7434) (1973) (5500)
Less: Exceptional item 619 619 - -
Profit / (Loss) before Tax (338) (7434) (1354) (5500)
Less: Provision for Taxation
Current year 435 175 - -
Deferred Tax Asset/
(Liability) (141) (1813) - (1457)
Profit/(Loss) after Tax (632) (5796) (1354) (4043)
Minority Interest - 1 - -
(632) (5795) (1354) (4043)
Add/(Less):
Excess/(Short) Provision for
Taxes of earlier years. 1 (84) 1 (69)
Net Profit/(Loss) (631) (5879) (1353) (4112)
Post Merger loss of Parul
Chemicals Limited for the
year ended 31st March, 2011 - - (28) -
Profit brought forward from
previous year - 216 - 1226
Profit/ (Loss) available for
Appropriation (631) (5663) (1381) (2886)
Carried forward to next year (631) (5663) (1381) (2886)
* Consolidated financial statements for the year ended 31st March, 2011
form part of the Annual Report and Accounts of its Subsidiary
Companies. Figures for the previous year have been regrouped, wherever
necessary to make them comparable with figures of the current year.
DIVIDEND
Your Directors have not recommended any dividend for the year 2010-11
keeping in view the loss in the working of the Company.
SCHEME OF ARRANGEMENT
The amalgamation of the erstwhile Parul Chemicals Limited (PCL),
Vadodara with the Company (PCCPL), has been sanctioned by the Hon'ble
High Court of Punjab & Haryana at Chandigarh and by the Hon'ble High
Court of Gujarat at Ahmedabad vide their orders dated 11th March, 2011
and 23rd March, 2011 respectively. Consequent upon the aforesaid
approvals, the assets and liabilities of PCL have been transferred to
and vested in the Company with retrospective effect from 1st April,
2009 ('the Appointed Date'). In view of this, the financial results of
the Company for the year 2010-11 have been prepared after taking effect
of the approved scheme. The Authorized Capital of the Company has
accordingly been increased to Rs. 18 crores from Rs. 15 crores as shown
in Schedule 'A of the Balance Sheet, with effect from 26th March, 2011
(the 'Effective Date'). Further, the Board of Directors of the Company
in their meeting held on 11th May, 2011, have allotted 69,293 Equity
shares of Rs. 10/- each fully paid-up to the shareholders of the
erstwhile PCL without payment being received in cash and in the
exchange ratio approved by the Hon'ble High Courts. The Company has
also initiated the process of listing of these shares on the Bombay
Stock Exchange Limited and National Stock Exchange of India Limited,
where the Company's shares are already listed.
Further, in accordance to the aforesaid sanctioned scheme of
arrangement, the fixed assets of the Company have been reinstated at
their respective fair value on the basis of the report of a competent
Valuer appointed by the Company. The re-instatement adjustment was
accordingly credited to Business Reconstruction Reserve (BRR) account.
The Company has utilized the BRR by adjusting certain expenses as
detailed in the Notes to Accounts.
The Board of Directors feel that the amalgamation of PCL with the
Company will provide benefit to the Company by way of business
integration and further strengthen its presence in the domestic and
export markets.
OPERATIONS
The total income of the Indian operations of the Company increased to
Rs. 368 crores with a net loss of Rs. 13 crores in the year under
review against the total income of Rs. 325 crores and a net loss of Rs.
41 crores in the previous year. The exports increased by 36% and were
recorded at Rs. 146 crores against Rs. 107 crores in the previous year.
It may be observed that operations of the Company had improved
marginally in the year but not upto the level it should have been. The
after effects of the global meltdown, disruption of operations in the
Agro Chemicals Division due to fire and gestation period after repair
of the plant caused shortage of working capital. The high interest cost
of the existing debts further affected the working. There could be no
infusion of capital from the market as envisaged due to various
reasons.
The operations of the overseas subsidiary companies have improved and
accordingly, the consolidated income of the Company during the year was
at Rs. 680 crores against Rs. 583 crores in the previous year with 17%
increase. Accordingly, the overall loss of the Company on consolidated
basis reduced to Rs. 6 crores against loss of Rs. 59 crores in the
previous year.
