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Directors Report of Southern Magnesium & Chemicals Ltd.

Mar 31, 2015

Dear Members,

The Directors hereby presents the 29th Annual Report of your Company together with the Audited Statement of Accounts and the Auditors' Report of your company for the financial year ended, 31st March, 2015. The summarized financial results for the year ended 31st March, 2015 are as under:

FINANCIAL REPORT / OPERATIONS: (Rs. In Lakhs)

Particulars Current Year Previous Year As on As on 31.03.2015 31.03.2014

Net Sale / Income from Operations 546.64 175.68

Other Income 2.14 0.23

Operating Expenses 292.54 152.22

Net Profit ( ) / (Loss) before tax 256.24 23.69 for the period

Current Tax / Exceptioanl Items 81.09 0.00

Net Profit ( ) / (Loss) for the period 337.33 23.69

REVIEW OF OPERATIONS:

During the period revenue of the Company increased to Rs. 546.64 lakhs as compared to Rs. 175.68 Lakhs of the previous year. The net profit before tax has also increased to Rs. 337.33 Lakhs from Rs. 23.69 Lakhs of the previous year.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors confirm that in the preparation of Profit & Loss Account for the year end and Balance Sheet as at that date ("Financial Statements") that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(e) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT, 2013

1. State of affairs of the company:

The Company deals in the business of Magnesium Metal. During the year, the Company has seen growth in terms of the Sale which is reflected in the financial results of the Company for the year.

2. Amounts, if any, carried to reserves:

The company transferred Rs. 3.36 crores to the general reserve out of the amount available for appropriation.

3. Dividend:

The Company has declared the dividend amounting to Rs 77.25 Lakhs, which includes the arrear of the outstanding cumulative preferential Dividend and also redeemed the said preference shares out of the current year profits.

4. Inter - Corporate deposits:

(i) The details relating to deposits are as follows: The Company has received Inter Corporate Deposits, the details of which is given below.

(a) Accepted during the year - Nil

(b) Remained unpaid or unclaimed as at the end of the year - Rs. 37,50,000/-

(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved at the beginning of the year; -Nil

Maximum outstanding during the year; Rs. 37,50,000/-

Outstanding at the end of the year; Rs. 35,50,000/-

(ii) The details of deposits which are not in compliance with the requirements of the Act- NIL.

5. Number of meetings of the Board:

Five meetings of the board were held during the year as per the details given below:

S. No. Date of Total No. of No. of Directors % of meeting Directors on the attended Attendance Date of Meeting

1 26.05.2014 5 4 80.00

2. 13.08.2014 6 4 66.67

3. 11.11.2014 6 5 83.33

4. 14.02.2015 6 6 100.00

5. 28.03.2015 6 5 83.33

6. Board Evaluation:

The board of directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49").

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness of the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of Independent Directors, performance of Non- Independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into accounts the views of Executive Directors and Non-Executive Directors. The same was discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of Board, its committee and individual directors was also discussed.

7. Policy on Directors' appointment and remuneration and others details:

The company's policy on Directors appointment and remuneration and other matters provided in section 178(3) of the companies act has been disclosed in the Corporate Governance Report, which forms part of this directors' report.

8. Directors:

There is no change in the offices held by the Directors of the company.

9. Internal Financial Control Systems and their Adequacy:

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis and which forms a part of this report.

10. Audit Committee

The details pertaining to composition of Audit Committee are included in Corporate Governance Report, which forms a part of this report.

11. A statement on declaration given by independent directors under Sub-Section (6) of Section 149:

The provisions of Section 149(6) relating to Independent Directors has been complied with.

12. Risk Management:

The Board of the company regularly reviews and had adopted measures to frame, implement and monitor the risk management plan for the company. The Board is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risk indentified, if any, by the business functions are systematically addressed through mitigating actions on a continuing basis.

