To the Members,
The Directors present this 36th Annual Report along with the audited financial statements of the Company for the financial year ended 31st March 2022.
1. FINANCIAL RESULTS
The Comparitive results of Audited Standalone and Consolidated Financial Statements for the financial year ended 31st March 2022 and 31st March 2021 are as follows:
(Rs In Lakhs)
|Particulars||Financial Year 31.03.2022||Financial Year 31.03.2021||Financial Year 31.03.2022||Financial Year 31.03.2021|
|Revenue from operations||54,393.51||49,263.43||78,229.95||68,672.52|
|Profit before Interest, Depreciation, Tax and Exceptional items||4,985.40||5,855.52||10,341.71||7,938.93|
|Profit before Tax & Exceptional items||845.12||1,391.20||3,902.88||1,099.46|
|Profit/(Loss) before Tax||845.12||1,391.20||3,902.88||1,099.46|
|Profit/(Loss) after Tax||793.50||3,532.92||3,488.62||2,885.95|
|Balance of profit brought forward from last year||13,870.18||10,264.97||14,725.76||11,764.01|
|Amount Available for appropriation||14,663.68||13,797.89||18,214.38||14,649.96|
|Transfer to general reserves||-||-||-||-|
|Dividend paid during the year||442.27||-||442.27||-|
|Tax on dividend||-||-||-|
|Other comprehensive Income/ (loss)||(34.82)||72.29||5.93||75.80|
|Balance Profit Carried to balance sheet||14,186.59||13,870.18||17,778.04||14,725.76|
2. COMPANY?S PERFORMANCE
During the year, your Companys total standalone revenue was Rs 54,393.51 Lakhs as against Rs 49,263.43 Lakhs in FY 2020-21 representing an increase of 10.41% over that of the previous year due to increase in the customer requirements. The consolidated revenue of the Company has also witnessed increase from Rs 68,672.52 Lakhs in FY 2020-21 to Rs 78,229.95 Lakhs registering a growth of 13.92%. The PBDIT has decreased from Rs 5,855.52 Lakhs (FY 2020-2021) to Rs 4,985.40 Lakhs (FY 2021-2022) due to overall increase in the total expenditure of the Company. The Company has netted a Profit After Tax (PAT) of Rs 793.50 Lakhs contributing 1.46% of the turnover of FY 2021-22. The Consolidated net profit during the year was Rs 3,488.62 Lakhs in comparison with previous year which stood at Rs 2,885.95 Lakhs resulting in an increase of 21%.
Impact of Covid-19 on Business Operations
The Covid-19 pandemic which had caused severe disruptions to the various sectors of the economy during the financial year 2020-21 had its traces of impact in the first two quarters of the financial year 2021-22. Though the vaccination drive has to some extent controlled the casualties the pandemic has been continuously posing myriad challenges upon the world economies. Your Company has taken top priority to ensure the safety and health of its employees and has relentlessly provided support and continued focus on running operations safely and efficiently to the best of the abilities and ensured continued support and minimum impact to the customers.
The second wave of Covid-19 which led to state induced lockdowns in May 2021 has brought several changes in the market conditions where the raw material prices soared across all segments leading to increase in input costs to the Company coupled with record high retail fuel prices globally. Despite the decline in the automobile industry due to Covid-19 pandemic, your Companys sales have increased by 10.41% against the declining market in FY 2021-22.
The Board has out of the profits available for appropriation recommended a dividend of Rs 2/- per equity share for the financial year 2021-22 on 2,21,13,625 equity shares of face value of Rs 10 each for the approval of the shareholders at the ensuing Annual General Meeting. The total dividend amount would be Rs 442.27 lakhs. The dividend, if approved by the shareholders, will be paid on or before 27th September 2022 to all the eligible shareholders whose names appear in the register of members of the Company as on 22nd August 2022 being the record date fixed for this purpose subject to deduction of tax at source where applicable.
4. TRANSFER TO GENERAL RESERVE
The Company retained the entire surplus in the Profit and Loss account and hence there has been no transfer to the general reserve of the Company for the financial year 2021-2022.
