Sree Rayalaseema Hi-Strength Hypo Ltd Directors Report.

To

The Members

Your Directors have pleasure in presenting the Fifteenth Annual Report of the Company for the year ended March 31 , 2020.

1. Financial Results:

Particulars 2019 - 2020 2018- 2019
Profit before interest, Depreciation and Tax 10588.75 10288.81
Less : Interest 1016.48 1576.35
Depreciation 5027.37 4491.86
Profit before Tax 4544.90 4220.60
Provision for Taxation & Deferred Income Tax 753.70 2178.03
Profit after Tax 3791.20 2042.57
Add: Balance brought forward from previous year 20544.02 18893.98
Other adjustments 516.58 392.52
Balance carried forward to next year 23818.64 20544.02

2. Performance:

During the year the Company achieved turnover of Rs. 689.10 Crores against previous year turnover of Rs.702.14 crores. The profit before tax stood at Rs.45.45 Crores as against Rs.42.20 crores for the previous year.

3. COVID : During lock down period , the operations of the company were slightly impacted due to non-availability of few raw materials, non movement of some finished products. There is no impact on capital and financial resources of the company and insignificant impact on profitability of the company.

4. Division / Segment Wise Operations

(a) The net sales of Calcium Hypo Chloride during financial year 2019-20 is Rs.291.28 crores as against 257.71 crores in previous year representing an increase of 13.03%.

(b) The net sales of Stable Bleaching Powder during financial year 2019-20 is Rs. 83.58 crores as against 95.57 crores in previous year representing a decrease of 12.54%.

(c) The net sales of Sodium Methoxide during financial year 2019-20 is 35.04 crores as against Rs. 32.82 crores in previous year representing an increase of 6.77%. And the net sales of Sodium Hydride during financial year 2019-20 is 8.50 crores as against Rs. 15.77 crores during previous financial year representing a decrease of 46.09%.

(d) The trading activity in coal had fetched an amount of Rs. 97.07 crores as against Rs. 101.22 crores during previous year.

(e) The net sales of Sulphuric acid during financial year 2019-20 is 129.36 crores as against Rs. 144.72 crores during previous financial year representing a decrease of 10.61%.

(f) Total power generated, sold through Thermal, Wind and Solar during the year under review is Rs. 4852.40 lakhs.

4. Dividend:

Your Directors have recommended a final dividend of Rs.2.50/- per equity share of face value Rs.10/- each /- (i.e.,25% on paid up share capital) for the financial year ended 31st March,2020 . The dividend payment is subject to approval of members at the ensuing Annual General Meeting. The total cash outflow on account of dividend on equity shares for the financial year 2019-20 would aggregate Rs. 4,29,12,053/-. The dividend will be paid to members whose names appear in the Register of Members as on the book closure date. The dividend payment date is 21st December,2020

5. Investor Education and Protection Fund (IEPF):

Pursuant to the applicable provisions of the Companies Act, 2013 read with the IEPF Authority ( Accounting, Audit, Transfer and Refund Rules) 2016, (‘the Rules), all unpaid and unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF authority. Accordingly, the Company has transferred unclaimed or unpaid dividend amounting to Rs. 19,49,114/- on 08.06.2018 relating to dividend declared in the year 2010-11. Further, 29,896 corresponding shares were transferred as per the requirements of the IEPF Rules. The details are made available on Company website, www.tgvgroup.com.

The shareholders can claim back their shares /dividend amount transferred to IEPF by filing Form IEPF-5 and other related documents.

The following table provides list of years for which unclaimed dividends and their corresponding shares would become eligible to be transferred to the IEPF on the dates mentioned below:

Financial Year Dividend Declared (%) Date of declaration of dividend Last date for claiming unpaid dividend Unclaimed Dividend Amount* (Rs.) Due date for transfer to the IEPF Account
2014-15 15% 30.09.2015 06.11.2022 27,10,035.72 07.11.2022
2015-16 15% 28.09.2016 04.11.2023 27,73,688.61 05.11.2023
2016-17 15% 27.09.2017 03.11.2024 27,24,819.40 04.11.2024
2017-18 20% 28.09.2018 04.11.2025 36,46,967.11 05.11.2025
2018-19 20% 30.09.2019 06.11.2026 34,60,805.55 07.11.2026

* Amount unclaimed as on August 31, 2020.

6. Board Meetings:

During the year, seven (7) Board Meetings and four (4) Audit Committee Meetings were held and the details of which are mentioned in Corporate Governance Report.

7. Transfer to Reserves:

Your Company did not transfer any sum to the General Reserve for the financial year under review.

