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Director's Report
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Sree Rayalaseema Hi-Strength Hypo LtdIndustry : Chemicals
BSE Code:532842
ISIN Demat:INE917H01012
Book Value(Rs):189.52
NSE Symbol:SRHHYPOLTD
Div & Yield %:2.08
Market Cap (Rs Cr.):165.38
P/E(TTM):8.34
EPS(TTM):11.55
Face Value(Rs):10
  Change Company 

To

The Members

Your Directors have pleasure in presenting the Thirteenth Annual Report of the Company for the year ended 31st March, 2018.

1. Financial Results:

( Rs. in lakhs )
Particulars 2017 - 2018 2016 - 2017
Profit before interest, Depreciation and Tax 6267.41 4555.46
Less : Interest 699.99 638.80
Depreciation 1866.07 2465.39
Profit before Tax 3701.35 1451.27
Provision for Taxation & Deferred Income Tax 40.72 (386.28)
Profit after Tax 3660.63 1837.55
Add: Balance brought forward from previous year 15513.20 14033.32
Other adjustments (279.86) (357.67)
Balance carried forward to next year 18893.98 15513.20

2. Performance:

During the year the Company achieved turnover of Rs. 555 crores against previous year turnover of Rs. 391 crores. The profit before tax stood at Rs.37.01 crores as against Rs. 14.51 crores for the previous year.

3. Expansion of sulphuric acid plant : The new sulphuric acid plant with 180 tonnes per day capacity was commenced in the month of January, 2018. Another plant with same capacity is under execution and civil, mechanical works at site are under progress. It is expected to be commissioned by December, 2018.

4. Registration under Patent Act: Hypo production process has been now registered under Patent Act which will safeguard our process and technology.

5. Division / Segment Wise Operations

(a) The net sales of Calcium Hypo Chloride during financial year 2017-18 is Rs. 224.83 crores as against 187.94 crores in previous year representing an increase of 16%.

(b) The net sales of Stable Bleaching Powder during financial year 2017-18 is Rs. 66.31 crores as against 41.01 crores in previous year representing an increase of 38%.

(c) The net sales Monochloro Acetic Acid during financial year 2017-18 is Rs. 0.74 crores as against 7.59 crores in previous year representing a decrease of 9.75 %.

(d) The net sales of Sodium Methoxide during financial year 2017-18 is 17.54 crores as against Rs. 17.53 crores during previous financial year and the net sales of Sodium Hydride during financial year 2017-18 is 24.83 crores as against Rs. 15.24 crores during previous financial year representing an increase of 38%.

(e) The trading activity in coal had fetched an amount of Rs. 109.78 crores as against Rs. 13.06 crores during part of previous financial year.

(f) The net sales of Sulphuric acid during financial year 2017-18 is 29.26 crores as against Rs. 21.73 crores during previous financial year representing an increase of 26%.

(g) Total power generated, sold including capative through Thermal, Wind and Solar during the year under review is Rs.2732.44 lakhs.

6. Dividend:

Your Directors have recommended a final dividend of Rs.2/- (i.e.,20%) per equity share of face value Rs.10/- each for the financial year ended 31st March, 2018. The dividend payment is subject to approval of members at the ensuing Annual General Meeting. The total cash outflow on account of dividend on equity shares for the financial year 2017-18 would aggregate Rs.3,26,13,160. The dividend will be paid to members whose names appear in the Register of Members as on 21.09.2018. The dividend payment date is 25.10.2018.

7. Investor protection and Education Fund (IEPF):

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

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

Financial Year Dividend Declared (%) Date of declaration of dividend Last date for claiming unpaid dividend Unclaimed Dividend Amount* (Rs.) Due date for transfer to the IEPF Account
2014-15 15% 30.09.2015 06.11.2022 27,11,272 07.11.2022
2015-16 15% 28.09.2016 04.11.2023 27,78,067 05.11.2023
2016-17 15% 27.09.2017 03.11.2024 27,27,310 04.11.2024

* Amount unclaimed as on 30th June, 2018.