13. Particulars of Loans, Guarantees or Investments Under Section 186 of the Companies Act, 2013:

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

14. Particulars of contracts or arrangements made with related parties Under Section 188 of the Companies Act, 2013:

None of the transactions with related parties falls under the scope of section 188(1) of the act. Information on transaction with related parties pursuant to section 134(3)(h) of the act read with rule 8(2) of the companies (Accounts) Rules, 2014 are given in Annexure-1 in Form AOC-2 and the same forms part of this report.

15. The change in the nature of business, if any:

There was no change in the nature of Business.

16. The details of directors or key managerial personnel who were appointed or have resigned during the year:

There was no appointment or resignation of any director or Key Managerial Personnel since the last Annual General Meeting.

17. The names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year:

The Company does not have any Subsidiary, Joint venture or associate company which have become or ceased to be its Subsidiaries, joint ventures or associate company during the year.

18. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future:

There are no material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. However the company has received some show- cause notices from stock exchanges for which company have replied accordingly.

19. Particulars of Employees:

The information required under section 197 of the act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are given below:

a. The ratio of remuneration of each director to the median remuneration of the employees of the company for the financial year:

Non Executive Directors Ratio to median remuneration

Raghavendra Rao Griddalur NIL

Chilukuri Mariamma NIL

Surya Sesha Prakash Valluru NIL

EShwariah Kaparthi NIL

Executive Directors Ratio to median remuneration

Ravi Prasas Nuthakki 17.36:1

Rajender Prasad Nuthakki 16.84:1

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief financial Officer, Company Secretary in the financial year:

Director, chief executuive officer, % of increase in remuneratiom chief financial officer, company in the financial year secretary

Ravi Prasad Nuthakki -MD and CEO 56.66

Rajender Prasad Nuthakki - Jt.MD and CFO 63.33

c. The percentage increase in median remuneration of employees in the financial year : 5.99%

d. The number of permanent employees on the rolls of the company: 21

e. The explanation on the relationship between average increase in remuneration and the companies performance:

The increase in remuneration is in line with market trends. In order to ensure that the remuneration reflects company's performance, the performance pay is linked to organisation performance.

f. Comparision of the remuneration of key managerial personnel against the performance of the company.

Aggregate remuneration of key managerial personnel 24,31,701/- (KMP) in FY 15

Revenue 5,48,77,939/-

Remuneration of KMP (as a % of revenue) 4.43/-

Profit before tax (PBT) (Rs. In Lakhs) 3,37,33,591/-

Remuneration of KMP (as a % of PBT) 7.21/-

g. Variation in the market capitalisation of the company, price earning ratio as at the closing date of the current financial year and previous financial year.

Particulars March 31, 2015 March 31, 2014 % Change

Market capitalisation (Rs. Crores) 54750000 27240000 100.99

Price Earning Ratio 1.65 14.65 -88.74

h. Percentage increase over decrease in the market quotation of the shares of the comapany comparison to the rate at which the company came out with the last public offer:

Particulars March 31, 2015 March 31, 2014 % Change

Market price (BSE) 18.25 9.08 100.99

i. Average percentile increase already made in the salaries of emloyees other than the managerial personnel in the last financial year and its comparision with percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average increase in salaries of employees other than managerial personnel in 2014-15 was 10.66%. however during the course of the year the total increase is approx 32.98% after accounting for addition, deletion and promotion of the employee force. Increase in Managerial Remuneraton for the year was 59.88%.

j. Comparision of each remuneration of key managerial personnel against the performance of the company:

Particulars Mr. Rajender Prasad Mr. Ravi Prasad Nuthakki Nuthakki

Remuneration in FY 15(Rs) 10,71,479 10,34,782

Revenue(Rs) 5,46,64,146 5,46,64,146

Remuneration as % of Revenue 1.96% 1.89%

Profit before tax (PBT) (Rs) 3,37,33,591 3,37,33,591

Remuneration (as % of PBT) 3.17% 3.06%

k. The key parameters for any variable component of remuneration availed by the directors:

The Board has approved one months bonus pay to all its employees at its meeting held on 14.02.2015 including its Executive Directors.

l. The ratio of remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Not Applicable

m. Affirmation that the remuneration is as per the remuneration policy of the company:

The Company affirms remuneration is as per the Remuneration policy of the company.

