DIRECTORS'REPORT Your Directors submit their 40th Annual Report together with the Audited Accounts for the financial year ended 31" March, 2015. Your Directors report that the Company's operations continued to be under severe pressure during the financial year 2014-15 owing to uncontrollable factors of excess capacity in the Chlor-Alkali Industry, escalating manufacturing costs, import of Caustic Soda at cheaper rates and lesser sales realisation. Despite the same, the Company achieved higher Sales Turnover of Rs.303.49 crores and better capacity utilisation of 93% in the financial year under review as compared to Rs.301.68 crores and 90%, respectively during the preceding financial year 2013-14. The Company also achieved a savingofaboutRs.4.22croresduringthefinancialyear2014-15as a result of purchase of part ofpowerat cheaper rates through Indian Energy Exchange under Open Access System. However, even with these favourable developments, theCompany'sprofitabilityinthe financialyear2014-15, was severelyimpacted due to thesaidearlierindicated uncontrollable adverse factors resulting in a lower combined average realisation per Electro-Chemical Unit (ECU) at Rs.34,075 and Net Loss (aftertax) of Rs. 12.93 crores as against the ECU of Rs. 34,680 and Net Loss (aftertax) of Rs. 9.57 crores in the financial year 2013-14. In view of the accumulated losses of the Company, the Directors regret their inability to recommend any dividend for the financial year 2014-15. Finance and Corporate Debt Restructuring The Corporate Debt Restructuring (CDR) Empowered Group had restructured the debt liabilities of the Company in January, 2003 and had thereafter revised, reworked and modified the same from time to time. The CDR Empowered Group had approved for the Company a proposal for One Time Settlement (O.T.S.) of the outstanding Term Loans and Non-Convertible Debentures and Sanctioned Working Capital Facilities as on 1 "April, 2012 on 100% principal basis with a cut-off date of 15th November, 2012. In terms of the same, the Company had already made the payment of the first and second tranches of the O.T.S. Amount and the interest payable upto the stipulated date by due dates. The last tranche of O.T.S. Amount had fallen due on 1" April, 2015. The Company was not in a position to meet its obligation for the payment of last tranche on its due date. The Company had informed the IDBI Bank Limited, the lead Financial Institution that the Board of Directors of PSIDC, the promoters of the Company, is agreeable for the conversion of entire balance debt of about Rs.43 crores of the Lenders into Equity Shares at a share price to be determined as per SEBI formula applicable on the date of freezing/accepting the proposal. At the request of the Company, the IDBI Bank Limited granted additional time till 30th September, 2015 for making the payment of last tranche of O.T.S. Amount. Subsequently, the Company has submitted a modified proposal to IDBI Bank Limited for conversion of part of balance outstanding Debt of the Lenders into Equity Shares at a share price to be determined as per SEBI formula and the balance outstanding Debt into Secured Fully Convertible Debentures and Secured Redeemable Non-Convertible Debentures. The IDBI Bank Limited will be placing the same before the CDR Empowered Group for approval. During the financial year under review, the Company did not raise funds byway of fixed deposits. The Company has become a Sick Industrial Company within the meaning of Section 3 (1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and a reference will be made to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15 of the SICA. Current Operations and Outlook The operations of the Company in the first Four Months ended 31" July, 2015 of the financial year 2015-16, continued to reel under severe pressure resulting in lower capacity utilisation at 83% as against 101% in the corresponding period of the preceding financial year. Although the Company has done marginally well during first two months of the first quarter of the financial year 2015-16 due to purchase of some part of its power requirements at cheaper rates under Open Access System, but, due to imposition of some restrictions by the Punjab State Power Corporation Limited, the Company's savings on account of Power purchase under Open Access, have got unfavorably impacted to a significant extent, thus adversely affecting the profitability of the Company in the remaining period of Two Months of Four Months ended 31" July, 2015 . The situation has been further aggravated due to levy of 5% Infrastructure Development Fee on Power by the Government of Punjab w.e.f. 15th June, 2015. All these resulted into a Net Loss (before tax) of Rs.3.78 crores in the Four Months ended 31" July, 2015 on a Sales Turnover of Rs.90.41 crores against a Net Profit (before tax) of Rs.1.21 crores on a Sales Turnover of Rs.114.15 crores in the corresponding period of the preceding financial year The Company is continuing its efforts to reduce its costs and increase its revenues. The major input cost i.e. Power cost constitutes about 60% of the total production cost. The Company continues its endeavour to purchase maximum possible portion of its power requirements at cheaper rates through Indian Energy Exchange under Open Access System. The Company endeavours for recoating of the Anodes and Cathodes and replacement of the Membranes in the Electrol ysers of its Plant Unit-I in a phased manner, for reduction in power consumption per unit of Caustic Soda Lye. The Chlorinated Paraffin Wax (CPW) Plant set up by