Overall, the business continued to sustain resilience to the downtrend of global growth
during the financial year ended March 31, 2016 reflecting a Net profit of Rs 1238.04 lacs,
decline of around 14%. The production reached record levels at around 57% and envisages
consistency in utilization of its production capacity in continuation.
Economy & Industry Scenario and Outlook
The below par performance of global economy was reflected in a continued deceleration
in most emerging and developing economies, driven by low commodity prices, weaker capital
inflows and subdued global trade. Against this backdrop, India seemed fairly resilient
with a stable domestic macro-economic conditions and currency that performed better than
most other emerging market currencies. However, a second consecutive year of drought and a
low increase in support prices have led to a sharply slower growing rural economy compared
to earlier years. The Chemical industry in spite of Chinese players performed fairly
favorably though there was deceleration in the commodity prices. Hence it is inevitable
for players to focus on broadening consistently customer base in the near future. Overall,
the small players from unorganized sector have evident stiff competition compelling your
Company to focus on improvising its margins thereon. Overall the fall prices and economy
downtrend of few Asian countries has resulted stagnant exports due to unviability. The
strategic efforts of the Management have been successful in consistent and repeated order
intake for your Company.
The global economic climate continues to be volatile, uncertain and prone to
geo-political risks. Week consumer sentiment and low commodity prices are expected to
affect global growth adversely. For India, 2016 despite challenging global headwinds will
witness a stable macro performance. The key determinants of Indias economic performance
on a long term basis will be the execution of the reforms agenda. While currently
inflation is expected to be benign, upside pressures on inflation exist from the vagaries
of monsoon or due to competitive devaluation of currencies. The financial Year 2015-16
witnessed few programs initiated by the Indian Government for the development of
agriculture. Ethanol blending was one of the programs, but however this program led to
scarcity of our raw material (Special Denatured spirit) which resulted in inconsistent
pricing. Your Company envisages for addressing the challenges by strategic sourcing of raw
materials. The Chemical industry being commodity oriented also witnessed inconsistent
pricing. Your Company through its enhanced sales distribution network managed to sustain
the market pressure.
Your Company expects to continue its strategy of seeking niche markets, broad customer
base overseas and domestically yielding better margins with enhanced volume growth. The
new R&D setup is endeavoring in addition of new products and has been successful in
testing the outcome. Your Company is also in the process of modifying its idle capacity to
cater to the new product expansion.
Segment-wise Performance
The low demand and competitive pricing for minerals in the overseas market marginally
dipped down the topline of the Trading Division by approximately 6%. However long term
contracts favored your company in sustaining the pressure of the low demand market. Your
chemical segment achieved highest volume growth in terms of production but the topline
decline was mainly due to reduced pricing of commodity products. The profits before
interest and tax marginally declined owing to the low demand. However decline in
profitability was marginal as your Company managed to focus only on customers yielding
higher margins despite existence of challenging market conditions.
Your Companys overall profit after tax for FY 2015-16 was Rs. 1238 Lacs against Rs.
1451 Lacs in FY 2014-15.
Opportunities,Threats, Risks and Concerns
The increased optimization of capacity of the Chemical Division due to addition of the
new boiler and process modification, your Company envisages to significantly increase its
market share by broadening its Customer base overseas as well as in the domestic sector.
The major threat and risk to reckon with is the highly volatile pricing of one of the raw
materials, import as well as domestic. Further in addition is the risk of availability of
Alcohol, our major raw material in the domestic arena due to ethanol blending program
initiated by the Government. Further, the commodity orientation for your Company, part of
the highly volatile Chemical Industry faces certain threats and risks.
Financial Performance
Financial performance achieved by your Company, during the year under review, is as
disclosed in this Report under the head Financial Results and Performance.
Internal Control Systems and Adequacy
Your Board has adopted appropriate procedures for ensuring orderly and efficient
conduct of its business, including adherence to the Companys policies, the safeguarding
of its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
disclosures.
Material Developments in Human Resource / Industrial Relation front, including number
of people employed
a. The number of employees for the year under review was 106. b. There were no material
developments as regards human resources / industrial relations front during the period
under review.
Credit Rating
Your Companys financial discipline and prudence is reflected in the strong credit
ratings ascribed by rating agency ICRA. Your Company has retained long-term rating of BBB-
and short-term rating of A3. The outlook assigned on the long-term rating is stable.