20. Disclosure as per Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013:

Your company has zero tolerance for sexual harassment at work place and has adopted a policy on prevention, prohibition and redressal of sexual harassment at work place in line with the provision of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 and rules framed there under.

No compliant have been received by the company on sexual harassment during the financial year 2014-2015.

21. Disclosure Requirements:

As per Clause 49 of the listing agreement entered into with the stock exchange, corporate governance report with certificate from Practising Company Secretary thereon and management discussion and analysis are attached, which form part of this report.

The company has formulated a whistle blower policy. A copy of the same is made available at the registered office of the company. The provisions of this policy are in line with the provisions of section 177(9) of the act and the revised Clause 49 of the Listing Agreements with the stock exchanges. Your Company has a vigil mechanism to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy enables reporting of unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy, to the management. The Vigil mechanism also ensures strict confidentiality is maintained and provided adequate safeguards against victimization of employees who avail of the mechanism and also provided for direct access to the Chairman of the Audit committee in exceptional cases.

22. Auditors:

Pursuant to the provision of section 139 of the act and the rules framed thereunder, M/s. K.S.Rao & Co (Firm Registration No. 003109S)., Chartered Accountants, were appointed as Statutory Auditors of the company from the conclusion of 28th Annual General Meeting held on 30.09.2014 till the conclusion of 31st Annual General Meeting of the company to be held in the year 2017, subject to ratification of their appointment at every subsequent Annual General Meeting.

23. Secretarial Auditors' Report:

The company has appointed M/s D.Hanumanta Raju & Co, Company Secretaries, Hyderabad as the Secretarial Auditor of the company to undertake audit as per the provisions of section 204 of the Companies Act, 2013 and the report of the secretarial auditor is annexed to this report. Management replies to the observations, comments and qualifications made by the secretarial auditor is as under:

1. The company has paid accumulated preference dividend out of the current year profits inspite of accumulated losses and has redeemed those preference shares out of current year profits without creating Capital Redemption Reserve.

The provisions of section 55(3) are not yet enforced by the regulator. As such the company is governed by the provisions of Companies Act, 1956 for redemption of preference shares. As per the said provisions the company was to approach to Company Law Board (CLB) for extension of the time for redemption. However the preference shareholder on request for extension for redemption period have not agreed to co-operate and agree for the same. The company was confident to make higher profits and was considering to redeem the same as per the relevant provisions. Also due to continuous losses the company was unable to create capital redemption reserve.

However due to some inadvertent and unforeseen contingencies the company did not perform as expected. By the time it was crystallised that the company will not be able to redeem as per the provisions, company has lost the time to make an application and get approval of the CLB. As such the Board has discussed the same at length and decided to redeem the same along with cumulative outstanding dividend from the current year profits while ensuring liquidity and working capital requirements of the company are not adversely effected. Also as the shares are not listed on the stock exchange the same was not intimated to the stock exchange.

2. There was no appointment of Company Secretary.

The board of directors of the company have discussed in board meeting that the company is required to appoint a Company Secretary as per the provisions of section 203 of the Companies Act 2013, and the relevant rules made thereunder. Also they expressed their inability to find a suitable candidate for the post in-spite of continuous efforts made by them. They have discussed the requirement of a good candidate with a few professors and reputed Practicing Company Secretaries and Chartered Accountants known to them and are hoping to find a suitable candidate soon to meet the requirements as per the Act.

3. The company has not maintained any functional website.

The company was continuously maintaining the official website i.e www.southernmagnesium.com. However due to some technical problems the website of the company is inactive and the company is under the process of resolving the issue. The company is taking steps to have a fully updated website with all required particulars and has initiated steps in this regard.

4. The company has received few show cause/penalty notices from Stock Exchange. The company replied to such notices & there is no further communication/ information from Stock Exchange.

The company has received few show cause notices/ penalty notices from stock exchange. Company replied to such notices and there is no further communication/ information from stock exchange. If any further communication/ information will be required by stock exchange, the same will be relevantly replied and dealt with by the company.

