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Nacl Industries Ltd.

BSE: 524709 | NSE: NACLIND |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE295D01020 | SECTOR: Pesticides & Agro Chemicals

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Aug 06, 11:37
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30-Day
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    38.65

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Aug 06, 11:37
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Volume
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54,978
10-Day
65,003
30-Day
92,551
28,546
  • Prev. Close

    38.80

  • Open Price

    38.70

  • Bid Price (Qty.)

    39.10 (68)

  • Offer Price (Qty.)

    39.30 (65)

Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

DIRECTORS’ REPORT

To,

The Members,

The Directors have pleasure in presenting the 31st Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2018.

Operating Results:

Your Company’s performance during the year as compared with that during the previous year is summarized below:

(Rs, in lakhs)

Particulars

Consolidated

Standalone

2017-18

2016-17

2017-18

2016-17

Gross Turnover (including Other Income)

88,487

85,038

88,423

84,977

Profit/(-) Loss before Finance Cost, Depreciation and Tax (EBIDTA)

6,768

7,104

6,777

7,113

Finance Charges

3,342

3,787

3,342

3,787

Depreciation and Amortization

1,977

2,823

1,977

2,823

Profit before exceptional items and tax.

1,449

494

1,458

503

Exceptional Items

-

2,557

-

2,557

Share of profit from associate

94

-

-

-

Profit before tax (PBT)

1,543

3,154

1,458

3,060

Provision for Tax

540

842

540

841

Deferred Tax

(154)

(954)

(154)

(953)

Profit after tax (PAT)

1,157

3,266

1,072

3,172

Other Comprehensive Income

46

(48)

46

(48)

Total Comprehensive Income

1,203

3,218

1,118

3,124

Profit for the year

1,203

3,218

1,118

3,124

Balance of profit brought forward from previous year

16,921

13,891

16,615

13,679

TOTAL

18,124

17,109

17,733

16,803

Appropriation

Dividend on equity shares

195

195

195

195

Dividend distribution tax

40

40

40

40

Balance profit carried forward to balance sheet

17,889

16,921

17,498

16,615

Dividend:

Your Board of Directors pleased to recommend a dividend of 12.50 paise per equity shares of Rs, 1/- each (i.e.12.50% of the paid up share capital) for the financial year ended 31st March, 2018. If the dividend, as recommended above, is approved by the members at the Annual General Meeting, the total outflow towards dividend on Equity Shares for the year would be Rs, 235.55 lakhs (including dividend distribution tax).

Performance:

Your Directors are pleased to inform that your Company has received the following awards during the year 2017-18:

i) Conferred with ‘INDIA’S BEST COMPANY OF THE YEAR AWARD-2017”, by International Brand Consulting Corporation (IBC), USA. This award is a distinctive recognition for a company recognized as, “BEST COMPANY” in its industry category based on current year market standing, innovation, leadership, governance, CSR and other such factors.

ii) Srikakulam Technical unit and Ethakota Formulation unit have been awarded with the “Best Management Award” by the Government of Andhra Pradesh for Management Practices for yet another year 2017. They were handed over by the Hon’ble Chief Minister of Andhra Pradesh. These awards were received for the second time for each of the units in last four years.

iii) Srikakulam Plant received the prestigious “Suraksha Puraskar” Award by the National Safety Council of India for the year 2017 in Group-B category for its best Safety Practices by Hon’ble Minister of the State Labour and Employment, Government of India. The Company was given the top ranking among various Indian crop protection products manufacturing Companies.”

The Company achieved a consolidated revenues of Rs, 88,487 lakhs during the year under review as against Rs, 85,038 lakhs achieved in the previous year. The Company’s profit before exceptional item and tax is '' 1,449 lakhs during the year under review against '' 494 lakhs during the previous year. The growth in revenue has been mainly attributable to growth in the Exports by 16% and in domestic formulations by 11%. The revenue for financial year 2016-17 are inclusive of Excise Duty (ED), whereas in the financial year 201718 ED is included upto 30th June, 2017 as GST has been implemented effective 01st July, 2017. The revenue, as per the Accounting Standards, for the remainig period of nine months of the financial year under rview do not include GST. During the year under review, the Company has adopted the Accounting Standards as per the IndAS. Accordingly the figures are strictly not comparable.

Plant Operations:

With the overall satisfactory performance during the year under review, the Srikakulam technical plant has achieved highest ever annual production of 6,023 MT as compared to 5,302 MT in the previous year, recording an increase in production by about 14% over previous year. The plant could achieve the desired results mainly due to growth in the export segment and its alignment for the production of various intermediates for captive consumption as well as marketing both in export and domestic market. The plant has continued to take various initiatives for cost savings and capacity utilization, besides regular efforts of streamlining, debottlenecking and augmenting plant efficiencies and enhancing productivity.

