BOARDS' REPORT TO THE MEMBERS, Your Directors have pleasure in presenting their Thirty Ninth Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 3I, 20I6 2. Company Affairs: (MANAGEMENT DISCUSSION AND ANALYSIS REPORT / OPERATIONS REPORTS OF COMPANY'S PERFORMANCE) A. Explosives Division The sale of Explosives for the year under review was 38,770 MT valued at Rs.I5,473 lakhs as against 43,484 MT valued at Rs.I7,250 lakhs of the previous year. The Sales turnover in Explosives decreased by II% in Quantity Terms and I0% in value. This decrease was mainly due to non-acceptance of orders in Coal Sector due to stiff competition and aggressive pricing. During the year, the turnover in regard to traded goods and export of finished goods in Explosives sector was Rs.99I lakhs as against Rs.I,47I lakhs for the corresponding period of the previous year. the decrease in sales was due to sluggish demand in explosives market. The sale of Detonating Fuse and related products during the year under review was valued at Rs.II29 lacs as against Rs.760 lacs during the corresponding period of the previous year. The increase was mainly due to higher sales of PETN products. B. Perlite Division The sale of Perlite and Perlite based products for the year under review were 6,789 MT valued at Rs.I,286 lakhs as against 9,253 MT valued at Rs.I,5I0 lakhs for the corresponding period of the previous year, resulted in reduction of 27% in quantity and I5% in value. The decrease in sales was due lesser Site Expansion Projects and adverse market competition. The turnover of services contracts and special products during the year under review was Rs.940 lakhs as against Rs. I87 lakhs for the corresponding period of the previous year. The export of Perlite products during the year was valued at Rs.535 lacs as against Rs.90 lacs for the corresponding period of the previous year. The operations for the year 20I5-I6 have resulted in a net profit of Rs.388 lakhs after charging depreciation, interest and tax as against Rs.342 lakhs for the corresponding period of the previous year. 3. Dividend The Directors have recommended a Dividend of Rs. 2.50 per share of Rs.I0/- each (25%) on the paid-up Equity Capital of the Company. 4. Business Focus and Highlights (A) EXPLOSIVES DIVISION The Explosives Sector witnessed growth during the year under review. The Coal sectors had already finalized orders at aggressive prices which the Company did not accept. However, the Company's products are well accepted in other segments of business. In regard to D Fuse and related products, the demand was consistent and the licensed capacity utilization was achieved. (B) PERLITE DIVISION The domestic market sale of Expanded Perlite products was satisfactory during the year under review. A new product line is being added in Perlite products with Japanese technology and commercial production is expected during the year 20I6-I7. (C) INDUSTRIAL RELATIONS The industrial relations during the year under review were cordial and there were no industrial disputes. (D) OUTLOOK FOR 2016-17, During the current financial year 20I6-I7, on account of stiff competition coupled, the Explosives Division is expected to be under pressure. The Explosives Accessories Divisions are showing encouraging performance. The Company will consolidate its growth in the new segment of business of Emulsion Explosives. Steps are taken for addition of balancing equipment in explosives and additional plants for increase in capacity which is expected to materialize in 20I6-I7. The Company expects growth in perlite products. Your Company will continue to make all efforts for optimizing the overall performance. (E) CAUTIONARY STATEMENT The statements, expressions, information given in this Management Discussions and Analysis Report describing the Company's objectives, projections, estimates, expectations or predictions may be deemed to be as "forward looking statements". Actual results might substantially or materially from those expressed or implied. Important developments that could affect the Company's operations included demand supply conditions, changes in Government, global economic scenario and such other developments different from Company's comprehension. 5. RESERVES A sum of Rs.589.40 lacs, which is surplus in the statement of Profit and Loss, the Board proposes to carry forward to reserves. 6. DEPOSITS The Company has not received any deposits during the financial year 20I5-I6. 7. QUALITY The Products of the Company are of high quality and have obtained required certifications and this shall be driving force for better sales. 8. INFRASTRUCTURE The Company is in the process of expansion at Viswasnagar, Garamsur and other Units. 9. RELATED PARTY TRANSACTIONS The Company has entered in to related party transactions which are in arms-length basis as mentioned in Annexure I to this report. 10. Board Committees The Company has following Committees of the Board: a) Audit Committee; b) Stakeholders Relationship Committee; c) Committee of Directors (Share Transfer Committee); d) Independent Directors Committee; e) Corporate Social Responsibility Committee; and f) Nomination and Remuneration Committee The composition of each of the above Committees, their respective role and responsibility is as detailed in the Report of Corporate Governance. 