AUDITORS AND AUDITORS REPORT
Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the Rules framed thereunder,
M/s R. A. Kuvadia & Co., Chartered Accountants, were appointed as Statutory Auditors
of the Company from the conclusion of the twenty second Annual General Meeting (AGM) of
the Company held on September 26, 2014 till the conclusion of the twenty fifth AGM to be
held in the year 2017, subject to ratification of their appointment at every AGM. Your
Directors propose ratification of appointment of M/s R. A. Kuvadia & Co, Chartered
Accountants, as statutory auditor for the year ended March 31, 2017.
The Auditors Report does not contain any qualification, reservation or adverse remarks.
Cost Auditors
Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rule 14
of the Companies (Audit and Auditors) Rules, 2014 M/s V. J. Talati & Co., Cost
Accountants, having Firm Registration No. R00213, were appointed as the Cost Auditors of
the Company to conduct the audit of Cost accounting records maintained by the Company
relating to "Chemicals" for the FinancialYear ended March 31, 2016.
The Board of Directors at its Meeting held on May 20, 2016 has, on the recommendation
of the Audit Committee, re-appointed M/s V. J. Talati & Co., Cost Accountants, having
Firm Registration No. R00213, as the Cost Auditors of the Company to conduct the audit of
Cost accounting records maintained by the Company relating to "Chemicals" for
the FinancialYear 2016-17 on a remuneration of Rs. 50,000/- plus applicable taxes and
out-of-pocket expenses payable at actual. The said remuneration is subject to the
ratification by the Members of the Company in terms of Section 148 of the Companies Act
2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to
time. The payment of remuneration to M/s V. J. Talati & Co., approved by the Board is
accordingly placed for ratification.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made
thereunder, the Company had appointed M/s. Jay Mehta & Associates, Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for the financial year
2015-16. The Secretarial Audit Report in Form MR-3, for financial year 2015-16, has been
appended as "Annexure B" to this Report.
The Secretarial Auditors contained following qualification, reservation or adverse
remarks:
The composition of the Board of Directors of the Company is not in accordance with the
provisions of Regulation 17(1)(b) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
Boards Explanation / Comments on above remarks:
The Company will work-out for a suitable option either to appoint new Independent
Director or appoint any existing non-executive director, not being a promoter or related
to promoter, as Chairman to make the Board composition as per provisions of Regulation
17(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Board of the Directors at their Meeting held on May 20, 2016 has re-appointed M/s.
Jay Mehta & Associates, Practicing Company Secretaries, to undertake the Secretarial
Audit of the Company for the financial year 2016-17.
BOARD COMMITTEES
Detailed composition of mandatory Board Committees viz. Audit Committee, Nomination and
Remuneration Committee, Stakeholders Relationship Committee and Corporate Social
Responsibility Committee, number of meetings held during the year under review and other
related details are set out in the Corporate Governance Report which forms a part of this
Report.
VIGIL MECHANISM
The Company has a Whistle Blower Policy to provide Vigil Mechanism for employees
including directors of the Company to report genuine concerns about unethical behaviour.
The said Policy has been uploaded on the website of the Company
www.ashokalcochem.com/InvetorUpdate.html.
PARTICULARS OF LOANS, GUARANTEE AND INVESTMENT
The details of Loans and Investment made by the Company, during the year, are as below:
| Name of Party |
Nature of Transaction |
Amount (Rs.) |
| Ashapura Claytech Ltd. |
Loan Given |
2,25,00,000 |
| Ashwa Minerals Private Limited |
Investment in Equity Shares |
73,10,000 |
The Company had also made investment in liquid funds which were redeemed before March
31, 2016. The Company has not provided any guarantee and/or securities.
TRANSACTIONSWITH RELATED PARTY
The transactions entered into by the Company with the related parties are on arms
length basis and in the ordinary course of business and were not material in nature.
Accordingly, the disclosure of said transactions in requisite Form AOC-2, is not
applicable.
CORPORATE SOCIAL RESPONSIBILITY
Your Company embraces responsibility for impact of its operations and actions on all
stakeholders including society and community at large. As per the requirements of the
Companies Act, 2013, the Company had duly constituted Corporate Social Responsibility
Committee. The brief outline of the Corporate Social Responsibility (CSR) policy of the
Company and the initiative undertaken by the Company on CSR activities during the year are
set out in Annexure C of this report in the format prescribed in the Companies (Corporate
Social Responsibility Policy) Rules, 2014. The details of composition of CSR Committee
etc. are provided under the Corporate Governance Report.