The working of Agrichem B.V., a subsidiary Company, has improved with
new product mix resulting to a higher gross margin. The Company added
new customers for its products and obtained few new registrations in
the European countries. The Company is now able to compete in the Crop
Protection industry with its efforts, knowledge of clients and leading
products. During the year, the sales of this subsidiary Company was Rs.
178 crores against Rs. 145 crores and PAT of Rs. 6 crores against the
loss of Rs. 13 crores in the previous year, after providing
amortization of Registration expenses.
In Sintesis Quimica, Argentina, another subsidiary Company, the income
has increased to Rs. 169 crores from Rs. 121 crores in the year under
review with a PAT of Rs. 3.18 crores against Rs. 3.73 crores in the
previous year. However, the profit did not increase in proportion to
increase in sales due to enormous increase in the cost of labour and
high inflation in that country.
OUTLOOK
The Company has the facilities of manufacturing technicals and branded
formulations of agro chemicals business. In addition, Pharma,
Industrial Chemicals and specialized bio-products add to the business
prospects.
Your Company has the potentials, zeal to grow, employees' dedication
and market of the products. The only constraint is high debt and less
capacity utilization due to working capital shortage. The efforts are
continued for infusion of Capital in the system to reduce pressure of
the debts. The synergy of utilization of product registrations in India
and Overseas, mixed product portfolio and efficiency in the
manufacturing processes are the key factors to bring turnaround in the
Company. The integration of products manufacturing in Indian units with
the overseas registrations will add value, once the production capacity
is fully utilized.
Therefore, the outlook of the Company in the medium to long term is
growth oriented barring unforeseen circumstances.
SUBSIDIARY COMPANIES
The consolidated result of the Company includes the results of the
subsidiary companies as mentioned in the Notes to Accounts of the
Consolidated Financial Statements.
Your Board of Directors of the Company have resolved for not attaching
the Balance Sheet, Profit and Loss Account and other documents of the
subsidiary companies with this Annual Report, in view of the general
exemption granted by the Ministry of Corporate Affairs, Government of
India under section 212(8) of the Companies Act, 1956 vide General
Circular No. 2/2011 dated 8th February, 2011. It is also stated that
the Annual Accounts of the Subsidiary Companies and the related
detailed information shall be made available to the shareholders of the
Company and its Subsidiaries, upon receipt of request from them and
shall be available for inspection at the registered office of the
Company and also at the registered office of the concerned Subsidiary
Companies. The Consolidated Financial Statement prepared in accordance
with Accounting Standard 21 of the Institute of Chartered Accountants
of India presented in this Annual Report include the financial
information of the subsidiary Companies. The statement pursuant to
Section 212 of the Companies Act, 1956 relating to the Subsidiary
Companies is also included in this Annual Report.
FINANCE
During the year under review, the Company tried to infuse equity into
the Company by way of issuing Preferential Convertible Warrants to one
of the Promoter of the Company, but the proposal could not get matured,
due to the inability of the Company to comply with the new proviso to
sub-regulation (2) of Regulation 72 of SEBI (Issue of Capital &
Disclosure Requirements) Regulations, 2009.
Further, the Company had requested the banks to restructure all the
credit facilities for harmonization of the terms and conditions as per
the available cash flow. The Banks have agreed to the proposal and the
Company is in the process of executing documents. The harmonization of
terms will help the Company to have more moratorium, longer period of
repayment with reduced interest.
FIXED DEPOSITS
The amount of Fixed Deposits as on 31st March, 2011 was Rs. 590 lacs
(previous year Rs. 481 lacs). The deposit amounting to Rs. 0.52 lacs
were unclaimed by 2 depositors as on 31st March, 2011 (previous year
Rs. 0.52 lacs by 2 depositors). The Company has sent reminders to these
depositors to complete the procedural formalities for repayment.
