chemfab alkalis ltd Directors report

DIRECTORS

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

FINANCIAL RESULTS

Particulars	For the Year Ended
	31st March 2014	31st March2013
	Rs. in lakhs	Rs. in lakhs
Profit before Interest and Depreciation	3,116	4,151
Less: Interest	14	0
Profit Before Depreciation	3,102	4,151
Less: Depreciation	627	668
Profit before Tax	2,475	3,483
Tax	736	1,212
Deferred Tax	94	-77
Net Profit For the Year	1,645	2,348
Balance brought forward from
Previous Year	7,929	6,354
Balance available for Appropriation	9,574	8,702
Appropriations:
Transferred to General Reserve	165	240
Interim Dividend Paid	0	459
Proposed Dividend	115	0
Dividend Tax	19	74
Balance carried to Balance Sheet	9,275	7,929

OPERATIONS

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

DIVIDEND

Your Directors recommend payment of Dividend of Rs.1.25 per share (25%) for the year ended 31^st March, 2014, absorbing a sum of Rs.1,14,64,621/- , subject to the approval of the Members at the ensuing Annual General Meeting.

MODERNIZATION

The Company has taken up a Project for improving process technology and modernizing its Plant. A sum of Rs. 61,84,86,060/- net of Cenvat credit was incurred on the Project during the current Financial Year, out of which Rs. 5,40,12,393/- is capitalised and Rs. 56,44,73,667/- is shown in the Balance Sheet as part of Capital Work in Progress. The completion and commissioning of the Project is pending subject to the requisite regulatory clearances.

EXPANSION

The Company had proposed expansion of its existing manufacturing capacity and in this connection has filed an appeal with the National Green Tribunal for grant of the necessary NOC. The directions from the Hon’ble Bench in this regard are awaited.

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

FIXED DEPOSITS

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

DIRECTORS

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

1. Shri J. Venkataraman

2. Shri Suresh Krishnamurthi Rao

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

AUDITORS

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

COST AUDITOR

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

PERSONNEL

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

DIRECTORS’ RESPONSIBILITY STATEMENT

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

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

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

(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) That the Directors had prepared the Annual Accounts on a going-concern basis.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Earnings: Rs. 73,13,358/-

Outgo : Rs. 1,15,23,368/-

POWER AND FUEL CONSUMPTION

Particulars	For the Year Ended
	31st March 2014	31st March 2013
	Rs. in lakhs	Rs. in lakhs
1. Electricity Purchased:
- Units	9,47,03,550	9,94,81,672
- Total Amount / Rs in Lakhs.	5,047	4,372
Rate Per Unit [Gross] Rs.	5.33	4.40
II. Furnace Oil
[A] Purchased:
- Quantity [KL]	580	490
- Total Amount / Rs in Lakhs.	253	204
- Average Rate per KL / Rs.	43,642	41,713
[B] Consumption:
- Furnace Oil [KL]	586	479
- Amount / Rs in Lakhs.	255	200
- Amount per KL / Rs.	43,485	41,747

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND CONSERVATION OF ENERGY

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

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

CORPORATE GOVERNANCE

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

MANAGEMENT DISCUSSION AND ANALYSIS

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

SECRETARIAL COMPLIANCE CERTIFICATE

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

INDUSTRIAL RELATIONS

Industrial relations continue to remain cordial.

ACKNOWLEDGEMENT

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

	For and on behalf of Board of Directors of
	CHEMFAB ALKALIS LIMITED
Place : Chennai	Suresh Krishnamurthi Rao
Dated : 11th April, 2014	Chairman