8. Subsidiaries, Joint Ventues and Associate Companies :

As on March 31, 2020 your Company has one Wholly owned subsidiary Company M/s TGV Sodium & Electrolite Private Limited , one Associate Company M/s TGV SRAAC Limited and no joint ventures. As required under sEbI(LODR) Regulations, 2015 and Section 129 of the Companies Act,2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the consolidated financial statements of your Company and its Subsidiary Company are provided in the Annual Report. The Consolidated financial statements have been prepared in accordance with Ind AS 27. The Consolidated financial statements have been prepared on the basis of audited financial statements of its subsidiary Company as approved by its Board of Directors.The Consolidated financial statement shows the financial resources, assets, liabilities, income, profit and other details of your Company and its subsidiary after elimination of inter -company transactions. In case of Associate Company M/s TGV SRAAC LIMITED, it had been concluded that it is not exercising significant influence although it holds more than 20% of share capital. Hence Company ceased to account the investment in TGV SRAAC Limited as per equity method in Ind As-28, investment in associates and Joint Ventures with effect from 01.04.2016. As on the date of this report the holding is reduced below 20% of the share capital due to corporate action by the investee Company. A Separate statement is annexed explaining salient features of the financial statements of the subsidiary and associate in AOC-1 ((Annexure-A) and the details of such entities of the Company formed/acquired /Ceased during the year are provided in (Annexure-A -1) to this report.

9. Insurance:

All assets of the Company and other potential risks have been adequately insured.

10. Fixed Deposits:

The Company has not accepted any public deposits under Section 73 of Companies Act, 2013 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

11. Listing of Shares:

The Equity shares of your Company are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Company has paid the Annual Listing fees to each of these Stock Exchanges for the financial year 2020-21.

12. Safety and Environment Protection:

(1) To ensure safety at work place, fire fighting system is strengthened.

(2) In Unit-IV Pharma Plant, Fire Hydrant System has been modified to Srpinklers system in Raw Material and Product Storage Area.

(3) Inside Cal Hypo Product Storage Godowns, Fire Hydrant System with Sprinklers has been arranged.

13. Industrial Relations:

Your Companys Industrial Relations continue to be harmonious and cordial.

14. Directors and Key Managerial Personnel:

Sri. H. Gurunath Reddy, Director is retiring by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Sri. P Ramachandra Gowd, Independent Director is reappointing for second term for a period of 5 years.

The brief particulars of the Directors seeking appointment / re-appointment at this Annual General Meeting are being annexed.

15. Evaluation of board performance:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI(LODR)Regulations, 2015, the Board has carried out performance evaluation taking into consideration of various aspects of the Boards functioning, composition of Board, and its Committees, execution, and performance of specific duties, obligations and governance. The Performance of evaluation of Independent Directors was completed. The Performance evaluation of Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with evaluation process.

16. Companys policy on directors appointment and remuneration:

The Nomination and Remuneration Committee had been constituted by the Board which ensures the selection .appointment of persons having wide exposure in their respective fields and remuneration to Directors. Key Managerial Personnel and Senior Management of the Company. The Board on the recommendation of the Nomination & Remuneration Committee takes necessary steps and decisions.

17. Statement of declaration given by independent directors under section 149(6) :

During the year under review the company has received the necessary declarations from each Independent Director in accordance with Section 149(7) of the Companies Act. 2013 that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act. 2013 and Regulation 16(1)(b) of the Securities Exchange Board of India(Listing Obligations & Disclosure Requirements ) Regulations. 2015.

18. Particulars of loans, guarantees or investments under section 186:

The Company had not given any loans. guarantees during the year 2019-20. The investment to the extent of Rs.1.00.000 made in wholly owned subsidiary Company during the year 2019-20.

19. Particulars of contracts or arrangements with related parties:

All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business. There are material significant related party transactions made by the Company . All Related Party Transactions are placed before the Audit Committee as also the Board for approval. where ever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors . The Company had formulated a policy on dealing with related party transactions which has been uploaded on the Companys website :www.tgvgroup.com . Form AOC- 2 is annexed to this report (Annexure-B).

20. Risk management policy:

A special team with senior executives had been formed to assist the Board (a) Overseeing and approving the Companys enterprise risk management framework and (b) Overseeing that all the risks that the organization faces such as strategic. financial. credit . market. liquidity. security. property. IT. legal and other risks and there is an adequate risk management infrastructure. The Company manages. monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

21. Vigil Mechanism / Whistle Blower Policy:

The company has adopted a vigil mechanism 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 behavior.

22. Extract of Annual Return :

Pursuant to the provisions of Section 134(3)(a) of the Companies Act,2013, the extract of the Annual Return in Form MGT-9 is attached as (Annexure- C). The same is available on the web link : https://www.tgvgroup.com/ investors/annual reports. The Annual Return will be uploaded on the Website of the Company once it is filed with the MCA.

23. Particulars of Energy conservation, Technology Absorption and Foreign Exchange earnings and outgo:

Information as per Section 134 (3) of the Companies Act, 2013 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 are forming part of the Directors Report for the year ended 31st March, 2020 is annexed to this Report (Annexure -D).

24. Corporate Governance:

A report on Corporate Governance along with a Certificate for compliance with the conditions of Corporate governance in accordance with Securities Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 issued by Practicing Company Secretary forms part of this Annual Report (Annexure -E) .

25. Management Discussion and Analysis Report :

Further to comply with regulation 34(2) read with Schedule V of SEBI(LODR) Regulations, 2015, ‘Management Discussion and Analysis has been annexed to this report (Annexure -F ).

