DIRECTORS' REPORT TO THE MEMBERS The Directors have pleasure in presenting herewith their Annual Report together with the audited Accounts of the Company for the year ended 31st March, 2015. OPERATING RESULTS During the year under review, your Company has achieved production of 47644 MT of Caustic Soda, generated Wind Power of 53200 kwh and earned Commission of Rs. 51.801 lacs in its Trading Division. INDUSTRIAL RELATIONS Relations with the staff and workers remained cordial throughout the year. GENERAL The Company has already been accredited with ISO 9001-2008, ISO 14001-2004 and ISO-18000 certifications by DNV and these certifications are being renewed as per procedures. The welfare activities and other community development programmes around the Factory including aid to educational institutions were continued. The result of the students of Jayshree Chemicals School at Ganjam, who appeared in the ICSE and ISC examinations during the year was cent percent. The Company's Shares are listed on the Bombay Stock Exchange Ltd. and the Listing Fees for the year ended 31st March, 2015 has been paid. The Company's Shares are available for dematerialisation both on National Securities Depository Ltd. and Central Depository Services (India) Ltd. The Company^ ISIN No. is INE 693E01016. The Board has approved in their meeting held on 8th September, 2014 sale of the Company's Chlor Alkali Manufacturing facility at Ganjam in Odisha and Salt Manufacturing Facility at Pundi in Andhra Pradesh on "as is where is basis" on a slump sale as a going concern to Aditya Birla Chemicals (India) Ltd. (ABCIL) at a lump sum consideration of Rs.212 Crores. The Company is under the process to finalise the closing date for hand over. CURRENT OUTLOOK Future of Chlor Alkali Industry is good. Demand of caustic soda in the State of Odisha has been throughout good. Besides consuming our production, caustic soda from other States also comes to Odisha in huge quantity to meet the ever growing need of alumina /aluminium industry. It is also used by paper, steel, power, pharmaceuticals, textiles, soaps and detergents industries. Chlorine consumption in the State of Odisha has been always lower due to lack of consuming industries. The ancillary units of CPW have been major consumers besides paper mills, pharmaceuticals and water treatment sector. Demand for Hydrochloric Acid has shown upward trend with addition of more HCl consuming industries in Odisha and nearby Andhra Pradesh. SAFETY The Company has adequate system for Industrial Safety. The year under review continued to be NIL accident year. ENVIRONMENT As reported earlier, your Company has implemented 'CHARTER ON CORPORATE RESPONSIBILITY FOR ENVIRONMENTAL PROTECTION' (CREP). It has taken all required steps to fully comply with statutory environmental regulations. STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF THE SUBSIDIARY Pursuant to sub-section (3) of Section 129 of the Companies Act, 2013 the statement containing the salient features of the financial statement of the Company's subsidiary, is given as Annexure 1.Further, brief about the business of the Subsidiary i.e. East Coast Powers Limited ("ECPL") is as under: The ECPL has not commenced its business operations. However, it has earned interest on Term Deposits with Bank. Approval of the Government of Odisha for Hydel Project from 24.7 MW to 20 MW, 6 MW and 6 MW aggregating to 32 MW is awaited. On receipt of the same a formal Memorandum of Understanding will be entered into between the Company and the Government of Odisha. Thereafter, the Detailed Project Reports will be submitted to the Government of Odisha for approval. As required under the Companies Act, 2013 the Board of Directors of the Company has by a resolution given consent for not attaching the balance sheet of ECPL for the year ended 31st March, 2015. Accordingly, the annual Accounts of the ECPL are not annexed to the Accounts of the Company. However, the same for the above year and the related detailed information including a hard copy thereof shall be made available at any point of time to those shareholders of the Company who seek the same. Annual Accounts of ECPL shall also be kept for inspection by any shareholder at the Registered Office of the Company. CONSOLIDATED FINANCIAL STATEMENTS As required under Accounting Standard 21, Consolidated Financial Statements of the Company together with its subsidiary, East Coast Powers Ltd., are annexed. CAPITAL / FINANCE As on 31st March, 2015, the issued, subscribed and paid up share capital of your Company stood at Rs. 29,32,64,570/-, comprising of 2,93,26,457 Equity shares of Rs. 10/- each. Details required pursuant to Section 134(3) of Companies Act, 2013 a) Extract of Annual Return Pursuant to Section 92(3) of the Companies Act, 2013 ('the Act') and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return is Annexed as Annexure 2. b) Details of Board Meetings A detailed note on the Board and its Committees is also provided under Corporate Governance Report Section. c) Directors' Responsibility Statement Pursuant to the requirements of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the Directors had 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 loss of the Company for that period; (c) the Directors had taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors had prepared the annual accounts on a going concern basis; (e) 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; and (f) 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. d) Declaration by Independent Directors Shri Prabir Chakravarti, Shri D. D. Kothari, Shri Satish Kapur and Smt. Sindhubala Choudhury are independent Directors on the Board of your Company. In the opinion of the Board and as confirmed by these Directors, they fulfil the conditions specified in Section 149 of the Companies Act, 2013 and the Rules made thereunder about their status as Independent Directors of the Company. Disclosure on Reappointment of Independent Directors : Shri Prabir Chakravarti, Shri D. D. Kothari, Shri Satish Kapur and Smt. Sindhubala Choudhury were appointed as Independent Directors on the Board of your Company for a period of 3 Consecutive years with effect from 27th September, 2014. Reappointment of Independent Directors will be done when the need arises in compliance with the Companies Act, 2013. e) Company's policy on Directors' appointment and remuneration as per Section 178(3) 1. Directors' appointment and remuneration policy is based on the provisions contained in the Companies Act, 2013, the Rules made thereunder and the Listing Agreement. 2. Remuneration of Key Managerial Personnel and other employees is based on the recommendation of the Audit Committee and approval of the Board of Directors on the basis of experience and exposure in the prescribed fields. APPOINTMENT POLICY The appointment policy for Independent Directors, Key Managerial Personnel & Senior Executives is as under- (A) Independent Directors : Independent Directors are appointed based on the criteria mentioned in Section 149(6) of the Companies Act, 2013 and in accordance with other applicable provisions of the Companies Act, 2013, Rules made thereunder and the Listing Agreement entered into with the Bombay Stock Exchange Ltd. (B) Key Managerial Personnel (KMP) : Based on the recommendation of the Audit Committee, KMP are appointed by the Board of Directors of the Company, based on the qualification, experience and exposure in the prescribed fields. Removal of the KMP is done by the Board of Directors of the Company. Appointment /Removal is in accordance with the provisions of the Companies Act, 2013, Rules made there under and the Listing Agreement entered into with the Bombay Stock Exchange. (C) Senior Executives : Senior Executives are appointed by the Managing Director and/or the Executive Director of the Company based on their qualification, experience & exposure. Removal of the Senior Executives is done by the Managing Director and/or the Executive Director. Appointment and removal is noted by the Board of Directors of the Company as required under clause 8(3) of the Companies (Meetings of Board and its Powers) Rules, 2014. f) Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made : i) by the Auditors in their report : No qualification or reservation has been observed by the Auditors in their Report. ii) by the Company Secretary in Practice in his Secretarial Audit Report : No qualification or reservation has been observed by the Secretarial Auditor in his Report. g) Particulars of loans, guarantees or investments under Section 186. The Board approved the unsecured loan of Rs. 16,00,000/-w.e.f 22nd July, 2014 at its Meeting on 12th August, 2014 to East Coast Powers Ltd. a subsidiary of the Company, bearing interest @ 16.5% per annum. h) Particulars of contracts or arrangements with related parties referred to in Sub-section (1) of Section 188. Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 is annexed herewith [in Form AOC-2] as Annexure-3. i) The state of the Company's affairs. Due to continuous losses, the Board has approved in their Meeting held on 8th September, 2014 sale of the Company's Chlor Alkali Manufacturing facility at Ganjam in Odisha and Salt Manufacturing Facility at Pundi in Andhra Pradesh on "as is where is basis" on a slump sale as a going concern to Aditya Birla Chemicals (India) Ltd. at a lump sum consideration of Rs. 212 Crores. The Company is under the process to finalise the closing date for hand over. j) Amount proposed to be carried to reserves. The Company proposes to carry Rs. (-3574.92) Lacs to reserves. k) Recommendation of Dividend The Board has not recommended any dividend for the financial year ended 31st March, 2015. l) Material changes and commitments, affecting the financial position of the Company : There has been no 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 this Report. (c) Foreign exchange earnings and Outgo During the year, total foreign exchange used was Rs. 54.10 Lakhs and the total foreign exchange earned was Rs. 51.80 Lakhs. n) Development and implementation of risk management policy As per the requirements of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically. The Risk Management Policy of the Company identifies, evaluates and mitigates the operational, strategic and external environment risks. For the same a Committee which has overall responsibility for monitoring and approving the risk policies and associated practices of the Company has been formed and it reviews the risks associated with the Company periodically. The Policy determines