In terms of the provisions of the Investor Education and Protection
Fund (Awareness and Protection of Investors) Rules, 2001, Rs. 44,425 of
Unclaimed Deposits pertaining to the financial year 2004-05 was
transferred to the Investor Education and Protection Fund on the due
date.
LISTING WITH STOCK EXCHANGES
The equity shares of the Company remains listed on Bombay Stock
Exchange Limited and National Stock Exchange of India Limited having
nation wide terminals. The requisite annual listing fees to these Stock
Exchanges have been paid.
INSURANCE
The Company has taken the required insurance coverage for its assets
against the possible risks like fire, flood, public liability, marine,
etc.
The Company has received Rs. 13.67 crores (including Rs. 6.19 crores
for 'Loss of Profit') from the Insurance Company against the claim
filed for loss due to fire in one of the plants in Punjab in April,
2009.
ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL
The environment management and pollution control are the foremost
priorities in all the units of the Company. Accordingly, all efforts
are made for the reduction of the waste generation and re-processing of
the waste material, wherever possible. Multi effect evaporators have
been installed in both the units in Punjab.
EMPLOYEES & INDUSTRIAL RELATIONS
Your Board of Directors sincerely appreciate the working and
contribution of all categories of employees in this difficult time.
Their suggestions to improve the productivity are seriously considered.
SOCIAL RESPONSIBILITY
In the Corporate Social Responsibility endeavour, medical camps and
scholarships to the needy students are arranged by the company, as per
the local requirement. The medical and other required facilities are
also provided to the surrounding villages. The trust created in the
memory of Late Shri S.D. Shroff, organizes the Blood Donation camp
every year.
RESEARCH & DEVELOPMENT / QUALITY CONTROL
The regular R&D activities are carried out in the laboratories of Agro
and Pharma manufacturing units to improve upon the existing processes,
decrease effluent load and to develop new products and by-products.
DIRECTORS
Shri A.G. Shroff, Non-Executive Director of the Company, has resigned
from the Board of Directors w.e.f 11th February, 2011. The Board of
Directors expressed their deep sense of appreciation and gratitude for
his outstanding services and contribution during his tenure as a
Director of the Company since 1986.
Further, in accordance with Article 146 of the Articles of Association
of the Company, read with Section 255 and 256 of the Companies Act,
1956,the office of Shri Jai Prakash Bhambhani is liable to retire by
rotation at this Annual General Meeting but he has not offered himself
for re-appointment. Accordingly, Shri Ajit R Sanghvi and Shri M.D.
Patel , Directors of the Company, are liable to retire by rotation at
this ensuing Annual General Meeting of the Company and being eligible,
offer themselves for reappointment.
The Board recommends their re-appointment for the approval of the
members.
The brief details relating to the directors, who are to be
re-appointed, as stipulated under Clause 49 (IV) (G) of the Listing
Agreement, are furnished in the
Corporate Governance Report forming part of the Annual Report.
The Export-Import Bank of India (EXIM), banker of the Company, has
appointed Shri R.W Khanna, Chief General Manager of EXIM Bank, as its
Nominee Director on the Board of the Company. The Board of Directors
welcome him on the Board of the Company and are confident that
knowledge, expertise and vision of Shri R.W Khanna will be an
invaluable contribution to the organization.
DEPOSITORY SYSTEM
M/s Alankit Assignments Ltd., 2E/21, Anarkali Market, Jhandewalan
Extension, New Delhi, are the Registrar and Share Transfer Agent of the
Company for the Physical as well as Demat shares. The members are
requested to contact the Registrar directly for any of their
requirements.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.
(i) PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC.
Particulars regarding conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under section 217(1)(e)
of the Companies Act, 1956, are given in the Annexure to this Report.
(ii) PARTICULARS OF EMPLOYEES
The information under section 217(2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Amendment Rules, 2011, is
not required to be attached with this report, as none of the employee
is covered under these Rules.