8. Board Meetings:

During the year 6(six) Board meeting and 5(five) Audit Committee Meetings were held and the details of which are mentioned in Corporate Governance Report.

9. Transfer to Reserves

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

10. Subsidiaries, Joint Ventues and Associate Companies :

The Company has no subsidiaries and joint ventures. In case of Associate Company TGV SRAAC LIMITED, it had been concluded that the Company is not exercising significant influence although it holds more than 20% of share capital. Hence Company ceased to account the investment in TGV SRAAC Limited as per equity method in Ind As-28, investment in associates and Joint Ventures with effect from 01.04.2016. The details of such entities of the Company formed/ acquired and /or companies during the year are provided in AOC-1 (Annexure-A) to this report.

11. Insurance:

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

12. Fixed Deposits:

The Company has not accepted any public deposit and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

13. Listing of Shares:

The Equity shares of your Company are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Company has paid the Annual Listing fees to each of these Stock Exchanges for the financial year 2018-19.

14. Safety and Environment Protection:

Management considers safety as paramount and in this regard continuous effort is being put. There is total compliance of use of PPEs and work permit system. Frequent training of employees and contractors are also being arranged. More efforts are being put on housekeeping to avoid fire and tripping hazards. These are being monitored by all senior executives and directors on daily basis.

All vents and emission points are now connected to efficient wet scrubbing system. New and second Sulphuric acid plant is fitted with a full capacity caustic scrubber to avoid any start up gas escape. New sulphonation plant ensures conversion of chlorine bearing effluent into gypsum.

15. Industrial Relations:

Your Company's Industrial Relations continue to be harmonious and cordial.

16. Preferential Allotment :

On 26.03.2018, the Company had allotted 8,15,329 Equity shares of Rs. 10/-each (at a premium of Rs. 88.19 per share) upon Conversion of warrants under 2nd tranche on preferential basis and necessary trading approvals in this regard were received from both stock exchanges i.e., BSE and National Stock Exchange of India Limited.

17. Directors and Key Managerial Personnel :

Sri. H.Gurunath Reddy, Director is retiring by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. For continuation of directorship of Sri Krishnamoorthy Chandraiah Naik, Non-Executive Director who is 84 years old , Special resolution is placed for members approval.

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

18. Evaluation of board performance:

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

19. Company's policy on directors' appointment and remuneration

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

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

The company has received the necessary declarations from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013 that he/ she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 .

21. Particulars of loans, guarantees or investments under section 186

The Company had not given any loans , guarantees during the year 2017-18.

22. Particulars of contracts or arrangements with related parties

All transactions entered with Related Parties for the year under review were on arm's length basis and in the ordinary course of business. There are material significant related party transactions made by the Company . All Related Party Transactions are placed before the Audit Committee as also the Board for approval, where ever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors . Form AOC-2 is annexed to this report (Annexure-B).

23. Risk management policy

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

24. Vigil Mechanism / Whistle Blower Policy

In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the company has adopted a vigil mechanism policy.

25. Extract of Annual Return :

The details forming part of the extract of Annual Return (Form-MGT-9) is annexed to this report (Annexure-C.)

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

Information as per Section 134 (3) of the Companies Act, 2013 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 are forming part of the Directors' Report for the year ended 31st March, 2018 is annexed to this Report (Annexure D).

27. Corporate Governance:

A separate report on Corporate Governance is being enclosed to this report (Annexure -E) a part of the Annual Report along with a Certificate from the Auditors of the Company regarding the compliance of the conditions of Corporate Governance as stipulated under regulation 34(3) read with Schedule V of SEBI(LODR) Regulations, 2015.