11. Particulars of Loans, Guarantees or Investments The Company has not given any loans, guarantees and has not made any investments in other entities. 12. Directors a. Re-appointment Shri Ashok V Chowgule, [DIN 000I8970] retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. Pursuant to the Section I49 of the Companies Act, 20I3, the office of independent directors are not liable to retire by rotation and they shall hold office for a term up to five consecutive years from the date they were appointed as Independent Directors by the Members in the General Meeting. b. Board Evaluation The Board has reviewed and evaluated the performance of all individual directors and the independent directors have reviewed and evaluated the performances of Chairman, Managing Director and non-independent Directors during the year at their meeting held on 22nd January, 20I6. They found that none of the board members have contravened any of the statutory provisions of Companies Act, 20I3 and its relevant rules, regulations, guidelines etc. applicable to them in exercise of their duties and responsibilities. c. Declaration by Independent Directors A declaration from Independent Director as required in sub-section (6) and (7) of Section I49 of the Companies Act, 20I3 is obtained. An independent director shall hold office for a term up to five consecutive years on the Board of a Company, but shall be eligible for reappointment for next five years d. Policy on Director's appointment and remuneration As per Section I78 of the Companies Act, 20I3, the Company was required to constitute a Nomination and Remuneration Committee for the purpose of identifying qualified persons for appointment of Directors and Senior/ Key Managerial Personnel in future and to fix their remuneration and other allowances. Currently the Company has an agreement with the Managing Director of the Company for a period of 5 years with effect 29th April, 20I4. e. Number of meetings of the board During the year four meetings of Board of Directors were held i.e. on 2Ist May, 20I5, 24th July, 20I5, 30th October, 20I5 and on 22nd January, 20I6. These meetings were held as per the provision of section I73 of the Companies Act, 20I3. f. Vigil mechanism/whistle blower policy The Company has established a Whistle Blower Policy for Directors and employees to report their genuine concern. The details of the same have been explained in the Corporate Governance Report and the same was inserted in the website of the Company. 13. Auditors' A. Statutory Auditors' and Auditors' Report M/s. Haribhakti and Co. LLP Statutory Auditors' (FRN I03523W) of the Company, have been holding office as Auditors' for a term of more than 30 years The said auditors' were appointed at the 37th Annual General Meeting of the Company held on 25th July, 20I4 for a period of three consecutive years till the conclusion of the 40th Annual General Meeting. B. Cost Auditors Pursuant to the provisions of Section I48 of the Companies Act, 20I3 and the Companies (Audit and Auditors') Rules, 20I4 Shri Vikas Vinayak Deodhar, Practising Cost Accountant, Membership No.38I3, the Cost Auditor, appointed by the Company to conduct audit of the cost records of the Company for the financial year 20I5-I6. C. Secretarial Auditors' Pursuant to the provisions of Section 204 of the Companies Act, 20I3 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20I4, M/s Swaroop, Ravishankar and Associates, Practising Company Secretaries, have been appointed for conducting the Secretarial Audit for the year ended 3Ist March 20I6, and their report is annexed as Annexure 4. 14. Key Managerial Personnel A. Managing Director Pursuant to section 203 of the Companies Act, 20I3 the Company has entered into an agreement with the Managing Director of the Company for a period of 5 years with effect 29th April, 20I4. B. Chief Financial Officer and Company Secretary Pursuant to section 203 of the Companies Act, 20I3 the Company has appointed Chief Financial Officer and Company Secretary with effect Ist March, 20I6. 15. Extract of Annual Return The extract of annual return in Form No. MGT - 9 is annexed as Annexure 6 to this report. 16. Significant and material orders The Company has sufficient orders on hand for Explosives and Perlite products for sustaining current level of operations 17. Internal Financial Control The Company has effective systems and procedures of internal financial control for ensuring orderly and efficient conduct of its business, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. These systems are periodically reviewed by the Audit Committee of the Board of Directos The Audit Committee and the Board have ensured that the said system is adequate considering the nature of business and size of transactions 19. Risk Management Policy The Company has formed a Risk Management Committee and implemented a risk management policy for the Company including identification therein of elements of risk, if any, and the same has been inserted in the website of the Company. 20. Corporate Governance The Corporate Governance certificate received from M/s. Haribhakti and Company LLPRs. Chartered Accountants, Mumbai (FRN I03523W) regarding compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing agreement is annexed with the report. 