(iii) RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies (Amendment) Act, 2000,
your Directors state that:
(a) in the preparation of the Annual Accounts for the year ended 31st
March, 2011, the applicable Accounting Standards have been followed
along with proper explanation relating to material departures, if any;
(b) they have 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 affairs of
the Company at the end of the financial year at 31st March, 2011 and of
the loss of the Company for the year ended on that date;
(c) they have taken proper and sufficient care for the maintenance of
adequate Accounting Records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) they have prepared the Annual Accounts on a going concern basis.
(iv) CEO/CFO CERTIFICATION
In terms of Clause 49 (V) of the Listing Agreement, the Certificate
duly signed by Shri Shalil Shroff, Managing Director (CEO) and Shri
Vipul Joshi, Chief Financial Officer of the Company was placed before
the Board of Directors along with the annual financial statements for
the year ended on 31st March, 2011, at its meeting held on 30th May,
2011. The said Certificate is also annexed to the Corporate Governance
Report.
COST AUDIT
The audit reports from Mrs. Pushpa Khanna, Cost Accountant and M/s
Khushwinder Kumar & Co., Cost Accountant, in respect of the audit of
cost accounts relating to "Insecticides" and "Bulk Drugs" respectively,
for the Financial year 2009-2010 have been submitted to the Central
Government directly on 25th September, 2010 and 20th September, 2010
respectively, which was due to be filed on September 27, 2010.
Further, the Company has received the approval of the Central
Government for the appointment of Mrs. Pushpa Khanna, Cost Accountant,
Chandigarh and M/s Khushwinder Kumar & Co. Cost Accountant, Jalandhar
as Cost Auditors for the Financial Year 2011-12.
AUDITORS' REMARKS
In the Audit Report on the Consolidated financial statements for the
Financial Year ended 31st March, 2011, the Auditors' have qualified as
under:
i) 100 % subsidiaries viz Agrichem Polska, N.V Agricultural Chemicals
and Agrichem Helvetia GmbH, have not been considered for the purpose of
preparation of the Consolidated Financial Statements.
ii) Effect of investment in associate companies on the financial
position and operating results of the Group, as required by Accounting
Standard (AS)- 23, 'Accounting for investment in Associates in
Consolidated Financial Statement' have not been considered in the
Consolidated Financial Statements.
The Board of Directors are of the opinion and record that the aforesaid
subsidiaries and the associate companies do not have any significant
operations, therefore, the non-inclusion of the same in the
Consolidated Financial Statements have no significant impact on the
financial position and operating results.
There are few remarks given in the Annexure to the Auditors' Report
which are self explanatory. Necessary actions are being taken on those
remarks and points wherever required including tagging of fixed assets
and updation of the Fixed Assets Register.
AUDITORS
M/s S.R. Batliboi & Company, Chartered Accountants, whose term of
office as the Statutory Auditors of the Company will expire at the
conclusion of the ensuing Annual General Meeting of the Company, have
given to the Company a notice in writing of their willingness for
re-appointment. They have also given a letter to the Company certifying
that their proposed appointment as Auditors would be in accordance
within the limits prescribed under section 224(1B) of the Companies
Act, 1956. The Directors of the Company have recommended their
appointment.
CORPORATE GOVERNANCE
Your Company continues to practice the principles of 'Good Corporate
Governance' during the year and the Board of Directors lay strong
emphasis on accountability, integrity and responsibilities in dealings
with employees, shareholders, consumers and community at large.
Report on Management Discussion and Analysis and Corporate Governance
Report along with a Certificate from S.K Sharma & Associates,
Practising Company Secretary, confirming compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreements with the Stock Exchanges, form part of the Annual Report.
ACKNOWLEDGEMENT
The Board of Directors appreciate the continued commitment and
dedication of employees at all levels. The support of various Banks and
other lenders to the Company is appreciated and acknowledged.
For and on behalf of the Board of Directors
G. NARAYANA
Chairman
Place : Mumbai
Date : May 30, 2011
Mar 31, 2010
The Directors are pleased to present the 34th Annual Report and the
Audited Statement of Accounts of the Company for the year ended 31 st
March,2010.