5. SHARE CAPITAL
The paid-up equity share capital of the Company as on 31st March 2022 stood at Rs 22,11,36,250 consisting of 2,21,13,625 equity shares having face value of Rs 10/- each fully paid up. There has been no change in capital structure of the Company.
6. MANAGEMENT DISCUSSION AND ANALYSIS
The main business of the Company is manufacturing automotive equipments/parts and pumps, emission control parts and various components for both ferrous and non-ferrous material and offers comprehensive Fuel Management Systems for Automotive Sector. A detailed analysis on the performance of the automotive industry, Companies performance, internal control systems, risk management are presented in the Management Discussion and Analysis Report forming part of this report and provided in Annexure I.
7. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
The Company has two wholly-owned subsidiaries as on 31st March 2022. There has been no material change in the nature of the business of the Subsidiaries. Pursuant to Section 129 (3) of the Companies Act, 2013 a statement containing the salient features of financial statements of the Companys subsidiaries viz., Ucal Polymer Industries Limited (UPIL) and Ucal Holdings Inc., (UHI) in Form AOC-1 is attached to the financial statements of the Company and is given in Annexure-II.
In terms of section 136 of the Companies Act, 2013 the Company has not attached the financial statements of the subsidiary companies. However, the financial information of the subsidiary companies is disclosed in the annual report as Consolidated Financial Statements in accordance with the applicable Accounting Standards (Ind AS). The annual accounts, reports and other documents of the subsidiary companies will be available for inspection during business hours, by any shareholder of the Company at the registered office of the Company and has placed separate audited financial statements of each of its subsidiary on its website www.ucalfuel.com. The Company shall also provide a copy of the audited financial statement in respect of each of its subsidiary companies upon request by any of its shareholders.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The composition of the Board of Directors and its Committees, viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee were constituted in accordance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), wherever applicable. The Corporate Governance Report annexed to this report contains an overview of the role, terms of reference, meetings and composition of the Board of Directors of the Company and its Committees.
During the year under review, the following were the changes in the composition of Board of Directors.
• Mr.S. Natarajan (DIN: 0155988), Non-Executive Independent Director resigned from the Board with effect from 19th July 2021. He also ceased to be Chairman of Audit Committee, Nomination
and Remuneration Committee effective from the said date. The Board placed on record its appreciation for the valuable guidance rendered by him during his tenure as Director of the Company.
• Mr. I.V. Rao (DIN: 00329370) was appointed as an Additional Non-Executive Independent Director by the Board of Directors in their meeting held on 13th August 2021. Subsequently the Shareholders at the 35th Annual General Meeting approved the appointment of Mr. I.V.Rao as an Independent Director for a period of three years with effect 13th August 2021 to 12th August 2024. He was also appointed as Chairman/Member of Nomination and Remuneration Committee and member of the Audit Committee with effect from 13th August 2021.
• Ms. Rekha Raghunathan (DIN: 00057774) resigned from the Board with effect from 8th February 2022. The Board placed on record its appreciation for the valuable guidance rendered by her during her tenure as Director of the Company.
• Mr. Ram Ramamurthy (DIN: 06955444), Wholetime Director retires by rotation and being eligible, offers himself for re-appointment in this 36th Annual General Meeting of the Company.
• Mr. Ram Ramamurthy (DIN: 06955444)
completes his term as Whole-time Director by 3rd September 2022 and considering his experience and knowledge, the Board of Directors are of opinion that the re-appointment of Mr. Ram Ramamurthy as Whole-time Director will be in the best interests of the Company and justifiable under Section 196 (3) (a) of the Companies Act, 2013 and has accordingly recommended his reappointment as Wholetime Director for a further period of two years from 4th September, 2022 to 3rd September, 2024 on a remuneration as detailed in the Notice convening this 36th Annual General Meeting.
• Mr.Abhaya Shankar (DIN: 00008378) is appointed as Additional Non-Executive and Non-Independent Director in the Board meeting held on 25th July 2022, subject to the appointment being approved by the shareholders at the ensuing 36th Annual
General Meeting. The Board recommends his appointment as Non-Executive Director for a term of three years commencing from 25th July 2022 and appropriate resolution for his appointment has been set out in detail in the Notice convening the ensuing 36th Annual General Meeting.