24. Clarifications on Auditors Comments in Auditors Report

Management replies to the observations, comments and qualifications made by the statutory auditor is as under:

1. Company had paid preference dividend on cumulative preference shares without setting off accumulated losses and depreciation and preference shares are also redeemed despite unavailable profits for distribution of dividends, thereby the Company has not complied with the provisions of Section 55 of the Companies Act 2013.

The provisions of section 55(3) are not yet enforced by the regulator. As such the company is governed by the provisions of Companies Act, 1956 for redemption of preference shares. As per the said provisions the company was to approach to Company Law Board(CLB) for extension of the time for redemption. However the preference shareholder on request for extension for redemption period have not agreed to co-operate and agree for the same. The company was confident to make higher profits and was considering to redeem the same as per the relevant provisions. Also due to continuous losses the company was unable to create capital redemption reserve.

However due to some inadvertent and unforeseen contingencies the company did not perform as expected. By the time it was crystallised that the company will not be able to redeem as per the provisions, company has lost the time to make an application and get approval of the CLB. As such the Board has discussed the same at length and decided to redeem the same along with cumulative outstanding dividend from the current year profits while ensuring liquidity and working capital requirements of the company are not adversely effected. Also as the shares are not listed on the stock exchange the same was not intimated to the stock exchange.

2. The Company has not adopted and complied with the requirements of AS-15 'Employee Benefits' in respect of the Gratuity liability, which constitutes a departure from the Accounting standards referred to in section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. In view of this the liability of the company in this regard could not be ascertained. Consequently, we are unable to comment about the impact of this on the profit for the year, income tax and shareholder's funds

In view of the losses of the company, the board has taken decision to provide for gratuity when it materializes.

3. We draw attention to Note 21.1 in the financial statements which state that the Company's current liabilities exceeded its current assets by Rs. 56.05 lakhs. Further, as indicated by the Company's Balance Sheet as at March 31, 2015, the net worth of the Company has eroded completely. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

Although this net worth of the Company has been eroded, the Company is presently making profits and hopes to come to positive net worth in the coming years.

25. Annual Return:

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure II and is attached to this Report.

26. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is as under.

(A) Conservation of energy : NIL

(B) Technology absorption : Not Applicable

(C) Foreign exchange earnings : NIL

(d) Foreign exchange outgo : Rs. 2,06,22,043/-

27. Acknowledgement:

Your Directors wish to place on record their gratitude to shareholders and thank the customers, bankers, vendors, State and Central Governments Authorities for their continued support to your Company's growth. Your Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support enabled to your company to make continued progress.

For and on behalf of the Board Southern Magnesium and Chemicals Limited

Place: Hyderabad Sd/- Sd/- Date: 03.08.2015 Mr. Rajender prasad Mr. Ravi Prasad Nuthakki Nuthakki Jt. Managing Director & CFO Managing Director & CEO (DIN- 00145659) (DIN- 00319537)




Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 28th Annual Report and the Audited Accounts for the year ended 31st March, 2014.

FINANCIAL REPORT / OPERATIONS: (Rs. In Lakhs)

Particulars Current Year Previous Year As on 31.03.2014 As on 31.03.2013

Net Sale and other Income 175.68 208.97

Profit/(Loss) Before Depreciation and Interest 30.68 60.02

Depreciation, and Interest 6.99 4.81

Net Profit / Net Loss (-) 23.69 55.21

Total Cum. Loss 578.71 602.40

REVIEW OF OPERATIONS:

During the year 2013-14, the Company had an income of Rs. 175.68 Lakhs against which the Company incurred a net profit of Rs. 23.69 Lakhs as compared to the income of Rs. 208.97 Lakhs and a net Profit of Rs. 55.21 Lakhs in the previous year 2012-13.

DIVIDEND:

In view of the accumulated losses, your Directors have decided not to recommend dividend for the year.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review.

LISTING:

The equity shares of your company are listed on BSE Limited.