the role of the Risk Management Committee of the Company which has been constituted to assist the Board of Directors of the Company in fulfilling its Corporate Governance oversight responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and external environment risks. The Risk Management Committee has overall responsibility for monitoring and approving the risk policies and associated practices of the Company. o) Policy of the Company on Corporate Social Responsibility Pursuant to Section 134 (1) of the Companies Act, 2013 Corporate Social Responsibility Committee (CSR Committee) has been constituted and CSR policy has been adopted. As and when your Company fulfills the criteria specified in Section 134 (1) of the Companies Act, 2013, it will approve the CSR Budget. As no CSR activity has been carried no Report on CSR Activities/ Initiatives is enclosed along with this Report. p) Formal annual evaluation by the Board of its own performance and that of its committees and individual directors Complied with the provisions of the Companies Act, 2013 and the Listing Agreement. q) Matters pursuant to Companies (Accounts) Rules, 2014 Shri Pawan Kumar Gupta was re-designated as the Chief Financial Officer of the Company by the Board of Directors at its Meeting held on 14th May, 2014. Ratio of Directors Remuneration to Median Employees' Remuneration & other as per Rule 5(1) to the 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: Ratio of remuneration of Shri Virendraa Bangur (Managing Director) to the median remuneration of the employees: 1740.18% Ratio of remuneration of Shri Prabhu Nath Ojha (Executive Director) to the median remuneration of the employees: 1081.56% None of the other Directors receive any remuneration other than the sitting fees for attending meetings of the Board or any Committee of the Board. (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; Percentage increase in remuneration of Shri Virendraa Bangur (Managing Director) : Nil Percentage increase in remuneration of Shri Prabhu Nath Ojha (Executive Director) : 3.31% Percentage increase in remuneration of Shri Pawan Kumar Gupta (Chief Financial Officer): 9.37% Percentage increase in remuneration of Shri Raj Kishore Gupta (Company Secretary) : Nil (iii) The percentage increase in the median remuneration of employees in the financial year : 12.84% (iv) The number of permanent employees on the rolls of Company : 313 permanent employees were on the rolls of the Company (v) The explanation on the relationship between average increase in remuneration and Company performance : As the Company is incurring heavy losses, only minimum increases were given to its employees. (vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company : Total remuneration paid to the Key Managerial Personnel of the Company during the year : Rs. 98,98,175/- As the Company is incurring losses, only minimum increase was given to Shri Pawan Kumar Gupta and Shri Prabhu Nath Ojha. Shri Virendraa Bangur, and Shri Raj Kishore Gupta were not entitled for any increase. (vii) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the company came out with the last public offer. Market Capitalisation as on 31/03/2015 : Rs. 4.96 * 29326457 = Rs. 14,54,59,227 Market Capitalisation as on 31/03/2014 : Rs. 7.45 * 29326457 = Rs. 21,84,82,105 Price Earning ratio as on 31/03/2015 : 4.96 / - 6.16 = (0.805) Price Earning ratio as on 31/03/2014 : 7.45 / - 9.73 = (0.765) % increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer = Rs. (15-7.45)/15 * 100 = 50.33% (decrease) (viii) Average percentile increase already made in the salaries of employees other than the Managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof : Average percentile increase already made in the salaries of employees other than the Managerial personnel in the last financial year : 15.06% Percentile increase in the managerial remuneration : 3.53% (ix) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company; As the Company is incurring losses, only minimum increase was given to Shri Pawan Kumar Gupta and Shri Prabhu Nath Ojha. Shri Virendraa Bangur, and Shri Raj Kishore Gupta were not entitled for any increase. (x) The key parameters for any variable component of remuneration availed by the directors: The remuneration availed by the directors during the year did not consist of any variable component. (xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: No employee received remuneration in excess of the remuneration paid to the Managing / Executive Director during the year. (xii) Affirmation that the remuneration is as per the remuneration policy of the Company. The Company follows its remuneration policy in fixing the remuneration of its employees or directors. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights, sweat equity shares or ESOP. 3. Neither the Managing Director nor the Whole-time Director of the Company receive any remuneration or commission from the subsidiary. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operations in future. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. INTERNAL FINANCIAL CONTROLS The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company. All transactions are authorised, recorded and reported correctly. Internal Audits and checks are carried out regularly. VIGIL MECHANISM Pursuant to the requirements of Section 177 (9) of the Companies Act 2013, the Company has established Vigil (Whistle Blower) Mechanism which aims to provide a channel to the Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or policy. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. The mechanism provides for adequate safeguards against victimization of directors and employees to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. This neither releases employees from their duty of confidentiality in the course of their work nor can it be used as a route for raising malicious or unfounded allegations about a personal situation. STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS In the last AGM held on 27th September, 2014 M/s. K. N. Gutgutia & Co., Chartered Accountants, were appointed Statutory Auditors of the Company for a period of one year. Approval for re-appointment of Statutory Auditors M/s. K. N. Gutgutia & Co., Chartered Accountants having Firm Registration No. 304153F on the terms and conditions as approved by the Audit Committee of the Company and as recommended by the Board of Directors of the Company, is being sought from the members of the Company at the ensuing AGM. Report of the Statutory Auditors alongwith Notes to Schedules is enclosed to this Report. The observations made in the Auditors' Report are self-explanatory and do not call for any further comments. COST AUDIT As per the Cost Audit Orders, Cost Audit is applicable to the Company's Caustic Soda, Liquid Chlorine, Hydrochloric Acid and Sodium Hypochlorite products for the year 2014-15. In terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Shri S. P. S. Dangi, Cost Accountant of 339, Saket Nagar, Indore (M.P.), who is a Fellow Member of the Institute of Cost & Works Accountants of India having Membership No.752 have been appointed as Cost Auditor to conduct the audit of cost records of your Company relating to Caustic Soda for the financial year ending on 31st March 2016. The remuneration proposed to be paid to him requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to the Cost Auditor is being sought at the ensuing AGM. Your Company submits its Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period. SECRETARIAL AUDIT In terms of Section 204 of the Act and the Rules made there under, Shri Arun Kumar Jaiswal Practicing Company Secretary was appointed Secretarial Auditor of the Company. The Report of the Secretarial Auditor is enclosed as Annexure 4 to this Report. The Report is self-explanatory and do not call for any further comments. DIRECTORS AND KEY MANAGERIAL PERSONNEL Shri Shree Kumar Bangur, a Director of the Company retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for reappointment. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Your Company has Rs. 62,135/- lying unpaid or unclaimed for a period of seven years against Dividend for the year 2007-08 (A/c no. 135103000000231). Therefore this amount is required to be transferred to the Investor Education and Protection Fund. Pursuant to the provisions of the Investor Education and Protection Fund (Uploading of information regarding Unpaid and Unclaimed Amounts lying with Companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of the last AGM (i.e. 27th September, 2014), with the Ministry of Corporate Affairs. FIXED DEPOSITS Your Company has not accepted any deposit from public in terms of Section 73 of the Companies Act, 2013. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis comprising an overview of the financial results, operations / performance and future prospects of the Company is annexed and forms part of this Report. HUMAN RESOURCES Your Company treats its human resources as one of its most important assets. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. Number of programs that provide focussed people attention are currently underway. Your Company's thrust is on the promotion of talent internally through job rotation and job enlargement. PARTICULARS OF EMPLOYEES The Company had no employee drawing remuneration specified under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the year under review. Accordingly, the particulars required under the above Rule have not been given. CORPORATE GOVERNANCE The Company has complied with the provisions of Clause 49 of the Listing Agreement relating to Corporate Governance. Report on Corporate Governance is annexed. Necessary declaration duly signed by the Executive Director of the Company to the effect that all the Board Members and Senior Management personnel have affirmed their compliance on an annual basis with the Code of Conduct as laid down by the Company pursuant to the requirements of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd. is annexed and forms part of this Report. ACKNOWLEDGEMENT Your Directors place on record their appreciation for employees at all levels, who contributed to the growth and performance of your Company. Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support. Your Directors also thank the Central and the State Government, and other statutory authorities for their continued support. On behalf of the Board Virendraa Bangur Managing Director (DIN : 00237043) Prabhu Nath Ojha Executive Director (DIN : 00592544) Date : 14th May, 2015 Place : Kolkata |