21. Directors' Responsibility Statement Your Company's Directors make the following statement in terms of sub-section (5) of Section 134 of the Companies Act, 20I3, which is to the best of their knowledge and belief and according to the information and explanations obtained by them - I. The financial statements have been prepared in conformity with the applicable Accounting Standards and requirements of the Companies Act, 2013, ("the Act") to the extent applicable to the Company; on the historical cost convention; as a going concern and on the accrual basis. There are no material departures in the adoption of the applicable Accounting Standards. II. The Board of Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period. III. The Board of Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. The Board of Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. IV The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. V The financial statements have been audited by M/s. Haribhakti and Company LLP Chartered Accountants, Mumbai, the Company's Auditors' 22. Particulars of Employees The total number of employees of the company as on March 31, 2016 was 236 as against 222 as on March 31, 2015 23. Particulars of loans , guarantees or investments under section 186 During the year the company has not sanctioned any loans, given securities and made any investments as prescribed under section 186 of the Companies Act, 2013. 24. Conservation of energy, research and development, technology absorption, foreign exchange and outgo The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows: I. CONSERVATION OF ENERGY (FORM 'A') This is not applicable to Explosives Industry. II. ABSORPTION OF RESEARCH and DEVELOPMENT (FORM 'B') A. Specific areas in which R & D is carried out by the Company. I. Cost reduction. II. Product and Technology Development for Explosives. III. Technical Services to monitor use of Explosives by Customers IV. Development of value added Explosive products. V. Development of improved and more efficient equipment. VI. Refinements and Developments in Packaging. VII. Product Development in relation to application of Explosives and Perlite. B. Benefits derived as a result of the above R & D: I. Introduction of products for difficult blasting conditions. II. Setting up of production facilities with indigenous Plant Equipment for Bulk and Packaged Explosives. III. Higher efficiency in use of Explosives to Customers. IV Higher efficiency in manufacturing process. V. Reduction in cost of production. VI. Entry into Export market. VII. New applications of our Explosives. VIII. Application of perlite concrete for cryogenic tanks. IX. Development of Air Decking system for blasting in boreholes. X. Export of Perlite Concrete Insulation Blocks. XI. Overseas Contracts deploying Mobile Perlite Expanders C. Future Plan of Action: I. Continue development work on Explosives. II. Evaluate other systems for SMS. III. Develop site applications using perlite. IV. Explore new products for diversification. D. Expenditure on R & D: I. Capital - Nil. II. Recurring - Rs. 26.03 lacs. III. Total - Rs. 26.03 lacs. IV. Total R & D expenditure as a % total turnover - 0.I3% TECHNOLOGY ABSORPTION, ADAPTATION and INNOVATION 1. Efforts, in brief, made towards technology absorption, adaptation and innovation: Strict Monitoring of emulsion explosives and making necessary improvements to meet the field requirements. 2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution etc. Emulsion products with fully indigenous equipment have been produced and supplied. These products have been well accepted by customers for use in difficult strata conditions. Safety standards have been maintained, both during manufacture and usage, based on periodic feedback. 3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year) following information may be furnished. (a) Technology imported : ^ (b) Year of import: (c) Has the technology been fully absorbed Rs. J Not Applicable (d) If not fully absorbed, areas where this has not J taken place, reasons there for and future plan of action 25. Corporate Social Responsibility (CSR) The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 20I4 the Company was required to spend a sum of 13.89 lacs towards Corporate Responsibility Policy and accordingly the Company has spent the same. 26. Acknowledgments Your Directors place on record their thanks to the Canara Bank for their unstinted co-operation and timely assistance. Your Directors would like to make a special mention of the support extended by the various Departments of Government of India, the State Government agencies, the Tax Authorities including the Customs and Excise Departments, Department of Industrial Policy and promotion, Ministry of Corporate Affairs, Securities and Exchange Board of India and others and look forward to their continued support in all future endeavours The Directors acknowledge the support and cooperation extended by valued customers of the Company. Your Directors also place on record their appreciation for the dedicated services rendered by the employees at all levels during the year under review. For and on behalf of the Board of Directors Ashok V Chowgule Chairman Date : 20th May, 20I6 Place : Mumbai |