CAPITAL OF THE COMPANY:

The Authorised Capital of the company stands at Rs. 5,00,00,000/- divided into 40,00,000 equity shares of Rs. 10/- each and 10,00,000 preference shares of Rs.10/- each. The Issued, Subscribed and Paid up capital of the company stands at Rs. 4,00,00,000 divided into 30,00,000 equity shares of Rs. 10/- each and 10,00,000 preference shares of Rs.10/- each.

SUBSIDIARY COMPANY:

The Company has no subsidiaries.

INSURANCE:

The company''s assets have been adequately insured against major risks.

DIRECTORS:

In accordance with the Companies Act, 2013 read with Articles of Association of the company, the Directors namely Mr. V. S. S. Prakash, Director and Mr. Eshwariah Kaparthi are re-appointed as the Independent Directors in pursuance of Section 149 and other applicable provisions and are not subject to retire by rotation. Your Board recommends the re-appointment of the Directors above in the best interests of the company.

Mr. G.Raghavendra Rao was appointed as Additional Director in Independent Category on 13.08.2014 and is now proposed to be regularised and appointed as a non-rotational Independent Director for a period of five years.

Also the Board has re-appointed Mr. N Ravi Prasad as the Managing Director at its meeting held on 13.11.2013 and changed his designation as Managing Director and Cheif Executive Officer at its meeting held on 13.08.2014.

Also the Board has re-designated Mr. N Rajender Prasad as the Jt. Managing Director and changed his designation as Jt.Managing Director and Cheif Financial Officer at its meeting held on 13.08.2014.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

I) In the preparation of the Annual Accounts, the Applicable accounting standards have been followed.

II) The Directors 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 and of the profit or loss of the Company for the period:

III) Proper and sufficient care has been taken for the maintenance of adequate accounting record in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for the preventing and detecting fraud and other irregularities.

IV) The Directors have prepared the Annual Accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

AUDITORS

Your directors propose the appointment of M/s. K. S. Rao & Co, Chartered Accountants, Hyderabad as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company.

COST AUDITOR

Your Directors have appointed Mr. Karuchola Koteshwara Rao, Hyderabad, Cost Accountant, as the cost auditor for the financial year 2013-14.

CLARIFICATIONS ON AUDITORS'' COMMENT IN AUDITORS REPORT:

1. Emphasis of matter:

In view of the losses of the Company, the Board has taken decision to provide for gratuity when it materializes.

2. Basis for qualified opinion:

Although this net worth of the Company has been eroded, the Company is presently making profits and hopes to come to positive net worth in the coming years.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

CORPORATE GOVERNANCE

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors is given elsewhere in the Annual report.

CODE OF CONDUCT:

The Code of conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of conduct has also been place signed on the website the company. A declaration signed by the Managing Director is given elsewhere in the Annual report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A) Conservation of Energy Nil

B) Technology absorption, adoption and innovation.

Specific areas in which R & D carried out by the company Nil Benefits derived as a result of the above R & D Nil Future plan of action Nil Expenditure on R & D

a. Capital Nil

b. Recurring Nil

c. Total Nil

d. Total R & D Expenditure as a percentage of Total Turnover Nil

1) Efforts made towards Technology N.A

2) Benefits derived as a result of the above efforts N.A

3) In case of imported technology imported during 1st 5 years (reckoned for the beginning of the Financial year) following information is furnished:

a) Technology N.A

b) Year Import N.A

c) Has Technology been fully absorbed N.A

d) If not fully absorbed, area not applicable N.A

e) Where this has not been the case, reason therefore and future plans of action N.A

C) FOREIGN EXCHANGE EARNING & OUT GO

During the year Foreign Exchange out go was Rs.60.27 lakhs and Foreign Exchange earnings was Rs. Nil.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the excellent service rendered by all the employees of the Company.

DECLARATION BY MANAGING DIRECTOR OF AFFIRMATION BY DIRECTORS AND SENIOR MANAGEMENT PERSONNEL OF COMPLIANCE WITH THE CODE OF CONDUCT:

The shareholders

I, N. Ravi Prasad, Managing Director of the Company do hereby declare that the directors and senior management of the Company have exercised their authority and powers and discharged their duties and functions in accordance with the requirements of the code of conduct as prescribed by the company and have adhered to the provisions of the same.

