Directors Report of Mangalore Chemicals & Fertilizers Ltd.
Mar 31, 2023
Your Directors have pleasure in presenting the Fifty Sixth Annual Report of Mangalore Chemicals & Fertilizers Limited ("Company") together with the Audited Statement of Accounts for the financial year ended March 31, 2023.
|
1. |
FINANCIAL HIGHLIGHTS |
(INR in crore) |
|
|
2022-23 |
2021-22 |
||
|
Revenue from operations |
3,641.52 |
2,895.58 |
|
|
EBITDA |
340.08 |
234.62 |
|
|
Finance Costs |
104.38 |
49.40 |
|
|
Depreciation |
59.67 |
50.56 |
|
|
Profit before tax |
176.03 |
134.66 |
|
|
Tax expense |
41.37 |
46.80 |
|
|
Profit after tax |
134.66 |
87.86 |
|
|
Other Comprehensive Income/(Loss) |
(0.32) |
(0.20) |
|
|
Total Comprehensive Income |
134.34 |
87.66 |
|
|
Earnings Per Share (Basic & Diluted) INR |
11.36 |
7.41 |
|
|
Net Worth |
803.19 |
683.07 |
|
The Board of Directors recommended a dividend of INR 1.50 per equity share of INR 10 each. The Dividend Distribution Policy is available on the website of the Company i.e. www.mangalorechemicals.com/investor/investor dividenddistribution policy
The revenue from operations for the year ended March 31, 2023 was INR 3,641.52 crore as compared to INR 2,895.58 crore for the year ended March 31, 2022.
The profit before tax for the year ended March 31, 2023 was INR 176.03 crore as compared to INR 134.66 crore for the year ended March 31, 2022. Total Comprehensive Income stood at INR 134.34 crore for the year ended March 31, 2023 compared to INR 87.66 crore for the previous year.
Your Company achieved production of 3,31,690 MTs during
the year against the reassessed capacity of 3,79,500 MTs on account of shutdown of urea plant for implementation of Energy Improvement Project in Ammonia Plant compared to 4,29,000 MTs during the previous year with necessary approval.
Di-Ammonium Phosphate (DAP) and Complex Fertilizers
Your Company produced 2,29,826 MTs of Phosphatic Fertilizers during the year compared to 2,51,854 MTs in the previous year, based on the availability of raw materials.
Ammonium Bi-Carbonate (ABC)
Production of ABC at 11,004 MTs during the year compared to 14,366 MTs in the previous year.
During the year, your Company sold 3,30,934 MTs of Urea compared to 4,31,110 MTs in the previous year. Sale of manufactured Phosphatic Fertilizers were 2,53,116 MTs compared to 2,39,959 MTs in the previous year. Sale of imported fertilizers were 30,180 MTs against 26,010 MTs in the previous year.
Sulphonated Naphthalene Formaldehyde (SNF)
The Company sold 17,081 MTs of SNF during the year, compared to 18,135 MTs in the previous year. The Company has continued with new product variants for applications in newer areas to improve plant utilization, in order to de-risk its focus on construction chemical industry.
We provide a comprehensive range of Agri Advisory Services designed to educate and inform farmers and Agri input dealers on various topics, including fertilizer use efficiencies, integrated nutrient management, soil health and other agricultural techniques. To accomplish this, we regularly organize market development programs that cater to both farmers and dealers. These programs include our Farmer-Connect initiatives such as Soil Health Days, Farmers Meetings, Crop Seminars, Method Demonstrations, Field Days and Intensive Farmer Connect Programs. Additionally, we actively engage with rural school children through our "Mangala Raitha Prathibe" project, aiming to educate them about farming and modern agriculture, thereby inspiring them to pursue agriculture as a profession or develop a connection with the agricultural sector.
The subsidy receivables increased during the year on account of escalation in commodity prices coupled with rupee depreciation. The estimated interest cost on account of delay in subsidy payment was INR 6.80 crore for the year 2022-23.
7. AMMONIA PLANT ENERGY IMPROVEMENT PROJECT
The ammonia plant is revamped based on KBR''s design by technological upgradation, replacement of aged equipment with new generation high efficiency equipment, recovery of waste heat and optimization of steam usage. The revamp has also increased about 25% capacity in Ammonia production substituting the part of Company''s ammonia import.
Erection, hook up and commissioning works of the project were carried out in the second quarter of the financial year during the plant shutdown. The Project was successfully completed and production was commenced in September 2022. The plant has completed more than 180 days of operation since completion of the project without major interruption as on 31st March 2023.
The revamp has considerably improved reliability of Ammonia plant by replacement of aging equipment.
Utility sections were also strengthened with addition of capacity to Nitrogen generation, Instrument Air Drying and Cooling water side stream filtrations. These initiatives have improved reliability of the section.
The writ petition filed by the Company before the Hon''ble High Court of Delhi (DHC) seeking remedy against some restrictive & discriminatory conditions imposed by the Notification No. 12018/4/2014-FPP dated June 17, 2015, was disposed since the GOI confirmed that the Company would be eligible for the benefits as are available to other manufacturers of Urea who have converted their manufacturing processes to gas based and are now utilizing gas for production of Urea.
The GOI issued Notification No.12012/1/2015-FPP dated March 28, 2018 confirming the availability of benefits to the Company for having converted its manufacturing process to gas based, on receipt & use of gas for production of Urea and continuation of existing policy till March 2020.
The Company has filed a writ petition against the DoF before DHC after its vain representations against arbitrary and discriminatory non extension of existed energy norms beyond March 2020 and bench marking the cost of production of Urea by using naphtha with that of gas price of fertilizer companies recently converted to natural gas.
The Nutrient Based Subsidy Scheme (NBS) was introduced by the GOI with effect from April 1, 2010 after de-controlling the DAP/complex fertilizers, where annual/bi-annual concession rates are announced leaving the market realization to reflect the fluctuations in respective commodity prices. However, the GOI is monitoring the market realization.
9. SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROLSAFETY
During the year, periodic audits of Safety, Health and Environment Management System were carried out by M/s DNV.
Your Company has taken measures to further strengthen safety systems inside the factory. Fixed Natural Gas leak detectors have been installed in areas of recently converted (Fuel Oil to Natural Gas) burners of Package Boiler and Dryer Combustion chamber in the DAP Plant and Standby auxiliary Boiler (IJT) in Ammonia Plant for early detection and alarm in case of any gas leaks. Addressable Fire Detection/Alarm system was extended to the Office area of Main Stores, New cable gallery in Captive Power Plant, Panel area in MPSS and New PLC room. ''Safe-Owl'' - a new Fire & Safety Equipment Inspection software for logging the inspection data of various safety and firefighting equipment on an online platform - was implemented. This paperless initiative will improve the process of inspection and improves reliability.
Third party safety audit of the entire factory was carried out. Extensive training programs related to fire prevention and basic firefighting, usage of breathing apparatus, usage of personal protective equipment, emergency management, work permit system, Safety, Health and Environment management system, were organized for employees. Regular mock drills were also conducted to check the emergency preparedness. Promotional campaigns like National Safety Day, Fire Service Week and Chemical Disaster Prevention Week were undertaken. Firefighting training is being conducted every Friday to train the employees and also contractors'' workman.
MCF Team won First Prize in the State Level safety Quiz Competition organized by Department of Factories, Boilers, Industrial Safety and Health, Government of Karnataka.
Annual medical examinations were conducted for all employees which included general physical examination, systemic examination and laboratory investigations and employees with abnormal findings were advised accordingly. Special tests like Pulmonary Function test, Audiometry and Vision test were also conducted for identified employees as per Statutory requirement. Health data of all the employees were recorded in Health Register-Form No. 16.
Medical examination of the canteen workers was conducted covering tests for any communicable diseases. Employees of Ammonium Bi-Carbonate Plant were examined for any communicable/skin diseases and were immunized against diseases like Hepatitis B and Tetanus as per schedule.
First aid training programmes were conducted for employees and contract workers regularly by Professional Faculty. Awareness programmes on "Health and Personal Hygiene" were conducted regularly for Canteen workers and ABC Plant employees. Training on proper usage of Spine Board and Splints in handling emergencies was conducted for the employees regularly.
Free Health Check-up camp was conducted for Loaders and Truck Drivers in association with Srinivasa Medical College Hospital, Mukka.
Blood donation camp was organized at factory in March 2023 in association with Indian Red-cross Society on occasion of Adventz Day.
COVID Vaccination camp was conducted in association with Primary Health Centre, Kulai and total 550 employees/Contract employees received Booster dose of the vaccine.
Free Eye Check-up camps were conducted at Krishnapura, near Surathkal and Ballamanja, near Belthangady in association with Justice K.S. Hegde Charitable Hospital and Artificial Limbs were distributed to 11 beneficiaries, both as part of CSR Activity.
As an ISO 14001 certified Company, many environmental management programs have been implemented to improve the environmental performance of the Company.
The Company has changed its Feedstock and Fuel from Naphtha to cleaner Natural Gas which has significantly reduced Sulphur Dioxide emissions.
Your Company has achieved zero liquid discharge status in 2010 by upgrading its effluent and sewage treatment plants to recover and reuse the treated waters. The rainwater harvesting system and sewage treatment plants are already installed at township for employees. In addition to the existing 64 acres of green belt in manufacturing site, your Company has planted 2,000 saplings during 2022-23.
Environmental Management System (EMS) in line with the new version, ISO 14001:2015 was adopted during the year 2017 and was recertified by M/s Det Norske Veritas, Bangalore during the year 2020. Your Company has installed Continuous Ambient Air Quality Monitoring (CAAQM) station inside factory premises for continuous monitoring of ambient air quality. Ambient air quality data from CAAQM station is being displayed in LED display board at the entrance of the factory facing National highway for public information. Your Company has also installed Continuous Online Monitoring Systems in Urea prill tower, Di Ammonium Phosphate plant stack, Sulphuric Acid plant stack. Online analyser for NOx measurement in Captive Power Plant stacks and main plant Boiler stacks were installed and commissioned during the year 2020-21 as per the Central Pollution Control Board (CPCB) guidelines. All the online analysers are functioning and the data is being transmitted to CPCB continuously.
In-house Environment Laboratory at factory has been assessed and accredited in accordance with standard ISO/ IEC 17025:2017 by National Accreditation Board for Testing and Calibration Laboratories (NABL). Lighting in the entire complex including hazardous area lighting has been now converted to LED lighting. Over 5,750 LED light fittings were installed over past three years with focus on reducing energy consumption. Installed "Solar water heater" for our Industrial canteen. The company has installed roof top solar PV plant of capacity 251.23 KWP. "E-waste Collection Facility" has been provided inside factory and also at MCF Township for collection and disposal of E-waste generated in a scientific manner. A Biogas plant is installed to generate cooking gas from canteen
food waste is operational and is contributing towards savings of natural resources. Company has installed Organic waste composting facility at its township to treat the wet waste generated in the colony houses.
The Company has registered itself with CPCB with respect to Plastic Waste Management Rule 2016 as Brand Owner and has engaged one Waste Management Agency for collection, transportation and recycling of the plastic waste generated in the market. The activity is completed for the year 2022-23 and will be continued for the year 2023-24.
The company has installed and commissioned highly efficient oxidizing biocide generating system based on most advanced technology available in market to produce Chlorine dioxide for treatment of circulating water of cooling tower, replacing the conventional generators. It has improved the circulating water quality further, reduced blow down quantity and hence generation of trade effluent.
Your Company has taken up initiative by commissioning Roof Top Solar Photo Voltaic System with a capacity of 251.23 kWp at plant in Mangalore in January 2019. During the year, 2,99,131 kWh and since commissioning, 13,27,556 kwh, of solar power was generated.
Annual Return referred to in Section 92(3) of the Companies Act, 2013 will be available on the website of the Company i.e. www.mangalorechemicals.com/investor/annual return
During the year, seven Board Meetings were held on May 17, 2022, July 07, 2022, August 01, 2022, November 03,
2022, January 12, 2023, January 30, 2023 and March 25,
2023. The details of the composition of the Board and attendance of the Directors at the Board Meetings, are provided in the Corporate Governance Report attached as Annexure 5.
During the year under review, five Audit Committee Meetings were held and all the recommendations of the Audit Committee were accepted by the Board. The details of the composition of the Audit Committee and details of committee meetings are given in the Corporate Governance Report attached as Annexure 5.
12. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with 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 at the end of the financial year and of the profit and loss of the Company for that period;
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 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 operating effectively;
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.
13. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration of independence from the Independent Directors and the same have been noted by the Board of Directors in its meeting held on May 11, 2023.
Mr. Marco Philippus Ardeshir Wadia (DIN: 00244357) was appointed as Additional Director (Independent Director) with effect from May 13, 2022 and his appointment was approved by the shareholders through postal ballot on July 31, 2022 (last date of e-voting).
Mr. Shubhabrata Saha (DIN: 03036747) Managing Director, resigned from the services of the Company from the closing hours of November 03, 2022.
Mr. Nitin Manguesh Kantak (DIN: 08029847) was appointed as Whole-time Director of the Company for a term of 3 years with effect from November 03, 2022 to November 02, 2025 and his appointment was approved by the shareholders through postal ballot on December 30, 2022 (last date of e-voting).
Mr. Sabaleel Nandy (DIN: 08677564) was appointed as Additional Director (Non-Executive Director) with effect from November 03, 2022, his appointment was approved by the shareholders through postal ballot on December 30, 2022 (last date of e-voting) and resigned on March 25, 2023.
Mr. N Suresh Krishnan (DIN: 00021965) was appointed as Additional Director (Non-Executive Director) with effect from March 25, 2023.
Mr. Akshay Poddar (DIN: 00008686) Non-Executive Director and Chairman of the Company is retiring by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment.
In the opinion of the Board of Directors, all the Independent Directors possess requisite expertise and experience on the roles, rights and responsibilities of Independent Directors.
15. DIRECTORS TRAINING & FAMILIARIZATION
The Company, in compliance with Regulation 25(7) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, formulates programs to familiarize new Independent Directors inducted on the Board with the Company, nature of the industry, business model and their roles and responsibilities.
Pursuant to the provisions of the Section 134, 178 and Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the following performance evaluations were carried out:
a. Performance evaluation of the Board, Chairman and nonIndependent Directors by the Independent Directors;
b. Performance evaluation of the Board, its committees and Independent Directors by the Board of Directors; and
c. Performance evaluation of every Director by the Nomination and Remuneration Committee.
The evaluation process covered adequacy of the composition of the Board and its Committees, disclosure of information to the Board and Committees, performance of duties and obligations, governance parameters, participation of the members of the Board/Committees and fulfilment of independence criteria and maintaining independence from the management by the Independent Directors.
Based on the evaluation done by the Directors, the performance of the Board, its Committees and the Directors was satisfactory and the quality, quantity and timeliness of flow of information between the management and the Board was appreciable.
17. NOMINATION AND REMUNERATION POLICY
Based on the recommendation of the Nomination and Remuneration Committee, the Board has approved the Nomination and Remuneration Policy. The Nomination and Remuneration Policy provides for constitution & role of Nomination and Remuneration Committee, guidelines on procedure for appointment/removal of Director, Key Managerial Personnel or at Senior Management level, recommendation for remuneration, compensation and commission to be paid to the Managing Director/Whole-time Director/Non-Executive Directors and carrying out evaluation of performance of every Director and Key Managerial Personnel.
The Nomination and Remuneration Policy is placed on the website of the Company i.e. www.mangalorechemicals.com/ investor/investor nomination remuneration policy.
18. SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The Company does not have any subsidiary, associate or joint venture.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the provisions of the Companies Act, 2013 the Board of Directors have constituted a CSR Committee and also approved the CSR Policy.
The CSR Committee formulates and recommends to the Board a CSR Policy which shall indicate the activities to be undertaken by the Company, as specified in Schedule VII of the Companies Act, 2013. The Committee also recommends the amount of expenditure to be incurred on CSR activities and monitors the CSR Policy of the Company from time to time. Other terms of reference are given below;
⢠The Corporate Social Responsibility Committee shall meet atleast once in a financial year.
⢠The quorum for the meetings shall be at least 2 members.
⢠The Committee shall recommend the amount of expenditure to be incurred on the CSR activities on an annual basis.
⢠The Committee shall monitor & recommend to the Board changes to the Corporate Social Responsibility Policy from time to time.
⢠The Company Secretary shall act as the secretary of the CSR Committee.
During the year, the Committee met twice on May 17, 2022 and
July 07, 2022. The attendance at the meeting was as follows:
|
Name of the member |
Status |
No. of meetings attended |
|
Rita Menon |
Chairperson |
2 |
|
D A Prasanna |
Member |
2 |
|
Shubhabrata Saha$ |
Member |
2 |
|
Nitin M Kantak@ |
Member |
- |
$ upto 03.11.2022, @ w.e.f. 03.11.2022 Based on the recommendation of the CSR Committee, the Company has formulated a comprehensive CSR policy. The detailed Annual Report on Company''s CSR activities is furnished in Annexure 1 attached to this report.
20. WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has established a vigil mechanism through Whistle Blower Policy and the Audit Committee of the Company is responsible to review periodically the efficient and effective functioning of the vigil mechanism, to deal with instances of fraud and mismanagement and suspected violations of the Company''s Code of Business Conduct and Ethics, if any.
The Whistle Blower Policy provides for adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The Whistle Blower Policy is placed on the website of the Company i.e., www.mangalorechemicals.com/investor/ investor whistle blower policy.
The Company has the requisite processes and procedures in place to identify and assist in minimizing exposure to risk that threaten the existence of the Company. Based on the recommendation of the Risk Management Committee, the Board has put in place a risk management policy to monitor and review potential risks.
The heads of departments regularly review and assess the departmental policies/procedures and identify risks, perform analysis of the frequency and severity of potential risks, select the best techniques to manage risk, implement appropriate risk management techniques and monitor, evaluate and document results.
22. LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013 during the year. The details of the investments made by Company are given in the notes to the financial statements.
23. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the year were at arm''s length. All related party transactions were approved by the Audit Committee and the Board of Directors.
The details of related party transactions as per Form AOC-2 is enclosed as Annexure 2 to the Directors'' Report. There were no related party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.
The Company has not accepted any deposits in the past or during the year.
The Statutory Auditors, M/s PKF Sridhar & Santhanam LLP, were appointed to hold office from the conclusion of 55th Annual General Meeting till the conclusion of 60th Annual General Meeting of the Company.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company re-appointed Mr. S Kedarnath, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the year 2022-23. The Secretarial Audit report is annexed herewith as Annexure 3.
The Company is required to maintain cost records as per Section 148(1) of the Companies Act, 2013, and accordingly such accounts & records are made and maintained. The Company appointed Mr. Y K Venkatesh, Cost Accountant, Membership No. 5294, as the Cost Auditor for the year 2022-23. The Cost Audit Report for the year ended March 31, 2022 was filed by the Company with the Ministry of Corporate Affairs on August 04, 2022.
There were no qualifications, reservations or adverse remarks made by the Statutory Auditor, Secretarial Auditor and Cost Auditor in their respective reports. No frauds have been reported by the Auditors during the year.
29. MATERIAL CHANGES & COMMITMENTS
There were 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 financial statements relate and the date of this report.
30. SIGNIFICANT & MATERIAL ORDERS
No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
31. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
The Company has adequate systems of internal control in place, which is commensurate with its size and the nature of its operations. The Company has designed and put in place adequate Standard Operating Procedures and Limits of Authority Manuals for conduct of its business, including adherence to Company''s policies, safeguarding its assets, prevention and detection of fraud and errors, accuracy and
completeness of accounting records and timely preparation of reliable financial information.
These documents are reviewed and updated on an ongoing basis to improve the internal control systems and operational efficiency. The Company uses a state-of-the-art ERP (SAP) system to record data for accounting and managing information with adequate security procedure and controls.
32. COMPLIANCE OF SECRETARIAL STANDARDS
The Company has complied with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.
33. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013
Details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, shall form part of this report. However, in terms of Section 136 of the Companies Act, 2013, this report is being sent to all the members of the Company excluding the aforesaid information. The said particulars are available for inspection by the Members at the Registered Office of the Company.
34. DISCLOSURE AS PER SECTION 22 OF THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaint has been filed or pending before the Committee during the year.
35. 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 furnished in Annexure 4 attached to this report.
36. OTHER DISCLOSURES UNDER RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014 AND SCHEDULE V OF SEBI (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015
No application was made or any proceedings filed against the Company under the Insolvency and Bankruptcy Code, 2016 during the Financial Year 2022-23. The Company has not given any Loans and advances in the nature of loans to firms/ companies in which Directors are interested. There were no one time settlement against any of the loan availed by the Company from the Banks or Financial Institutions during the Financial Year 2022-23.
The Company is committed to good corporate governance practices. The Board endeavors to adhere to the standards set out by the Securities and Exchange Board of India (SEBI) on corporate governance practices and accordingly has implemented all the mandatory stipulations.
A detailed Corporate Governance Report in line with the requirements of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 regarding the corporate governance practices followed by the Company and the certificate from Practicing Company Secretary relating to compliance of mandatory requirements along with Management Discussion and Analysis report are given as Annexure 5 and 6 respectively. A statement regarding opinion of the Board, with regard to integrity, expertise and experience (including proficiency) of the Independent Directors appointed during the year is given in Corporate Governance Report annexed as Annexure 5.
38. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to amended Regulation 34(2)(f) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the top 1000 listed companies based on market capitalization calculated as on March 31 of every financial year, need to prepare Business Responsibility and Sustainability Report in the format as specified by SEBI vide its circular dated May 10, 2021. Accordingly, your Company being one of the top 1000 listed companies based on market capitalization as on March 31, 2023, has prepared business responsibility and sustainability report which is annexed as Annexure 7.
Your Directors wish to place on record their sincere appreciation for the guidance and advice given by Mr. Shubhabrata Saha and Mr. Sabaleel Nandy.
Your Directors thank the Company''s clients, vendors, investors and bankers for their support. Your Directors also wish to place on record their appreciation of the excellent performance of the employees.
Your Directors express their gratitude to the Government of India, the State Governments, the Customs and Excise Departments and other government agencies for their support and look forward to their continued support in the future.
For and on behalf of the Board of Directors,Akshay Poddar
Chairman DIN: 00008686
May 11, 2023
Mar 31, 2018
1. The Directors place before you the Fifty First Annual Report of the Company together with Statement of Accounts for the financial year ended March 31, 2018.
2. FINANCIAL HIGHLIGHTS
(Rs. in Crores)
|
2017-18 |
2016-17 |
|
|
Revenue from operations |
2,692.90 |
2,493.99 |
|
EBITDA |
202.46 |
181.67 |
|
Finance Costs |
90.42 |
116.29 |
|
Depreciation |
36.99 |
35.26 |
|
Profit before tax |
75.05 |
30.12 |
|
Tax expense |
14.46 |
10.70 |
|
Profit after tax |
60.58 |
19.41 |
|
Other Comprehensive Income/(Expense) |
(0.16) |
0.11 |
|
Total Comprehensive Income |
60.42 |
19.52 |
|
Earnings Per Share (Basic & Diluted) Rs. |
5.11 |
1.64 |
|
Net Worth |
477.33 |
424.03 |
3. DIVIDEND
The Board of Directors recommended a dividend of Re.1 per equity share of Rs.10/- each.
4. REVIEW OF OPERATIONS
The revenue from operations for the year ended March 31, 2018 was Rs. 2,692.90 crores as compared to Rs. 2,493.99 crores for the year ended March 31, 2017.
The profit before tax for the year ended March 31, 2018 was Rs. 75.05 crores as compared to Rs. 30.12 crores for the year ended March 31, 2017. Total Comprehensive Income stood at Rs. 60.42 crores for the year ended March 31, 2018 compared to Rs. 19.52 crores for the previous year. The results for the year ended March 31, 2018 were primarily achieved on account of operational efficiency, lower finance cost and the favourable market conditions.
5. PRODUCTION Urea
Your Company achieved production of 4,09,500 MTs during the current year.
Di-Ammonium Phosphate (DAP) and Complex Fertilizers
Your Company produced 2,65,552 MTs of Phosphatic Fertilizers during the year compared to 2,62,046 MTs in the previous year.
Ammonium Bi-carbonate (ABC)
Production of ABC at 16,693 MTs during the year compared to 13,014 MTs in the previous year.
6. SALES
During the year, your Company sold 4,03,011 MTs of Urea compared to 3,79,400 MTs in the previous year. Sales of manufactured Phosphatic Fertilizers were 2,54,297 MTs compared to 2,59,792 MTs in the previous year. Sales of imported fertilizers were 3,44,996 MTs against 2,91,599 MTs in the previous year.
Sulphonated Naphthalene Formaldehyde (SNF)
The plant set up in August 2010 for manufacture of SNF on a modular basis can take care of increased demand. The Company sold 17,621 MTs of SNF during the year, compared to 16,051 MTs in the previous year. The Company has continued with new product variants for applications in newer areas to improve plant utilization, in order to de-risk its focus on construction chemical industry.
Specialty Plant Nutrition (SPN) Products
The country is facing a serious problem of deterioration in soil productivity due to indiscriminate and imbalanced use of Urea and NPK fertilizers, inadequate use of other nutrients essential for plant growth and injudicious use of irrigation water. In order to arrest soil deterioration and improve soil conditions and its productivity, your Company continues to supply products that maintain soil health, provide balanced and complete nutrition, and improve crop health.
In order to support marketing requirement with timely supply of quality SPN products, the specialty fertilizer manufacturing facility in Mangalore with an annual capacity of 12,000 MT of Water Soluble Fertilizers and Micronutrient Mixtures, has greatly helped in growth of SPN products business.
To address the nutrient deficiencies noticed in the soil resulting in lower productivity or crop failure in the areas serviced by Company''s Marketing network, R&D unit of the Company at Hassan has been developing nutrient mixtures, enriched organic manure products and soil conditioners to mitigate crop specific issues, apart from providing analytical and advisory service to farmers. The response from the crop growers on the effectiveness of these products has been very positive and there is a growing demand for development of similar products for other crops.
In order to encourage scientific application of fertilizers and plant nutrients, your Company has been trying to introduce these concepts at the grass roots level. To actively focus attention of all concerned on the specifics involved therein, lot of customer education programs were carried out to popularize usage of SPN products under the concept of Mangala Integrated Nutrient Management (Mangala INM).
Concentrated and continued effort in identifying customer needs, introducing suitable SPN products and educating farmers as well as channel partners in proper use of these inputs has resulted in achieving a turnover of Rs. 167 Crores during the year.
Crop Protection Chemical (CPC) Products
As a part of diversification and growth strategy, and in order to offer a wider range of agri. inputs, a collaborative approach was adopted by your Company for marketing the products of reputed pesticide companies through its channel partner network. Your Company has also introduced selected molecules in its own brand. The Crop Protection Chemical business registered a turnover of Rs. 29 crores during the year.
Analytical and Advisory Service
To promote the concept of Integrated Nutrient Management (Mangala INM), R & D facility at Hassan continues to analyze samples of soil, water, plant tissues, plant nutrients, organic manures, soil amendments, fertilizers etc. Through this facility, analysis of the samples pertaining to customers is done and appropriate recommendations for soil health management and crop management are given. Suitable follow up is done by Company''s experts and extension workers to ensure effective implementation of the recommendation. All these are provided to customers free of cost to ensure their active participation in achieving profitability and sustainability in agriculture.
7. WORKING CAPITAL
Continued under-provisioning for fertilizer subsidy in the Union Budget with resultant unusual delay in subsidy payment by Government of India (GOI) contributed to precarious working capital condition and increased working capital costs.
8. MODERNIZATION OF AMMONIA/UREA PLANTS
Natural Gas Conversion Project
All equipment related to NG conversion project were installed in ammonia and captive power plant. Majority of the equipment were commissioned successfully and plant is ready in all respects to receive natural gas.
As informed by GAIL (India) Ltd., the progress in the laying of gas pipeline from Kochi to Mangaluru has picked up momentum in this financial year and the pipeline is expected to be ready by end of 2018-19.
Ammonia Plant Energy Improvement Project
The Government of India (GOI) in pursuit to manage the subsidy burden is reducing the energy norm as a mandate to all the urea manufacturing units. As a preparedness to this mandate, the Company has taken up Ammonia Plant Energy Improvement project to reduce overall energy consumption of Urea production. Separate studies were conducted by two renowned Ammonia plant licensors and Kellog Brown & Root LLC, USA, was chosen for licensing and to carry out basic egineering of the project. Basic Engineering was completed in September 2017. The work on detailed engineering started in October 2017. Placement of order for long lead items is planned for second quarter of 2018-19 with estimated commissioning by first quarter of 2020-21.
9. FERTILIZER POLICY
The Government of India (GOI) by its notification No.12012/3/2010-FPP dated 2nd April 2014 specified that the production of high cost naphtha based units will continue under modified NPS - III till the gas availability and connectivity is provided to these units or June 30, 2014, whichever is earlier, beyond which subsidy for naphtha based units will not be paid, which was further extended until September 30, 2014. Laying of Gas pipeline from Kochi to Mangalore by GAIL (India) Limited made negligible progress till then.
The GOI allowed operation of Naphtha based urea plants for 100 days as per Notification No. 12012/3/2010-FPP from January 07, 2015 pursuant to the legal process initiated by the Company & permitted continuation of the same policy till June 16, 2015.
The GOI vide its Notification No.12018/4/2014-FPP dated June 17, 2015 allowed continuation of production of urea by 3 Naphtha based units (MFL - Manali, MCFL - Mangalore and SPIC - Tuticorin) till these plants get assured supply of gas either by gas pipeline or any other means. The Company had approached Hon''ble High Court of Delhi seeking remedy against some restrictive conditions imposed in terms of the subsidy mechanism that reduces the eligible subsidy, which are discriminatory compared to the recently converted naphtha based urea plants.
The petition was disposed since the GOI confirmed that the Company would be eligible for the benefits as are available to other manufacturers of Urea who have converted their manufacturing processes to gas based and are now utilizing gas for production of Urea.
The GOI issued Notification No.12012/1/2015-FPP dated March 28, 2018 confirming the availability of benefits to the Company for having converted its manufacturing process to gas based, on receipt & use of gas for production of Urea and continuation of existing policy till March 2020.
The Nutrient Based Subsidy Scheme (NBS) was introduced by the GOI with effect from April 1, 2010 after de-controlling the DAP/complex fertilizers, where annual /bi-annual concession rates are announced in advance leaving the market realization to reflect the fluctuations in respective commodity prices. However, the GOI is monitoring the market realization.
10. SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Safety
Recertification of OHSAS 18001:2007 was done by the certification body DNV-GL during the year. In addition to the periodic audits carried out under the integrated management system, a statutory - annual safety audit was also carried out by external auditors Rams Safety Consultants, Chennai.
A public awareness programme was conducted at Shree Devi Institute of Technology in December 2017.
Lock-Out/Tag-Out (LOTO) system was implemented throughout the plant to avoid accidents due to inadvertent release of hazardous energy thereby enhancing safety of working personnel. Fire alarm system has been extended to cover more areas in the plant.
Extensive training programs related to rescue operations, usage of personal protective equipment, emergency management, Fire Safety at home, Safety, Health and Environment management system, were organized for employees. Regular mock drills were also conducted to check the emergency preparedness. Awareness campaigns like National Safety Day, Fire Service Week and Chemical Disaster Prevention Week were undertaken.
Firefighting training is being conducted every Friday to train the employees and also contractors'' workmen. Various training programmes (Audio, Visual & practical) were conducted both at works and township.
Health
Periodic medical examination was conducted for all the employees and contract workers which included general physical examination, systemic examination and laboratory investigations.
Special tests like pulmonary function test for the employees who are exposed to dust and chemicals, audiometry for those exposed to noise and vision test for those who require high visual acuity at workplace were conducted by experts as per schedule.
Medical examination of the canteen workers was conducted with more stress on personal hygiene and tests were conducted for any communicable diseases. Medical health data of all the employees was generated after receiving the reports and the findings were incorporated in Form No.16 as per statutory requirement. The employees with abnormal findings on annual medical examination were counselled and advised regarding further management.
First aid training programmes were conducted for employees and contract workers regularly. Health awareness programmes on various subjects like Plastic Surgery - the art of healing, Diabetes-Causes & Management, Ergonomics-Helping to work better, Liver Disorders-Causes & Management, were conducted by the experts for the employees. Practical session on Yoga for healthy Living was conducted for employees by a Yoga expert.
Health & Eye check-up camps, Dental check-up/awareness camps, Cardiac Check-up camps were conducted in neighbouring villages and schools. Our Medical team has delivered talk on "Occupational Health & Hygiene" for the employees of neighboring industries. "Arogya Seva Ratna Award" was conferred to the present Head of Medical Services of the factory by Department of Boilers, Industries & Occupational Health, Government of Karnataka for his contribution in the field of Occupational Health in year 2017.
Environment
As an ISO 14001 certified company, many environmental management programs have been implemented to improve the environmental performance of the Company. The Company achieved zero liquid discharge status in 2010 by upgrading its effluent and sewage treatment plants to recover and reuse the treated waters. The rainwater harvesting system and sewage treatment plants are already installed at its Township for employees. In addition to the existing 64 acres of green belt in its manufacturing site, the Company has planted 2,000 saplings during 2017-18.
Environmental Management System (EMS) in line with the new version, ISO14001:2015 was implemented in during the year and certified by M/s Det Norske Veritas, Bangalore valid up to 16th August 2020.
