Pondy Oxides & Chemicals Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the 24th Annual Report on the Operations of your Company along with the Audited financial statements for the financial year ended March 31, 2019 together with Auditors Report thereon.

FINANCIAL HIGHLIGHTS

The Companys financial performance for the year ended March 31, 2019 and the comparative figures for the previous year are summarized below:

(Rs in Lakhs)

Particulars For the year ended March 31, 2019 For the year ended March 31, 2018
Revenue from Operations 1,04,888.55 95,563.34
Other income 398.93 263.55
TOTAL REVENUE 1,05,287.48 95,826.89
Profit Before Depreciation, Interest and Tax (PBDIT) 6,829.41 5,951.86
Depreciation and Interest 1,641.60 1,554.55
Profit Before Tax and Exceptional items 5,187.81 4,397.31
Exceptional items - -
PROFIT BEFORE TAX (PBT) 5,187.81 4,397.31
Tax 1,814.98 1,479.38
Profit for the year 3,372.83 2,917.93
Other comprehensive income 4.13 11.91
TOTAL COMPREHENSIVE INCOME 3,376.96 2,929.84

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which this financial statement relates and the date of this report. There has been no change in the nature of business of the Company.

PERFORMANCE OVERVIEW

Your Company delivered outstanding performance during the year in the challenging economic environment. The highlights of the Companys performance for the year ended March 31, 2019 are as under :

The total net sales of the Company increased by 10% to Rs 1,04,382.41 lakhs (PY Net Sales: Rs 95,179.53 lakhs).

Exports increased by 24% to Rs 54,930.56 lakhs for the year 2018-19 from Rs 44,250.24 lakhs in the previous year.

PBDIT increased by 15% to Rs 6,829.41 lakhs. (PY Rs 5,951.86 lakhs).

Profit Before Tax and Exceptional Items increased by 18% to Rs 5,187.81 lakhs (PY Rs 4,397.31 lakhs).

Net profit for the year increased by 15% to Rs 3,372.83 lakhs. (PY Rs 2, 917.93 lakhs).

DIVIDEND

Your Directors are pleased to recommend a Final Dividend of Rs 4.00 (i.e. 40%) per equity share of Rs 10/- each for the financial year ended March 31, 2019. The Dividend, subject to the approval of the Shareholders at the Annual General Meeting to be held on September 18, 2019, will be paid to the members whose name appears in the Register of Members as on September 11, 2019.

The total cash flow on account of dividend, including the Dividend Distribution Tax will be Rs 269.00 lakhs. Further, the Company has transferred Rs 330.00 lakhs to the General Reserve.

UNPAID/ UNCLAIMED DIVIDEND

In accordance with the provisions of Section 125 of Companies Act, 2013 read with Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred unpaid and unclaimed dividends amounting to Rs 2.26 lakhs to the Investor Education and Protection Fund during the year.

MERGER

During the year, your Board recommends the merger of Meloy Metals Private Limited with your Company subject to the approval of the regulators, National Company Law Tribunal and Shareholders with a share exchange ratio of 102 Equity shares of Pondy Oxides and Chemicals Limited (POCL) of Rs 10/- each fully paid up for every 100 Equity shares of Meloy Metals Private Limited (MMPL) of Rs100/- each fully paid up. Your Company has already obtained No Objection from Bombay Stock Exchange Limited on July 23, 2019 as required under various acts and SEBI (LODR) and is in the process of seeking necessary approval from National Company Law Tribunal, Chennai and other regulatory and statutory authorities.

EXTRACT OF ANNUAL RETURN

An extract of Annual Return pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 in the prescribed Form MGT 9 is provided as Annexure - I to this report.

ANNUAL RETURN

In terms of section 134(3)(a) of the Companies Act, 2013 as amended by the Companies (Amendment) Act, 2017 effective July 31, 2018, a copy of the Annual Return in Form MGT-7 is to be placed on the website of the Company. The same is available in the website of the Company www.pocl.co.in.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. R P Bansal, Whole-Time Director, who has been longest in the office, liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

During the year under review, Mr. A Vijay Anand has been appointed as Additional Director in the category of Independent Director of the Company, with effect from December 27, 2018 who hold the office till the conclusion of the Annual General Meeting of the Company. To get additional input in the implementation of the expansion programme and re-structuring proposals, the Board recommends his re-appointment as Independent Director of the Company.