RISK MANAGEMENT POLICY
Risks can be internal and external and are inherent in all administrative and business
activities. Formal and systematic risks have evolved and they are now regarded as good
management practice also called Risk
Management. Your Directors have been entrusted with the responsibility to assist the
Board in overseeing and approving the Companys enterprise wide risk management framework,
overseeing all the risks that the organization faces and also identify and assess adequacy
of risk management infrastructure. The Companys management systems, organizational
structures, processes, standards, code of conduct and behaviors together govern and
conducts the business of the Company and manages associated risks. The Company has
introduced several improvements and processes to drive a common integrated view of risks,
optimal risk mitigation, responses and efficient management of internal control and
assurance activities. This integration is introduced several improvements and processes to
drive a common integrated view of risks, optimal risk mitigation, responses and efficient
management of internal control and assurance activities. This integration is enabled by
all three being fully aligned across Group wise Risk Management, Internal Control and
Internal Audit methodologies and processes.
EXTRACT OFTHE ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT- 9 in
accordance with Section 92(3) of the Companies Act, 2013 read with the Companies
(Management and Administration) Rules, 2014, are set out herewith as "Annexure
D" to this Report.
CORPORATE GOVERNANCE
The Report on Corporate Governance forms part of this Report as "Annexure-
E".
A Certificate from M/s. Jay Mehta & Associates, Practicing Company Secretaries,
confirming compliance with the conditions of Corporate Governance as stipulated under the
SEBI Regulations 2015, also forms part of the Annual Report.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted any deposit within the
meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies
(Acceptance of Deposits) Rules, 2014, as amended from time to time.
SIGNIFICANT / MATERIAL ORDERS PASSED BYTHE REGULATORS/COURTS
There are no significant/material orders passed by the Regulators or Courts or
Tribunals impacting the going concern status of your Company and its operations in future.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
& REDRESSAL) ACT 2013:
The Company has set up an Internal Complaints Committee to redress complaints received
regarding sexual harassment in line with the requirements of the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and the Rules made
thereunder.
During the year under review, the Company did not receive any complaint.
CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Rule 8 (3) of the Companies (Accounts) Rules, 2014, the required details
are as below:
Conservation of energy:
(i) The steps taken or impact on conservation of energy
Energy Conservation dictates how efficiently a company can conduct its operations. Your
Company has recognized the importance of energy conservation in decreasing the deleterious
effects of global warming and climate change. Your Company has undertaken various energy
efficient practices and has strengthened the Companys commitment towards becoming an
environment friendly organization. The Key Initiatives towards conservation of Energy
were:
• Internal periodic energy audits to improve energy performance and benchmarks.
• Commissioning of an Advance Technology environment Protecting Boiler.
• Minimising energy consumption by calculating thermodynamically feasible energy
targets and optimising heat recovery systems, energy supply methods and process operating
conditions through Pinch Analysis.
• Modifications of Heat Recovery systems for eliminating waste steam and thereby
optimising energy resources.
(ii)The steps taken by the Company for utilising alternate sources of energy
Major energy conservation initiatives taken for steam saving which has helped us to
reduce the Coal consumption that has reduced emission of CO2 in atmosphere, which helps in
global warming. Harmonic Audit is done at the plant to identify the losses in the plant
and rectify the same.
(iii)The capital investment on energy conservation equipment - Rs. 296.05 lacs
(Boiler & Heat recovery Cost)
Technology absorption:
The Companys integrated new research and technology unit helps create superior value
by harnessing internal research and development skills and competencies and by innovating
in emerging technology domains related to various business.
The Company focuses on new product, process modification to support existing business
and create breakthrough technologies for new business. Major Efforts made towards
Technology Absorption, developed 5 new products in R & D with successive trials.
Development of New Quality Control Analyticals for R & D Support solved the debottling
of the utility Load to run the plant on full capacity.
Foreign exchange earnings and outgo
(Amount in lacs)
| Total Foreign Exchange used and earned |
2015 - 2016 |
2014 - 2015 |
| i. Foreign Exchange used |
3275.26 |
2644.20 |
| ii. Foreign Exchange earned |
18486.51 |
20257.84 |
ACKNOWLEDGMENT
The Board acknowledges with thanks the contributions and support received from the
Shareholders Government, Local Authorities, Financial Institutions & Banks, Creditors
& Suppliers, Valued Customers, Employees and other Stakeholders of your Company.
|
For and on behalf of the Board |
|
|
sd/- |
sd/- |
| Place: Mumbai |
Purab Shah |
Sunil Shah |
| Date: August 11, 2016 |
Executive Director & CEO |
Director |
+91-9892691696