Environment Laboratory of the Company has been assessed and accredited in accordance with standard ISO/IEC 17025:2015 by National Accreditation Board for Testing and Calibration Laboratories (NABL).
The Company has installed Continuous Ambient Air Quality Monitoring (CAAQM) station inside factory premises for continuous monitoring of ambient air quality. Ambient air quality data from CAAQM station is being displayed in LED display board at the entrance of our factory facing National highway for public information. The Company has also installed Continuous Online Monitoring Systems in Urea prill tower, DAP plant stack and sulphuric acid plant stack as per the Central Pollution Control Board (CPCB) guidelines.
11. EXTRACTS OF ANNUAL RETURN
Pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return are furnished in Annexure 1 attached to this Report.
12. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
During the year, four Board Meetings were held on May 18, 2017, July 29, 2017, October 26, 2017 and February 09, 2018.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
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 at the end of the financial year and of the profit and loss of the Company for that period;
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 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 operating effectively;
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.
14. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration of independence from the Independent Directors and the same have been noted by the Board of Directors in its meeting held on May 24, 2018.
15. DIRECTORS
The Board of directors at its meeting held on July 29, 2017, based on the recommendation of the Nomination and Remuneration Committee, appointed Mr. Sunil Sethy and Mrs. Rita Menon as Additional Directors which was approved by the members at the Annual General Meeting held on September 25, 2017.
Mr. Akshay Poddar will be retiring by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.
Mr. Kapil Mehan and Mrs. Ritu Mallya resigned from the Board of Directors with effect from June 03, 2017 and July 06, 2017 respectively.
16. DIRECTORS'' TRAINING & FAMILIARIZATION
In accordance with the provisions of Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had organized a Familiarization Programme. Mrs. Rita Menon, who was inducted on the Board of Directors on July 29, 2017 visited the Company''s plant at Mangalore on December 14, 2017 and the management made a presentation on the nature of the industry and the business model practiced by the Company explaining the various manufacturing activities, viz. Urea, DAP, ammonia, etc. and was briefed about the end to end production process and operation of the plant.
The Independent Directors of the Company were invited to the Board meeting of Zuari Agro Chemicals Limited, the holding company, held on April 18, 2018 wherein 5 year strategy plan for agri. business of Adventz group was presented which covered global fertilizer supply/demand outlook, developments in global fertilizer market, domestic market demand projections and market share of agri. business of Adventz group.
17. PERFORMANCE EVALUATION
Pursuant to the provisions of the Section 134, 178 and Sch. IV of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the following performance evaluations were carried out;
a. Performance evaluation of the Board, Chairman and nonIndependent Directors by the Independent Directors;
b. Performance evaluation of the Board, its committees and Independent Directors by the Board of Directors; and
c. Performance evaluation of every Director by the Nomination and Remuneration Committee.
The evaluation process covered adequacy of the composition of the Board and its Committees, disclosure of information to the Board and Committees, performance of duties and obligations, governance parameters, participation of the members of the Board and the Committees.
Based on the evaluation done by the Directors, the performance of the Board, its Committees and the Directors was satisfactory and the quality, quantity and timeliness of flow of information between the management and the Board was appreciable.
18. NOMINATION & REMUNERATION POLICY
Based on the recommendation of the Nomination and Remuneration Committee, the Board has approved the Nomination & Remuneration Policy which deals with appointment and removal of the Directors, evaluation of the Directors, remuneration for the Directors, Key Managerial Personnel and Senior Management which is attached to this Report as Annexure 2.
19. SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The Company does not have any Subsidiary, Associate Company or Joint venture.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors has constituted a CSR Committee and also approved the CSR Policy.
Terms of Reference:
The CSR Committee formulates and recommends to the Board a CSR Policy which shall indicate the activities to be undertaken by the Company, as specified in Schedule VII of the Companies Act, 2013. The Committee also recommends the amount of expenditure to be incurred on CSR activities and monitors the CSR Policy of the Company from time to time.
During the year, the Committee met twice on May 17, 2017 and July 29, 2017. The attendance at the meeting was as follows :-
|
Name of the member |
Status |
No. of meetings attended |
|
Narendra Mairpady |
Chairman |
2 |
|
D A Prasanna |
Member |
2 |
|
Rita Menon @ |
Member |
1 |
|
K. Prabhakar Rao @ |
Member |
1 |
|
Kapil Mehan # |
Member |
1 |
@ w.e.f. 29.07.2017, # up to 03.06.2017
Based on the recommendation of the CSR Committee, the Company has formulated a comprehensive CSR policy. The details of CSR policy, CSR initiative and activities during the year and the Annual Report on Company''s CSR activities are furnished in Annexure 3 attached to this report.
21. COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM
The composition of the Audit Committee during the year is shown in the Corporate Governance Report attached as Annexure 7.
The Company has established a vigil mechanism through Whistleblower Policy and the Audit Committee of the Company is responsible to review periodically the efficient and effective functioning of the vigil mechanism, to deal with instances of fraud and mismanagement and suspected violations of the Company''s Code of Business Conduct and Ethics, if any. No fraud has been reported by the Auditors to the Audit Committee or the Board.
The Policy provides for adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The whistleblower policy is placed on the website of the Company www.mangalorechemicals.com.
22. RISK MANAGEMENT
The Company has the requisite processes and procedures in place to assist in minimizing exposure to risk that threaten the existence of the Company, including vendor contracting, transferring risk through personal liability, health, travel and life insurance; preventing/controlling risk through training and supervision; and by analyzing the risk in a manner that considers the whole organization and not just its individual components.
The heads of departments regularly review and assess the departmental policies/procedures and identify risks, perform analysis of the frequency and severity of potential risks, select the best techniques to manage risk, implement appropriate risk management techniques and monitor, evaluate and document results.
23. LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013 during the year. The details of the investments made by Company are given in the notes to the financial statements.
24. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the year were at arm''s length. All related party transactions are approved by the Audit Committee and the Board of Directors. The details of related party transactions as per Form AOC-2 is enclosed as Annexure 4 to the Directors'' Report. There were no related party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.
25. DEPOSITS
The Company has not accepted any fixed deposits in the past or during the year.
26. STATUTORY AUDIT
The Statutory Auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, were appointed to hold office from the conclusion of 50th Annual General Meeting till the conclusion of 55th Annual General Meeting of the Company.
27. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company reappointed Mr. S. Kedarnath, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the year 2017-18. The Secretarial Audit report is annexed herewith as Annexure 5.
28. COST AUDIT
The Company re-appointed Mr. P. R. Tantri, Cost Accountant, Membership No. 2403, as the Cost Auditor for the year 2017-18. The Cost Audit Report for the year ended March 31, 2017 was filed by the Company with the Ministry of Corporate Affairs on August 28, 2017.
29. AUDITORS'' REPORT & SECRETARIAL AUDIT REPORT
There were no qualifications, reservations or adverse remarks made by the Statutory Auditor and the Secretarial Auditor in their respective reports.
30. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were 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 financial statements relate and the date of this report.
31. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013
Details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, shall form part of this report. However, in terms of Section 136 of the Act, this report is being sent to all the members of the Company excluding the aforesaid information. The said particulars are available for inspection by the Members at the Registered Office of the Company.
32. DISCLOSURE AS PER SECTION 22 OF THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the internal complaints committee is constituted and no complaint/case has been filed/pending before the Committee during the year.
33. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, 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 furnished in Annexure 6 attached to this report.
34. CORPORATE GOVERNANCE
The Company is committed to good corporate governance practices. The Board endeavors to adhere to the standards set out by the Securities and Exchange Board of India (SEBI) on corporate governance practices and accordingly has implemented all the mandatory stipulations.
A detailed Corporate Governance Report in line with the requirements of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 regarding the corporate governance practices followed by the Company and the certificate from Practicing Company Secretary relating to compliance of mandatory requirements along with Management Discussion and Analysis report are given as Annexure 7 and 8.
35. ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation of the guidance and advice given by Mr. Kapil Mehan and Mrs. Ritu Mallya during their association with the Company.
Your Directors thank the Company''s clients, vendors, investors and bankers for their support. Your Directors also wish to place on record their appreciation of the excellent performance of the employees.
Your Directors express their gratitude to the Government of India, the State Governments, the Customs and Excise Departments and other government agencies for their support, and look forward to their continued support in the future.
For and on behalf of the Board of Directors,
Arun Duggal
Chairman
May 24, 2018
Gurugram
Mar 31, 2015
Dear Shareholders,
The Directors are pleased to present your Company's Forty Eighth Annual
Report together with the audited statement of accounts for the year
ended March 31, 2015.
FINANCIAL HIGHLIGHTS
Rs. in Crores
2014-15 2013-14
Sales (including other income) 2590.25 3314.81
EBITDA 170.62 224.76
Finance Costs 123.67 102.45
Depreciation 28.66 28.76
Profit before Tax (PBT) 18.29 93.55
Tax expense (19.25) 22.62
Profit after Tax 37.54 70.93
Net Worth* 659.97 635.86
* includes Revaluation Reserve of Rs. 76.70 crores and Rs. 80.08 crores
respectively.
DIVIDEND
The Board of Directors recommended a dividend of Rs. 0.60 per equity
share of Rs. 10 each.
PERFORMANCE
During 2014-15, your Company achieved a turnover of Rs. 2578.78 crores
compared to Rs. 3310.26 crores in the previous year. PBT at Rs. 18.29
crores is significantly lower compared to Rs. 93.55 crores during the
previous year, mainly due to shut down of Urea plant from October 1,
2014 to January 6, 2015 on account of Fertilizer Policy of Government
of India for Naphtha based urea units.
PRODUCTION
Urea
Your Company achieved production of 2,50,582 MTs against the reassessed
capacity of 3,79,500 MTs, mainly due to shut down of plant from October
1, 2014 to January 6, 2015.
Di-Ammonium Phosphate (DAP) and Complex Fertilizers
Your Company produced 1,69,835 MTs of Phosphatic Fertilizers during the
year compared to 1,55,992 MTs in the previous year. Plant utilisation
would have been much better, if there had been regular and adequate
availability of Phosphoric Acid.
Ammonium Bi-carbonate (ABC)
Production of ABC at 8,556 MTs during the year compared to 15,542 MTs
in the previous year, was affected by inadequate availability of
carbon-dioxide due to ammonia/urea plant shut down.
SALES
During the year, your Company sold 2,49,820 MTs of Urea compared to
3,79,456 MTs in the previous year. Sales of manufactured Phosphatic
Fertilizers were 1,71,376 MTs compared to. 1,53,803 MTs in the previous
year. Sales of imported fertilizers were 1,86,199 MTs against 1,98,775
MTs in the previous year.
Plant Nutrition Products sales have increased to Rs. 200 crores from
Rs. 173 crores, an increase of 16%. Plant Protection Products sales have
increased from Rs. 56 crores in the previous year to Rs. 67 crores in
current year, an increase of 20%. These achievements are quite
commendable given the various constraints faced by the Company and the
unfavourable market situation.
SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
The plant set up in August 2010 for manufacture of SNF on a modular
basis can take care of increased demand. The Company sold 9,948 MTs of
SNF during the year, compared to 10,786 MTs in the previous year. The
plant capacity utilization was lower due to cheaper imports and
sluggishness in construction industry. The Company has continued with
new product variants for applications in newer areas to improve plant
utilization, in order to de-risk its focus on construction chemical
industry.
PLANT NUTRITION PRODUCTS
In order to retain & improve soil productivity and derive increased
output from the same area of land, it is necessary to maintain soil
health, correct imbalances in the nutrients essential for plant growth
and yield, and manage irrigation properly. However, deterioration in
soil productivity has reached alarming levels, due to indiscriminate
and imbalanced use of NPK fertilizers, inadequate use of other
nutrients essential for plant growth and injudicious use of irrigation
water. Increase in the farm gate prices of Phosphatics and Potash,
compared to stagnant Urea prices has further aggravated this problem.
In order to arrest and correct this situation, your Company has
introduced products that maintain soil health, provide balanced and
complete nutrition and improve crop health.
To address the nutrient deficiencies noticed in the soil resulting in
inadequate output or crop failure in the areas serviced by our
marketing network, our Research and Development (R & D) units at Hassan
and Hubli have been developing nutrient mixtures, enriched organic
manure products and soil conditioners to mitigate crop specific issues,
apart from providing analytical and advisory service. The response from
the crop growers on the efficacy of these products has been quite
positive and there is a growing demand for development of similar
products for other crops.
To actively focus attention of all concerned on the specifics involved
therein, your Company has been promoting successfully two unique
concepts viz. Mangala Mitra and Mangala Saathi for three years now.
Under Mangala Mitra, opinion leaders in the villages were identified,
enrolled, educated and trained on a continual basis on the whole gamut
of soil management, crop nutrition and crop protection. These Mangala
Mitras in turn educate fellow farmers on various aspects of crop
cultivation. Through this innovative approach, your Company is
effectively implementing the Mangala Integrated Nutrient Management
("Mangala INM") concept, an approach to enable the farmer to make his
agriculture an economically sustainable one. Under Mangala Saathi, all
the good and potentially good dealers are given special attention
through many unique programs that encourage and motivate them for
better performance. These two approaches have greatly helped in
promoting nutrient management awareness.
The Mangala INM concept was introduced in 2002-03 where your Company
achieved a modest turnover of Rs. 32 lakhs in the Plant Nutrition product
segment. Focussed and continued effort in identifying customer needs,
introducing suitable products and educating farmers as well as channel
partners in proper use of these inputs has resulted in a significant
business growth year on year, with the Company achieving a turnover of
Rs 200 Crores during the year. The growth achieved during the year that
witnessed unfavourable market situation has been considerable.
In order to support marketing requirement with timely supply of quality
Plant Nutrition products, the Specialty Fertilizer manufacturing
facility set up in 2011 at the factory in Mangalore with an annual
capacity of 12,000 MT of Water Soluble Fertilizers and Micronutrient
Mixtures, has greatly helped in growth of water soluble fertilizer
segment in your Company, one of the fast growing agri input segments in
India
PLANT PROTECTION CHEMICALS
As part of diversification and growth strategy and in order to offer a
wider range of agri-inputs, your Company introduced Plant Protection
(PP) products in July 2010. As an entry strategy, a collaborative
approach was adopted, with your Company marketing the products of
reputed pesticide companies through its channel partner network.
Subsequently, your Company also started introducing selected molecules
in its own brand. During the year, your Company launched Mangala Ace,
an insecticide. In addition, a spray adjuvant was launched under brand
name Mangala Super spreader. In the financial year 2015-16, your Company
plans to launch 4 more selected molecules under its own brand. The
Plant Protection Chemicals business registered a turnover of Rs. 67
crores compared to Rs. 56 crores in the previous year.
ANALYTICAL AND ADVISORY SERVICE
To promote the concept of Mangala INM, R & D facilities established at
Hassan and Hubli have the capability to analyze sample substrates of
soil, water, plant tissues, plant nutrients, organic manures, soil
amendments, fertilizers etc. Through these facilities, analysis of the
samples pertaining to our customers is done and appropriate
recommendations for soil health management and crop management are
given. Suitable follow up is done to ensure effective implementation of
the recommendation. All these are provided to our customers free of
cost to ensure their active participation in achieving profitability
and sustainability in agriculture.
WORKING CAPITAL
Continued under-provisioning for fertilizer subsidy in the Union Budget
with resultant unusual delay in subsidy payment by Government of India
(GOI) contributed to precarious working capital shortage, resulting in
lower imports than market demand. Delay in the release of GOI subsidy
and increase in interest and other costs charged by banks resulted in
increase in finance cost.
RENOVATION / MODERNIZATION OF AMMONIA / UREA PLANTS - NG CONVERSION
PROJECT
As mandated by Department of Fertilizers, GOI, the Company has
successfully completed gas conversion project of urea operations in
June 2014 at a cost of around Rs. 305 crores. The plant can therefore
work on dual feed of gas and naphtha. The Company has signed a Gas
Supply Agreement with Indian Oil Corporation Limited and a Gas
Transmission Agreement with GAIL (India) Limited in February 2011.
Though Petronet LNG terminal of Kochi has been commissioned in
September 2013, unsatisfactory progress in laying of gas pipeline from
Kochi to Mangalore by GAIL (India) Limited has prevented your Company
from receiving gas for urea production. Various alternatives are being
studied, for providing gas availability/connectivity to Mangalore.
FERTILIZER POLICY
As per the Modified New Pricing Scheme (NPS) - III for existing urea
units notified on April 2, 2014, the production of the high cost
naphtha based urea units namely SPIC - Tuticorin, MFL - Manali and your
Company was to continue till the gas availability and connectivity is
provided to these units or by June 2014, whichever is earlier, beyond
which subsidy for naphtha based plants will not be paid.
