Praj Industries Ltd Directors Report.
The Members of,
Praj Industries Limited,
Your Directors are pleased to present the 33rd Annual Report and the Audited Financial Statements for the year ended 3181 March, 2019.
During the year under review, your Company has recorded total income of र9517 Mn (previous year र7283 Mn), registering increase of 31% in total income. Profit before Tax increased by 103% to र809 Mn (previous year र399 Mn). The performance summary is presented herewith:
|Other Comprehensive Income||5||7|
|Total Comprehensive Income||629||322|
|(+) Balance in Profit & Loss account||4969||5067|
|(+) INDAS Adjustments (ESOPs)||9||2|
|(-) IND AS Adjustment (Adjustment to opening Retained Earnings-IND AS 115: Revenue Recognition)||(154)||-|
|Profit Available for Appropriations||5453||5391|
|Dividend (Including Special Interim Dividend)|
|Dividend Tax (Including Special Interim Dividend)||79||59|
|Transfer to Special Economic Zone Re-investment Reserve||62||72|
|Balance in Statement of Profit & Loss||4926||4969|
State of Companys Affairs
Please refer Management Discussion & Analysis report annexed to this report dealing with the state of Companys affairs at length. (Refer Annexure 1).
Summary of Consolidated Results
During the year, the Total Income stood at र11734 Mn which is more by 23% over last year (र9502 Mn). Profit before tax at र879 Mn is higher by 66% over last year (र530 Mn). The performance summary is presented herewith:
|(र in Mn)|
|PAT (after Minority Interest)||682||395|
|(+) Other Comprehensive Income||6||8|
|Total Comprehensive Income||688||403|
The Board of Directors at its meeting held on 28th January, 2019, declared and paid Special Interim Dividend of र0.50 per equity share (25%) of Face value of र2/- for the financial year 2018-19. The Special Interim Dividend pay-out was र110.029 Mn (Dividend: र91.266 Mn and Dividend Distribution Tax र18.763 Mn).
The Board of Directors of your Company has recommended a final dividend of र1.62 /-(81%) per equity share of Face value of र2/- for the Financial Year ended 31st March, 2019. The dividend is payable subject to shareholders approval at the ensuing Annual General Meeting (AGM). The final dividend pay-out, if approved by the shareholders in the ensuing AGM, will be around र356.992 Mn (Dividend: र296.123 Mn and Dividend Distribution Tax र60.869 Mn).
With this, the total dividend payout, including dividend distribution tax for the financial year 2018-19 will be र467.021 Mn The dividend payout is in accordance with the Companys Dividend Distribution Policy.
Dividend Distribution Policy
In accordance with the Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure 11. The Policy is also hosted on the website of the Company and can be viewed at www.prai.net
Investor Education and Protection Fund (IEPF)
Pursuant to the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred unclaimed/ unpaid dividend of र10,93,699/- to Investor Education and Protection Fund pertaining to the financial year 2010-11 on 14/09/2018. Further, the Company has also transferred 39,880 shares to IEPF on 26/10/2018.
Details of Nodal Officer
Mr. Dattatraya Nimbolkar, Chief Internal Auditor and Company Secretary has been appointed as Nodal Officer of the Company. Details in this regard are available on the website of the Company at www.praj.net
The Company is not proposing any transfer to the General Reserve for the year 2018-19.
a) CRISIL has re-affirmed "A1+" rating to the Companys short-term banking facilities which signifies that the degree of safety regarding timely payment of instruments is very strong.
b) CRISIL has also re-affirmed its rating of the Companys long-term bank facilities to "AA/stable. The "AA" rating signifies high safety with regard to timely payment of long-term financial obligations.
Praj Engineering & Infra Ltd., India, Praj HiPurity Systems Ltd. , India, Praj Americas Inc., U.S.A., Praj Far East Co. Ltd., Thailand, Praj Industries (Africa) (Pty.) Ltd, South Africa, Praj Far East Philippines Ltd. Inc., The Philippines and Praj Industries (Namibia) Pty. Ltd., Namibia continue to be subsidiaries of your Company.