• Ms. Lakshminarayan Priyadarshini
(DIN:06592671) completes her first term as Independent Director by 6th December 2022 and is eligible for re-appointment for second and final term of next five years. Based on her skills, experience, knowledge and performance evaluation and recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on July 25, 2022, has proposed the re-appointment of Ms. Lakshminarayanan Priyadarshini (DIN:06592671) for the approval of the shareholders in this 36th Annual General Meeting as an Independent Director for a second and final term of five years from the conclusion of this 36th Annual General Meeting up to the conclusion of 41st Annual General Meeting to be held in the year 2027. The Company has received requisite consent/declarations for re-appointment of Ms. Lakshminarayanan Priyadarshini (DIN:06592671) as an Independent Director as required under the Companies Act,2013 and rules made thereunder.
• During the year Mr.S. Narayan was appointed as Company Secretary with effect from 16th November 2022 in the place of Ms.Rekha Raghunathan who has resigned as the Company Secretary. Mr. S. Narayan hold the office of Key Managerial Personnel (KMP) within the meaning of Section 2(51) of the Companies Act, 2013.
• Mr. Jayakar Krishnamurthy, Managing Director, Mr. Ram Ramamurthy, Whole-time Director, Mr. Syed Abdul Hadi, Chief Executive Officer, Mr. Ramanathan, Chief Financial Officer and Mr. S. Narayan, Company Secretary hold the office of Key Managerial Personnel of the Company as on 31st March 2022. The Information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration
of Managerial Personnel) Rules, 2014 in respect of directors, key managerial personnel and employees are given in Annexure-III to this report. The information as per Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report.
Brief resume/details of Directors who are to be appointed/re-appointed as mentioned herein has been furnished in Annexure-A along with the explanatory statement in the Notice convening the ensuing 36th Annual General Meeting of the Company.
The Director(s) who are proposed for appointment/ re-appointment at the ensuing 36th Annual General Meeting of the Company, in Boards opinion, they possess integrity, necessary expertise, relevant experience and proficiency. The Corporate Governance Report annexed to this report contains necessary disclosures regarding the Director(s) and the terms and conditions of appointment of Independent Directors have been disclosed on the website of the Company at http://www.ucalfuel.com/ UCAL-ID-appointment-letter.pdf.
All the Directors have affirmed compliance with the Code of Conduct of the Company. The Company has received the necessary declarations from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013 confirming that he/she meets the criteria of independence as laid out in Section 149(6) of the Companies Act, 2013 and in accordance with Regulations 16(1) (b) and 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances affecting their status as Independent Directors of the Company.
The Board of Directors at its first meeting of the financial year 2021-22 has taken on record the declarations and confirmations submitted by the Independent Directors and other Directors in terms of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has also obtained a certificate from the Practicing Company Secretary that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as Directors of companies by the SEBI/ Ministry of Corporate Affairs or any such statutory authority. There are no Alternate Directors being appointed on the Board of the Company.
9. NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR
During the year under review, Five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings of the Board of Directors was within the time period prescribed under the Companies Act, 2013.
10. BOARD COMMITTEES
The primary committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. A detailed note on the committees along with the details of their meetings held during the year is provided under the Corporate Governance Report forming part of this Boards Report.
11. DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD ALONG WITH REASONS.
The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year, the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried out all the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review.
12. DETAILS OF POLICIES DEVELOPED BY THE COMPANY
12.1 Nomination and Remuneration policy
The Company has formulated a Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy is being governed by the Nomination and Remuneration Committee and the policy lays down the standards to be followed by the Nomination and Remuneration Committee for appointment, remuneration and evaluation of the Directors, Key Managerial Personnel and Senior Management of the Company.
The key objectives of the Policy are:
a. To formulate the criteria for determining qualifications, competencies, positive attributes and independence for appointment of a Director (Executive / NonExecutive) and recommend to the Board of Directors of the Company (the "Board"), policies relating to the remuneration of the Directors, Key Managerial Personnel and other employees.
b. To formulate criteria for evaluation of the members of the Board and provide necessary report to the Board for further evaluation of the Board.
c. To provide to Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations.
d. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.