M/s. Flow Tech Chemicals Pvt. Limited on B.O.O. basis in the Company's Plant Complex is likely to be commissioned shortly. The same will lead to increased capacity utilization and reduced requirement for additional Chlorine Tonners. Environment and Energy Conservation The Company's endeavour has always been to accord high priority to carry out its operations in an environment-friendly fashion and the Company has been taking appropriate pollution control and safety measures. A Safety Audit of the Plant was got conducted during the financial year 2014-15 from the National Safety Council and its recommendations are being implemented. The Company continues to place a great emphasis on energy conservation. The Company is getting the Energy Audit conducted on regular basis. The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as required to be disclosed pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is given in Annexure-I forming apart of this report. Listing The Equity Shares of the Company are listed on the Bombay Stock Exchange Limited. The Annual listing fee for the year 2015-16 has been paid to the Bombay Stock Exchange Limited. Human Resources Your Company continues to develop and upgrade the skills of its human resources. Industrial relations continued to be cordial. The Company has not received any complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year ended 31" March, 2015, there was no employee of the Company whose particulars need to be included in this report under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Corporate Governance The Management Discussion and Analysis Report for the financial year 2014-15 required in terms of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited is annexed herewith as Annexure II forming a part of this report. The Corporate Governance Report for the financial year 2014-15 and Auditors' Certificate regarding compliance of conditions of Corporate Governance, required in terms of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited are also annexed. Directors & Key Managerial Personnel The Punjab State Industrial Development Corporation Limited (PSIDC) nominated Shri Anirudh Tewari, IAS as Director and Chairman of the Company vice Shri D.P. Reddy, IAS w.e.f. 18th May, 2015. Consequently, Shri D.P. Reddy, IAS resigned as a Director of the Company w.e.f. 18th May, 2015. The Board of Directors of the Company has appointed Shri Anirudh Tewari, IAS, as Additional Director of the Company w.e.f. 18th May, 2015. The Directors place on record their appreciation of the valuable guidance provided by Shri D.P. Reddy, IAS. The PSIDC had withdrawn the nomination of Shri S.S. Bains, IAS as its Nominee Director on the Board of Directors of the Company w.e.f. 16th July, 2015. Shri S.S. Bains, IAS resigned as a Director as well as Managing Director of the Company w.e.f. 16th July, 2015. The Directors place on record their appreciation of the valuable services rendered by Shri S.S. Bains, IAS, during his tenure with the Company. The PSIDC nominated Shri Amit Dhaka, IAS as its Nominee Director on the Board of Directors of the Company w.e.f. 14th August, 2015. The Board of Directors of the Company has appointed Shri Amit Dhaka, IAS, as Additional Director of the Company w.e.f. 14th August, 2015 and has also appointed him as the Managing Director of the Company for a period of five years w.e.f. 17th August, 2015. Shri J.S. Saraon ceased to be the Director of the Company w.e.f. 17th April, 2015 consequent upon his demise. The PSIDC had withdrawn the nomination of Shri Yogesh Goel as its Nominee Director on the Board of Directors of the Company w.e.f. 28th May, 2015. Shri Yogesh Goel resigned as a Director of the Company w.e.f. 28th May, 2015. The PSIDC nominated Shri S.R. Ladhar, IAS as its Nominee Director on the Board of Directors of the Company w.e.f. 5th August, 2015. The Board of Directors of the Company has appointed Shri S.R. Ladhar, IAS, as Additional Director of the Company w.e.f. 5th August, 2015. Shri Anirudh Tewari, IAS, Shri S.R. Ladhar, IAS and Shri Amit Dhaka, IAS hold office as Directors till the date of the ensuing Annual General Meeting. Notices in writing have been received from a member under Section 160 of the Companies Act, 2013, signifying his intention to propose at the ensuing Annual General Meeting the appointment of ShriAnirudh Tewari, IAS, Shri S.R. Ladhar, IAS and Shri Amit Dhaka, IAS as Directors of the Company, whose period of office shall be liable to determination by retirement of Directors by rotation. The Board of Directors of the Company had appointed Smt. Gurneet Tej, IAS, as Additional Director of the Company on 11th February, 2015. Smt. Gurneet Tej, IAS (Woman Director) holds office till the date of the ensuing Annual General Meeting. Pursuant to the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, the Board of Directors is seeking appointment of Smt. Gurneet Tej, IAS (Woman Director) as an Independent Director of the Company for a term of five consecutive years w.e.f. 29th September, 2015. Notice in writing has been received from a member under Section 160 of the Companies Act, 2013, signifying his intention to propose at the ensuing Annual General Meeting the appointment of Smt. Gurneet Tej, IAS as an Independent Director of the Company. The IDBI Bank Limited has withdrawn the nomination of Shri Ravi Kumar as its Nominee Director and nominated Shri Rajesh Malhotra as its Nominee Director on the Board of Directors of the Company w.e.f. 8thSeptember, 2014. The IFCI Limited had withdrawn the nomination of Shri S. Sengupta