26. Corporate Social Responsibility :

In compliance with the guidelines prescribed under Section 135 of Companies Act, 2013, your Company has constituted a CSR Committee which monitors the implementation of C.S.R. activities. During the year there is no change in the constitution of the CSR Committee. The members of the committee are Sri A Kailashnath as Chairman and Smt.D S Sai Leela, Sri P Ramachandra Gowd as members. Appropriate steps are taken by the company to integrate CSR activities for the development of areas surrounding the Company in particular and other areas in general. During the financial year 2019-20, the company had to spent Rs.62,48,818. Against this, the Company had spent Rs.95,73,656. Details of C.S.R. activities are annexed to this report (Annexure - G).

27. Cost Auditors:

As per section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audits) Rules,2014 as amended, the Board of Directors of your Company on recommendation of the Audit Committee appointed M/s. Kapardhi & Associates, Cost Accountants as the Cost Auditors to carry out the cost audit of products of the Company. The remuneration of cost auditors has been approved by the Board of Directors on the recommendation of Audit Committee and the requisite resolution for ratification of remuneration of cost auditors by the members has been set out in the notice of 15th Annual General Meeting of your Company.

The cost audit report for the financial year ended March 31,2019 issued by M/s. Kapardhi & Associates, Cost auditors in respect of various products prescribed under Cost Audit Rules does not contain any qualification, reservation and the same was filed with Ministry of Corporate Affairs. The cost audit report for the financial year ended March 31 , 2020 is being submitted shortly.

28. Statutory Auditors:

The members at the 12th Annual General Meeting held on September 27, 2017, appointed M/s T.Adinarayana & Co., Chartered Accountants (Firm Registration No.000041S) as the Statutory Auditors of the company to hold office for a term of five years from the conclusion of 12th Annual General Meeting until the conclusion of the Annual General Meeting of the Company for the financial year 2021-22 on such remuneration as may be determined by the Board of Directors.

The members may note that the Ministry of Corporate Affairs vide its notification dated May 7, 2018 has done away with the requirement of yearly ratification of appointment of Statutory Auditors.

Pursuant to Section 139 of the Companies Act, 2013, the Statutory Auditors M/s T.Adinarayana & Co., Chartered Accountants have confirmed that they are eligible to continue as auditors.

There are no qualifications, reservation or adverse remark or disclaimer made in the audit report for the financial year 2019-20.

29. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had re-appointed M/s. Geetha Serwani & Associates, Practicing Company Secretary, Hyderabad to undertake the Secretarial Audit of the Company for the Financial Year 2019-20. The Report of the Secretarial Audit Report is annexed to this report (Annexure- H ). The report does not contain any qualification , reservation or any adverse remark.

30. Disclosure as per Sexual Harrassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. y

a. No. of complaints filed during the financial year - Nil

b. No. of complaints disposed during the financial year - Not Applicable

c. No. of complaints pending as on end of the financial year - Nil

31. Directors Responsibility Statement:

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

(i) that the preparation of the accounts for the financial year ended March 31,2020 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

(iii) that 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; and

(iv) that the Directors had prepared the accounts for the financial year ended March 31, 2020 on a ‘going concern basis.

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

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

32. Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

There are no material changes which affects the financial position of the Company according to the date of financial year and the date of its report .

33. Particulars of Employees:

Except Sri T G Bharath, Chairman & Managing Director ,no employee of the Company is drawing remuneration as prescribed under Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014.

34. Particulars of Remuneration:

Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of Companies Act,2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.:

(i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Name of the Director Ratio to Median Remuneration
Sri.T.G.Bharath , CMD 72.79%
A.Kailashnath, Director 0.19%
Sri.H.Gurunath Reddy, Director 0.11%
Smt.D. S. Sai Leela , Director 0.19%
Sri.P.Ramachandra Gowd , Director 0.19%
Sri.Krishnamoorthy Chandraiah Naik, Director 0.11%

(ii) The percentage increase in remuneration of each Director, Chief financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

Sri.T.G.Bharath, Managing Director * -
Smt.V Surekha , Company Secretary 3.10%
Sri.Ifthekhar Ahmed, Chief Financial Officer 2.86%

*Appointed as Chairman & Managing Director on May 30 , 2019 and drawn remuneration for 10 months only.

(iii) The percentage increase in the median remuneration of employees in the financial year - 2.59%

(iv) The number of permanent employees on the rolls of Company - 430

(v) Average percentile increase already made in the salaries of employees other than managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration :

The average increase in salaries of employees other than managerial personnel in 2019-20 was 2.59% . Percentage increase in the managerial remuneration for the year cannot be compared as remuneration for a period of 10 months received during financial year 2019-20.

(vi) Affirmation that the remuneration is as per the remuneration policy of the Company : YES

35. Acknowledgements:

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from Customers, Banks, Suppliers, Shareholders, Government departments and other statutory authorities and others associated with the Company. Your directors also wish to place on record their appreciation for the contributions made by employees at all levels, during the year under review.

The Directors regret the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic.