Fertilizers & Chemicals Travancore Ltd Directors Report.

Your Directors are pleased to present the 75th Annual Report and Audited Financial Statements of the Company and the Report of the Auditors for the financial year ended March 31, 2019.

Your Directors are happy to inform that your company has reported a profit of Rs. 163.14 Crore during the financial year 2018-19. The profit is after considering the extra ordinary income on sale of Land to Bharat petroleum Corporation Ltd (BPCL) amounting to Rs. 433.89 crore.

During the financial year 2018-19, the Company could sustain the financial, production and marketing performance at a reasonable level, despite various adverse situations.

Highlights

Net profit of Rs. 163.14 Crore Highest sale of organic Fertilizers

Development and launching of Phosphate Rich Organic Manure (PROM) Safety Awards for both the production Divisions Award from Pollution Control Board Leveraging 170 acres of Land to BPCL

Recognition in implementation of Official Language.

PERFORMANCE- 2018-19

1. Financial Performance

Financial Performance of the Company for the year ended March 31, 2019 is summarized below: Rs. in crores

Particulars 2018-19 2017-18
Net Sales 1954.98 1928.67
Other Income 456.75 41.63
Total Revenue 2411.73 1970.30
Total Expenses 2248.59 2099.36
Earnings before interest, depreciation and Taxes (EBIDTA) 466.19 209.50
Interest 280.53 321.42
Depreciation 22.52 17.15
Profit before tax 163.14 -129.06
Other comprehensive Income 18.00 2.68
Total Comprehensive income 181.14 -126.37

Due to the accumulated loss, your directors have not recommended any dividend for the financial year 2018-19. The Company has not transferred any amount to Reserve during the financial year 2018-19.

2. Production and Sales

Production (in MT) (in MT)
2018-19 2017-18
Factamfos 20 : 20 634362 661973
Ammonium Sulphate 141754 180178
Caprolactam 0 0
Sales (in MT) (in MT)
2018-19 2017-18
Fertilisers 781240 867370
Caprolactam 0 0

The company was able to maintain the momentum in production and marketing during the financial year 2018-19 The physical performance of the Company during the financial year 2018-19 was affected by the unprecedented flood during August, 2018, forcing stoppage of plants. During the financial year 2018-19, the Ammonia plant was not operated due to high price of RLNG. The production of Fertilisers was maintained with imported Ammonia. This has affected the capacity utilization of the plants due to logistics constraints. The increase in the prices of raw materials and unfavorable exchange rate variations have affected the financial performance of the Company during the financial year 2018-19. Despite the constraints, Company could finish the year with a reasonably good production and sales performance. On Production front, Factamfos production for the fiscal is 6.34 lakh MT and Ammonium Sulphate 1.42 Lakh MT, as compared to 6.61 Lakh MT and 1.80 lakh MT respectively during the previous year. Annual production of bulk Factamfos at Cochin Division surpassed 5 Lakh tons for the first time after 2009-10. On marketing front, during the financial year 2018-19, Factamfos sale was 6.20 lakh MT and Ammonium Sulphate sale was 1.36 lakh MT as compared to 6.7 lakh MT and 1.7 lakh MT during the last financial year.

During the year 2018-19 FACT Engineering Works bagged prestigious orders from BPCL- Kochi Refinery, Travancore Titanium Products Ltd and Kerala Minerals and Metals Ltd. worth Rs. 1030.45 lakh.

As part of revival strategy, the Company leveraged 170 acres of lands to BPCL and its proceeds after deducting the outstanding amount due to them was received during the financial year 2018-19.

FACT has finalized an ambitious production and marketing plan for the financial year 2019-20. The Company is planning one million ton production of fertilisers during the financial year 2019-20.

Your Directors are happy to inform you that for the first time in the history of the Company, FACT has tied up for supply of RLNG for the entire financial year 2019-20 at a reasonable rate. The Company has also planned to import and market one lakh ton of Fertilisers. The Company is also planning to restart the Caprolactam Plant in a phased manner.

The production and marketing performance of the Company during the first three months of the financial year 2019-20 is encouraging and the Company expect to end the year 2019-20 with a positive result.

Management Discussion and Analysis Report

Management Discussion and Analysis Report covering the operational aspects for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015(as amended) is presented in a separate section forming part of Directors Report.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company for the financial year ended March 31, 2019, prepared in accordance with Section 129(3) of the Companies Act 2013 and relevant accounting standards form part of the Annual Report.

Directors and Key Managerial Personnel Appointments

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.86/2/2017-HR-1 dated 11th January, 2019 appointed Shri. Kishor Rungta as Chairman & Managing Director of the Company.

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.88/3/2018-HR-1 dated 30th January, 2019, entrusted the additional charge of the post of Director (Finance), FACT to Shri Umesh Dongre, Director (Finance) Rashtriya Chemicals and Fertilisers Ltd.

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.86/1/2017-HR-PSU dated 18th April , 2019, entrusted the additional charge of the post of Director (Technical), FACT to Shri Sudhir Dattatraya Panadare, Director (Technical) Rashtriya Chemicals and Fertilisers Ltd.

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.86/2/2012-HR-PSU dated 18th April , 2019, entrusted the additional charge of the post of Director (Marketing ), FACT to Shri K U Thankachen, Director (Marketing) Rashtriya Chemicals and Fertilisers Ltd.

Shri C Pradeepkumar, DGM (Finance) is appointed as the Chief Financial Officer of the Company with effect from 29th January 2019.

Shri Kishor Rungta, C&MD, C Pradeepkumar, CFO and Shri K.V. Balakrishnan Nair, Company Secretary are the Key Managerial Personnel of the company.

Retirements and Resignations

On appointment of Shri Kishor Rungta as Chairman and Managing Director , Shri Manoj Mishra ceased to be the C&MD of the Company with effect from 02.02.2019.

Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, vide Order No.86/1/2017- HR-1 dated 14th January, 2019 entrusted the additional charge of Post of Director (Technical) FACT to Shri D Nandakumar, Director (Marketing) FACT and Shri U Saravanan ceased to be the Director (Technical ) of the Company with effect from 31.10.2018 Consequent to the Government of India, Ministry of Chemicals & Fertilisers, Department of Fertilisers, Order No.88/3/2018-HR-1 dated 30th January, 2019, Sri Sanjay Maheshwari ceased to be the Director(Finance) of the Company with effect from 01.02.2019.

Shri D Nandakumar, Director (Marketing) retired from the service of FACT on superannuation with effect from 31.05.2019.

The period of the initial appointment of Shri KPS Nair, Independent Director and Dr S Murali, Independent Director ended in June 2019. The notification from the Government of India on appointment / re-appointment of Independent Directors in place of Shri KPS Nair and Dr. S Murali is awaited.

The Board placed on record its appreciation on the valuable services rendered by Shri Manoj Mishra C & MD, Shri U Saravanan, Director (Technical), Shri Sanjai Maheswari, Director (Finance), Shri D Nandakumar, Director (Marketing), Shri KPS Nair, Independent Director and Dr. S Murali, Independent Director.

Reappointment of Independent Directors

As per section 149 (10) of the Companies Act 2013, none of the Independent Directors has been reappointed on the Board of the Company.

Disqualification of Directors

None of the Directors has committed any disqualification as provided under section 164 of the Companies Act 2013.

Annual Evaluation of Board.

FACT being a Government Company, all appointments on the Board is made by the Government of India, Ministry of Chemicals and Fertilizers, Department of Fertilizers. The performance of Directors are evaluated by the Ministry of Chemicals & Fertilizers, Department of Fertilizers, Government of India. As per Government of India, Ministry of Corporate Affairs notification dated 5th June 2015, clause (e) and (p) of sub-section 3 of Section 134 of the Companies Act 2013 relating to appointment, remuneration and Annual evaluation of Board on its performance are not applicable to FACT.

However, suitable mechanism is being evolved for Annual Performance evaluation of Board as per SEBI (LODR) Regulation 2015.

Declaration of Independent Directors

All independent directors have made declaration of independence under sub-section (6) of Section 149 of Companies Act, 2013.

Meetings of the Board

During the financial year 2018-19, Eight meetings of the Board were convened and held. The details of the meetings of the Board of Directors are given in the report on Corporate Governance, which is part of this report. The intervening gap between the meetings was within the limit prescribed under the Companies Act 2013.

Secretarial Standards

Your Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relating to "Meetings of the Board of Directors" and "General Meetings" respectively, have been followed by the Company.

Corporate Governance

The Company is committed to maintain the highest standard of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Board lays emphasis on transparency and accountability for the benefit of all stake-holders of the Company. The Report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 annexed to this report forms an integral part of this report.

AUDITORS

(1) Statutory Auditors and Statutory Auditors Report

M/s. Babu A Kallivayalil & Co., Chartered Accountants, Kochi, was reappointed as Statutory Auditors of the Company for the year 2018-19 by the Comptroller and Auditor General of India. M/s Narotham Madhav & Ramesh, Chartered Accountants, Hyderabad, was reappointed as Branch Auditors for the year 2018-19 for the Area / Regional Offices at Andhra Pradesh, Telengana and Karnataka States. M/s Siv Ram & Raj, Chartered Accountants, Chennai, was appointed as Branch Auditors for the year 2018-19, for the Area / Regional Offices at Tamil Nadu and Kerala, by the Comptroller and Auditor General of India.

The report of the Statutory Auditors on the financial statements for the financial year 2018-19 is an unmodified report.

(2) Cost Audit

As prescribed under section 148 of the Companies Act ,2013, read with the Companies (Cost Report and Audit ) Rules 2014, the cost accounting records are being maintained by the Company. M/s BBS & Associates, Cost Accountants, Kochi has been reappointed as Cost Auditors of the Company for the year 2018-19. Cost Audit report for the financial year 2017-18 was filed with Ministry of Corporate Affairs on 23.10.2018.

(3) Secretarial Audit

M/s SVJS & Associates, Company Secretaries, Kochi, has been appointed as Secretarial Auditors of the Company for the year 2018-19. The report of the Secretarial Auditor is annexed to this report as Annexure-1. The Secretarial Auditors have not made any adverse remarks or comments in the report.

Comments of C& AG

Comptroller and Auditor General of India(C&AG) has conducted a supplementary audit under section 143(6) of the Companies Act 2013 on the financial statements including consolidated financial statement of the Company for the financial year 2018-19. C&AG has not given any comment on the financial statements of the Company.

Audit Committee

In line with the provisions of Section 177 of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 an Audit Committee of the Board has been constituted. Details of Members/ Meetings of the Audit Committee are elaborated in the report on Corporate Governance annexed here with. There were no instances in which the Board had not accepted any recommendation of the Audit Committee.

Associate Company

FACT-RCF Building Products Limited (FRBL) and Kerala Enviro Infrastructure Ltd. are the associate companies of FACT. During the financial year, no Company has become/ceased to become subsidiaries/Joint Ventures and Associate Company of FACT. In accordance with the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the associate companies and joint ventures in Form AOC1 is provided as part of the Annual Report.

Report on financial position and Performance of Joint Venture

During the financial year 2018-19, the financial results of FRBL shows a net loss of Rs. 2.71. crore. Due to the accumulated loss, the entire networth of FRBL has been eroded. The Company has created provisions for the entire investment made in FRBL.

The financial results of Kerala Enviro Infrastructure Ltd. for the financial year 2018-19 shows a profit of Rs. 4.92 Crore.

Public Deposit

During the financial year 2018-19, the Company has not accepted any deposit from public.

Investor Education and Protection Fund (IEPF)

During the year 2018-19 FACT has transferred an amount of Rs. 0.49 lakh to Investor Education and Protection Fund.

Contract or arrangement with related parties

The transactions entered with related parties for the year under review were on arms length basis and in the ordinary course of business. The disclosure in form No AOC-2 for the transactions with related parties during the period under review is enclosed as Annexure -2.

Corporate Social Responsibility

FACT continues to give priority on various Social Responsibility measures during the financial year 2018-19 . The Company has constituted a Board level Committee as per the provisions of Companies (Corporate Social Responsibility Policy) Rules 2014. Annual Report on CSR as per the provisions of Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed to this report as Annexure-2A.

Material changes and commitments

There were no material changes and commitments affecting the financial position of the company between the end of financial year (31st March 2019) and the date of the report. Similarly, there was no change in the nature of business of the company during the financial year 2018-19 .

Risk Management

FACT has formulated a risk management policy for identification of potential area of risk and mitigation of the same. FACT is having adequate risk management infrastructure in place capable of addressing all potential risks.

Internal Financial Control

FACT is having an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit wing of FACT headed by Deputy General Manager monitors and evaluate the efficacy and adequacy of Internal Control System in the Company. The observation of internal audit and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. Based on the recommendation of Internal Audit, the functional heads take necessary corrective actions in their functional area thereby strengthen internal control.

Vigil Mechanism & Whistle Blower Policy

FACT is having a vigil mechanism for directors and employees to report their concerns. The Directors and employees can approach Chairman Audit Committee of the Board directly and report their concern in appropriate case. The vigil mechanism and whistle blower policy is published in the web site of the Company www.fact.co.in.

Code of Conduct

FACT is having a code of conduct known as FACT Code of business Conduct and Ethics applicable to the members of the Board and all senior executives of the Company. The code has been posted on the Companys website www.fact.co.in . The code lays down the standard procedure of business conduct which is expected to be followed by the Directors and senior executives of the Company.

The Board members and Senior Executives of the Company have affirmed compliance of the Code of Conduct for the financial year 2018-19.

Prevention of Insider Trading

No instances of insider trading have been reported on FACT shares till date. A Code of Conduct for prevention of insider trading and code for corporate disclosure is published in the website of the company, www.fact.co.in .

Particulars of Loan given, Investment made, Guarantees given and securities provided

Particulars of Investment made by the Company, are provided in the financial statement for the year 2018-19.

During the financial year 2018-19, FACT has not provided any loan/guarantee or made any investment within the purview of Section 186 of the Companies Act 2013.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has formulated an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

The following is the summary of sexual harassment complaints received and disposed off during the period under review:

Number of complaints at the beginning of the year Nil
Number of complaints received during the year Nil
Number of complaints disposed off during the year Nil
Number of complaints at the end of the year Nil

Particulars of Employees

During the year under review, none of the employees of the Company had drawn remuneration in excess of the limit prescribed under section 134 (3)( c) of the Companies Act 2013 read with Companies (Appointment of Managerial personnel) Rules 2014.

Integrity Pact

During the Financial year 2018-19, FACT has finalised the integrity pact in line with Government of India guidelines in this regard.

The Right to Information Act 2005

FACT is complying the provisions of the Right to Information Act 2005 and the details relating to Public Information Officer, Assistant Public Information officer, Appellate Authority, Nodal officer etc. are published in the website of the Company www.fact.co.in.

Extract of Annual Return

The Extract of Annual Return of the Company as provided under Sub section (3) of Section 92 of Companies Act, 2013, in Form MGT9 is annexed as Annexure-3.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Information regarding the conservation of energy, technology absorption, and foreign exchange earnings and-outgo as required to be disclosed in terms of the Companies (Accounts) rules 2014 is set out in a separate statement attached to this report.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that :

(a) in the preparation of annual accounts for the year ended March 31, 2019, the applicable accounting standards had 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 as at March 31, 2019 and of profit and loss statement for the year ended March 31, 2019.

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. (d) the directors 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 were operating effectively; and (f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

General

The Board of Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review.

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the company under any scheme.

4. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

5. Neither the Managing Director nor the whole time Directors of the Company receive any remuneration or commission from its Associate Company.

6. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

7. No fraud has been reported by the auditors to the Audit Committee or to the Board.

8. There were no cases filed pursuant to the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013.

Acknowledgement

Your Directors gratefully acknowledge the valuable guidance and support extended by the Department of Fertilisers, Department of Public Enterprises and other Departments of Government of India, and the State Governments of Kerala, Tamilnadu, Karnataka, Andhra Pradesh and Telangana and Union Territory of Puducherry.

The Directors deeply appreciate the committed efforts put in by the employees and look forward to their dedicated services and endeavor in the years ahead to enable the Company to scale greater heights.

The Directors also acknowledge the continued support extended by the Shareholders, Dealers, Suppliers, Bankers, Valued Customers and Auditors of the Company, the Press and Electronic Media.

For and on behalf of the Board of Directors.

(Kishor Rungta)

CHAIRMAN AND MANAGING DIRECTOR

DIN-00231106

Place : Udyogamandal

Date : 31-07-2019