For and on behalf of the board of Directors Southern Magnesium and Chemicals Limited

Place: Hyderabad (N.Ravi Prasad) Date: 13.08.2014 Managing Director


Mar 31, 2013

The Directors have pleasure in presenting the 27th Annual Report and the Audited Accounts for the year ended 31st March, 2013.

FINANCIAL REPORT / OPERATIONS: (Rs. In Lakhs)

Particulars Current Year Previous Year As on 31.03.2013 As on 31.03.2012

Net Sale and other Income 208.97 163.61

Profit/(Loss) Before Depreciation and Interest 60.02 (2.49)

Depreciation, and Interest 4.81 8.62

Net Profit / Net Loss (-) 55.21 (11.11)

Total Cum. Loss 602.40 (657.61)

It is with deep sorrow that we bring to your attention that our Founder and former Chairman, Padmashree Dr. N. B. Prasad has left for heavenly abode on 29th April this year leaving a big void amongst us. The Board wishes to place on record the unstinted support, advice and guidance that he has given during the last nearly three decades and for the selfless contributions he has made.

REVIEW OF OPERATIONS:

During the year 2012-13, the Company had an income of Rs. 208.97 Lakhs against which the Company incurred a net profit of Rs. 55.21 Lakhs as compared to the income of Rs. 163.61 Lakhs and a net loss of Rs. 11.11 Lakhs in the previous year 2011-12.

DIVIDEND:

In view of the accumulated losses, your Directors have decided not to recommend dividend for the year.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review.

LISTING:

The equity shares of your company are listed on BSE Limited.

CAPITAL OF THE COMPANY:

The Authorised Capital of the company stands at Rs. 5,00,00,000/- divided into 40,00,000 equity shares of Rs. 10/- each and 10,00,000 preference shares of Rs.10/- each. The Issued, Subscribed and Paid up capital of the company stands at Rs. 4,00,00,000 divided into 30,00,000 equity shares of Rs 10/- each and 10,00,000 preference shares of Rs.10/- each.

SUBSIDIARY COMPANY:

The Company has no subsidiaries.

INSURANCE:

The company''s assets have been adequately insured against major risks.

DIRECTORS:

In accordance with the Companies Act, 1956 read with Articles of Association of the company, the Director namely Sri. V. S. S. Prakash, Director retires by rotation and is eligible for re-appointment. Your Board recommends the re-appointment of the Director above in the best interests of the company.

Sri. Snehal A Thakkar resigned the Board on 30.05.2013 and the Board of Directors of the company places on record their sincere appreciation and thanks for the valuable guidelines and contribution given by Sri. Snehal A Thakkar.

Sri. K. Eshwaraiah was appointed as additional director on the board w.e.f. 30.05.2013.

BRIEF PROFILE OF SRI. V. S. S. PRAKASH:

Particulars Sri. V. S. S. Prakash

Date of Birth 12.05.1958

Date of Appointment 30.04.2009

Qualifications B.com

No. of Shares held in the Company Nil

BRIEF PROFILE OF SMT.MARIYAMMA

Particulars Smt.Mariyamma

Date of Birth 22.05.1957

Date of Appointment 01.02.2013

Qualifications DGM, APIDC (APIDC Nominee Director)

No. of Shares held in the Company Nil

BRIEF PROFILE OF SRI. K. ESHWARAIAH:

Particulars Sri. K. Eshwaraiah

Date of Birth 12.08.1954

Date of Appointment 30.05.2013

Qualifications DGM RRL (Retd.,) APIDC

No. of Shares held in the Company Nil

Directorships held in other companies Nil

DIRECTORS RESPONSIBILITY STATEMENT:

As required under section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

I) In the preparation of the Annual Accounts, the Applicable accounting standards have been followed.

II) 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 at the end of the financial year and of the profit or loss of the Company for the period:

III) Proper and sufficient care has been taken for the maintenance of adequate accounting record in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for the preventing and detecting fraud and other irregularities.