The Cabinet Committee on Economic Affairs (CCEA), in its meeting held
on August 27, 2014, approved the operation of these three Naphtha based
urea plants from July 01, 2014 to September 30, 2014. Meanwhile, your
Company had approached Hon'ble High Court of Delhi on September 29,
2014 with a prayer to direct the GOI to continue subsidy for Naphtha
based plants until gas is made available to the Company. CCEA in its
meeting held on December 10, 2014 allowed operation of Naphtha based
urea plants for 100 days from the date of notification of its decision
i.e January 07, 2015. Accordingly, the Urea plant which was shut from
October 01, 2014 to January 06, 2015 resumed operations on January 7,
2015, which adversely affected operations and profitability. Lower PBT
for the year 2014-15 is mainly due to lower production and sale of urea
on account of shut down.
The Urea production is being continued after the expiry of said period
of 100 days i.e April 16, 2015, based on the orders of the Hon'ble High
Court of Delhi dated April 16, 2015 which ordered GOI to continue with
the arrangement made as per Notification No. 12012/3/2010-FPP dated
January 07, 2015, until GOI makes appropriate policy for subsidy to
Naphtha based plants.
The Nutrient Based Subsidy Scheme (NBS) was introduced by the GOI with
effect from April 1, 2010, enabling GOI to announce annual concession
rates in advance. This facilitates the Company to plan import of higher
quantities of Phosphatic and Potassic fertilizers. GOI had reduced the
subsidy of Muriate of Potash (MOP) only for the year 2014-15 due to
lower prices in international market and decided to continue the
existing subsidy rates for Phosphatic and Potassic fertilizers under
the Nutrient Based Subsidy (NBS) policy for the year 2015-16.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Safety
Your Company has obtained Occupational Health and Safety Management
System certification OHSAS 18001:2007 by DNV as part of its commitment
to continual improvement. In addition to the periodic audits carried
out under the integrated management system, a statutory - annual safety
audit was also carried out by a team of Internal Auditors. Your Company
has obtained ISO 22000:2005 certificate for manufacturing of food grade
Ammonioum Bi-carobonate (ABC) during the year.
Extensive training programs related to rescue operations, usage of
personal protective equipment, emergency management, Fire Safety at
home, SH&E management system for employees were organized. Regular
mock drills were also conducted to check the emergency preparedness.
Firefighting training is being conducted every Friday to train the
employees and also contractors'workmen. Various training programmes
(Audio, Visual & practical) were conducted both at plant location and
township.
Health
Periodic medical examination was conducted for all the employees and
contract workers which included general physical examination and
laboratory investigations. Special tests like pulmonary function test
for the employees who are exposed to dust and chemicals, audiometry for
those exposed to noise and vision test for those who require high
visual acuity at workplace were performed periodically.
Medical examination was conducted for the employees at Corporate Office
and also at the area offices. The employees with abnormal findings on
annual medical examination were advised regarding further management.
Medical examination of the canteen workers with more stress on personal
hygiene was conducted. Regular check-up of canteen premises and the
canteen food was carried out for maintaining hygiene and the quality of
the food. First aid training programmes were conducted for employees
and contract workers.
Health awareness programmes on various subjects like Diabetic foot
care, Diet for diabetics, Hazards of drug abuse & prevention and Swine
-flu were conducted by experts.
Environment
As an ISO 14001 certified company, many environmental management
programs have been implemented to improve the environmental performance
of the Company. The Company has installed waste water treatment plant
to treat, recycle and reuse the entire quantity of sewage and process
effluents, thereby achieving the status of zero liquid effluent
discharge. This is achieved by upgrading the effluent treatment system
by the installation of Lamella clarifier, Ultra-filtration and Reverse
Osmosis (RO) technologies for the treatment of trade effluent and
Membrane Bio- Reactor (MBR) technology for the treatment of domestic
effluent. As a part of corporate social responsibility, the Company has
implemented the rainwater harvesting system at the Township and has
installed sewage treatment plant to treat the sewage generated at the
Township. The treated sewage water is used for gardening. In addition
to the existing 64 acres of green belt, Company has planted 2,000
saplings during 2014-15.
The Company has installed Continuous Ambient Air Quality Monitoring
(CAAQM) station inside factory premises for continuous monitoring of
ambient air quality. Ambient air quality data from CAAQM station is
being displayed in LED display board at the entrance of our factory
facing National Highway for public information.
The Company has bagged the prestigious "FAI Environmental Protection
Award" instituted by the Fertilizer Association of India (FAI) in the
NP/NPK fertilizer plants excluding captive acids category continuously
for the last five years.
On the occasion of "World Environment Day - 2014" celebration jointly
organized by Dakshina Kannada District Administration, Karnataka State
Pollution Control Board and Mangalore City Corporation on 21.6.2014,
Mangalore Chemicals & Fertilizers Limited was awarded the Environment
Award for installing the waste water recovery unit with modern
technology and reusing the entire treated wastewater. The award was
handed over by Shri B. Ramanath Rai, Hon'ble Minister for Forest,
Environment and Ecology, Government of Karnataka.
SHARE CAPITAL
As at March 31, 2015, the paid up capital of the Company was Rs.
118,51,51,500 comprising 11,85,15,150 shares of Rs.10 each. There was no
change in the paid up share capital of the Company during the year.
Zuari Fertilisers and Chemicals Limited (a wholly owned subsidiary of
Zuari Agro Chemicals Limited),which was holding 16.43% of the paid of
share capital of the Company at the beginning of the year, acquired
0.04% paid up share capital of the Company in November 2014 pursuant to
the open offer followed by another open offer in May 2015 acquiring
36.56% of the paid up share capital of the Company under the extant
Regulations, aggregating its total holding to 53.03%. In view of this,
your Company has become subsidiary of Zuari Fertilisers and Chemicals
Limited. Consequently, the Company has also become subsidiary of Zuari
Agro Chemicals Limited.
EXTRACTS OF ANNUAL RETURN
Pursuant to the provisions of Section 92 of the Companies Act, 2013
read with Rule 12 of the Companies (Management and Administration)
Rules, 2014, the extracts of Annual Return are furnished in Annexure 1
attached to this Report.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
Five meetings were held during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors
confirm 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 the Companies Act, 2013 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;
e) the directors, have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and operating effectively;
f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration of independence from the
Independent Directors and the same have been noted by the Board of
Directors in its meeting held on May 29, 2015.
DIRECTORS
Dr. Vijay Mallya resigned from the Board of Directors of the Company
with effect from 30.11.2014 due to his other pre-occupations. Mr. N
Sundar Rajan ceased to be Independent Director of the Company we.f
17.7.2014 on his unfortunate demise.
Mrs. Ritu Mallya was inducted on the Board of Directors with effect
from December 4, 2014, Mr. S. R. Gupte retires at the Annual General
Meeting and is not seeking re-election. Mr. Srinivasulu Reddy Magunta
is appointed as an Independent Director with effect from 07.08.2014.
Your Directors wish to place on record the seminal role played by Dr.
Vijay Mallya in steering the Company through difficult phases and
shaping the growth by his vision, leadership and guidance. Your
Directors also wish to place on record their sincere appreciation of
the invaluable contribution by Mr. N Sunder Rajan during his
association with the Company.
DIRECTORS' TRAINING, FAMILIARIZATION & EVALUATION AND NOMINATION &
REMUNERATION POLICY
Considering the long association of the directors with the Company and
their seniority and expertise in their respective areas of
specialization and knowledge of the fertilizer industry, their training
and familiarization are not considered necessary and accordingly no
such programmes were conducted.
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an evaluation of
performance of the directors individually as well as the evaluation of
the Board and Committees. The evaluation process was carried out by
circulating questionnaires on the Board and Committees'functioning
such as adequacy of the composition of the Board and its Committees,
disclosure of information to the Board and Committees, performance of
duties and obligations, governance parameters, participation of the
members of the Board and Committees. The performance evaluation of the
Independent Directors was carried out by the entire Board. The
performance evaluation of the non Independent Directors was carried out
by the Independent Directors. The Directors expressed their
satisfaction with the evaluation process and performance of Board of
Directors and Committees.
The Company has the Nomination & Remuneration Policy which deals with
appointment and removal of directors, evaluation of directors,
remuneration for the directors, key managerial personnel and senior
management, which is attached to this Report as Annexure 2.
SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The Company does not have any Subsidiary, Associate Company or Joint
venture.
CORPORATE SOCIAL RESPONSIBILITY
Your Company discharged its corporate social responsibility in true
spirit and has been actively engaged in the upliftment / development of
the communities in its operating territory.
The Board of Directors of the Company in its meeting held on August 07,
2014 has constituted the Corporate Social Responsibility (CSR)
Committee to monitor implementation of CSR activities of the Company.
The CSR Committee consists of the following Directors as its members
1. Mr. S R Gupte, Chairman
2. Mr. Srinivasulu Reddy Magunta
3. Mr. Pratap Narayan
4. Mr. Deepak Anand
Based on the recommendation of the CSR Committee, the Company has
formulated a comprehensive Corporate Social Responsibility (CSR) policy
under which Rural Health and Rural Education have been the areas of
specific focus. The details of CSR policy, CSR initiative and
activities during the year and the Annual Report on Company's CSR
activities are furnished in Annexure 3 attached to this report.
COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM
The Audit Committee consists of the following members;
1. Mr. Pratap Narayan, Chairman
2. Mr. Srinivasulu Reddy Magunta
3. Mr. S. R. Gupte
The Company has established a vigil mechanism through its Whistleblower
Policy and the Audit Committee of the Company is responsible to review
periodically the efficient and effective functioning of the vigil
mechanism, to deal with instances of fraud and mismanagement, and
suspected violations of the Company's Code of Business Conduct and
Ethics, if any.
The Policy provides for adequate safeguards against victimization of
employees and directors who express their concerns. The Company has
also provided direct access to the Chairman of the Audit Committee on
reporting issues concerning the interests of the employees and the
Company. The whistleblower policy of the Company is placed on the
website of the Company which can be accessed at
http://www.mangalorechemicals.com/investor-whistle-blower-policy.
RISK MANAGEMENT
The Company has the requisite processes and procedures in place to
assist in minimizing exposure to risk that threaten the existence of
the Company, including vendor contracting, transferring risk through
personal liability, health, travel and life insurance;
preventing/controlling risk through training and supervision; and by
analyzing the risk in a manner that considers the whole organization
and not just its individual components.
The heads of departments regularly review and assess the departmental
policies/procedures and identify risks, perform analysis of the
frequency and severity of potential risks, select the best techniques
to manage risk, implement appropriate risk management techniques and
monitor, evaluate and document results.
LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the
provisions of section 186 of the Companies Act, 2013. The details of
the investments made by company are given in the notes to the financial
statements.
RELATED PARTY TRANSACTIONS
There were no contracts or arrangements made with related parties as
defined under Section 188 of the Companies Act, 2013 during the year.
DEPOSITS
During the year, the Company has neither accepted nor renewed any
deposits, covered under Section 73 of the Companies Act, 2013 read with
Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014.
STATUTORY AUDIT
The Statutory Auditors, M/s K. P Rao & Co., Chartered Accountants, were
appointed to hold office from the conclusion of 47th Annual General
Meeting till the conclusion of 50th Annual General Meeting of the
Company subject to ratification by the members at every Annual General
Meeting. Accordingly, their appointment needs to be ratified by the
members at the Annual General Meeting.
SECRETARIAL AUDIT
Pursuant to provisions of Section 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, the Company appointed Mr. S. Kedarnath, Practicing Company
Secretary to undertake the Secretarial Audit of the Company. The
Secretarial Audit report is annexed herewith as Annexure 4.
COST AUDIT
The Company re-appointed Mr. P R. Tantri, Cost Accountant, Membership
No. 2403, as the Cost Auditor for the year 2014-15. The Cost Audit
Report for the year ended March 31, 2014 has been filed with the
Ministry of Corporate Affairs.
AUDITORS' REPORT & SECRETARIAL AUDIT REPORT
There were no qualifications, reservations or adverse remarks made
either by the Statutory Auditors or by the Secretarial Auditor in their
respective reports.
MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
There were 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 financial statements relate
and the date of this report.
DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013
The information required pursuant to Section 197 read with Rule 5 of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, shall form part of
this report. However, in terms of Section 136 of the Act, this report
is being sent to all the members of the Company excluding the aforesaid
information. The said particulars are available for inspection by the
Members at the Registered Office of the Company.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL)ACT,20I3
Pursuant to Section 22 of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, the committee is
constituted and no complaint / case has been filed / pending with the
Company during the year.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, 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 furnished in Annexure 5 attached to
this report.
CORPORATE GOVERNANCE
The Company is committed to good corporate governance practices. The
Board endeavors to adhere to the standards set out by the Securities
and Exchange Board of India (SEBI) on corporate governance practices
and accordingly has implemented all the mandatory stipulations
prescribed.
A detailed corporate governance report in line with the requirements of
Clause 49 of the listing agreement regarding the corporate governance
practices followed by the Company and the Statutory Auditors'
certificate indicating compliance of mandatory requirements along with
management discussion and analysis report are given as Annexure 6 and 7.
ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation of
the guidance and advice given by Dr. Vijay Mallya and Mr. N Sunder
Rajan during their association with the Company.
Your Directors thank the Company's clients, vendors, investors and
bankers for their support. Your Directors also wish to place on record
their appreciation of the excellent performance of the employees.
Your Directors express their gratitude to the Government of India, the
State Governments, the Customs and Excise Departments and other
government agencies for their support, and look forward to their
continued support in the future.
For and on behalf of the Board of Directors,
SR Gupte Deepak Anand
Director Managing Director
May 29, 2015 Mumbai
Mar 31, 2014
Dear Members,
The Directors are pleased to present your Company''s Forty Seventh
Annual Report together with the audited statement of accounts for the
year ended March 3I, 2014.
FINANCIAL HIGHLIGHTS
(Rs. Crores)
2013-14 2012-13
Sales (including other income) 3314.81 2790.04
EBITDA 224.76 185.22
Interest 102.45 86.97
Depreciation 28.76 29.01
Profit before Tax 93.55 69.24
Tax expense 22.62 2.67
Profit after Tax 70.93 66.57
Net Worth * 635.86 583.25
* includes Revaluation Reserve of Rs. 80.08 Crores and Rs. 81.77
Crores respectively.
DIVIDEND
The Board of Directors recommended a dividend of Rs. 1.20 per equity
share of Rs. 10/- each.
PERFORMANCE
During 201 3-14, your Company achieved a turnover of Rs. 33I0.26 Crores
compared to Rs. 2779.59 Crores in the previous year. PBT at Rs. 93.55
Crores is higher compared to Rs. 69.24 Crores during the previous year,
despite an increase in finance cost due to high subsidy outstanding
from GOI. Increased profitability can be attributed to efficient full
capacity production of Urea, appreciation of INR against USD to 60
levels from a peak of Rs. 68 per USD and higher sales of the more
profitable Plant Nutrition and Plant Protection products.
Urea
Your Company achieved production of the full re-assessed capacity of
3,79,500 MTs.
Di-Ammonium Phosphate (DAP) and Complex Fertilizers
Your Company produced 1,55,992 MTs of Phosphatic Fertilizers during the
year compared to 1,65,6I5 MTs in the previous year. The utilization of
our phosphatic fertilizer capacity was lower due to reduced
availability of Phosphoric Acid.
SALES
During the year, your Company sold 3,79,456 MTs of Urea compared to
3,79,487 MTs in the previous year. Sales of manufactured Phosphatic
Fertilizers were 1,53,803 MTs compared to 1,65,652 MTs in the previous
year. Sales of imported fertilizers were 1,98,775 MTs as against 87,056
MTs in the previous year.
Plant Nutrition Products sales have increased to Rs. 173 crs from Rs.
138 crs, a substantial increase of 25%. Plant Protection Products sales
have almost doubled from Rs. 29 crs in the previous year to Rs. 56 crs
in current year. These achievements are quite encouraging in addition
to being more profitable than commodity fertilizers.
SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
The plant set up in August 2010 for manufacture of SNF can be expanded
on a modular basis to take care of increased demand. The Company sold
I0,786 MTs of SNF during the year, compared to I6,I45 MTs in the
previous year. The plant capacity utilization has decreased due to
slump in the construction industry. During the year some new customers
were added and export orders executed. Company has added new product
variants for application in newer areas, in order to de-risk its focus
on construction chemical industry.
PLANT NUTRITION PRODUCTS
The country continues to face a serious problem of deterioration in
soil productivity, due to indiscriminate and unbalanced use of NPK
fertilizers, inadequate use of other nutrients essential for plant
growth and injudicious use of irrigation water. Disproportionate
increase in the farm gate prices of Phosphatics and Potash, compared to
low, highly subsidised Urea, has aggravated this problem. In order to
arrest and correct this deterioration of soil condition, your Company
has introduced products that maintain soil health, provide balanced and
complete nutrition and improve crop health.