The remuneration policy is designed keeping in mind various factors like financial position of the Company, trend in the industry, qualification and experience of the appointee, past performance and past remuneration of the appointee. The remuneration relating to certain senior management positions and chief executive officer has a fixed and variable component which is based on achieving certain fixed targets thereby aligning the vision and goals of the organisation to the compensation. The philosophy behind the remuneration policy is to attract and retain talented individuals and develop and motivate them to achieve the goals of the organisation. The remuneration to the Chairman and Managing Director and Whole-time Director shall be in accordance to the limits / percentage / conditions laid down in the Companies Act 2013. The remuneration to other employees will be such that it ensures a direct relationship to their performance. The remuneration policy is disclosed in the website of the Company at http://www.ucalfuel. com/UCAL-Nomination-remuneration-Policy. pdf. The Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure IV and forms part of this report
12.2 Corporate Social Responsibility (CSR) policy
Your Company recognizes that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organizations. Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society.
Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board and the Chairman of the Committee is an Independent Director. The said Committee has formulated and approved the CSR policy as per the approach and direction given by the Board pursuant to the recommendations made by the Committee.
The CSR Policy of the Company focuses on constitution of CSR Committee, roles and responsibilities of CSR Committee, CSR activities to be undertaken and allocation of funds for carrying out such CSR activities, Implementation and monitoring the execution of CSR activities for the Company. The Policy applies to all CSR projects/programmes undertaken by the Company in India as per Schedule VII of the Companies Act, 2013.
The Annual Report on CSR activities as required under the provisions of the Companies Act, 2013 is annexed herewith marked as Annexure-V and forms part of this report.
12.3 WHISTLE BLOWER POLICY
The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower) mechanism provides a channel to the Employees and Directors to report to the Management concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.
With a view to establish a mechanism for protecting employees reporting unethical behaviour, frauds, or violation of the Companys Code of Conduct, misuse or abuse of authority, fraud or suspected fraud, violation of Company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies etc., the Board has adopted a Whistle Blower Policy. The Policy also provides for access to the Chairman of the Audit Committee and no person has been denied access to the Audit Committee. The details are explained in the Corporate Governance Report and are also posted on the Companys website at http://www.ucalfuel.com/UCAL-Whistle-Blower- Policy.pdf.
12.4 RISK MANAGEMENT POLICY:
The Company has adopted an all-pervasive Risk Management Policy to ensure that effective risk management is in place to address the overall business risks and concerns. The Company has a risk management mechanism in place to manage uncertainties through risk identification, assessment of risk on the scale of probability and severity, risk management framework, risk matrix, risk score, the format of reporting of risk areas and mitigation plan to overcome the risks circulated to all the department heads.
The risk assessment report finalized with various departments highlighting their potential risk areas has been further reviewed by the Risk Management Committee at its meeting held on 1st February 2022 wherein the said Committee perused the risk reports and held detailed discussion and suggested measures for risk mitigation including systems and process for internal control of identified risks. The Risk Management Policy is disclosed in the website of the Company http://www.ucalfuel. com/UCAL-Risk-Management-Policy.pdf.
12.5 SEXUAL HARASSMENT POLICY:
The Company has in place a policy for prevention of sexual harassment in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An internal committee has been set up at each plant to redress sexual harassment complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaint was received during the financial year 2021-2022. The Sexual Harassment policy is disclosed in the website of the Company at http://www.ucalfuel.com/UCAL-SEXUAL- HARASSMENT-POLICY.pdf.
12.6 PREVENTION OF INSIDER TRADING
The Company has framed a code of conduct for prevention of insider trading based on Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. This code is applicable to all the Board members/ employees/officers/ designated persons of the Company. The code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the Designated Persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The code of conduct for prevention of insider trading is disclosed in the website of the Company http://www.ucalfuel.com/UCAL- Insider-trading-code.pdf.
13. MEETING OF INDEPENDENT DIRECTORS
In terms of Regulation 25(3) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and as stipulated in the code for Independent Directors under Schedule IV of the Companies Act, 2013 a separate meeting of Independent Directors was held on 11th February 2022 to review the performance of non-independent directors including Chairman and Managing Director and the Board as a whole. The Independent Directors also in the said meeting assessed and reviewed the quality, quantity and timeliness of the flow of information between the Management and the Board and its committees which is essential for effective discharge of their duties. All the Independent Directors attended the meeting.
14. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Every Independent Director is briefed about the history of the Company, its policies, customers, technological developments, Companys strategy, operations, product offerings, organisation structure, human resources, technologies, facilities and risk management. Factory visits are also arranged for the Directors who wish to familiarize themselves with the manufacturing processes and operations of the Company. The Independent Directors are briefed on their role, responsibilities, duties and are kept updated on the various regulatory and legislative changes that may occur from time to time affecting the operations of the Company. The Independent Directors are also briefed on the various policies of the Company like the code of conduct for directors and senior management personnel, policy on related party transactions, policy on material subsidiaries, whistle blower policy and CSR policy. The familiarization programme for the independent directors is disclosed in the website of the Company at http://www.ucalfuel.com/UCAL Familiarization Programme.pdf.
15. BOARD EVALUATION
An annual evaluation of the performance of the individual Executive and Non-Executive Directors, Board as a whole, functioning of its committees, and the Chairman of the Board was carried out based on the criteria set by the Nomination and Remuneration Committee. A structured questionnaire was sent to all the Directors seeking qualitative inputs and detailed comments on various parameters as recommended by the Nomination and Remuneration Committee. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from 1 to 3 with 1 marking they agree to the evaluation parameters set out and 2 marking they disagree to the evaluation parameters set out and 3 marking no opinion to the evaluation parameters set out. The grading done on the basis of a 3-points scale revealed more realistic data on measuring the effectiveness of the Board dynamics, Directors individual performance and contribution, flow of information, decision making of Directors and performance of Board and Committee as a whole.
Board Diversity and skill set to review strategies, risk management dimensions and processes, flow of information, adequacy and timeliness of agenda materials, effectiveness of presentations and more importantly the processes of reviewing strategic matters, annual operating plan and strategic business plans were the key focus areas for evaluation of the Board and its Committee functioning.
I n terms of Section 134(3)(p) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board taking into consideration the positive feedback on the Board Evaluation Process Document from all the Directors, expressed their satisfaction on evaluation of the performance of each Director widely on the parameters in terms of their participation in the Board Meetings, timely guidance provided by them to the Management, criteria of independence met by them, effective deployment of their Knowledge and expertise, prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in a bonafide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company. During the evaluation process, the Director who is being evaluated did not participate.
The Board also expressed their satisfaction on the evaluation of the functioning of the Board and Committee as a whole on the basis of proper combination of Directors having specialized knowledge, expertise and high caliber in driving the growth and business of the Company, high degree of professionalism maintained in conducting the Board and Committee process, presence of gender diversity and transparency while dealing with strategic matters and openness of the Board to accept suggestions from any member of the Board.
16. AUDIT COMMITTEE AND AUDITORS
16.1 AUDIT COMMITTEE
The audit committee conforms to the requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The members of the Audit Committee as on date of this report are Mr.S.Balasubramanian, Independent Director, Ms.Lakshminarayanan Priyadarshini, Independent Director, Mr.IV.Rao, Independent Director and Mr. Jayakar Krishnamurthy, Managing Director. Mr. S. Balasubramanian is the Chairman of the Audit committee. The committee met five times during the year. Detailed disclosure on the terms of reference and meetings are provided under the Corporate Governance Report forming part of this Boards Report.
16.2 STATUTORY AUDITORS
M/s R. Subramanian and Company, LLP, Chartered Accountants, Chennai (Registration Number: 004137S/S200041) were appointed as statutory auditors of the Company as per the members approval accorded in their 31st Annual General Meeting (AGM) held on 28th September 2017 to hold office till the conclusion of the 36th Annual General Meeting of the Company.
Based on the recommendations of the Audit Committee, the Board of Directors now recommend their re-appointment as Statutory Auditors of the Company, for a second term of five consecutive years commencing from 36th Annual General Meeting and to hold office upto the conclusion of the 41st Annual General Meeting of the Company to be held in the calendar year 2027. Their re-appointment is subject to approval of the shareholders of the Company at the ensuing 36th Annual General Meeting of the Company.