Consolidated Financial Statements of the Company, which include the results of the said Subsidiary Companies, are included in this Annual Report. Further, a statement containing the particulars for each of the Companys subsidiaries is also enclosed. Copies of Annual Accounts and related detailed information of all the subsidiaries can also be sought by any member of the Company or its Subsidiaries by making a written request to the Company Secretary at the Registered Office of the Company in this regard. The Annual Accounts of the Subsidiary Companies are also available for inspection at the Companys and/or the concerned Subsidiarys Registered Office.
The Company has formulated a policy for determining material subsidiaries and such policy is hosted on the Companys website i.e. www.praj.net
Further, a statement containing salient features of the financial statements of subsidiaries in the prescribed format AOC-1 is appended as Annexure 7 to this Report. The statement also provides the details of performance, financial position of each of the subsidiaries.
Pursuant to the provisions of Regulation 34 (2) & (3) and 53(f), read with Schedule V of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report (Annexure 1), Report on Corporate Governance and Compliance Certificate on Corporate Governance (Annexure 3), Business Responsibility Report (Annexure 10), Dividend Distribution Policy (Annexure 11) are annexed to this report.
Shareholders at their 32nd Annual General Meeting held on 6th August, 2018, approved the appointment of Mr. Shishir Joshipura (DIN: 00574970) as Chief Executive Officer and Managing Director of the Company for a period of Five (5) years with effect from 2nd April, 2018 and appointment of Dr. Shridhar Shukla (DIN 00007607) as an Independent Director for a period of Five (5) years with effect from 12th April, 2018.
Mr. Daljit Mirchandani Director (DIN: 00022951) is retiring by rotation at the ensuing Annual General Meeting. However, due to his other pre-occupations, Mr. Daljit Mirchandani is not offering himself for re-appointment. The Board wishes to place on record its appreciation for his valuable contribution during his tenure as Director of the Company.
Ms. Parimal Chaudhari (DIN 00724911) will retire at 33rd Annual General Meeting and being eligible, has offered herself for re-appointment as Director of the Company.
The existing Agreement entered into with Mr. Pramod Chaudhari, Executive Chairman (DIN 00196415) expires on 31st July, 2019. Based on the recommendation of Nomination and Remuneration Committee, your Directors have approved the extension of tenure of Mr. Pramod Chaudhari for further period of three (3) years up to 31st July, 2022, subject to approval of shareholders at the ensuing Annual General Meeting of the Company.
Item No. 5 of Notice of 33rd Annual General Meeting contains necessary details of Special Resolution in this regard.
The existing Agreement entered into with Mr. Sachin Raole, CFO and Director-Finance & Commercial (DIN 00431438) expires on 31st July, 2019. Based on the recommendation of Nomination and Remuneration Committee, your Directors have approved the extension of tenure of Mr. Sachin Raole for further period of three (3) years, up to 31st July, 2022, subject to approval of shareholders at the ensuing Annual General Meeting of the Company.
Item No. 6 of Notice of 33rd Annual General Meeting contains necessary details of Ordinary Resolution in this regard.
Members at 28th Annual General Meeting held on 28th July, 2014, had appointed Mr. Berjis Desai, Mr. Rajiv Maliwal and Mr. Sivaramakrishnan S. Iyer as Independent Directors of your Company for a period of five (5) years.
As per provisions of Section 149 (10) of the Companies Act, 2013 read with relevant Rules and Schedule IV, Independent Director can be re-appointed for consecutive term of five (5) years, subject to approval of shareholders by way of Special Resolution.
Mr. Berjis Desai (DIN 00153675) and Mr. Sivaramakrishnan S. Iyer (DIN 00503487) have given their consent for re-appointment as Independent Directors.
Item Nos. 7 & 8 of Notice of 33rd Annual General Meeting contain necessary details of Special Resolution of respective Independent Directors.
The tenure of Mr. Rajiv Maliwal (DIN 00869035) as Independent Director expires at the conclusion of 33rd Annual General Meeting of the Company. However, he is not offering himself for reappointment. The Board wishes to place on record its appreciation for his valuable contribution during his tenure as Director of the Company.