Our R&D units at Hassan and Hubli continue to develop nutrient
mixtures, enriched organic manure products and soil conditioners to
mitigate crop specific issues. These products, in addition to
alleviating nutrient deficiencies and improving tolerance to crop
specific diseases, lead to better quality and higher productivity. The
response from the crop growers on the effectiveness of these products
has been very positive and there is a growing demand for development of
similar products for other crops.
In order to encourage scientific application of fertilizers and plant
nutrients, your Company has been trying to introduce these concepts at
the grass root level. Your Company continues to successfully implement
Mangala Mitra and Mangala Saathi schemes. These Mangala Mitras educate
fellow farmers on various aspects of crop cultivation to enable them to
make agriculture economically sustainable. Under Mangala Saathi, all
good and potentially good dealers are given special attention through
many unique programs that encourage and motivate them for better
performance.
The Mangala INM concept introduced in 2002-03 started with a modest
turnover of Rs. 32 lakhs in the Plant Nutrition product segment.
Focused and sustained efforts have resulted in a significant business
growth year on year, reaching a turnover of Rs. 173 Crores during the
year.
PLANT PROTECTION CHEMICALS
As part of diversification and growth strategy and in order to offer a
wider range of agri inputs, your Company introduced Plant Protection
(PP) chemicals in July 2010. During the year under review, your Company
launched two products in the Mangala brand name, viz., Mangala DiDips
(an insecticide) and Mangala Surakshit (a fungicide). In addition, an
in-house product having fungicidal property was launched under brand
name Mangala Kolenashak. In the financial year 2014-I5 your Company
plans to launch 3 more selected molecules under its own brand. The
Plant Protection Chemicals business nearly doubled its turnover to Rs.
56 crores from Rs. 29 crores of the previous year.
WORKING CAPITAL
During the year under review on an average, there has been adequate
rain fall resulting in good demand for fertilizers. Continued under
provisioning for fertilizer subsidy in the Union Budget, and resultant
unusual delay in subsidy payment by Government of India (GOI)
contributed to precarious working capital shortage, resulting in lower
imports than market demand. Continued delay in the release of GOI
subsidy and increase in interest rates charged by banks resulted in
increase in interest cost.
FERTILIZER POLICY
Stage III of New Pricing Scheme (NPS) for Urea announced in March 2007
stipulated that existing Naphtha/Furnace Oil/LSHS units should convert
to gas by 3I.3.20I0. Due to delay in laying of pipeline and inadequate
gas pipeline network in South India, Government of India had extended
this deadline. Government of India, vide letter No.I20I2/3/20I0-FPP dt.
2nd April 2014 has specified that production of high cost Naphtha based
Urea units will continue under modified NPS-III till the gas
availability and connectivity is provided to these units or June 2014
whichever is earlier, beyond which subsidy for Naphtha based plants
will not be paid. Your Company has taken up this matter suitably with
Government of Karnataka and Department of Fertilizers, Government of
India to extend this deadline till gas availability is ensured at
Mangalore; GOI decision awaited. The Company has signed a Gas Supply
Agreement with Indian Oil Corporation and a Gas Transmission Agreement
with GAIL (India) Limited. The LNG terminal at Kochi has been
commissioned in 20I3. Work on gas receiving station of GAIL is in
progress at our premises in Mangalore.
With effect from April I, 20I0, the government introduced a Nutrient
Based Subsidy (NBS) policy for Phosphatic and Potassic fertilizers,
announcing the rate of subsidy in advance for the full year. For
20I3-2014, this subsidy had again been reduced.
RENOVATION / MODERNIZATION OF AMMONIA / UREA PLANTS - NG CONVERSION
PROJECT
As mandated by Department of Fertilizers, GOI and as a part of the
renovation / modernization programme, the feed and fuel viz. Naphtha/
Furnace oil has been replaced with equipments capable of accepting
Natural Gas (NG) also in Ammonia/ Urea plants and captive power plant
(CPP).
M/s Jacobs Engineering U.K and Jacobs Engineering India carried out the
Basic and detailed Engineering work for NG conversion of Ammonia plant.
3 dual feed Diesel Generators were commissioned in 20I2 and 3 new dual
feed Diesel Generators have been procured from Wartsila, Finland and
installed to complete changeover in CPP Your Company is fully ready to
receive and run its plants on Natural Gas as soon as the same is made
available at Mangalore, to comply with the GOI directive.
The LNG terminal at Kochi has been commissioned in September 20I3.
Laying of Gas pipeline from Kochi to Mangalore by GAIL (India) Limited
is making slow progress and expected to be completed in 20I6-I7.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Safety
Your Company has obtained Occupational Health and Safety Management
System certification OHSAS 18001:2007 by DNV as part of its commitment
to continual improvement. In addition to the periodic audits carried
out under the integrated management system, a statutory annual safety
audit was also carried out by M/s Rams Safety Consultants, Chennai. A
Safety study was carried out for NG Conversion projects by M/s Chem
Design Company, Hyderabad.
The Company organized extensive training programs including rescue
operations, usage of personal protective equipment, emergency
management, Fire Safety at home, awareness training on near miss
incident reporting and S, H&E management system for employees. In
addition, regular mock drills were conducted to check the emergency
preparedness and weekly Fire fighting trainings were organized to train
the employees as well as contractors'' workmen.
Health
Periodic medical examination is conducted for all the employees.
Special tests like pulmonary function test for the employees who are
exposed to dust and chemicals, audiometry for those exposed to noise
and vision test for those who require high visual acuity at workplace
were performed periodically. Medical examination of the canteen workers
with increased emphasis on personal hygiene was conducted. Regular
inspection of canteen premises and the canteen food was carried out for
maintaining hygiene and the quality of the food. First aid training
programmes were conducted for employees and contract workers. Health
awareness programmes on various subjects like Cancer-causes and modern
trends in management of back pain were conducted for MCF employees.
Health awareness programmes on menstrual problems and infertility &
Breast cancer- causes and management were conducted for the family
members at MCF Township. Free Bone density test was organized at
company''s occupational health center for the employees and voluntary
blood donation camp was organized at MCF Township.
Environment
As an ISO I400I certified company, many environmental management
programs have been implemented. Continuing with its green initiative
the Company in addition to the existing 60 acres of green belt, has
planted 3,000 saplings during 201 3-14. Your Company has implemented
rainwater harvesting system and has installed sewage treatment plant to
treat the sewage generated at the Township. The treated sewage water is
used for gardening.
Your Company has also installed wastewater treatment plant to treat,
recycle and reuse the entire quantity of sewage and process effluents,
thereby achieving the status of zero liquid effluent discharge. This
was achieved by upgrading the effluent treatment system by the
installation of Lamella clarifier, Ultra-filtration and Reverse Osmosis
(RO) technologies for the treatment of trade effluent and Membrane Bio-
reactor (MBR) technology for the treatment of domestic effluent.
Your Company has installed Continuous Ambient Air Quality Monitoring
(CAAQM) station inside the factory premises for continuous monitoring
of ambient air quality. Ambient air quality data from CAAQM station is
being displayed on LED board at the entrance of the factory facing
National highway for public information. Your Company has received the
prestigious "FAI Special Environmental Protection Award" instituted by
the Fertilizer Association of India (FAI) for the NP/NPK fertilizer
plants excluding captive acids category for the fourth consecutive year
(20I0-20I3).
Your Company celebrated World Environment Day on June 24, 20I3 and
rededicated its efforts for preservation of environment and ecology.
This year''s theme ''Think-Eat-Save'' encourages all of us to be more
aware of the environmental impact of the food choices we make and
empowers us to take informal decisions.
SOCIAL RESPONSIBILITY
Your Company continued to discharge its Social Responsibility in true
spirit and has been actively engaged in the up-liftment/ development of
the communities in its operating territory. Your Company has formulated
a comprehensive Corporate Social Responsibility (CSR) policy under
which Rural Health and Rural Education have been the areas of specific
focus.
In line with this philosophy, your Company formulated two schemes viz.
"Project Eye Care" intended to prevent/eradicate eye related ailments
in identified rural areas and "Mangala Akshara Mitra" intended to
provide basic facilities and infrastructure to rural schools to promote
education and to make schooling a pleasant experience. These schemes
were extended to rural and remote locations in the Company''s operating
territory for the benefit of the poor and needy.
During the year, under "Project Eye Care" six free eye camps and
cataract surgery camps were conducted in the neighboring villages like
Kalasa, Kateel, Ballamanja, Mundkur, Manjeshwara and Belvai. Free
spectacles were distributed for the needy.
Under its "Mangala Akshara Mitra" program, the basic infrastructures
that are required, but are lacking in identified schools in remote
locations were provided by your Company. Those include desks, tables,
chairs, green boards, racks, cupboards, school bags, lunch plates,
water glasses and computers. 24 government primary & higher primary
schools located in the districts of Belguam, Hassan, Kolar, Kurnool,
Chickballapur, Uttara Karnataka, Bagalkot, Bijapur, Davanagere, Bellary
and Chickmagalore and about 7000 poor students were the beneficiaries
under this project during the year.
Your Company is also giving special attention to the schools for
special children (physically & mentally challenged) by providing Water
purifiers, Uniforms, special teaching aids, furniture, sanitation
facility etc.
In addition to the above, your Company organized various cultural
activities, felicitated young sports persons, sponsored community
development programmes, health awareness camps, sports events, and
provided financial assistance, uniforms, computers and sanitation
facilities to the neighbourhood schools. During the year, your Company
conducted several training programs, field demonstrations, crop
seminars and krishi melas and organized rural sports and health camps
for farmers/ channel partners.
Representatives from the public, government and other public
administrative bodies actively supported and participated in all the
programs of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
A report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under Section 2I7(I)
(e) read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, I988, is set out in Annexure-I to this
report.
PARTICULARS OF EMPLOYEES
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, I975, is set out in Annexure-2 to this report.
CORPORATE GOVERNANCE
A report on Corporate Governance is annexed separately as part of this
Report along with a certificate of compliance from a Chartered
Accountant.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion and Analysis report is annexed to this report
in Annexure-4.
DIRECTORS'' RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
. the applicable accounting standards have been followed in the
preparation of the annual accounts and there are no material
departures.
. the accounting policies are in conformity with those generally
accepted and have consistently been followed and the
judgements and estimates made 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 for the year under
review.
. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions
of the Companies Act, I956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities.
. the annual accounts have been prepared on a going concern
basis.
BOARD OF DIRECTORS
In accordance with the provisions of the Companies Act, 20I3 and the
Company''s Articles of Association, Mr. S R Gupte retires by rotation at
the ensuing Annual General Meeting and being eligible, offers himself
for re-appointment.
AUDITORS
M/s. K. P Rao & Company, Chartered Accountants, retire as Statutory
Auditors of the Company at the conclusion of the ensuing forty
seventh annual general meeting, and being eligible offer themselves for
re-appointment.
COST AUDITORS
Mr. PR.Tantri, Cost Auditor has submitted the cost audit report
for the financial year 2014 which has been considered by your
Directors.
The Cost Audit Report for the financial year ended on 3I.3.20I3 due
for filing by 30.9.20I3, was filed with the Ministry of Corporate Affairs
on 23.9.20I3.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the
excellent performance of the employees of the Company during the
year.
Your Directors also express their gratitude to the bankers, government
agencies, customers, business associates and shareholders for
their co-operation and look forward to their continued support in the
future.
On behalf of the Board of Directors
Place : Bangalore
Date : May I5, 2014 Vijay Mallya
Chairman
Mar 31, 2013
The Directors are pleased to present your Company''s Forty Sixth Annual
Report together with the audited statement of accounts for the year
ended March 31, 2013.
FINANCIAL HIGHLIGHTS
(Rs.Crores)
2012-13 2011-12
Sales (including other income) 2790.04 3720.13
EBITDA 185.22 208.73
Interest 86.97 77.16
Depreciation 29.01 29.10
Profit before Tax 69.24 102.47
Tax expense 2.67 33.37
Profit after Tax 66.57 69.10
Net Worth * 583.25 535.49
* includes Revaluation Reserve of Rs.81.77 Crores and X 83.93 Crores
respectively.
DIVIDEND
The Board of Directors recommended a dividend of X 1.20 per equity
share ofRs. 10/- each.
PERFORMANCE
During 2012-13, your Company achieved a turnover of X 2779.59 Crores
compared to X3707.17 Crores in the previous year. PBT at X 69.24 Crores
was lower compared to Rs. 102.47 Crores during the previous year.
Profitability was adversely affected because of drop in volumes, mainly
of non urea fertilizers, caused by failure of monsoon in both Kharif
and Rabi seasons and demand destruction caused by sharp increases in
MRP of these fertilizers to compensate for increase in international
prices and reduction in Government of India subsidy.
PRODUCTION
Urea
Your Company achieved production of the full re-assessed capacity of
3,79,500 MTs.
Di-Ammonium Phosphate (DAP) and Complex Fertilisers
Your Company produced 1,65,615 MTs of Phosphatic Fertilizers during the
year compared to 1,72,276 MTs in the previous year. Production of
phosphatic fertilizers was marginally lower due to reduced availability
of Phosphoric Acid.
Ammonium Bi-carbonate (ABC)
Production of ABC was 16,111 MTs during the year compared to 15,893 MTs
in the previous year.
SALES
During the year, your Company sold 3,79,487 MTs of Urea compared to
3,79,545 MTs in the previous year. Sales of manufactured Phosphatic
Fertilizers were 1,65,652 MTs compared to 1,74,240 MTs in the previous
year. Sales of imported fertilizers were 87,056 MTs as against 4,60,356
MTs in the previous year.
Plant Nutrition Products sales increased from Rs.132 crores to Rs.138
crores and Plant Protection Products sales increased from X 22 crores
to Rs.29 crores. These increases, though modest, are quite remarkable in
view of the adverse market conditions
SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
The state-of-the-art plant was set up in August 2010 for manufacture of
SNF which can be expanded on a modular basis to take care of increased
demand. You will be happy to note that the Company sold 16,145 MTs of
SNF during the year, compared to 11,458 MTs in the previous year. The
plant capacity utilization has substantially increased. During the
year many new customers were added and export orders were executed for
the first time. The liquid and powder forms of SNF have been well
received in the market and have created a brand name for excellent
quality.
PLANT NUTRITION PRODUCTS
It is necessary to maintain soil health, manage proper irrigation and
correct imbalances in the nutrients essential for plant growth to
counter the serious problem of deterioration in soil productivity, due
to indiscriminate and unbalanced use of NPK fertilizers.
Disproportionate increase in the farm gate prices of Phosphatics and
Potash, compared to Urea has further aggravated this problem. In this
direction your Company has continuously introduced crop specific grades
of nutrient mixtures, organic products and soil conditioners.
These products, in addition to alleviating nutrient deficiencies and
improving tolerance to crop specific diseases, also lead to better
quality and higher productivity. The response from the crop growers on
the effectiveness of these products has been very positive.
Attention of all concerned on scientific and balanced application of
fertilizers is focussed through two unique concepts viz. Mangala Mitra
and Mangala Saathi. Under Mangala Mitra, opinion leaders in the
villages were identified, enrolled, educated and trained on a continual
basis on the whole gamut of soil management, crop nutrition and crop
protection to educate fellow farmers. Through this innovative approach,
your Company is effectively implementing an approach to enable the
farmer to make his agriculture an economically sustainable one. Under
Mangala Saathi, all the good and potentially good dealers are given
special attention through many unique programs that encourage and
motivate them for better performance.
The Mangala INM concept was introduced in 2002-03 where your Company
achieved a modest turnover of Rs.32 lakhs in the Plant Nutrition product
segment. Concentrated efforts have resulted in a significant increase
year on year, with the Company achieving a turnover of X 138 Crores
during the year. This growth is significant as the year witnessed
failure of monsoon which led to reduced cropped area and declining
productivity.
Your company successfully commissioned a Specialty Fertilizer
manufacturing facility in April 2011 with an annual capacity of 12,000
MTs at its factory in Mangalore to produce Water Soluble Fertilizers
and Micronutrient Mixtures. This greatly helped in our participation
in the growth of water soluble fertilizer segment, one of the fastest
growing agriculture input segments in India.
PLANT PROTECTION CHEMICALS
Your Company introduced Plant Protection (PP) products in July 2010.
As an entry strategy, a collaborative approach was adopted, with your
Company marketing the products of reputed pesticide companies through
its channel partner network. During the year under review, your Company
launched three products in the Mangala brand name, viz., Mangala
Mahacardo (an insecticide), Mangala COC (a fungicide) and Mangala
Pardic (a weedicide). In the financial year 2013-14, your Company plans
to launch 3 more products of selected molecules under its own brand.
The Plant Protection Chemicals business registered a turnover of Rs.29
crores compared to Rs.22 crores in the previous year.
ANALYTICAL AND ADVISORY SERVICES
The R & D facilities established at Hassan and Hubli have the
capability to analyze sample substrates of soil, water, plant tissues,
plant nutrients, organic manures, soil amendments, fertilizers etc.;
appropriate recommendations for soil health and crop management are
given. Suitable follow up is done by our experts and extension workers
to ensure effective implementation of the recommendations. All these
are provided to our customers free of cost to ensure their active
participation in achieving profitability and sustainability in
agriculture.
WORKING CAPITAL
During the year under review our marketing territories were adversely
affected by unprecedented drought. Large brought forward stocks of
fertilizers, manifold increase in selling price of non urea
fertilizers, erratic availability of phosphoric acid and other raw
materials coupled with deficient monsoon affected the sales. Due to
continued underprovisioning for fertilizer subsidy in the Union Budget,
payment of subsidy has been inordinately delayed stretching upto over 9
months in many cases. This delay in the release of GOI subsidy,
depreciation of NR vs. USD and increase in interest rates charged by
banks resulted in the increase in interest cost.
FERTILIZER POLICY
Stage - III of the New Pricing Scheme (NPS) for Urea announced by the
Government of India in March 2007 lapsed on March 31, 2010. The
existing policy has been extended provisionally until further orders.
With effect from April 1, 2010, the government introduced a Nutrient
Based Subsidy (NBS) policy for Phosphatic and Potassic fertilizers,
announcing the rate of subsidy in advance for the full year. For
2013-14, this subsidy has again been substantially reduced. Coupled
with the sharp depreciation of the Indian Rupee, this has led to
volatility in MRP.
RENOVATION / MODERNIZATION OF AMMONIA / UREA PLANTS - NG CONVERSION
PROJECT
As per the directive of Department of Fertilizers, GOI and as a part of
the renovation / modernization programme, the feed and fuel viz.
Naphtha/ Furnace oil will be replaced with Natural Gas (NG) in Ammonia/
Urea plants and captive power plant (CPP). The conversion project is
expected to be completed in 2013-14.
M/s Jacobs Engineering U.K and Jacobs Engineering India carried out the
Basic Engineering study for NG conversion of Ammonia plant and detailed
Engineering work is under progress. Procurement of various items
required for the project implementation has already commenced. 3 dual
feed Diesel Generators were commissioned in 2012 and 3 new dual feed
Diesel Generators will be procured from Wartsila, Finland and installed
to complete changeover in CPP.
The LNG terminal at Kochi is expected to be commissioned in 2013.
Laying of Gas pipeline from Kochi to Mangalore by GAIL India Limited is
in progress and expected to be completed by mid 2014.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Safety
Your Company has obtained Occupational Health and Safety Management
System certification OHSAS 18001:2007 by DNV as part of its commitment
to continual improvement. In addition to the periodic audits carried
out under the integrated management system, a statutory - safety audit
was also carried out by a team of Internal Auditors.
The Company organized extensive training programs including rescue
operations, usage of personal protective equipment, emergency
management, Fire Safety at home, awareness training on near miss
incident reporting and S, H&E management system for employees. In
addition, regular mock drills were conducted to check the emergency
preparedness and weekly Fire fighting trainings were organized to train
the employees as well as contractors'' workmen.
Your Company received first prize for "Best Safe Practices" in the year
2012 instituted by Department of Factories, Boilers, Industrial Safety
& Health, Bangalore, Government of Karnataka for mega scale industry
category in Karnataka.
Health
Periodic medical examination is conducted for all the employees.
Special tests like pulmonary function test for the employees who are
exposed to dust and chemicals, audiometry for those exposed to noise
and vision test for those who require high visual acuity at workplace
were performed periodically. Medical examination of the canteen workers
with increased emphasis on personal hygiene was conducted. Regular
inspection of canteen premises and the canteen food was carried out for
maintaining hygiene and the quality of the food. First aid training
programmes were conducted for employees and contract workers. Health
awareness programmes on management of burn injuries, Diabetes and its
complications, Health hazards of Alcohol & Tobacco consumption and
Biomedical Waste Management were conducted for the employees and
township families. Free dental check-up and treatment camp was
organized at MCF Township. Free cardiac check-up programme and Nerve
Conduction test were organized at company''s occupational health centre
for the employees.
Environment
As an ISO 14001 certified company, many environmental management
programs have been implemented. Your Company has installed wastewater
treatment plant to treat, recycle and reuse the entire quantity of
sewage and process effluents, thereby achieving the status of zero
liquid effluent discharge. This was achieved by upgrading the effluent
treatment system by the installation of Lamella clarifier, Ultra-
filtration and Reverse Osmosis (RO) technologies for the treatment of
trade effluent and Membrane Bio- reactor (MBR) technology for the
treatment of domestic effluent.
Your Company has also implemented the rainwater harvesting system and
sewage treatment plant at its Township. The treated sewage water is
used for gardening. Continuing with its green initiative, the Company
in addition to the existing 55 acres of green belt, has planted 5,000
saplings during 2012-13.
Your Company has installed Continuous Ambient Air Quality Monitoring
(CAAQM) station inside the factory premises for continuous monitoring
of ambient air quality. Ambient air quality data from CAAQM station is
being displayed on LED display board at the entrance of the factory
facing National highway for public information.
In recognition of these efforts, your Company has received the
prestigious "FAI Environmental Protection Award" instituted by the
Fertilizer Association of India (FAI) for the NP/NPK fertilizer plants
excluding captive acids category for the third consecutive year.
Your Company along with FAI jointly organized a meet on "Group
discussion on Environment in the fertilizer industry" at Mangalore.
Participants from fertilizer industries, experts from Ministry of
Environment and Forests (MoEF), Central and State Pollution Control
Board discussed various environment related issue.
SOCIAL RESPONSIBILITY
Your Company continued to discharge its Social Responsibility in true
spirit and has been actively engaged in the up-liftment/ development of
the communities in its operating territory. Your Company has formulated
a comprehensive Corporate Social Responsibility (CSR) policy under
which Rural Health and Rural Education have been the areas of specific
focus.
In line with this philosophy, your Company formulated two schemes viz.
"Project Eye Care" intended to prevent/eradicate eye related ailments
in identified rural areas and "Mangala Akshara Mitra" intended to
provide basic facilities and infrastructure to rural schools to promote
education and to make schooling a pleasant experience. These schemes
were extended to rural and remote locations in the Company''s operating
territory for the benefit of the poor and needy.
During the year, under "Project Eye Care" five free eye camps and
cataract surgery camps were conducted in the neighbouring villages like
Permude, Gunduri, Manjeshwara, Sacharipete and Belvai. Free spectacles
were distributed for the needy. Free Medical and Dental check-up camp
was conducted at Marakada near MCF Township.
Under its "Mangala Akshara Mitra" program, the basic infrastructures
that are required, but are lacking in identified schools in remote
locations were provided by your Company. Those include desks, tables,
chairs, green boards, racks, cupboards, school bags, lunch plates,
water glasses and computers. 28 government primary & higher primary
schools located in the districts of Belguam, Hassan, Kolar, Kurnool,
Chickballapur, Uttara Karnataka, Bagalkot, Bijapur, Davanagere, Bellary
and Chickmagalore and about 5000 poor students were the beneficiaries
under this project during the year.
In addition to the above, your Company organized various cultural
activities, felicitated young sports persons, sponsored community
development programmes, health awareness camps, sports events, and
provided financial assistance, uniforms, computers and sanitation
facilities to the neighbourhood schools. During the year, your Company
conducted several training programs, field demonstrations, crop
seminars and krishi melas and organized rural sports and health camps
for farmers/ channel partners.
Representatives from the public, government and other public
administrative bodies actively supported and participated in all the
programs of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
A report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under Section 217(1)
(e) read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988, is set out in Annexure-1 to this
report.
PARTICULARS OF EMPLOYEES
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975, is set out in Annexure-2 to this report.
CORPORATE GOVERNANCE
The Company has fully complied with the requirements relating to
Corporate Governance as mandated by the Listing Agreements with the
Stock Exchanges. A detailed report on Corporate Governance is contained
in Annexure-3 to this report.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion and Analysis report is annexed to this report
in Annexure-4.
DIRECTORS'' RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
- the applicable accounting standards have been followed in the
preparation of the annual accounts and there are no material
departures.
- the acounting policies are in conformity with those generally
accepted and have consistently been followed and the judgements and
estimates made 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 for the year under review.
- 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.
- the annual accounts have been prepared on a going concern basis.
BOARD OF DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the
Company''s Articles of Association, Mr. S R Gupte and Mr. N Sunder Rajan
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
Mr. Shrikant G Ruparel, Independent Director expired on 11.2.2013 & Mr.
B S Patil, Independent Director resigned with effect from 1.6.2013.
The Board places on record appreciation for the valuable contributions
made by them during their tenure as Directors of the Company.
AUDITORS
M/s. K.P.Rao & Company, Chartered Accountants, retire as Statutory
Auditors of the Company at the conclusion of the ensuing forty sixth
annual general meeting, and being eligible offer themselves for re-
appointment.
COST AUDITORS
Mr. PR.Tantri, Cost Auditor has submitted the cost audit report for the
financial year 2012-2013 which has been considered by your Directors.
The Cost Audit Report for the financial year ended 31.3.2012 which was
due for filing on 30.9.2012, was filed with the Ministry of Corporate
Affairs on 24.9.2012
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the
excellent performance of the employees of the Company during the year.
Your Directors also express their gratitude to the bankers, government
agencies, customers, business associates and shareholders for their
co-operation and look forward to their continued support in the future.
On behalf of the Board of Directors
Place : Mumbai Vijay Mallya
Date : August 1, 2013 Chairman
Mar 31, 2012
The Directors are pleased to present your Company's Forty Fifth Annual
Report together with the audited statement of accounts for the year
ended March 31, 2012.
FINANCIAL HIGHLIGHTS
(Rs. Crores)
2011-12 2010-11
Sales (including other income) 3720.13 2523.83
EBITDA 208.73 159.06
Interest 77.16 18.58
Depreciation 29.10 28.88
Profit before Tax 102.47 111.60
Provision for Tax 33.37 34.06
Profit after Tax 69.10 77.54
Net Worth* 535.49 485.10
* includes Revaluation Reserve of Rs.83.93 Crores and Rs.86.12 Crores
respectively.
DIVIDEND
The Board of Directors recommended a dividend of Rs.1.20 per equity
share of Rs.10/- each.
PERFORMANCE
During 2011-12, your Company achieved the highest ever turnover of Rs.
3707.17 Crores compared to Rs. 2520.46 Crores in the previous year,
registering a growth of 47.08%. For the third consecutive year your
Company sold over a Million Metric Tonnes of fertilizers. However, the
PBT at Rs. 102.47 Crores was lower compared to Rs. 111.60 Crores during the
previous year. Profitability was adversely affected by an abnormal
increase in interest on working capital and lower production of
phosphatics due to non-availability of imported Phosphoric Acid.
PRODUCTION
Urea
Your Company achieved production of the full re-assessed capacity of
3,79,500 MTs.
Di-Ammonium Phosphate (DAP) and Complex Fertilisers
Your Company produced 1,72,276 MTs of Phosphatic Fertilizers during the
year compared to 2,23,552 MTs in the previous year. The lower
production was on account of erratic and inadequate supplies of
phosphoric acid.
Ammonium Bi-carbonate (ABC)
Production of ABC was 15,893 MTs during the year compared to 15,330 MTs
in the previous year.
SALES
During the year, your Company sold 3,79,546 MTs of Urea compared to
3,79,442 MTs in the previous year. Sales of manufactured Phosphatic
Fertilizers were 1,74,240 MTs compared to 2,24,938 MTs in the previous
year. Sales of imported products registered significant growth, with
imported Phosphatics at 3,69,181 MTs as against 2,07,320 MTs in the
previous year. Sales of Muriate of Potash increased to 91,176 MTs
compared to 88,052 MTs in the previous year.
SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
As a step towards diversification from the fertilizer sector to
Chemicals Production/Trading, your Company had identified Sulphonated
Naphthalene Formaldehyde. Accordingly, a state-of-the-art plant was set
up in August 2010, which can be expanded on a modular basis to take
care of increased demand. You will be happy to note that the Company
sold 10,946 MTs of SNF during the year, compared to 4,406 MTs in the
previous year. The prime application for SNF is in the manufacture of
super plasticizer used in construction chemical industry. For increased
market share, new variants are being developed for different
applications for specific customer needs. In addition, new customers
are being identified and added for greater capacity utilisation. The
liquid and powder forms of SNF have been well received in the market
and have created a brand name for excellent quality.
PLANT NUTRITION PRODUCTS
In order to retain/improve soil productivity and derive increased
output from the same area of land, it is necessary to maintain soil
health and correct imbalances in the nutrients essential for plant
growth. However the country continues to face a serious problem of
deterioration in soil productivity, due to indiscriminate and
unbalanced use of NPK fertilizers, inadequate use of other nutrients
essential for plant growth and injudicious use of irrigation water.
Disproportionate increase in the farm gate prices of Phosphatics and
Potash, compared to Urea has further aggravated this problem. In order
to arrest and correct this deterioration of soil condition, your
Company has introduced crop specific grades of nutrient mixtures and
soil conditioners.
To address the nutrient deficiencies noticed in the soil resulting in
inadequate output or crop failure in the areas serviced by our
Marketing network, our R&D unit at Hassan has been developing nutrient
mixtures and soil conditioners to mitigate crop specific issues. These
products, in addition to alleviating nutrient deficiencies and
improving tolerance to crop specific diseases also lead to better
quality and higher productivity. The response from the crop growers on
the effectiveness of these products has been very positive and there is
a growing demand for development of similar products for other crops.
In order to encourage scientific application of fertilizers and plant
nutrients, your Company has been trying to introduce these concepts at
the grass roots level. To actively focus attention of all concerned on
the specifics involved therein, your Company successfully introduced
two unique concepts viz., Mangala Mitra and Mangala Saathi in the
previous year. Under Mangala Mitra, opinion leaders in the villages
were identified, enrolled, educated and trained on a continual basis on
the whole gamut of soil management, crop nutrition and crop protection.
These Mangala Mitras in turn educate fellow farmers on various aspects
of crop cultivation. Through this innovative approach, your Company is
effectively implementing the "Mangala INM" concept, an approach to
enable the farmer to make his agriculture an economically sustainable
one. Under Mangala Saathi, all the good and potentially good dealers
are given special attention through many unique programs that encourage
and motivate them for better performance. These two approaches have
greatly helped promoting nutrient management awareness.
The Mangala INM concept was introduced in 2002-03 where your Company
achieved a modest turnover of Rs. 32 lakhs. Concentrated efforts have
resulted in a significant increase year on year, with the Company
achieving a turnover of Rs. 131 Crores during the year, a growth of 31%
over the previous year.
In order to support with timely supply of quality Plant Nutrition
products, your Company successfully commissioned a Specialty Fertilizer
manufacturing facility in April 2011 with an annual capacity of 12,000
MTs at its factory in Mangalore, to produce Water Soluble Fertilizers
and Micronutrient Mixtures.
PLANT PROTECTION CHEMICALS
As part of diversification and growth strategy and in order to offer a
wider range of agri inputs, your Company introduced Plant Protection
(PP) products in July 2010. As an entry strategy, a collaborative
approach was adopted, with your Company marketing the products of
reputed pesticide companies through its channel partner network. In
the year under review, your Company launched two products in the
Mangala brand name, viz., Mangala Mahakill an insecticide and Mangala
Samhar, a Herbicide. In the financial year 2012-13, your Company plans
to launch 5 more products of selected molecules under its own brand.
The Plant Protection Chemicals business registered a turnover of Rs. 22
crores compared to Rs.12 crores in the previous year.
WORKING CAPITAL
Delay in agreement on the prices of imported fertilizers with the
international suppliers and consequent delayed ordering resulted in
bunched up imports in the second half of 2011-12. This resulted in
heavy congestion at the east coast ports. Non-availability of railway
rakes at the same time contributed to material being stuck at the ports
for a long period of time. These factors combined by inordinate delay
in release of GOI subsidy, nearly 30% increase in interest rates
charged by banks and 20% depreciation of INR vs. USD have contributed
to the very significant increase in interest cost.
FERTILIZER POLICY
Government of India is yet to announce the new Urea fertilizer policy
for grant of concession as well as investments in the sector. Stage -
III of the New Pricing Scheme (NPS) for Urea announced by the
Government of India in March 2007 lapsed on March 31, 2010. In the
interim, as a stop gap arrangement, the existing policy has been
extended provisionally until further orders.
With effect from April 1, 2010, the government introduced a Nutrient
Based Subsidy (NBS) policy for Phosphatic and Potassic fertilizers,
announcing the rate of subsidy in advance for the full year. For
2012-13, this subsidy has been substantially reduced. Coupled with the
sharp depreciation of the Indian Rupee, this has led to an abnormal
increase in MRPs for these fertilizers.