M/s. R.Subramanian and Company, LLP, Chartered Accountants have confirmed that they are eligible for the proposed reappointment under the Companies Act, 2013, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder they have given their consent for their re-appointment as Statutory Auditors of the Company and has issued certificate confirming that their reappointment, if made, will be within the limits prescribed under the provisions of Section 139 of the Companies Act, 2013 (the Act) and the rules made thereunder.
The notice convening the ensuing 36th Annual General Meeting includes the proposal for re-appointment of M/s. R.Subramanian and Company, LLP, Chartered Accountants as statutory auditors.
The emphasis of matter specified in the Independent auditors report on the Standalone Financial Statements has been explained in Note No.39 of the notes to accounts.
The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer and no fraud have been reported by the auditors under Section 143 (12) of the Companies Act, 2013 requiring disclosure in the Boards report.
16.3 SECRETARIAL AUDITOR
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 at the Board Meeting held on 11th November 2021 had appointed M/s. P.Muthukumaran & Associates, a firm of Practising Company Secretaries as secretarial auditor of the Company to undertake secretarial audit of the Company for the financial year 2021-2022. The report of the secretarial auditor is given in Annexure-VI and forms part of this report.
Observation in Secretarial Audit Report
The listed entity falls under top 2000 listed entities based on market capitalization during the period. Hence, the Board shall comprise of not less than six directors as stipulated under Regulation 17 (1) (c). The Composition of the Board of Directors as stipulated under above said regulation is not met for the period from February 08, 2022.
On 8th February 2022, Ms. Rekha Raghunathan, Director resigned from the Board and as a consequence, there arise a shortfall in the Board Composition as the Board strength reduced to Five Directors. The Company took immediate steps towards identifying a new Director on the Board and though it had shortlisted and conducted discussions with prospective candidates it could not onboard before the end of the financial year 31st March 2022. However, the Board has appointed a new director Mr. Abhaya Shankar as an Additional Non-Executive Director with effect from 25th July 2022 and with the said appointment, the shortfall in the composition of the Board have been set right. It is also pertinent to mention that there was no shortfall in the minimum strength of the Independent Directors and the composition of the Board Committees as of 31st March 2022 did not get affected with the resignation of Ms. Rekha Raghunathan.
16.4 INTERNAL AUDITORS
M/s. P. Chandrasekar, LLP, Chartered Accountants, continue as internal auditors of the Company. Their scope of work is periodically reviewed and updated by the audit committee. It includes among other things a review of the operational efficiency, effectiveness of systems and controls in existence, review of the processes to safeguard the assets of the Company and assessing the strength of the internal control in all areas. The internal auditors report is discussed with the concerned stakeholders and corrective remedial action is taken on a regular basis in consultation with the audit committee. The internal auditors were present at the audit committee meetings as and when required.
16.5 COST AUDITOR
Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 and sub section (3) of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, as amended, the Board of Directors in their meeting held on 25th July 2022 have appointed Mr.LThriyambak, Cost Accountant (Membership No. 40720) as Cost Auditor for the financial year 20222023 at Rs 2,00,000 per annum (Rupees Two lakhs only) subject to the remuneration being ratified by the shareholders at the ensuing Annual General Meeting to conduct the audit of the cost accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and The Companies (Cost records and audit) Rules, 2014 as amended. The Company has received consent from Mr.L.Thriyambak for appointment as Cost Auditor for the financial years 20222023.
The Audit Committee had recommended his appointment and remuneration subject to the compliance of all the requirements as stipulated under the Act and circulars issued thereunder. As specified by the Central Government under Section 148(1) of the Companies Act, 2013, the cost records are required to be maintained by the Company and accordingly such accounts and records are made and maintained.
17. DIRECTORS? RESPONSIBILITY STATEMENT
In terms of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 the Directors to the best of their knowledge and belief and according to information and explanation obtained by them confirm that,
a) i n the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
b) they have selected such accounting policies and applied 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 31st March 2022 and of the profit and loss of the Company for the year ended 31st March 2022.
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a "going concern" basis.
e) they have laid down proper internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating efficiently.
18. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR.
There are no proceedings pending under the Insolvency and Bankruptcy Code, 2016 during the year under review.