WORKING RESULTS (Rs. in Lacs)
Consolidated* Standalone
2009-10 2008-09 2009-10 2008-09
Sale of Products & Other
Income (Net) 58302 74339 32473 49693
Profit / (Loss) before
Depreciation & Tax (4015) 3929 (4441) 2081
Less: Depreciation/Amortisation 3419 3121 1069 919
Profit/(Loss) before Tax (7434) 808 (5500) 1162
Provision for Taxation
Current year including FBT (175) (603) - (418)
Deferred Tax Asset/(Liability) 1813 63 1457 (68)
Profit/(Loss) after Tax (5798) 268 (4043) 676
Minority Interest 1 3 - -
(5795) 271 (4843) 676
Add/(Less):
Prior Period Adjustments - (238) - (27)
Excess/(Short): Provision for
Taxes of earlier years. (84) (125) (89) (126)
Net Profit/(Loss) (5879) (92) (4112) 523
Profit brought forward from
previous year 216 624 1226 1019
Profit available for
Appropriation (5663) 532 (2886) 1542
Out of this, the Directors have
made the following
appropriations :
Proposed Dividend - 99 - 99
Tax on Dividend - 17 - 17
Transfer to General
Reserve - 200 - -
200
Carried forward to next year (5663) 216 (2886) 1226
* Consolidated financial statements for the year ended 31 st March,
2010 form part of the Annual Report and Accounts of its Subsidiary
Companies. Figures forthe previous year have been regrouped, wherever
necessary to make them comparable with figures of the current year.
DIVIDEND
Your Directors have not recommended any dividend forthe year 2009-10
keeping in view the loss in the working of the Company.
OPERATIONS
During the year, the total income on standalone basis of the Indian
operations was Rs. 325 crores against Rs. 497crores in the previous
year, down by 35%. The decrease in turnover and contribution posted a
net loss of Rs. 41.12 crores against the net profit of Rs 5.23 crores
in the previous year. The export sales were less at Rs. 107 crores
against Rs. 148 crores of last year, also less by 28%.
The year under review was a difficult one. The recession, sluggish
export recovery and a slowdown in the financial flow into the economy
in the year 2008-09 following the financial crisis remained in the
first half of the year under review.
Inspite of the beginning of recovery trend in the second half of
2009-10, the Company could not take advantage of the same because of
the major fire in one of the agro chemicals plant at Derabassi in
April, 2009 (as reported in the last Annual Report). The products
affected in the fire were the key products. Rehabilitation work of the
said plant could only be completed in December, 2009. The delay in
disbursement of claim from the insurance company and non operation of
the plant for large part of the year resulted into the liquidity crisis
in the Company. The procurement of raw materials and other inputs to
achieve full production was not possible in the circumstances. The
service of the debts taken for overseas and Indian acquisition put
further pressure on the cash flow. Moreover, the Companys efforts to
raise equity could not materialize in the year under review. The short
term borrowings, therefore, remained the only source to run the day to
day business, which further increased the interest burden. The adverse
foreign exchange fluctuation added to the loss and serious impact on
the working results.
The formulated agro chemicals business has spread its wings and have
the potential to grow in wide area. The operations have been expanded
in the cotton belt of Maharashtra and Chattisgarh states for the
insecticides, herbicides and fungicides business. This Division is
maturing and expected to give fillip to the revenue and profitability
of the Company in future. However, in the year under review, late rains
created uncertainty in the initial sowing period and then flood in the
Southern States affected the sales.
As stated in the last Annual Report, the Company has acquired Parul
Chemicals Limited, Baroda (Parul) as 70% subsidiary Company to
strengthen the formulation business. The Board of Directors of the
Company have now.decided to amalgamate this Company to integrate
Paruls manufacturing capability and other business with the Companys
formulation business. The application for approval of amalgamation of
Parul with the Company had been filed with the Honble High Court of
Gujarat at Ahmedabad and Punjab & Haryana at Chandigarh.
Pharma unit in Punjab has started the production of new API and
obtained additional job work.
In Industrial Chemicals Division at Tarapur, the production of new
product was commenced to partially utilize the surplus capacity of the
plant. Accordingly, the said plant should add to the revenue in near
future. Pune unit could not meet its target because of unavailability
of raw material including erratic supply of Phosphorous and reduced
demand of the products in the domestic market. However, the current
year projection looks better in view of improvement in the domestic
demand.
The operations of the Trading Division was severely affected duetothe
working capital deterioration.
The operations of the overseas subsidiary companies have grown. The
better results are envisaged in the coming years after proper
utilization of the available registrations, products and extensive
market. Sintesis Quimica SAIC (SO.) has increased its presence in the
local and international Biological Market and have introduced new
insecticides in Soyabean cultivation. In part of the year due to
international crisis, the export of inoculants to US was significantly
less. The drought in Argentina reduced the cultivated area of wheat,
corn and sunflower, thereby affecting the sales. However, partially it
was compensated with larger sales in formulations. The Company has come
up with profit due to international alliances and involvement of other
marketing companies to reach new customers and capture value.
Agrichem B.V., another subsidiary Company has a wide spread product
range in insecticides, herbicides and fungicides with number of
registrations in various countries and is expected to perform better in
the coming years. However, in the year under review, sluggish European
market had an impact on the performance and amortization of product
registration expenses put pressure on the margins of this overseas
subsidiary.
The consolidated results of the Company includes the results of the
subsidiary companies namely (i) STS Chemicals (UK) Ltd., (ii) SD AgChem
(Europe) NV, (iii) Sintesis Quimica, S.A.I.C., Argentina (iv)Agrichem
B.V., Netherlands, (v)N.V. Agricultural Chemicals, (vi) Agrichem
Helvetia GmbH, (vii) PG Crop Protection Ltd., (viii) SD Agchem
Netherlands 1 B.V. and ix) Parul Chemicals Limited, Vadodara.
The Consolidated income of the Company during the year 2009-10 was Rs.
583 crores against Rs. 743 crores of previous year down by 22%. This
resulted into a loss of Rs. 59 crores againstthe loss of Rs. 92 lacs in
2008-09.
OUTLOOK
The Board of Directors of your Company are confident that situation
should normalize in the current year., The Company has the full export
orders of its key products, therefore, utilization of full capacity,
particularly in the Agro Division will remain the prime focus. The long
term borrowings, equity generation and expected release of Insurance
Claims in the near future should bring turnaround in the Company.
Moreover, the strategy adopted in the past few years, viz. obtaining
product registrations in India and overseas, mixed product portfolio
and efficiency in the manufacturing processes should help the Company
to recover fast. The product registrations in one of the subsidiary
company in European Unions have been fully integrated in line with the
products manufacturing in Indian units. The Consolidation of these
activities should enable the Company to face market turbulence more
effectively.
The Company is therefore, with facilities of manufacturing technicals,
branded formulations possesses the entire value chain of agro chemicals
business. In addition, Pharma, Industrial Chemicals and specialized
bio-products adds to the business prospects.
Therefore, the outlook of the Company in the medium to long term is
growth oriented barring unforeseen circumstances.
SUBSIDIARY COMPANIES
In terms of the approval granted by the Central Government under
section 212(8) of the Companies Act, 1956, the audited accounts of the
subsidiary Companies are not attached to this Annual Report. However,
the consolidated financial statements prepared in accordance with
Accounting Standard 21 of the Institute of Chartered Accountants of
India presented in this Annual Report include the financial information
of the subsidiary Companies. The Accounts of the subsidiary Companies
will be made available to the members upon receipt of request from them
and shall be available for inspection at the registered office of the
Company and also at the registered office of the concerned subsidiary
Companies. The statement pursuant to Section 212 of the Companies Act,
1956 relating to the subsidiary Companies is included in this Annual
Report.