Composition of Key Managerial Personnel (KMP)
The Company has the following KMP;
|Name of the KMP||Designation||Date of Appointment||Date of Resignation|
|Mr. Pramod Chaudhari||Executive Chairman||08.11.1985||N.A.|
|Mr. Shishir Joshipura||Chief Executive Officer and Managing Director||02.04.2018||N.A.|
|Mr. Sachin Raole||CFO and Director- Finance & Commercial||13.07.2016||N.A.|
|Mr. Dattatraya Nimbolkar||Chief Internal Auditor & Company Secretary||22.07.2011||N.A.|
Composition of Audit, Nomination & Remuneration Committee
For details, kindly refer the Corporate Governance Report annexed to this Report(Annexure 3).
Declaration from Independent Directors
The Independent Directors have submitted their annual declaration to the Board confirming that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 read with rules framed there under.
a) Internal Auditors
The Internal Auditors, Khare Deshmukh & Co., Chartered Accountants, Pune have conducted internal audits periodically and submitted their reports to the Audit Committee. Their reports have been reviewed by the Statutory Auditors and the Audit Committee.
The Board has appointed Khare Deshmukh & Co., Chartered Accountants Pune, as Internal Auditors of the Company for the financial year 2019-20.
b) Statutory Auditors
The members, in the 29th Annual General Meeting held on 6th August, 2015, appointed M/s PG. Bhagwat, Chartered Accountants, Pune as Statutory Auditors of the Company for a period of five years with effect from the conclusion of 29th Annual General Meeting held on 6th August, 2015.
c) Cost Auditors
Your Company has appointed Dhananjay V. Joshi & Associates, Cost Accountants as Cost Auditors of the Company for the financial year 2019-20 at the remuneration as set out in item No.4 of the explanatory statement which is subject to the ratification of members in the ensuing Annual General Meeting.
d) Secretarial Auditors
M/s KANJ & Co., LLP, Pune, were appointed to conduct the Secretarial Audit of the Company for the financial year 201819, as required under Section 204 of the Companies Act, 2013 read with rules framed thereunder. The Secretarial Audit Report (MR-3) for F.Y. 2018-19 forms part of the Annual Report as Annexure 6.
The Board has appointed KANJ & Co. L.L.P, Pune, as Secretarial Auditors of the Company for the financial year 2019-20.
Material changes and commitments, if any, affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of the report
No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2018-19 till the date of this report. Further there was no change in the nature of business of the Company.
Statement concerning development and implementation of risk management policy of the Company
In accordance with the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board adopted Risk Management Policy and initiated necessary steps for framing, implementing and monitoring the risk management plan for the Company.
The main objective of this policy is to ensure sustainable business growth and to promote a pro-active approach in identifying, reporting, evaluating and mitigating risks associated with the business.
The policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.
In todays challenging and competitive environment, strategies for mitigating inherent risks associated with business and for accomplishing the growth plans of the Company are imperative. The common risks inter alia are risks emanating from; Regulations, Competition, Business, Technology obsolescence, Investments, Retention of talent, Finance, Politics and Fidelity.
As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same.
The Risk Management Policy is also hosted on the Companys website i.e. www.prai.net
The Company has instituted adequate Internal Controls and processes to have a cohesive view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities.
In the opinion of the Board, there are no risks which may threaten the existence of the Company.
Internal financial controls
The Company has in place, adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
Remuneration Policy for Directors and KMP
The Companys remuneration policy for Directors/ KMP is directed towards rewarding performance based on review of achievements periodically. The remuneration policy is in consonance with the existing industry practice.
The said policy is available on Companys website i.e. www.praj.net and is also attached as Annexure 8 to this report.
During the year, your Company allotted 1,715,435 shares on exercise of options under the Employee Stock Option Plan 2011. Consequent to the above, the Issued, Subscribed and Paid up Share Capital of your Company increased from 180,932,415 ( 361.865 Mn) shares to 182,647,850 ( 365.296 Mn.) as of 31st March, 2019.
During the year, your Company has granted the following options under Employees Stock Option Plan 2011;
|Sr. No.||No. of Options||Exercise Price/Option|
|Grant VIII||90,000||र 50/- per option|
|Grant IX||1,135,000||र 70/- per option|
|Grant X||400,000||र 70/- per option|
Please refer Annexure 4 to this report for the particulars required to be disclosed pursuant to Rule 12 (2) of the Companies (Share Capital and Debentures) Rules, 2014 and Clause 14 of SEBI (Share Based Employee Benefits) Regulations, 2014.
Vigil Mechanism/Whistle Blower Policy
In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the Company has adopted a Vigil Mechanism/Whistle Blower Policy. This policy is explained in Corporate Governance Report and is also hosted on the website of Company at www.prai.net.
Details of policy developed and implemented by the Company on its Corporate Social Responsibility initiatives
Kindly refer Annexure 2 to this Report.
Particulars of loans, guarantees or investments made under section 186 of the Companies Act, 2013
Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. (Please refer Note No. 4 to the Standalone Financial Statements).
Contracts and arrangements with Related Parties
All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. Such transactions form part of the notes to the financial statements provided in this Annual Report. (Please refer Note No. 31 to the Standalone Financial Statements).
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 which is available on the Companys website at the link: www.praj.net
The information in respect of Related Party transactions is given below;
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basis ;
N.A. as there were no transactions during the year which were not at arms length.
2. Details of material contracts or arrangement or transactions at arms length basis;
During the financial year 2018-19, all the transactions entered into with related parties were at arms length. However, these transactions were not material.
Regulation 4 (2) (f) (ii) (9) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. Also, the Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its Committees and individual Directors. In addition, Schedule IV to the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated. The Board works with the Nomination & Remuneration Committee to lay down the evaluation criteria for the performance of Executive/Non-Executive/Independent Directors.
Independent Directors have three key roles-Governance, Control and Guidance. Some of the performance indicators based on which the Independent Directors are evaluated include:
a) Ability to contribute to and monitor the Companys corporate governance practices.
b) Ability to contribute by introducing international best practices to address top-management issues.
c) Active participation in long-term strategic planning.
d) Commitment to the fulfillment of a Directors obligations and fiduciary responsibilities; these include participation in the Board and the Committee Meetings.
In pursuance of above, the Company has devised a policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors.
The evaluation of all the Directors, Committees and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination & Remuneration Committee.
Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors and the Secretarial Auditors in their reports
There were no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors in their report.
Extract of Annual Return
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in prescribed Form MGT-9 for the year ended 31st March, 2019 is as per Annexure 5 to this report.
Number of Board Meetings conducted during the year under review
The Board met five times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Directors Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:-
(a) in the preparation of the annual accounts, the applicable accounting standards have 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 at the end of the financial year and of the profit of the Company for that period;
(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.
Details in respect of frauds reported by auditors under sub-section (12) of Section 143 other than those which are reportable to the Central Government.
During the year, there was no such incidence of fraud reported by Statutory Auditors to the Management.
However, there was one case involving unauthorized transfer of secret information relating to the business of the Company by one of the employees of the Company to the outsiders, for which necessary legal action has been initiated by the Company.
The Company has neither accepted nor renewed any deposits during the year under review and also did not have any outstanding deposits at the end of the year.
Remuneration ratio of the Directors/Key Managerial Personnel (KMP)/Employees
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company and Directors is furnished hereunder:
|Sr. No.||Name||Designation||Remuneration paid FY 2018-19 रMn.||% increase/ (Decrease)in remuneration over FY 2017-18||Ratio of the remuneration of each Director to median remuneration of employees|
|1||Mr. Pramod Chaudhari||Executive Chairman||51.627||Nil||53.7|
|2||Mr. Shishir Joshipura||CEO & MD||28.580||NA||29.7|
|3||Mr. Berjis Desai||Non- Executive Independent Director||2.100||56||2.2|
|4||Ms. Parimal Chaudhari||Non- Executive Director||1.650||65||1.7|
|5||Mr. Rajiv Maliwal||Non- Executive Independent Director||0.600||33||0.6|
|6||Mr. Sivaramakrishnan Iyer||Non- Executive Independent Director||1.750||30||1.8|
|7||Mr. Daljit Mirchandani||Non-Executive Non-Independent Director||11.700||7||12.2|
|8||Mr. Sachin Raole||CFO and Director- Finance & Commercial||7.711||1||8.0|
|9||Ms. Mrunalini Joshi||Non- Executive Independent Director||0.550||57||0.6|
|10||Dr. Shridhar Shukla||Non- Executive Independent Director||0.550||NA||0.6|
|11||Mr. Dattatraya Nimbolkar||Chief Internal Auditor & Company Secretary||9.089||4||9.4|
The median remuneration of employees of the Company during the financial year was र0.962 Million. In the financial year, there was an increase of 8% in the median remuneration of employees.
There were 885 permanent employees on the rolls of Company as on 31st March, 2019.
Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2018-19 was around 9% whereas the managerial remuneration for the same financial year increased by around 4%.
The key parameters for the variable component of remuneration paid to the Directors are considered by the Board of Directors based on the recommendations of Nomination and Remuneration Committee as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
Particulars of employees
The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is given in Annexure 9 to this Report.
Details of significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.
No such events occurred during the financial year 2018-19.
Prevention of Sexual Harassment Policy
The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The Company has constituted Internal Complaint Committee as per the aforesaid Act.
Your Directors state that during the year under review, there was no case filed pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Energy Conservation, Technology Absorption, Adaptation, Innovation:
During the year, Praj in its continued endeavor of optimizing energy and water consumption in distillery has come up with Innovative integrated Sustainable Technologies. Adoption of these technologies will help distillery to reduce water and thermal energy requirement by 75%. Praj has successfully commissioned and demonstrated this technology in one of the plants in Maharashtra and already set a new benchmark.
Praj Green fuel production technologies play a key role in meeting greenhouse gas emission reduction target, a step towards global sustainability. Praj has successfully developed and commercialized Process Optimized Flexible Integrated Incineration Technology for improving carbon footprint.
1. During the year, 13 foreign patents were applied and 10 patents (Indian 7 and foreign 3) were granted.
2. As a part of value maximization initiative, Praj has continued its focus on development of bio-refinery based on 1st generation and 2nd generation feedstocks. Prajs advanced Maximol dehydration technology for throughput enhancement with sweating of plant assets helps to increase profitability for the customers. Process Reliability, equipment performance with respect to uptime (on-stream factor) has been successfully demonstrated on Rice straw and Wheat straw for domestic and international customer. We are glad to announce that Praj has been selected as technology partner for four commercial scale 2nd generation plants announced by OMCs.
3. Praj announced ground-breaking of integrated demo plant of compressed bio-Gas (CBG) at the hands of Dr. Anil Kakodkar, Chairman- High Level Committee and Chairman- Scientific Advisory Committee on Hydrocarbons of Ministry of Petroleum and Natural Gas. The ceremony was held on Wednesday, 9th Jan 2019. Commercial demo plant installation and commissioning will be done in coming financial year.
4. Praj and GEVO has jointly developed advanced biofuel (IBA) technology using Sugary feedstock.
5. Praj has also developed enzymatic bio-diesel technology from oleo-chemical feed stock(UCO). Prajs clean and efficient bio-diesel technology helps to promote waste to energy initiative from Ministry of India.
6. As recognition towards contribution made by Praj in Bio-economy, it gives us immense pleasure to share that Praj is ranked as 8th in the list of TOP 50 hottest companies in Advanced Bio-economy for Year 2019 by Biofuel Digest.
Foreign Exchange Earnings & Outgo
|Net Foreign Exchange Earnings||1765||2804|
Your Company has retained its status as a net forex earner consecutively for past 22 years.
Your Directors wish to place on record their appreciation towards all associates including Customers, Collaborators, Government Agencies, Bankers, Suppliers, Shareholders, Auditors, Employees and others who have reposed their confidence in the Company.
|For and on behalf of the Board of Directors|
|Place: Pune||Pramod Chaudhari|
|Date: 16th May, 2019||Executive Chairman|