19. THE DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.
During the year under review the Company has not carried out any one-time settlement with the Bank or Financial Institutions in respect of any loans availed from them.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Companys CSR activities are in the field of education, sports, health, sanitation and preservation of culture and heritage. As per Section 135 of the Companies Act, 2013, the CSR Policy was formulated by the CSR Committee and thereafter approved by the Board. The CSR policy is displayed on the website of the Company http://www.ucalfuel. com/UCAL-CSR-Policy.pdf. Mr.S.Balasubramanian is the Chairman of the Committee and Mr. Ram Ramamurthy and Mr. Jayakar Krishnamurthy are the other members of the Committee. For the financial year 2021-22 the report on corporate social responsibility is given as Annexure-V and forms part of the Boards Report.
21. PUBLIC DEPOSITS
During the financial year 2021-22, the Company has not accepted any deposits from the public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules 2014 and there is no outstanding amount on account of principal or interest on deposits from public as on date.
22. ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on March 31,
2022 is available on the Companys website at www.ucalfuel.com.
23. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND (EPF)
The details pertaining to the transfer of unclaimed dividend and shares to the Investor Education and Protection Fund during the reporting period are disclosed in the Corporate Governance report annexed to this report.
24. INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has an efficient internal control system commensurate with its size and nature of business to safeguard the assets of the Company and to ensure effective utilisation of resources. These controls ensure that transactions are completed on time and in an accurate manner and by following proper procedures and systems. The Company has external teams carrying out audit to strengthen the internal audit and risk management functions. The internal auditors cover a wide area of operations and this is being continuously reviewed by the Audit Committee. Internal audit is conducted on a quarterly basis by a team of internal auditors and the reports together with the action taken reports are reviewed by the Audit Committee periodically. The Board and Audit Committee ensure that the internal financial control system operates effectively and they regularly review the effectiveness of internal control system in order to ensure due and proper implementation and due compliance with applicable laws, accounting standards and regulatory norms. A system of management controls is also in place to ensure higher levels of efficiency and to keep the organisation competitive. All the critical functions of the Company i.e., Sourcing and Procurement, Manufacturing, Costing, Finance, Dispatch and Sales are handled through Oracle fusion system which is well-integrated. Checks and controls have been built into the system to handle the transactions. Existing internal controls provide adequate assurance to the management for all the transactions covering operations, inventory, fixed assets, financial records and compliance to statutory requirements. The systems and controls are reviewed periodically to ensure their effectiveness. The Board has adopted various policies like Material Subsidiary Policy, Whistle Blower Policy and Related Party Transactions Policy to safeguard the assets of the Company, to
ensure timely information and to prevent and detect frauds and errors.
25. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE, EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, on energy conservation, technology absorption, foreign exchange earnings and outgo is given in Annexure VII.
26. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Particulars of loans and advances given, guarantees given, securities provided and investments made are provided in the Note No. 3,4,11 and 47 of the notes to accounts of the Standalone Financial Statements.
27. CLOSURE OF OPERATIONS OF PUDUCHERRY PLANT II OF THE COMPANY
Your Board of Directors after carefully considering various factors with respect to continuing operations at Plant II location inter-alia the out-dation of products resulting out of transition of BS IV to BS VI norms, lack of business prospects, intense competition, lack of orders from customers, transition from BS VI to Electric Vehicle leaving no marketability of products, severe impact on the production in Plant II subsequent to lock out and lock down situations faced earlier at Plant II, felt that continuing the operations of Puducherry Plant II will only lead to the burden of excessive cost of production resulting in financial loss and thus becoming a drain on the resources of the Company. For the reasons mentioned above, continuing the manufacturing operations at Plant II at Puducherry found to be extremely difficult, the Board of Directors took decision to close down the Plant situated at A-98-A100-A107, PIPDIC Industrial Estate, Mettupalayam, Puducherry - 605 009 with effect from 12th March 2022 and intimated the Stock Exchanges on 10th January 2022 regarding the closure of the Puducherry Plant II effective from 12th March 2022.
28. MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year i.e., 31.03.2022 to which the financial statements relate until the date of this report.