The Shareholders of the Company, in their Meeting held on September 12, 2014, appointed Dr. Shoba Ramakrishnan as an Independent Director of the Company for a period commencing from April 01, 2015 and ending on September 18, 2019. Dr. Shoba Ramakrishnan is a Post Graduate in Science and Philosophy and she also holds a Doctorate in Philosophy. She is a Member of the Stakeholder Relationship Committee and the CSR Committee. Taking into account, the expertise and contribution made by her to the Board and as recommended by the Nomination and Remuneration Committee, the Board proposes to re-appoint her as an Independent Director for a second consecutive term of 5 years commencing from September 19, 2019 to September 18, 2024.

The Company has received declaration from all the Independent Directors confirming that they meet the criteria of Independence as prescribed under the Act and Listing Regulations.

Brief profile of the Directors seeking appointment/re-appointment along with the disclosures required pursuant to provisions of Listing Regulations and the Companies Act, 2013 are given in the Notice of the Annual General Meeting, forming part of the Annual Report.

During the year, five(5) meetings of the Board of Directors were held. The particulars of the meetings held and attendance by each Director are detailed in the Corporate Governance Report, which forms a part of this report. The Company has complied with the applicable Secretarial Standards as issued by the Institute of Company Secretaries of India in compliance of Section 118 (10) of the Companies Act, 2013 read with Standard 9 of the revised Secretarial Standards on Board Meetings.

The Directors on the Board are

Name of the Director Designation
Mr. Anil Kumar Bansal Chairman and Whole-Time Director
Mr. Ashish Bansal Managing Director
Mr. R.P. Bansal Whole Time Director
Mr. Anilkumar Sachdev Independent - Non Executive Director
Mr. G.P.Venkateswaran Independent - Non Executive Director
Dr. Shoba Ramakrishnan Independent - Non Executive Director
Mr. A Vijay Anand Independent - Non Executive Director

INDEPENDENT DIRECTORS AND FAMILIARISATION PROGRAMME

In terms of the provisions of Section 149(7) of the Companies Act, 2013, all the Independent Directors of the Company have furnished a declaration to the Company stating that they fulfill the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and are not disqualified to act as an Independent Director.

In compliance with Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Board has adopted a policy on familiarisation programme for Independent Directors of the Company. The policy familiarises the Independent Directors with the nature of industry in which the Company operates, business model of the Company, their roles, rights and responsibilities in the Company.

The details of familiarisation programme during the financial year 2018 – 19 are available on the website of the Company at http://pocl.co.in/policies/Details-of-Familiarisation-programme.pdf.

KEY MANAGERIAL PERSONNEL

The following Directors/Officials of the Company have been designated as Key Managerial Personnel (KMP) of the Company by the Board of Directors in terms of provisions of Section 203 of the Companies Act, 2013 and the Regulations:

Name of the Director/KMP Designation
Mr. Anil Kumar Bansal Chairman and Whole-Time Director
Mr. Ashish Bansal Managing Director
Mr. R.P. Bansal Whole Time Director
Mr. K Kumaravel GM Finance & Company Secretary
Mrs. Usha Sankar Chief Financial Officer

There has been no change in the Key Managerial Personnel during the financial year 2018 – 19.

BOARD COMMITTEES

In compliance to the provisions of Companies Act, 2013 and SEBI Listing Regulations, the Company has constituted various committees of the Board. Details of scope, constitution, terms of reference, number of meetings held during the year under review along with attendance of Committee Members therein forms part of the Report on Corporate Governance, which is annexed to this report. Details of the constitution of these Committees is also available on the website of the Company www.pocl.co.in.

BOARD EVALUATION

As required under the Companies Act, 2013 and the Listing Regulations, an annual performance evaluation of the Board is undertaken where the Board formally assesses its own performance with an aim to improve the effectiveness of the Board and the Committees. The Company has devised a policy for performance evaluation of the Board, Committees and Directors which include criteria for performance evaluation of Non-executive and Executive Directors.

The Company carried out the evaluation process internally which included the evaluation of the Board as a whole, Board Committees and Peer evaluation of the Directors. The evaluation process focused on various aspects of the functioning of the Board and Committees such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues, etc. The report on performance evaluation of the Individual Directors was reviewed by the Chairman of the Board and feedback was given to Directors.

Details of performance evaluation of Independent Directors as required under Schedule IV to the Companies Act, 2013 is provided in Report on Corporate Governance.

The Directors have expressed their satisfaction with the evaluation process and its results.

REMUNERATION POLICY OF THE COMPANY

In terms of provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of SEBI Listing Regulations, a policy relating to remuneration for the Directors, Key Managerial Personnel and other employees has been adopted by the Board of Directors thereby analyzing the criteria for determining qualifications, positive attributes and independence of a Director. The said policy is available on the website of the Company at http://pocl.co.in/policies/Nomination-and-Remuneration-Policy.pdf.

There has been no change in the policy since the last financial year.

PARTICULARS OF REMUNERATION OF DIRECTORS AND EMPLOYEES

The details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been provided as Annexure – II to this Report.

In terms of the provisions of section 197(12) of the Companies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report. However, having regard to the provisions of the first proviso to section 136(1) of the Companies Act, 2013, the Annual report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary at the Registered Office and the same will be furnished on request.

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

(A) Conservation of Energy

(i) Steps taken on conservation of energy:

Energy Conservation measures taken:

All efforts for saving energy are being pursued by your company and the major measures taken during the year are:

The Company has installed furnace oil burner in refining kettles on trial basis and switched over to furnace oil consumption instead of diesel in the manufacturing of Lead Metal and proposed to reduce energy consumption by 20% during the year 2019-20 by replacing in all refining kettles.

The Company has installed LED lights in all it units gradually to reduce the power consumption by 10%.

The Company introduced adequate transparent sheets to the roof top to reduce power consumption by increasing day light.

The Company proposes to introduce Variable Frequency Drive (VFD) for new compressor to reduce the electricity consumption.

(ii) Steps taken for utilizing alternate source of energy

The company is exploring the possibility of usage of Gas instead of Diesel as a fuel to substantially save the energy cost.

(iii) The capital investment on energy conservation equipments

The company has made sizeable investment in capital equipments mainly energy conservation equipment in all its facilities wherever required.

(B) Technology absorption

The Company has not absorbed any new technology during the year under review. However, the Company continued to improve the quality of products through its normal research and development system and improved the quality of the product and reduced the cost of production.

(C) Foreign Exchange Earnings and Outgo

(Rs in Lakhs)

Foreign Exchange Earnings-
1. Export Earnings 54,930.56
Foreign Exchange Outgo-
1. Raw Materials 81,032.65
2. Capital Goods 278.48
3. Membership fee 4.27
4. Travelling 4.82
5. Commission 55.98
6. Repairs and Maintenance 6.36

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its ordinary course of business and on arms length basis. All Related Party Transactions are placed before the Audit Committee for review and approval. The Audit Committee has provided omnibus approval for transactions which are of repetitive nature and/or entered in the Ordinary Course of business and are at Arms Length and periodically review the transactions on quarterly basis.

During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions and Listing Regulations.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board may be accessed on the Companys website at: http://pocl.co.in/policies/Related-Party-Transaction.pdf.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS

The Company has not given any loans or provided guarantees or securities to any other body corporates as envisaged under Section 186 of the Companies Act, 2013 during the year 2018-19. The details of the investments made by the Company are given under the Note No. 7 forming part of the financial statements.

DEPOSITS

During the year, your Company did not accept any deposits under Chapter V of the Companies Act, 2013. The Company has however received loans from Directors and in accordance with the provisions of Rule 2(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014, the details of the Loan received is given under Note No. 50 of the Notes forming part of the financial statements.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

The Company does not have subsidiary or associate Company. The Company is also not a subsidiary of any other Company. As at March 31, 2019, the Company has not entered into any joint ventures.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee with Mr. Anilkumar Sachdev as the Chairman of the Committee and Mr. Ashish Bansal and Dr. Shoba Ramakrishnan as Members of the Committee. The CSR policy of the Company is available on the Companys website http://pocl.co.in/policies/CSR_Policy.pdf.

As part of its initiatives under "Corporate Social Responsibility" (CSR), the company has contributed funds for the following schemes-

1. Provision of health care service by sponsoring the treatment of Poor and Under privileged.

2. Empowering women by providing livelihood to the Widow and Single women who have been abandoned by the family.

3. Providing education.

4. Contribution to orphanage, flood relief and safety cameras.

5. Education including construction of schools/upgrading facilities for school etc.

6. Environment Protection.

7. Rural Development - providing infrastructure in and around the villages surrounding the Plant.

Detailed Report on CSR activities in the prescribed format is attached in Annexure - III.

AUDIT COMMITTEE AND VIGIL MECHANISM

The Company has re-constituted Audit Committee on the appointment of Mr. A. Vijay Anand. The re-constituted Committee comprises of Three (3) Independent Directors namely, Mr. Anilkumar Sachdev, Mr. G.P.Venkateswaran and Mr. A. Vijay Anand.

During the year all the recommendations made by the Audit Committee were accepted by the Board.

POCL has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism.

The Vigil Mechanism is supervised by the Audit Committee and the whistle blower has direct access to the Chairman of the Audit Committee. The vigil mechanism and whistle blower policy is available on the Companys website at http://pocl.co.in/policies/Whistle-Blower-Policy.pdf.

RISK MANAGEMENT POLICY

The Board has adopted and implemented a suitable Risk Management Policy for the company which identifies therein different elements of risk which may threaten the existence of the company.

INTERNAL FINANCIAL CONTROLS

The Company has Internal Control Systems commensurate with the size, scale and complexity of its operations.

The Board has devised systems, policies, procedures and frameworks for the internal control which includes adherence to companys policy, safeguarding assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with best practices, the Audit Committee and the Board reviews these internal control systems to ensure they remain effective and are achieving their intended purpose.

The Auditors of the Company have verified the internal financial control systems prevailing in the organization and confirmed the effectiveness of the same in their report during the year 2018-19.

AUDITORS AND AUDITORS REPORT

1. Statutory Auditors

M/s. L. Mukundan and Associates, Chartered Accountants, were appointed as Statutory Auditors of the Company, for a term of 5 (five) consecutive years, at the 22nd Annual General Meeting held on September 27, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

The Report given by the Auditors on the financial statement of the Company is forming part of this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

2. Cost Auditor

M/s. Vivekanandan Unni & Associates, Cost Accountants (having Firm Registration Number: 000085) has been appointed as the Cost Auditor of the Company for the year 2018-19 for conducting audit of the cost accounts maintained by the Company relating to inorganic chemicals and base metals.

The Board of Directors on the recommendation of the Audit Committee has approved the remuneration of

Rs 30,000/- (Rupees Thirty Thousand Only) in addition to applicable taxes and out of pocket expenses. As per the provisions of Section 148 of the Companies Act, 2013, the remuneration of the Cost Auditors is required to be ratified by the shareholders of the Company. A resolution seeking members ratification for the remuneration payable to the Cost Auditor forms part of the notice convening this Annual General Meeting.

In respect of the cost audit for the year 2017-18, the Cost Audit Report does not contain any qualification, reservation or adverse remark.

3. Secretarial Audit

The Board had appointed KSM Associates, Practising Company Secretaries, to conduct Secretarial Audit for the FY 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 is annexed herewith marked as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

REPORTING OF FRAUDS BY THE AUDITORS

During the year under review, the Statutory Auditors, Cost Auditors or Secretarial Auditors have not reported any fraud to the Audit Committee or the Board under Section 143(12) of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators or Courts which would impact the going concern status of the Company and its future operations.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(3) of the Listing Regulations, is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the

Corporate Governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

DISCLOSURE UNDER THE SEXUAL HARASSMENT AT WORK PLACE

The Company has in place an Anti Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘POSH Act). Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees of the Company are covered under this policy.

During the year, there were no complaints received pursuant to the provisions of the POSH Act.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 134 of the Companies Act, 2013, with respect to Directors responsibility statement it is hereby confirmed that: 1. in the preparation of the annual accounts applicable accounting standards has been followed and there is no material departure from the same; 2. the Directors 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 i.e., March 31, 2019 and of the profit of the Company for that period; 3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the Companys assets and for preventing and detecting fraud and other irregularities; 4. the Directors have prepared the annual accounts on a going concern basis; 5. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and 6. 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.

AWARDS AND RECOGNITION

During the year, your company has received awards including; l National Award with a Gold Trophy for being the top exporter (Medium Enterprise) in the year 2016-17 from Engineering Export Promotion Council (EEPC), Ministry of Commerce and Industry, Government of India. l Winner of the first edition of The Economic Times Awards, Tamilnadu for Excellence in Business performance.

ACKNOWLEDGEMENT

Your Directors take this opportunity to place on record their sincere appreciation for the continued trust and confidence reposed in the Company by the bankers, business associates, regulatory authorities, customers, dealers, vendors and shareholders. Your Directors recognize and appreciate the services rendered by the officers, staff and employees of the Company at all levels for their dedicated efforts to improve the performance of the Company.

For and on behalf of the Board of Directors
Pondy Oxides and Chemicals Limited
Anil Kumar Bansal Ashish Bansal
Date : 12.08.2019 Executive Chairman Managing Director
Place : Chennai DIN: 00232223 DIN: 01543967