FINANCE
During the year under review, 6,00,000 Preferential Convertible
Warrants (PCW), were converted into Equity shares on 11th August, 2009,
at a price of Rs. 136/-per share having face value of Rs. 10/-each. Ten
percent amount received from the remaining subscribers of 9,10,000 PCW
were forfeited as per the SEBI guidelines as they did not opt for
conversion. The Paid Up Share Capital, thereafter, increased to Rs.
7,19,28,920 consisting of 71,92,892 equity shares of Rs. 10/- each.
These shares have been listed on the Bombay Stock Exchange Limited and
National Stock Exchange of India Limited.
As stated earlier, the Company was facing huge liquidity problem and in
absence of infusion of sufficient equity through various means, the
Company had to resort to the additional borrowings to meet its day to
day working capital requirement and fund the interest cost. This has
increased the cost of borrowing and affected the bottom line of the
Company. During the year under review, Company had taken additional
borrowings from Central Bank of India (Rs. 25 crores), Union Bank of
India (Rs. 25 crores), Allahabad Bank (Rs. 50 crores) and Bank of
Baroda (Rs. 50 crores).
The Company had repaid part of the term loan to AXIS Bank (Rs. 666
lacs), EXIM Bank (Rs. 500 lacs), Bank of Rajasthan (Rs. 500 lacs) and
Cash Credit limit of Rs. 1800 lacs to AXIS Bank, Rs. 1300 lacs to EXIM
Bank. However, the overall borrowings have increased due to the
operational reasons as stated above.
FIXED DEPOSITS
The amount of Fixed Deposits as on 31 st March, 2010 was Rs. 481 lacs
(previous year Rs. 431 lacs). The deposit amounting to Rs. 0.52 lacs
were unclaimed by 2 depositors as on 31 st March, 2010 (previous year
Rs.0.72 lacs by 4 depositors). The Company has sent reminders to these
depositors to complete the procedural formalities for repayment.
LISTING WITH STOCK EXCHANGES
The equity shares of the Company remains listed on Bombay Stock
Exchange Limited and National Stock Exchange of India Limited having
nation wide terminals. The requisite annual listing fees to these Stock
Exchanges have been paid.
INSURANCE
The Company has taken the required insurance coverage for its assets
against the possible risks like fire, flood, public liability, marine,
etc.
ENVIRONMENT MANAGEMENT AND POLLUTION CONTROL
The Company is conscious of its environment management and pollution
control. In all the units efforts are taken for reduction of the waste
generation and re- processing of the waste material, wherever possible.
Multi effect evaporators installed in both units in Punjab are helping
in managing the environment.
EMPLOYEES & INDUSTRIAL RELATIONS
The relations of the management and all categories of employees are
cordial. The patience and belongingness of the Companys employees are
enormous. Their suggestions to improve the productivity are seriously
considered.
SOCIAL RESPONSIBILITY
The Company continues to meet its social responsibility by arranging
medical camps, donation of medicine and giving scholarships to the
needy students. The trust created in the memory of late Shri S.D.
Shroff, organizes the Blood Donation camp every year and serve the
nearby villages with required medical help.
RESEARCH & DEVELOPMENT/QUALITY CONTROL
The R&D laboratories of Agro Chemicals and Pharma Division are
recognized and approved by the Department of Scientific & Industrial
Research, Government of India, New Delhi. The regular R&D activities
are carried out in these laboratories to improve upon the existing
processes and to develop new products and by-products. All the incoming
Raw Materials and Finished Goods are regularly checked as per the ISO
9001 and IS014001 guidelines to keep the strict quality control of the
Raw Materials, Finished Goods and new products. It helps in maintaining
and improving the Raw Material efficiency of the existing products.
DIRECTORS
In accordance with Article 146 of the Articles of Association of the
Company and with the provisions of the Companies Act, 1956, Shri
Jagdish R Naik, Shri Vijay Rai and Shri Atul G Shroff, Directors of the
Company retire by rotation at the ensuing Annual General Meeting of the
Company and being eligible, offerthemselves for reappointment.
Your Board recommends theirre-appointmentforthe approval of the members.