29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has framed a Related Party Transaction Policy in compliance with Section 177 of the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, in order to ensure proper reporting and approval of transactions with related parties. The Policy is available on the website of the Company http://www.ucalfuel.com/UCAL-Related- Party-Transactions-Policy.pdf.
The material transactions entered by the Company with any related party during the financial year 20212022 did not have any potential conflict with the interest of Company at large as per Section 188 of Companies Act, 2013. All transactions entered into with related parties were at an arms length basis and in the ordinary course of business. Form AOC-2 as required under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014, is given in Annexure-VIII and forms part of this report. The Companys related party transactions have been entered into for meeting the requirements of operations and at an arms length basis and in the ordinary course of business.
30. CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the Company during the year under review.
31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
During the year 2021-2022 no significant and material orders were passed by the courts, regulators or tribunals affecting the going concern status of the Company and its future operations.
32. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY?S SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
No Company has become or ceased to be the Companys subsidiary, joint venture or associate Company during the financial year 2021-2022.
33. INDUSTRIAL RELATIONS / MATERIAL DEVELOPMENTS IN HUMAN RESOURCES
Companys Human Resource function is aligned with the Companys overall growth vision and continuously works on areas such as recruitment and selection policies, disciplinary procedures, reward/ recognition policies, learning and development programmes as well as all-round employee development. The Company provides a safe and rewarding environment that attracts and retains a talented team and where employees are engaged in delivering exceptional results to the customers and investors. The Company acknowledges the indispensable role of all employees in driving continued success.
During the year cordial and healthy relations were maintained with all sections/levels of employees.
34. CORPORATE GOVERNANCE
The Company adheres to all the requirements of the code of corporate governance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on corporate governance along with certification of the Chief Executive Officer and Chief Financial Officer is attached in Annexure-IX. Certificate from M/s. P.Muthukumaran & Associates, a firm of Practising Company Secretaries regarding compliance of the conditions of corporate governance as stipulated by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given in Annexure-X.
35. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as applicable to the Company in terms of Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the financial year 2021-22 is provided in Annexure-XI to this report. The Company practices various business responsibility initiatives as per the framework developed under the guidance of the chairman and managing director who is also responsible for the implementation of the same. The Business Responsibility Policies and the Business Responsibility Report are displayed on the website of the Company http://www.ucalfuel. com/business-responsibility-report.asp.
As your Company does not fall under top 1000 listed entities based on market capitalisation calculated as of 31st March 2022, the mandatory reporting in the business responsibility report on the initiatives taken by the Company from an environmental, social and governance perspective does not become applicable to the Company for the financial year 2021-22.
36. STATEMENT ON COMPLIANCE TO APPLICABLE SECRETARIAL STANDARD
The Company has complied with all the applicable secretarial standards as issued by the Institute of Company Secretaries of India during the year 20212022.
37. ANNUAL GENERAL MEETING
In view of COVID-19 pandemic and to support the health and well-being of all stakeholders, the 36th Annual General Meeting of the Company would be conducted through Video Conferencing (VC) or Other Audio Visual Means (OAVM) on 29th August 2022 at 3.00 p.m, as per the framework notified by the Ministry of Corporate Affairs and Securities and Exchange Board of India (SEBI). The notice convening the 36th Annual General Meeting shall contain detailed instructions and notes in this regard.
In view of the exemption available vide General Circular 02/2022 dated May 05, 2022, issued by the Ministry of Corporate Affairs read with previous circulars and SEBI Circular dated May 13, 2022 in this regard the Company has not printed physical copies of annual report for distribution. The full Annual Report shall be made available on the website of the Company and also shall be disseminated to the stock exchanges where shares of the Company are listed. The electronic copies of the annual report and the notice convening the 36th Annual General Meeting would be sent to the shareholders whose e-mail addresses are registered with the Company or their respective Depository Participants (DP).
The Board thanks all its employees, customers, bankers, vendors, suppliers and governmental agencies for their continued support even during the times of COVID-19 pandemic. The Board is grateful to the shareholders for their continued trust and confidence in the Company.
|For and on behalf of the Board|
|Place: Chennai||Jayakar Krishnamurthy|
|Date: 25th July 2022||Chairman and Managing Director|