Alufluoride Ltd Directors Report.

To

The Members of Alufluoride Limited

Your Directors have pleasure in presenting the Annual Report of your Company along with the audited Statement of Accounts for the financial year ended 31st March, 2020. The Report also includes the Management Discussion and Analysis Report in accordance with the Guidelines on Corporate Governance and consolidated Financial Statements.

FINANCIAL RESULTS

The Financial results of the Company for the period under review are as follows:

(Rs. In lakhs)

31-03-2020 31-03-2019
Sales and other revenue 7,572.76 6,551.01
Profit before Finance charges, Depreciation, Tax & other adjs 1,736.85 1,179.25
Less: Finance charges 88.22 5.54
Profit before Depreciation, Tax & other adjs 1,648.63 1,173.71
Less: Depreciation 188.89 82.22
Profit before Tax & other adjs 1,459.74 1,091.49
Less: Provision for current tax 410.00 223.00
Taxes of earlier years 14.17
Deferred Tax Asset/ Liability adjs 2.06 42.34
Profit before appropriations and carried to Balance Sheet 1,033.51 826.15
Add/Less: Other Comprehensive Income (Ind-AS adjs) (78.30) (99.52)
Profit before appropriations and carried to Balance Sheet 955.21 726.63

COMPANYS PERFORMANCE

Your Directors report that during the year under review the Company produced 8,223 MT and sold 8,569 MT Aluminium Fluoride, as against 8,741 MT Production and 9,136 MT sold during 2018-19. Sales and other Revenue reported at Rs. 7,572.76 lakhs as against Rs. 6,551.01 lakhs during 2018 - 2019.

For reduction of energy cost and to engage with renewable and sustainable green energy, the Company installed a 3 MW Solar plant at its Companys land at Polepalli, Visakhapatnam District, AP Out of this 3 mW, 1.4 MW Solar plant is originally scheduled to synchronize to Grid by end of March, 2020, but due to COVID 19, the synchronization formalities could not be completed by the Government and it is expected to be completed by August 2020. Your Company expects further savings as energy cost is expected to rise, year on year.

With improved unit sales realization, consumption norms, production, efficient working capital management and cost control measures, the Company posted a net profit (before Ind-AS adjustments) of Rs. 1,033.51 lakhs for the year as against a net profit (before Ind-AS adjustments) of Rs. 826.15 lakhs in 2018-19.

OUTLOOK FOR THE CURRENT YEAR

Your Directors report that the Companys ALUMINIUM FLUORIDE production capacity expansion works started in FY 2018-19 and it is expected to be completed by end March, 2020. Due to COVID-19 pandemic, the expansion works were delayed, mainly due to suppliers inability to depute technicians for commissioning of major equipment. The Company is making every effort to commission the new plant as early as possible and it is expected to be completed by 30th September, 2020. As soon as the date of commissioning of the new plant is finalized, it will be submitted to the BSE for the information of members.

Due to COVID-19 situation, Aluminium production has significantly been affected resulting in decline of demand for Aluminium Fluoride which has impacted in reduced Aluminium Fluoride sale price. However, as the Company had finalized all sale contracts for the current year, before the impact of COVID -19, the Company is hopeful, with increased production of the new plant from September, 2020, of posting good returns in the current year.

TERM LOAN AND WORKING CAPITAL LIMITS WITH BANKS

Your Directors report that for the Companys ALUMINIUM FLUORIDE expansion project, ICICI Bank Ltd., Visakhapatnam has sanctioned a term

loan of Rs. 2,500 lakhs and Rs. 500 lakhs for fund & non-fund based working capital limits. As against these facilities, during the year under review an amount of Rs. 330.50 lakhs was drawn towards term loan, Rs. 400 lakhs towards working capital and Rs. 66.45 lakhs towards non-fund based working capital limits for issue of bank guarantee to customers. A charge was created, in favour of the lender, on the assets of the company to secure the said loan facilities.

FUTURE PROJECTS

The Company had signed on 8th January, 2020 at Amman, Jordan, a joint venture (JV) agreement, as a majority partner, with Jordan Phosphate Mines Company PLC (JPMC) to commission a green field Aluminium Fluoride plant at Eshidiya Free Trade Zone, Jordan. The Company is in the process of incorporating a new Company at Dubai, UAE, which will be a subsidiary of Alufluoride Ltd., and a Joint Venture partner with JPMC. Due to Covid- 19 incorporation of the new company at Dubai, UAE was delayed, and the Company will incorporate as soon as travel is permitted and the new Company will sign various other project agreements with various agencies. Consequently, the commissioning of the new plant in Jordan will commence.

EXPORTS

During the year under review, the Company registered Exports Sales of Rs. 1,025.78 lakhs as against NIL Export Sales during FY 2018-19.

INSURANCE

All the properties of the Company including Buildings, Plant and Machinery and Stocks have been adequately insured.

DIVIDEND

Your Directors wish to record that, during the year under review, the Company has declared a Dividend of 20% (Rs. 2 per share) for the year FY 2019-20.

CORPORATE GOVERNANCE

As per chapter IV of the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 a separate section on Corporate Governance is

enclosed which forms part of the Annual Report. A certificate from the Auditors of the Company on compliance with the conditions of Corporate Governance as stipulated under the SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 is annexed to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed section of the Management Discussion and Analysis for the period under review as required under SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015 is given as a separate statement forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, it is hereby confirmed:

i. In the preparation of the annual accounts for the financial year ended 31st March, 2020, the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the company for that period;

iii. 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;

iv. The Directors had prepared the accounts for the financial year ended 31st March, 2020 on a going concern basis; and

v. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently.

DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP)

Directors

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Sri Ashok Vemulapalli, Director (DIN: 00730615) will be retiring at the conclusion of this Annual General Meeting and has conveyed his consent for reappointment.

Key Managerial Personnel

The Company has named the Managing Director, Director - Finance & Commercial as CFO and Company Secretary as its Key Managerial Personnel under the provisions of Section 203 of the Companies Act, 2013.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

Sri Grandhi Sreeramakrishna, Sri A.V.V.S.S.Ch.B. Sekhar Babu and Sri Yugandhar Meka are the Independent Directors of the Company. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year.

NUMBER OF MEETINGS OF THE BOARD

Six meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under SEBI (Listing obligations & Disclosure

Requirements) Regulations, 2015. The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, Etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, Etc.

The Board and the Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and Individual Directors was also discussed.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the Directors report.

DISCLOSURE AS REQUIRED UNDER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

The Disclosure as required under Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 is appended in Annexure - A to the Board Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED IN SUB - SECTION (1) OF SECTION 188

Details of transactions with related parties falling under the scope of Section 188(1) of the Act & Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 (Form No. AOC2) is given in Annexure B to the Board Report.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 205 of the Act and the rules framed there under Mr. G.M.V. Dhanunjaya Rao of GMVDR & Associates, Company Secretaries was appointed as Secretarial Auditor of the Company and the Secretarial Audit Report issued by them for the financial year 2019-20 is made a part of this Report.

COST AUDIT

Cost Audit for financial year 2019-20 is not applicable in view of the Cost Audit Amendment Rules, 2014, Government of India, Ministry of Corporate Affairs, Notification, New Delhi, dated 31.12.2014.

EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure C in the prescribed Form MGT-9, which forms part of this report.

AUDITORS REPORT AND SECRETARIAL AUDITORS REPORT

The Auditors Report and Secretarial Auditors Report does not contain any qualifications, reservations or adverse remarks.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY

On 27.05.2019 the company has allotted 8,20,082 equity shares of Rs.10 each on conversion of 8,20,082 warrants of Rs.10 each.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Corporate Social Responsibility (CSR) have become applicable to the Company from the financial year 2018 -19 as the net profit of the Company for the financial year 2017-18 is in excess of Rs. 5 crores.