RENOVATION / MODERNIZATION OF AMMONIA / UREA PLANTS - NG CONVERSION
PROJECT
As per the directive of Department of Fertilizers, GOI and as a part of
the renovation / modernization programme, the feed and fuel viz.,
Naphtha/ Furnace oil will be replaced with Natural Gas (NG) in Ammonia/
Urea plants and captive power plant (CPP).
A Gas Sale Agreement has been entered into with Indian Oil Corporation
for supply of RLNG from Kochi Terminal of Petronet LNG Limited and a
Gas Transmission Agreement has been signed with Gail (India) Limited.
Based on latest indications, supply of gas to Mangalore is expected in
the second half of 2013. The location has been identified for gas
receiving station of GAIL at our plant premises and work has started
thereon.
The Petronet LNG terminal is expected to be commissioned in September
2012 at Kochi. As indicated by Gail (India) Ltd., laying of Gas
pipeline from Kochi to Mangalore is likely to be completed in the
second half of 2013.
M/s Jacob Engineering, UK have been engaged for the basic engineering
study for gas conversion, which has been completed. Detailed
Engineering is in progress. Your Company has already procured from
Wartsila, Finland, three Dual Feed DG sets. The balance three DG sets
and the Ammonia - Urea plant modification are expected to be ready
synchronized with gas supply.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL Safety
The Company has obtained Occupational Health and Safety Management
System Certification OHSAS 18001:2007 as a part of its commitment to
continual improvement. In addition to the periodic audits carried out
under the integrated management system, a statutory safety audit was
also carried out by M/s Rams Safety Consultants Chennai.
Extensive training programs including rescue operations, usage of
personal protective equipment, emergency management, safe handling of
LPG at home, awareness training on near miss incident reporting, S,H&E
management system, were organized for employees and regular mock drills
were conducted to check the emergency preparedness.
The Company has procured a State-of-art ambulance equipped with all
modern facilities for emergency and a Rescue Tool to rescue people from
collapsed building. In addition, fire fighting training was imparted
periodically to train the employees as well as contractors' workmen.
Your Company received the "Unnatha Suraksha Puraskara" for
outstanding safety performance and management system, instituted by the
National Safety Council, Karnataka Chapter Bangalore.
Health
As in the past, periodic medical examination was conducted for all the
employees, including general physical examination and laboratory
investigations. Special tests like pulmonary function test for the
employees who are exposed to dust and chemicals, audiometry for those
exposed to noise and vision test for those who require high visual
acuity at workplace were performed periodically. Medical examination of
the canteen workers with increased emphasis on personal hygiene was
conducted. Regular inspection of canteen premises and the canteen food
was carried out for maintaining hygiene and the quality of the food.
First aid training programmes were conducted for employees and contract
workers. Health awareness programmes on stress management, back
pain-causes & management, diet & nutrition were conducted for the
benefit of employees. A free Asthma check-up camp also was organized at
MCF Township.
Environment & Pollution Control
As an ISO 14001 certified Company, many environmental management
programs have been implemented. Your Company has installed waste water
recovery facility to treat, recycle and reuse the entire quantity of
sewage and process effluents, thereby achieving zero liquid effluent
discharge.
Your Company has also implemented rain water harvesting system and
sewage treatment plant at its township. The treated sewage water is
used for gardening. Continuing with its green initiative, the Company
planted an additional 3000 saplings in the green belt area in its
factory in Mangalore.
In recognition of these efforts, your Company received the
"Environmental Protection Award for NP/NPK Fertilizer Plants"
instituted by the Fertilizer Association of India for the second
consecutive year.
SOCIAL RESPONSIBILITY
Your Company continued to discharge its Social Responsibility in true
spirit and has been actively engaged in the up-liftment/ development of
the communities in its operating territory. Your Company has formulated
a comprehensive Corporate Social Responsibility (CSR) policy under
which Rural Health and Rural Education have been the areas of specific
focus.
In line with this philosophy, your Company formulated two schemes viz.,
"Project Eye Care" intended to prevent/eradicate eye related
ailments in identified rural areas and "Mangala Akshara Mitra"
intended to provide basic facilities and infrastructure to rural
schools to promote education and to make schooling a pleasant
experience. These schemes were extended to rural and remote locations
in the Company's operating territory for the benefit of the poor and
needy.
During the year, under "Project Eye Care" four free eye camps were
conducted in collaboration with Justice K. S. Hegde Charitable Hospital
at Sacharipete, Vogga, Soorinje and Gundoori villages. Over 1000 people
attended these eye camps of which about 1 00 were recommended surgery,
to be carried out free of cost by the hospital and about 650 people
received free spectacles from your Company.
Under its "Mangala Akshara Mitra" program, the basic infrastructure
that is required, but is lacking in identified schools in remote
locations, was provided by your Company. Those include, desks, tables,
chairs, green boards, racks, cupboards, school bags, lunch plates,
water glasses and computers. 34 government primary & higher primary
schools located in the districts of Belgaum, Chamaraja Nagara,
Chitradurga, Gulbarga, Hassan, Haveri, Kolar, Kurnool, Mandya, Mysore,
North Kanara, Raichur, Shimoga and Tumkur and about 5000 poor students
were the beneficiaries under this project during the year.
During the current year, your Company's CSR initiative has been
extended to two other new segments of the society.
- Tribal Community: Households of underprivileged tribal community
living in the remote forest areas of Chamaraja Nagar and North Kanara
District of Karnataka were provided with solar lamps, woolen blankets
and household stainless steel utensils. Nearly 350 Tribal families have
been benefited so far.
- Schools for Special Children: Selected institutions for Special
Children (physically & mentally challenged) are also being assisted
with Water purifiers, Uniforms, Teaching aids, furniture, sanitation
facility etc. Three such Institutions covering over 1 90 Special
children have been assisted so far.
In addition to the above, your Company organized various cultural
activities, felicitated young sports persons, sponsored community
development programmes, health awareness camps, sports events, and
provided financial assistance, uniforms, computers and sanitation
facilities to the neighbourhood schools. During the year, your Company
conducted several training programs, field demonstrations, crop
seminars and krishi melas and organized rural sports and health camps
for farmers/ channel partners.
Representatives from the public, government and other public
administrative bodies actively supported and participated in all the
programs of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
A report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under Section 217(1)
(e) read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988, is set out as Annexure-1 to this
report.
PARTICULARS OF EMPLOYEES
There were no employees, in respect of whom information in accordance
with sub-section (2A) of Section 217 of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, is to be
provided.
CORPORATE GOVERNANCE
The Company has fully complied with the requirements relating to
Corporate Governance as mandated by the Listing Agreements with the
Stock Exchanges. A detailed report on Corporate Governance is contained
in Annexure-2 to this report.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion and Analysis Report is annexed to this report
(Annexure-3).
DIRECTORS' RESPONSIBILITY
Pursuant to Section 21 7 (2AA) of the Companies Act, 1 956, your
Directors confirm that:
- the applicable accounting standards have been followed in the
preparation of the annual accounts and there are no material
departures.
- the accounting policies are in conformity with those generally
accepted and have consistently been followed and the judgements and
estimates made 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 for the year under review.
- proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1 956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
- the annual accounts have been prepared on a going concern basis.
BOARD OF DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the
Company's Articles of Association, Mr. Shrikant G. Ruparel and Mr.
Pratap Narayan retire by rotation at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment.
AUDITORS
M/s. K. P. Rao & Company, Chartered Accountants, retire as Statutory
Auditors of the Company at the conclusion of the ensuing forty fifth
annual general meeting, and being eligible offer themselves for
re-appointment.
COST AUDITORS
Mr. P. R. Tantri, Cost Auditor has submitted the cost audit report for
the financial year 2011-2012 which has been considered by your
Directors.
The Cost Audit Report for the financial year ended 31.3.2011 which was
due for filing on 30.9.2011, was filed with the Ministry of Corporate
Affairs on 24.9.2011.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the
excellent performance of the employees of the Company during the year.
Your Directors also express their gratitude to the bankers, government
agencies, customers, business associates and shareholders for their
co-operation and look forward to their continued support in the future.
On behalf of the Board of Directors
Mumbai Vijay Mallya
August 10, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors are pleased to present your Company's Forty Fourth Annual
Report together with the audited statement of accounts for the year
ended March 31, 2011.
FINANCIAL HIGHLIGHTS
(Rs. Crores)
2010-11 2009-10
Sales (including other income) 2523.83 2081.73
EBITDA 159.06 130.61
interest 18.14 23.44
Depreciation 28.88 18.37
Profit before Tax before exceptional items 112.04 88.80
Loss on sale / diminution in value
of Fertilizer Companies GOI Special Bonds - 4.27
Profit before Tax 112.04 84.53
Provision for Tax 34.50 28.04
Profit after Tax 77.54 56.49
Net Worth 485.10* 429.61*
* includes Revaluation Reserve of Rs. 86.12 Crores and Rs. 88.35 Crores
respectively.
DIVIDEND
The Board of Directors recommended a dividend of Rs. 1.20 per equity
share ofRs. 10/- each.
PERFORMANCE
2010-11 was a yet another year of growth and improved performance, with
your Company registering the highest ever turnover and Profit Before
Tax (PBT). Your Company achieved a record sale of One Million Metric
Tonnes of fertilizers for the second year in a row. Sales (including
other income) of your Company for the year 2010-2011 was Rs. 2523.83
Crores compared to Rs. 2081.73 Crores in the previous year, registering
a growth of 21%. The PBT at Rs. 112.04 Crores was higher compared to
Rs. 84.53 Crores during the previous year, representing an increase of
33%.
PRODUCTION
Urea
Your Company achieved production of the full re-assessed capacity of
3,79,500 MTs.
Di-Ammonium Phosphate (DAP) and Complex Fertilisers
Your Company achieved production of 2,23,552 MTs of Phosphatic
Fertilizers during the year compared to 2,82,173 MTs in the previous
year. The lower production is on account of erratic and inadequate
supplies of phosphoric acid.
Ammonium Bi-carbonate (ABC)
Your Company achieved full capacity production of 15,330 MTs of ABC.
SALES
During the year, your Company sold 3,79,442 MTs of Urea compared to
3,83,338 MTs in the previous year. Sales of manufactured Phosphatic
Fertilizers was 2,24,938 MTs compared to 2,80,413 MTs in the previous
year. Sales of imported products registered significant growth, with
imported Phosphatics at 2,07,320 MTs compared to 1,74,670 MTs in the
previous year. Sales of Muriate of Potash was 88,052 MTs compared to
57,435 MTs in the previous year.
SULPHONATED NAPHTHALENE FORMALDEHYDE (SNF)
In line with the Company's growth objective, a state-of-the-art plant
with an annual production capacity of 21,450 MTs of liquid SNF was
commissioned in August 2010. SNF is predominantly used in the
construction chemical industry for manufacture of super plasticizer.
The product samples were sent to leading customers for field trials and
were well accepted. The liquid and powder forms of SNF were released to
the market with the trade names ChemCF NL and ChemCF NP respectively.
During the year, 4400 MTs of liquid SNF were produced.
INTEGRATED NUTRIENT MANAGEMENT (INM)
The country is facing a serious problem of deterioration in soil
productivity. Indiscriminate and unbalanced use of N.P.K fertilizers
over the years and inadequate use of other nutrients essential for
plant growth are amongst the main reasons for the loss in soil
productivity.
Improvement in soil productivity and maintenance of the soil fertility
can be achieved by the adoption of an Integrated Nutrient Management
(INM) approach. Having been actively associated with the farming
community for over 3 decades, your Company believes it has a key role
to play in helping the farmers to achieve higher productivity as well
as superior quality of farm produce.
NM encompasses soil health management, water management, plant
nutrition and plant protection. Your Company has been engaged in
imparting extensive and continuous education to farmers and channel
partners on the need to practice INM techniques, so that all the
essential nutrients are made available in time at every stage of crop
growth.
To help the farmer achieve this objective, over the last few years, MCF
has been developing and introducing Plant Nutrition (PN) products that
are required for achieving root and shoot growth, more fowering, higher
fruit and seed setting, improved quality and extended shelf-life of the
produce.
Some of the crop specific PN products developed at the Company's R&D
unit in Hassan and introduced during the year include Mangala Tur
Special and Mangala GT Booster for Tur, and Ginger & Turmeric crops,
respectively. Mangala Cotton Special and Mangala Chilli Special for
Bt. Cotton and Chilli crops are ready for introduction. These products,
in addition to improving tolerance to crop specific diseases also lead
to better quality and higher productivity. The response from the crop
growers on the effectiveness of these products has been very positive
and there is a growing demand for development of similar products for
other crops.
In order to increase the coverage under its Integrated Nutrient
Management program, your Company introduced two unique concepts viz.
Mangala Mitra and Mangala Saathi. Under Mangala Mitra, opinion leaders
in the villages are identifed and enrolled to educate fellow farmers on
various aspects of crop cultivation. Under the Mangala Saathi, the
key channel partners are identifed and are given special attention for
promoting INM awareness.
All these efforts have led to the Company achieving a turnover of
Rs.100 Crores during the year compared to about Rs. 62 Lakhs achieved
during the year 2002-2003 when the INM concept was frst introduced.
In order to meet the increasing demand for PN products, your Company
has set up a Specialty Fertilizer manufacturing facility at its factory
in Mangalore, to produce Water Soluble Fertilizers and Micronutrient
Mixtures. The plant with an annual capacity of 12,000 MTs was
commissioned in April 2011. Another facility to produce 10,000 MTs per
annum of soil conditioners is under construction and will be
commissioned during the current financial year.
PLANT PROTECTION CHEMICALS
As part of its diversification and growth strategy and in order to offer
a wider range of agri inputs, your Company introduced Plant Protection
(PP) Chemicals in July 2010. As an entry strategy, a collaborative
approach was adopted, with your Company marketing the products of
reputed pesticide companies through its channel partner network.
During the first 9 months of operations, the business registered an
impressive turnover of Rs. 12 crores. In the current financial year
2011-2012, in addition to the above arrangement, your Company also
plans to launch its own brand of PP products for a few select
molecules.
WORKING CAPITAL
During the year, the domestic production of fertilizers and import of
fertilizers were almost at the same level as in the previous year. In
order to meet its working capital needs, your Company also availed of
short term loans from banks that carried lower rate of interest
compared to normal cash credit limits. Settlement of subsidy claims was
also relatively better during the year. All these factors and efficient
working capital management contributed to reduction of interest costs.
FERTILIZER POLICY
Stage -III of the New Pricing Scheme (NPS) for Urea announced by the
Government of India in March 2007 lapsed on March 31, 2010. As the new
policy is yet to be finalized and announced, the existing scheme has
been extended provisionally until further orders.
As per the existing policy, all Naphtha/Furnace Oil/LSHS based units
were to convert to gas by March 31, 2010. However, this time limit is
expected to be extended upto 31.03.2013 by Government of India, for
which an official communication is awaited. A Gas Sale Agreement has
been entered into with Indian Oil Corporation for supply of RLNG from
Kochi Terminal of Petronet LNG Limited and a Gas Transmission Agreement
has been signed with Gail (India) Limited. Based on latest indications,
supply of gas to Mangalore is expected to commence by end 2012. Leading
consultants have been engaged for the basic engineering study for gas
conversion and for the power plant conversion from furnace oil to gas.
Your Company has already placed orders with Wartsila, Finland for
supply of Dual Feed/NG DG sets to be commissioned in two phases in
April 2012 and in April 2013 without affecting the normal production of
Urea.
With effect from April 1, 2010, the government introduced a Nutrient
Based Subsidy (NBS) policy for Phosphatic and Potassic fertilizers. In
terms of this policy, each nutrient content in fertilizer, is assigned
a value and the aggregate of these values is considered to arrive at
the concession rates. Under NBS, the government announces the rate of
subsidy in advance for the full year thereby enabling higher import and
sale of fertilizers to meet the market needs.
SUBSIDIARY COMPANY
MCF International Limited, the wholly owned subsidiary of the Company
had filed a Scheme, for its amalgamation with the Company, before the
Hon'ble High Court of Karnataka, with the effective date of April 1,
2010. This scheme of amalgamation has been sanctioned by the Hon'ble
High Court on July 8, 2011.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Safety and Health
The Company has obtained Occupational Health and Safety Management
System Certification OHSAS 18001 as a part of its commitment to
continual improvement. In addition to the periodic audits carried out
under the integrated management system, a statutory safety audit was
also carried out by cross functional internal auditors. DNV, the
certification agency has recertified your Company's OHSAS 18001 system,
conforming to the latest 2007 version.
Extensive training programs including rescue operations, usage of
personal protective equipment, emergency management, safe handling of
LPG at home, awareness training on near miss incident reporting, S,H&E
management system, were organized for employees and regular mock drills
were conducted to check the emergency preparedness. In addition, fre
fghting training was conducted periodically to train the employees as
well as contractors' workman. Your Company received the "Second Best
Safe Industry" award in the large sector, which was instituted by the
Directorate of Factories and Boilers, Govt. of Karnataka.