IV) The Directors have prepared the Annual Accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

AUDITORS

Your directors propose the appointment of M/s. K. S. Rao & Co, Chartered Accountants, Hyderabad as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company.

COST AUDITOR

Your Directors have appointed Sri Karuchola Koteshwara Rao, Hyderabad, Cost Accountant, as the cost auditor for the financial year 2012-13.

CLARIFICATIONS ON AUDITORS'' COMMENT IN AUDITORS REPORT:

1. Emphasis of matter: In view of the losses of the Company, the Board has taken decision to provide for gratuity when it materializes.

2. Basis for qualified opinion: Although this net worth of the Company has been eroded, the Company is presently making profits and hopes to come to positive net worth in the coming years.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

CORPORATE GOVERNANCE

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors is given elsewhere in the Annual report.

CODE OF CONDUCT:

The Code of conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of conduct has also been place signed on the website the company. A declaration signed by the Managing Director is given elsewhere in the Annual report.

C) FOREIGN EXCHANGE EARNING & OUT GO

During the year Foreign Exchange out go was Rs.85.67 lakhs and Foreign Exchange earnings was Rs. Nil.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the excellent service rendered by all the employees of the Company.

DECLARATION BY MANAGING DIRECTOR OF AFFIRMATION BY DIRECTORS AND SENIOR MANAGEMENT PERSONNEL OF COMPLIANCE WITH THE CODE OF CONDUCT:

The shareholders

I, N. Ravi Prasad, Managing Director of the Company do hereby declare that the directors and senior management of the Company have exercised their authority and powers and discharged their duties and functions in accordance with the requirements of the code of conduct as prescribed by the company and have adhered to the provisions of the same.

For and on behalf of the board of Directors

Southern Magnesium and Chemicals Limited

Sd/-

Place: Hyderabad (N.Ravi Prasad)

Date: 29.08.2013 Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the 24th Annual Report and the Audited Accounts for the year ended 31st March 2010.

FINANCIAL REPORT /OPERATIONS (Rs.Lakhs)

Particulars Current Year Previous Year As on 31.03.2010 As on 31.03. 2009

Net Sale and other income 64.34 115.01

Profit Before Depreciation and interest (10.56) 6.34

Depreciation and interest 6.18 268.67

Net Profit (net loss) (16.74) (262.33)

Total Cum. Loss (661.65) (644.91)

OPERATIONS

The Company is continuing business by procuring Magnesium Metal from Open market and processing the same to meet the requirements of customers.

Retirement of DIRECTORS by rotation

Sir.V.S.S. Prakash, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re appointment.

CLOSURE OF SHARE TRANSFER BOOKS

The Share Transfer Books will remain closed for three days from 27.09.2010, to 29.09.2010 both days inclusive.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed:

ii) The Directors have selected such accounting polices 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 and of the profit or loss of Company for the period.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting record 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

iv) The Directors have prepared the annual accounts on a going concern basis.

PARTICULARS OF EMPLOYEES

As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with (Companies Particulars of Employees) Rules, 1975, there are no employees who are in receipt of remuneration exceeding Rs.6.00 lakhs per annum.

AUDITORS

You are requested to appoint M/S. K.S.Rao & Company, Chartered Accountants, Hyderabad as auditors for the year 2010-2011 and fix their remuneration.

CORPORATE GOVERNANCE

As required by Clause 49 of the listing Agreement a Report on Corporate Governance is Appended.

DEPOSITS

In terms of Reserve Bank of India, Directions 1977 read with Section 58A of the Companies Act, 1956, the Directors Report as under:

1) Number of depositors who have not claimed their deposits been paid by the Company after due date Nil

2) Total amount remaining unclaimed/unpaid Nil

LISTING ON STOCK EXCHANGES:

Companys shares are listed in Mumbai Stock Exchange and Listing fees have been paid up to date to the Mumbai Stock Exchange.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation of the excellent service rendered by all the employees of the Company.

On behalf of the Board of Directors Sd/-

Place: Hyderabad (N.Ravi Prasad)

Date : 12-08-2010 Managing Director

 
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