The Company has constituted a Corporate Social Responsibility (CSR) Committee in terms of Section 135(1) of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014. The committee consists of the following:

1. Sri A.V.V.S.S.Ch.B. Sekhar Babu - Chairman
2. Sri Ashok Vemulapalli - Member
3. Smt. Jyothsana Akkineni - Member
4. Sri K. Purushotham Naidu - Member

The CSR activities, projects and programmes that will be undertaken by the Company shall be those as may be approved by the committee that will be constituted / reconstituted by the Board of Directors of the Company in this regard (CSR Committee). The CSR Committee will approve the undertaking of such activities, projects and programs as are covered under the following areas set out in Schedule VII of the Companies Act, 2013. Our company is committed to ensuring the social wellbeing of the society through its Corporate Social Responsibility (CSR) initiatives. Our focus will be on rural development programs, Swachh Bharat, promoting education, promoting health care including preventive health care and sanitation facilities to weaker sections of society through organizing health camps, meeting operation expenditure of children and poor people.

In accordance with the provisions of Section 135 of the Companies Act, 2013, an abstract of Companys CSR activities is given in Annexure E to this report.

FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year under review. As such no amount of principal or interest was outstanding on the date of the Balance Sheet.

UNPAID / UNCLAIMED DIVIDEND

Out of the Interim Dividend amount of Rs. 156.41 lakhs declared by your Directors during the FY 201920, an amount of Rs. 11.90 lakhs remained unclaimed / unpaid as on 31.03.2020. Further, there is no amount (s) of Dividend which remained unclaimed for a period of 7 years and hence the requirement of transfer of such amount(s) to Investor Education & Protection Fund (IEPF) doesnt arise.

INTERNAL CONTROL

The Company has a proper and adequate system of internal control to ensure all the assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, regarded and reported correctly. The internal control is supplemented by an extensive program of internal audits, review by management and procedures. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of assets.

The Companys Internal Audit Department is regularly carrying out the Audit in all areas. Additionally, the Audit committee is reviewing all Audit Reports with significant control, all issues raised by internal and external auditing regularly, reports on the business development, all the past and the future plans are given to the Board of Directors, Internal Auditors reports are regularly circulated to all the senior management to comply with the findings.

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

Additional information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be disclosed in terms of Section 134(3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is given in Annexure D and forms part of this report.

POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company always believed in providing an encouraging work environment devoid of discrimination and harassment including sexual harassment and has adopted a policy in line with

the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made thereunder. The objective of the policy is to prohibit, prevent and address issues of sexual harassment at the workplace. The policy covers all employees irrespective of their nature of employment and also applicable in respect of all allegations of sexual harassment made by an outsider against an employee. An Internal Complaints Committee (ICC) has also been set up to redress complaints received on sexual harassment. No complaint was pending at beginning of the year and none has been received during the year.

EMPLOYEE RELATIONS

During the year under review, the Company has enjoyed cordial relationship with all section of employees. The Company believes that the employees play a vital role in increasing the turnover and profitability of the Company and the strength of the Company lie in harnessing the manpower in achieving sustained long-term growth in all spheres.

ENVIRONMENT & SAFETY MEASURES

Following the ISO Certifications of 9001, 14001 and OHSAS 18001 the Company will continue taking all the necessary measures to maintain high standards of Environment, Clean and Green Belt, Water Harvesting, Pollution Control, Health and Safety Precautions.

ACKNOWLEDGEMENT

Your Directors take this opportunity in expressing their gratitude to the Government of India and the State Government. The Board is also thankful to all its Bankers, Contractors, Customers and Shareholders for their unstinted support to the Company.

For and on behalf of the Board For ALUFLUORIDE LIMITED

VENKAT AKKINENI
Managing Director
DIN: 00013996
G SREERAMAKRISHNA
Hyderabad Chairman
13 August, 2020 DIN:06921031