Environment & Pollution Control
As an ISO 14001 certifed Company, many environmental management
programs have been implemented. During the year, your Company installed
waste water recovery facility to treat, recycle and reuse the entire
quantity of sewage and process effuents, thereby achieving zero liquid
effuent discharge.
Your Company has also implemented a rain water harvesting system and
sewage treatment plant at its township. The treated sewage water is
used for gardening purpose. Continuing with its green initiative, the
Company planted an additional 5000 saplings in the green belt area in
its factory in Mangalore.
In recognition of these efforts, your Company received the
"Environmental protection award for NP/NPK fertilizer plants" for the
year 2009-10 instituted by the Fertilizer Association of India.
SOCIAL RESPONSIBILITY
Your Company undertakes its Social Responsibility obligation in its
true spirit and has always been actively engaged in the up-liftment/
development of the communities in its operating territory. Your Company
has formulated a comprehensive Corporate Social Responsibility (CSR)
policy under which Rural Health and Rural Education have been the areas
of specific focus during the year.
In line with this philosophy, your Company formulated two schemes viz.
"Project Eye Care" intended to prevent/eradicate eye related ailments
in identifed rural areas and "Mangala Akshara Mitra" intended to
provide basic facilities and infrastructure to rural schools to promote
education and to make schooling a pleasant experience. These schemes
were implemented in rural and remote locations in the Company's
operating territory for the benefit of the poor and needy.
Under "Project Eye Care" two free eye camps each were conducted in
collaboration with Justice K S Hegde Charitable Hospital at Sacharipete
in Udupi district and Vogga village in Dakshina Kannada district during
the year. Over 1000 people attended these eye camps of which about 150
were recommended surgery, to be carried out free of cost by the
hospital and about 650 people received free spectacles from your
Company.
A free diabetes detection and cardiac check-up camp was held in
January, 2011 at the staff club of the Company's colony for the benefit
of poor and needy residing nearby. Over 100 persons benefited by the
camp where ECG and ECHO tests were conducted free of cost.
Under its "Mangala Akshara Mitra" program, the basic infrastructure
that is required, but is lacking in identifed schools in remote
locations, was provided by your Company. Those include, desks, tables,
chairs, green boards, racks, cupboards, school bags, lunch plates,
water glasses and computers. Ten government primary & higher primary
schools located in the districts of Bellary, Bijapur, Chamaraja Nagara,
Chickkaballapur, Dharwar and Gadag and about 4000 poor students were
the beneficiaries under this project.
In addition to the above, your Company organized various cultural
activities, felicitated young sports persons, sponsored community
development programmes, health awareness camps, sports events, and
provided financial assistance, uniforms, computers and sanitation
facilities to the neighborhood schools. During the year, your Company
conducted several training programs, field demonstrations, crop seminars
and krishi melas and organized rural sports and health camps for
farmers/ channel partners.
Representatives from the public, government and other public
administrative bodies actively supported and participated in all the
programs of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
A report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under Section 217(1)
(e) read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988, is set out as Annexure-1 to this
report.
PARTICULARS OF EMPLOYEES
There were no employees, in respect of whom information in accordance
with sub-section (2A) of Section 217 of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, is to be
provided.
CORPORATE GOVERNANCE
The Company has fully complied with the requirements relating to
Corporate Governance as mandated by the Listing Agreements with the
Stock Exchanges. A detailed report on Corporate Governance is contained
in Annexure-2 to this report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis report is annexed to this report
(Annexure-3).
DIRECTORS' RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confrm that:
- the applicable accounting standards have been followed in the
preparation of the annual accounts and there are no material
departures.
- the accounting policies are in conformity with those generally
accepted and have consistently been followed and the judgements and
estimates made 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 for the year under review.
- 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.
- the annual accounts have been prepared on a going concern basis.
BOARD OF DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the
Company's Articles of Association, Mr. S R Gupte and Mr. N Sunder Rajan
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
AUDITORS
M/s.K.P.Rao & Company, Chartered Accountants, retire as Statutory
Auditors of the Company at the conclusion of the ensuing forty fourth
annual general meeting, and being eligible offer themselves for
re-appointment.
COST AUDITORS
Mr. PR.Tantri, Cost Auditor has submitted the cost audit report for the
financial year 2010-2011 which has been considered by your Directors.
The Cost Audit Report for the financial year ended March 31, 2010 which
was due for filing on September 30, 2010 was filed with The Ministry of
Corporate Affairs on September 24, 2010.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the
excellent performance of the employees of the Company during the year.
Your Directors also express their gratitude to the bankers, government
agencies, customers, business associates and shareholders for their
co-operation and look forward to their continued support in the future.
On behalf of the Board of Directors
New Delhi Vijay Mallya
August 2, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present your Companys Forty Third Annual
Report together with the audited statement of accounts for the year
ended March 31, 2010.
FINANCIAL HIGHLIGHTS
The financial highlights for the year under review are given below:
(Rs. Crores)
2009-10 2008-09
Sales (including other income) 2081.73 2484.04
EBITDA 130.61 131.85
Interest 23.44 36.00
Depreciation 18.37 16.96
Profit before Tax before exceptional items 88.80 78.89
Loss on sale /
diminution in value of
Fertilizer Companies GOI Special Bonds 4.27 35.63
Profit before Tax 84.53 43.26
Provision for Tax 28.04 15.09
Profit after Tax 56.49 28.17
Net Worth 429.61* 389.20*
* includes Revaluation Reserve of Rs. 88.35 Crores and Rs. 90.57 Crores
respectively.
DIVIDEND
The Board of Directors recommended a dividend of Re.1/- per equity
share of Rs.10/- each.
PERFORMANCE
2009-2010 has been yet another year of records, with your Company
achieving sales of 1 million metric tonnes of fertilizer sales, highest
ever sales of Phosphatics and highest ever profit after tax (PAT).
Sales (including other income) of your Company during the year 2009-
2010 aggregated to Rs. 2081.73 Crores against Rs. 2484.04 Crores in the
previous year. Despite a higher sales volume, the turnover was lower,
attributable to decrease in the prices of raw materials as well as
finished goods. The EBITDA for the year was Rs.130.61 Crores compared
to Rs.131.85 Crores during the previous year.
PRODUCTION
Urea
Your Company achieved production of the full re-assessed capacity of
3,79,500 MTs.
Di-Ammonium Phosphate (DAP) and Complex Fertilisers
Your Company achieved the highest ever annual production of 2,82,173
MTs of DAP and NP (20:20:0:13) during the year compared to 2,33,343 MTs
in the previous year.
Ammonium Bi-carbonate (ABC)
Production of 15,330 MTs of ABC achieved by your Company was also the
highest ever compared to the production of 15,121 MTs during the
previous year.
SALES
Your Company achieved a record sale of One Million Metric Tonnes of
Fertilizers for the year 2009-10. During the year, your Company sold
3,83,338 MTs of Urea compared to 3,86,836 MTs in the previous year.
Sales of DAP and NP [20:20:0:13] amounted to 2,80,413 MTs as against
2,35,566 MTs in the previous year. Sales of traded products also
registered significant growth, especially imported DAP at 1,74,670 MTs
as against 64,126 MTs in the previous year.
INTEGRATED NUTRIENT MANAGEMENT
Under its Integrated Nutrient Management (INM) initiative, your Company
continued its efforts to create awareness about the advantages of
balanced use of fertilizers. As a result of the sustained focus of your
Company over the last few years, sales from this initiative for the
year under review stood at Rs. 72 Crores, representing an increase of
33% over Rs.54 Crores in the previous year.
In addition to providing extension support to farmers and dealers, the
INM unit of your Company at Hassan continued with its research
activities and produced soil and crop specific grades of fertilizers
and soil health enhancers. Farmers using the recommended soil and crop
specific products reported better crop quality and significant increase
in yields. Your Company will continue its efforts to ensure that
awareness of balanced use of fertilizers further increases amongst the
farming community.
WORKING CAPITAL
During the year, domestic production as well as imports of phosphatic
fertilizers were substantially higher than in the previous year.
Nevertheless, on account of lower prices of raw materials as well as of
finished products, the overall requirements of working capital limits
did not increase. Further, in order to meet its working capital needs,
your Company availed of short term loans from banks that carried lower
rates of interest compared to normal cash credit limits. Settlement of
subsidy claims was also relatively better during the year. All these
factors contributed to reduction in interest costs.
During the year under review, the Government of India did not issue any
Fertilizer Bonds. However, in order to meet working capital needs, your
Company had to liquidate the Fertilizer Bonds issued during the
previous year, at a discount, resulting in a loss of Rs.4.27 crores.
FERTILIZER POLICY
Stage-III of the New Pricing Scheme (NPS) for Urea announced by the
Government of India in March 2007 expired on March 31, 2010. As the new
policy is yet to be finalized and announced, the existing scheme has
been extended provisionally.
As per the existing policy, all Naphtha/Furnace Oil/LSHS based units
were to convert to gas by March 31, 2010. Your Company is in readiness
for conversion, subject to availability of gas. Conclusion of
agreements with Indian Oil Corporation, Gas Authority of India Limited
for supply of gas and its transportation is in final stages. Based on
latest indications, supply of gas to Mangalore is expected to commence
by end 2012. Your Company has commissioned a basic engineering study
for the purpose of conversion to gas.
The policy in regard to concessions for Phosphatic and Potassic
fertilizers was based on import parity price during the year 2009-10.
With effect from April 1, 2010, the Government has introduced the
Nutrient Based Subsidy (NBS) policy for these fertilizers. In terms of
this policy, each nutrient content in fertilizer, is assigned a value
and the aggregate of these values is considered to arrive at the
concession rates. Besides, an additional subsidy on fortified
subsidized fertilizers carrying secondary and micro-nutrients as per
the Fertilizer (Control) Order, 1985 [FCO] has also been announced. The
Government of India has also issued guidelines for the manufacture and
sale of customized fertilizers under clause 20B of FCO to promote
balanced plant nutrition and maximize fertilizer use efficiency.
SUBSIDIARY COMPANY
Besides being one of the worlds largest producers of food grains,
India ranks second in the world in the production of fruits and
vegetables. However, lack of adequate processing, preservation and
storage facilities and inadequate supply chain management lead to high
post-harvest losses on account of spoilage, wastages and quality
deficiencies. On the other hand, increased urbanization and improved
standards of living have led to increase in demand for food and food
products.
Recognizing the need to improve efficiencies and to address the issue
of inadequate post-harvest processing, storage, packing and
distribution facilities, your Companys subsidiary MCF International
Limited had embarked on an innovative AGRI project to address some of
these problems by leveraging its linkages with farmers.
The number of farmers enrolled and the area of coverage under the
project increased to 3900 and 13500 acres respectively during the year
and the Company achieved vegetable sales of 30MTs per day by the end of
the financial year.
The Ministry of Corporate Affairs, Government of India, has exempted
your Company from the requirement of attaching the audited accounts of
the subsidiary Company to its annual accounts for the year ended March
31, 2010. The annual accounts of the subsidiary Company and the related
detailed information will be made available to the holding and
subsidiary Companys investors seeking such information at any point of
time. The annual accounts of the subsidiary Company is also available
for inspection by any investor at the Registered Office of the
subsidiary Company as well as your Company and the accounts of the
subsidiary Company is also uploaded on the website of your Company.
SAFETY, HEALTH, ENVIRONMENT AND POLLUTION CONTROL
Your Company had obtained Occupational Health and Safety Management
System certification OHSAS 18001 as part of its commitment to
continuous improvement. The certifying agency, DNV, has recertified the
OHSAS 18001 system conforming to the latest version. In addition to the
periodic audits carried out under the integrated system, a statutory
safety audit was also carried out by Chemical Design Company,
Hyderabad.
Extensive training programs including rescue operations, usage of
personal protective equipment, emergency management, safe handling of
LPG at home, awareness training on near miss incident reporting, S,H&E
management system, internal auditor training by DNV were organized for
employees and regular mock drills were conducted to review the
emergency preparedness.
As in the past, periodic medical examination was conducted for all the
employees, which included general physical examination and laboratory
tests for blood sugar and lipid profile. Special tests like pulmonary
function test for the employees who are exposed to dust and chemicals,
audiometry test for those exposed to noise and vision test for those
who require high visual acuity at the workplace were also performed.
Effluent Treatment
During the year, the company established a facility to treat, recycle
and reuse as process water the entire quantity of sewage and process
effluent water, thereby achieving the status of zero liquid discharge.
As an ISO 14001 certified company, many environmental management
programs were implemented to improve the environmental performance of
the Company.
Your company received the "Third Best Safe Industry Award in the Large
Sector" instituted by the Directorate of Factories and Boilers, Govt.
of Karnataka.
SOCIAL RESPONSIBILITY
The Company has formulated a comprehensive CSR policy covering all
areas of its operations. Some of the CSR activities/programs undertaken
during the year are set out below:
Flood Relief : During September 2009, several districts of Northern
Karnataka experienced the worst ever floods in the history of the
State. The heavy torrential rains caused extensive damage to
infrastructure and standing crops and resulted in loss of human lives.
Your Company, being in the service of the farming community for over
three decades in Karnataka, immediately initiated flood relief measures
in several villages of North Karnataka by organizing food camps,
distributing bare necessities such as utensils, clothes, and blankets
in collaboration with the district administration, NGOs as well as
Mangala Dealer associations. In addition, several flood affected rural
schools were provided with basic requirements like bags, books,
sweaters, water filters etc.,
Community Development: Your Company organized various cultural and
religious activities, sponsored community development programmes,
health awareness camps, sports events, provided financial assistance,
uniforms, computers and sanitation facilities to the neighborhood
schools and adopted "Sambar Deer" at Pilikula Biological Park.
"The United Kingdom - Mangalore Chemicals & Fertilizers - Tungabhadra
Gramin Bank Gram Vikas Trust" was established in 1986. During the year
the trust sponsored the provision of desks, writing boards, furniture,
cupboards, computers and drinking water facilities to various schools.
Your Company provided health care equipments, furniture for the
emergency / casualty ward of Vijayanagar Institute of Medical Sciences,
Bellary and sponsored a learning center for the female child in Raichur
district. Your Company also sponsored a project on Environmental
Education and Protection in Rural Area in Ramnagar district.
For the benefit of the farming community and their families in times of
distress, the Company has taken an accident insurance for farmers in
its operating territory under a Group Insurance Scheme. The scheme
covers over 1.7 Lakh farmers and provides insurance cover of Rs.25,000
in cases of death and permanent disability.
During the year, your Company conducted several training programs,
field demonstrations, crop seminars and krishi melas and organized
rural sports and health camps for farmers/ dealers.
As a part of its corporate responsibility, the Company implemented the
rainwater harvesting system at its township in Mangalore and installed
a sewage treatment plant to treat the sewage generated. The treated
sewage water is used for gardening. The Company has also planted 3000
saplings in the green belt area.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.
A report in respect of conservation of energy, technology absorption,
foreign exchange earnings and outgo as required under Section 217(1)
(e) read with the Companies (Disclosure of Particulars in the Report of
the Board of Directors) Rules, 1988, is set out as Annexure-1 to this
report.
PARTICULARS OF EMPLOYEES
Information in accordance with sub-section (2A) of Section 217 of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975, is provided in Annexure-2 to this report.
CORPORATE GOVERNANCE
The Company has fully complied with the requirements relating to
Corporate Governance as mandated by the Listing Agreements with the
Stock Exchanges. A detailed report on Corporate Governance is contained
in Annexure-3 to this report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis report is annexed to this report
(Annexure-4).
DIRECTORS RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm that:
- the applicable accounting standards have been followed in the
preparation of the annual accounts and there are no material
departures.
- the accounting policies are in conformity with those generally
accepted and have consistently been followed and the judgements and
estimates made 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 for the year under review.
- 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.
- the annual accounts have been prepared on a going concern basis.
BOARD OF DIRECTORS
In accordance with the provisions of the Companies Act, 1956 and the
Companys Articles of Association, Mr. B S Patil and Mr. Pratap Narayan
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
AUDITORS
M/s.K.P.Rao & Company, Chartered Accountants, retire as Statutory
Auditors of the Company at the conclusion of the ensuing forty third
annual general meeting, and being eligible offer themselves for re-
appointment.
COST AUDITORS
Mr. P.R.Tantri, Cost Auditor has submitted the report for the financial
year 2009-2010 which has been considered by your Directors.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the
excellent performance of the employees of the Company during the year.
Your Directors also express their gratitude to the bankers, government
agencies, customers, business Associates and shareholders for their
co-operation and look forward to their continued support in the future
On behalf of the Board of Directors
Banglore Vijay Mallya
July 21,2010 Chairman
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