as its Nominee on the Board of Directors of the Company and nominated Shri Jagdish Garwal as its Nominee Director w.e.f. 13th November, 2014 and had advised the Company to co-opt him on the Board of Directors. Consequently, Shri S. Sengupta resigned as a Director of the Company w.e.f. 13th November, 2014. Accordingly, the Board of Directors of the Company had appointed Shri Jagdish Garwal, as Additional Director of the Company on 13th November, 2014. The IFCI Limited had subsequently withdrawn the nomination of Shri Jagdish Garwal as its Nominee on the Board of Directors of the Company w.e.f. 11th August, 2015. Consequently, Shri Jagdish Garwal resigned as a Director of the Company w.e.f. 11th August, 2015. The Directors place on record their appreciation of the valuable contribution made by Shri J.S. Saraon, Shri Yogesh Goel, Shri Ravi Kumar, Shri S. Sengupta and Shri Jagdish Garwal. Pursuant to the provisions of Section 203 of the Companies Act, 2013, Shri Ajay Pal Singh, General Manager (Finance) has been designated as Chief Financial Officer. Audit Committee The Audit Committee of the Board comprised of Shri J.S. Saraon, Shri D.C. Mehandru, Shri J.S. Mann and Shri Jagdish Garwal with Shri J.S. Saraon as its Chairman. Subsequently, Shri J.S. Saraon ceased to be a Member and Chairman of the Committee w.e.f. 17th April, 2015 consequent upon his demise. The Board had appointed Shri D.C. Mehandru as the Chairman of the Audit Committee w.e.f. 26th May, 2015. Shri Jagdish Garwal subsequently ceased to be the Member of the Committee consequent upon withdrawal of his nomination by IFCI Limited and his resignation as a Director of the Company w.e.f. 11th August, 2015. Risk Management Committee As required under Clause 49 (VI) of the Listing Agreement, the Board of Directors of the Company has constituted a Risk Management Committee to monitor and review the Risk Management Plan of the Company. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that: (i) In the preparation of the annual accounts for the financial year ended 31" March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the period under review; (iii) 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; (iv) The Directors have prepared the annual accounts for the financial year ended 31" March, 2015 on a 'going concern' basis; (v) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; (vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Declaration of Independent Directors All the Independent Directors have met requirements specified under Section 149(6) of the Companies Act, 2013 regarding holding the position of 'Independent Director' and necessary Declaration from each Independent Director under Section 149(7) of the Act has been received. The Independent Directors have held a separate meeting during the year under review. Related Party Transactions Policy As required under Clause 49 (VII) of the Listing Agreement, the Board of Directors of the Company in its meeting held on 11th February, 2015 had approved the Related Party Transactions Policy of the Company. The same has also been placed on the Company's Website www.punjabalkalies.com During the year under review, the Company has not entered into any arrangement or contract or transactions with related parties except the remuneration paid to the Key Managerial Personnel. Vigil Mechanism and Whistle Blower Policy As required under Section 177 (9) of the Companies Act, 2013 and Clause 49 (II) (F) of the Listing Agreement, the Board of Directors of the Company in its meeting held on 11th February, 2015 had approved the Vigil Mechanism and Whistle Blower Policy of the Company. The same has also been placed on the Company's Website www.punjabalkalies.com Auditors The appointment of M/s. S.Tandon& Associates, Chartered Accountants and M/s. A.K. Sood& Associates, Chartered Accountants, as Auditors of the Company from the conclusion of the ensuing Annual General Meeting until the conclusion of 41" Annual General Meeting to be held in the year 2016 is subject to ratification by the Members. The Auditors being eligible, have indicated their willingness to the same. Cost Auditors The Board has, subject to the approval of the Shareholders, appointed M/s. J.K. Kabra & Co., Cost Accountants as Cost Auditors of the Company for conducting an audit of the cost accounting records of the Company in respect of the financial year 2015-16. Secretarial Audit M/s. A. Arora & Co., Practising Company Secretaries, were appointed as Secretarial Auditors of the Company for the financial year 2014-15. Their Secretarial Audit Report of the Company for the financial year ended 31" March, 2015 is annexed as Annexure-lll to this Report. The Report does not contain any qualification. M/s. A. Arora & Co., Practising Company Secretaries were reappointed as Secretarial Auditors of the Company for the financial year 2015-16. Extract of Annual Return Pursuant to Section 134 (3)(a) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, Extract of Annual Return in Form MGT-9 is annexed as Annexure-IV tothis Report. Acknowledgements Your Directors place on record their appreciation of the cooperation and support extended by the Central and State Governments, Financial Institutions, Punjab State Industrial Development Corporation Limited, Punjab State Power Corporation Limited, Company's Bankers and esteemed customers. Your Directors also acknowledge the valuable contribution made by the members of management team, staff and workforce. For and on behalf of the Board Sd/- (ANIRUDH TEWARI) Chairman Place:Chandigarh Date : August 17, 2015 |