28. Management Discussion and Analysis Report :

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

29. Corporate Social Responsibility :

CSR Committee monitors the implementation of C.S.R. activities. During the year there is no change in the constitution of the CSR Committee. The members of the committee are Sri A Kailashnath as Chairman and Smt.D S Sai Leela , Sri P Ramachandra Gowd as members. Appropriate steps are taken by the company to integrate CSR activities for the development of areas surrounding the Company in particulars and other areas in general. During the financial year 2017-18 ,the company had to spent Rs.43,80,317 as against this the Company had spent Rs. Rs. 44,22,424.Details of C.S.R. activities are annexed to this report (Annexure – G).

30. Cost Auditors and their Report :

As per section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audits) Rules, 2014 as ammended, the Board of Directors of your Company on recommendation of the Audit Committee appointed M/s. Kapardhi & Associates, Cost Accountants as the Cost Auditors to carry out the cost audit of products of the Company. The remuneration of cost auditors has been approved by the Board of Directors on the recommendation of Audit Committee and the requisite resolution for ratification of remuneration of cost auditors by the members has been set out in the notice of 13th Annual General Meeting of your Company.

The cost audit report for the financial report ended 31st March, 2017 issued by M/s Kapardhi & Associates, Cost auditors in respect of various products prescribed under Cost of Audit Rules does not contain any qualification, reservation and the same was filed with the Ministry of Corporate Affairs. The cost audit report for the financial year ended March 31st, 2018 is being submitted shortly.

31. Statutory Auditors:

M/s T. Adinarayana & Co., Chartered Accountants (Registration No.000041S), were appointed as Statutory Auditors of the Company at the Annual General Meeting held on 27th September, 2017 for a term of five consecutive years. As per the provisions of section 139 of Companies Act, 2013 , the appointment of Auditors is required to be ratified by members at every Annual General Meeting.

In accordance with the Companies Amendment Act, 2017 enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

The Auditors Report does not contain any qualification, reservation or any adverse remark.

32. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has re-appointed M/s. Geeta Serwani & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the Financial Year 2017-18. The Report of the Secretarial Audit Report is annexed to this report (Annexure- H ). The report does not contain any qualification, reservation or any adverse remark.

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

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

During the financial year 2017-18, the Company received no complaints on sexual harassment.

34. Directors' Responsibility Statement:

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) that the preparation of the accounts for the financial year ended 31st March, 2018 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

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

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors had prepared the accounts for the financial year ended 31st March, 2018 on a ‘going concern' basis.

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

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

35. Explanations or comments on qualifications, reservations or adverse remarks or disclaimers made by the Auditors and the Practicing Company Secretary in Practice.

There are no qualifications, reservation or adverse remark or disclaimer made by Statutory auditor in his report and Company secretary in practice in the secretarial audit report.

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

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

37. Particulars of Employees:

No employee of the Company is drawing remuneration as prescribed under Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014.

38. Particulars of Remuneration:

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

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

Name of the Director Ratio to Median Remuneration
Sri.T.G.Bharath, Chairman & Managing Director 85.64
Sri.A.Kailashnath, Director 0.14
Sri.H.Gurunath Reddy, Director 0.07
Smt.D.S. Sai Leela, Director 0.14
Sri.P.Ramachandra Gowd, Director 0.14
Sri.Krishnamoorthy Chandraiah Naik, Director 0.07

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

Sri.T.G.Bharath, Chief Executive Officer 25.35%
Smt.V Surekha, Company Secretary 4.51%
Sri.Ifthekhar Ahmed, Chief Financial Officer 41%

(iii) The percentage increase in the median remuneration of employees in the financial year - 5%

(iv) The number of permanent employees on the rolls of Company - 400

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

The average increase in salaries of employees other than managerial personnel in 2017-18 was 5%. Percentage increase in the managerial remuneration for the year was 60%.

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

39. Acknowledgements:

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

For and on behalf of the Board
Sd/-
T.G. Bharath
Place : Kurnool Chairman & Managing Director
Date : 14th August, 2018 (DIN : 00125087)

   

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