DEPOSITORY SYSTEM
M/s Alankit Assignments Ltd., 2E/21, Anarkali Market, Jhandewalan
Extension, New Delhi, are the Registrar of the Company for the Physical
as well as Demat shares. The members are requested to contact the
Registrar directly for any of their requirements.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.
(i) PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC.
Particulars regarding conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under section 217(1)(e)
of the Companies Act, 1956, are given in the Annexure to this Report.
(ii) PARTICULARS OF EMPLOYEES
The information as required under section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, is
v attached with this report.
(iii) RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies (Amendment) Act, 2000,
your Directors state:
(a) that in the preparation of the Annual Accounts for the year ended
31st March,2010, the applicable Accounting Standards have been followed
alongwith proper explanation relating to material departures, if any;
(b) that they have selected such Accounting Policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year at 31 st March, 2010 and
of the loss of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance
of adequate Accounting Records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) that the Annual Accounts have been prepared on agoing concern
basis.
(iv) CEO/CFO CERTIFICATION
The CEO (Managing Director) and the CFO of the Company have certified
to the Board in the manner required under Corporate Governance Code,
concerning the annual financial statement.
COST AUDIT
The reports of Mrs. Pushpa Khanna, Cost Accountant in respect of the
audit of cost accounts of the "Insecticides" and of M/s Khushwinder
Kumar & Co., Cost Accountant in respect of the audit of cost accounts
of the "Bulk Drugs" for the year 2008-09 have been submitted by them
directly to the Central Government.
AUDITORSREMARKS
The Companys Auditors have made qualifications in the Auditors Report
on the Standalone and Consolidated financial statements for the
Financial Year ended 31st March, 2010, which have been
replied/explained as given below:-
i) that the Company has not made a provision for diminution other than
temporary in the value of long term investment amounting to Rs.98 lacs.
The Board is of the opinion that the diminution in the value of long
term investment is not of a permanent nature and accordingly no
provision is considered necessary.
ii) PG Crop Protection Limited, N.V. Agricultural Chemicals and
Agrichem Helvetia GmbH, 100% subsidiaries of the Company have not been
considered forthe purpose of preparation of the consolidated financial
statements.
iii) Effect of investment in associate companies on the financial
position and operating results of the Group, as required by Accounting
Standard (AS) 23, Accounting for Investment in Associates in
Consolidated Financial Statements have not been considered in the
consolidated financial statements.
The Board of Directors are of the opinion that the aforesaid
subsidiaries and the associate Companies do not have any significant
operations, therefore, the non-inclusion of the same in the
Consolidated Financial Statements have no significant impact on the
financial position and operating results.
There are few remarks given in the Annexure to the Auditors Report
which are self explanatory. However, necessary actions are being taken
on those remarks and points wherever required including tagging of
fixed assets and updation in the Fixed Assets Register.
AUDITORS
M/s S.R. Batliboi & Company, Chartered Accountants, whose term of
office as the Statutory Auditors will expire at the conclusion of the
ensuing Annual General Meeting of the Company, have given to the
Company a notice in writing of their willingness for reappointment.
They have also given a letter to the Company certifying that their
proposed appointment as Auditors would be in accordance within the
limits prescribed under section 224(1 B) of the Companies Act, 1956.
The Directors of the Company recommend their appointment.
CORPORATE GOVERNANCE
As per the Listing Agreement, a separate statement on Management
Discussion and Analysis, Corporate Governance Report and a Certificate
from the Practising Company Secretary regarding compliance form part of
this Annual Report.
ACKNOWLEDGEMENT
The Board of Directors deeply acknowledge the contribution of all the
stakeholders of the Company and value their support and suggestions.
The support of various Banks and other lenders to the Company at the
difficult time is worth praising and deserve heartfelt thanks. We,
assure all the stakeholders that the team PCCPL is fully dedicated and
assure that with the continuous support, we will overcome the
turbulence in this year.
For and on behalf of the Board of Directors
G.NARAYANA
Place:Mumbai Chairman
Date:June 18,2010