Ethakota formulation unit has been able to satisfactorily meet not only the domestic formulation market demand but also the demand from the newer and expanding export market. The unit also achieved highest ever production of 24,738 MT/KL during the year under review, comparing to the previous year production of 21,333 MT/KL registering a growth of about 16%. The higher production was mainly due to increase in demand of Granules. The unit has been in continuous growth mode being capable of handling any market demand both in terms of flexibility in product mix and demand in higher volumes. The continued focus on areas of improving flexibility, enhancing capacities, increased productivity, de-bottlenecking, quality control and better supply chain initiatives are yielding results.

An amicable working environment in both units has enabled maintaining cordial relationship with workers Unions and other Stakeholders.

Domestic Markets:

The southwest monsoon in 2017 was below normal for India with the countrywide rainfall standing at 95 percent of the long period average (LPA). Although the same is termed as normal rainfall keeping in view the long period average (LPA) rainfall that India received, it was not evenly distributed. In the overall comfortable situation, whereas excess monsoon rains were recorded by the states of Andhra Pradesh, Gujarat, West Rajasthan and NMMT (Nagaland, Manipur, Mizoram, and Tripura), there were pockets of deficiencies with Punjab, Haryana, Uttar Pradesh and Vidarbha getting less than their usual share of rains. Adding to it, although the

northeast monsoon has ended with overall normal for various parts of south east regions of India, with a good rainfall for Tamil Nadu & Puducherry, it was not without hiccups. After initial spell of good rains, it witnessed weeks of prolonged dry spells in various pockets of those regions.

Despite the very competitive market conditions, your Company achieved domestic sales of Rs, 52,249 lakhs for the year under review (as against Rs, 47,031 lakhs in the previous year), a net increase of approximately 11% over the previous year. This growth is mainly attributable to aggressive positioning, focus on sale of priority products, addition of new products and improved flexibility of Ethakota formulation plant. Given the favorable monsoon predicted for the year 2018, the prospects for the domestic market looks promising in quarters ahead.

Export Market:

The normalization of agrochemical inventories in the distribution channels has helped in resuming the agrochemical business in certain markets. With the inventory situation in Brazil easing out, your company’s technical business to Brazil has contributed positively to the exports sales. Enforcement of increasingly stricter environment norms in China, has provided trading opportunities to supply Technicals to new customers in Australia, New Zealand and Vietnam. Contract manufacturing business was affected due to lack of campaigns of certain products and low off take of one formulation to China due to bleak demand. Delay in the renewal of registrations, political situation in Yemen, price pressure and inventory levels at distributor level continued to impact the formulation business. However, with market and product development activities and branding, the outlook for this business segment looks positive in the coming years. Your company continued its efforts to register its brands in South East Asia and Africa and got three registrations in Ethiopia.

In spite of inconsistency in the global agrochemical market, the performance of Exports function has increased by nearly 16% when compared to that of the last year. The sales were '' 12,741 lakhs in the year under review as compared to '' 10,989 lakhs in the previous year. This was possible due to the business development activities that have been initiated post fiscal 2013 and your company’s continued attempt in maintaining strong relation with the Contract Manufacturing Customers.

Credit Rating:

During the year under review, the Credit Analysis and Research Limited (CARE) has upgraded the rating for Long Term and Short Term Bank facilities of the Company, as follows:

a) Long-term Bank facilities: ‘CARE A- Stable (‘Single A minus; Outlook: Stable) from CARE BBB positive (Triple B plus: outlook positive) and

b) Short-term Bank facilities: ‘CARE A2 (A two) from CARE A3 (A three Plus)’.

Change of Name:

Consequent to the approval of the Shareholders of the Company in the last Annual General Meeting held on 05thAugust, 2017, the Company has changed its name from ‘Nagarjuna Agrichem Limited’ to ‘NACL Industries Limited’ vide the ‘Certificate of Incorporation pursuant to change of name’ dated 04th September, 2017 issued by the Registrar of Companies, Hyderabad, for Andhra Pradesh and Telangana, Ministry of Corporate Affairs, Government of India. However, there was no change in the nature of the business of the Company.

Fire insurance Claim:

Further to the Insurance Company’s final assessment on account fire accident at Srikakulam Plant on 30th June, 2012 and releasing the final payment in the previous year, your Company has initiated necessary Arbitration process, as there were many deductions made by the Insurance Company, besides not considering claim for ‘Loss of Profit’ (LoP) and interest for delayed settlement of claim. Based on the legal opinion and consultation, the Company has filed necessary application under the provisions of Arbitration and Conciliation Act, 1996 before the Hon’ble High Court, New Delhi in terms of both the policies i.e. Fire Policy & Loss of Profit Policy (LoP) covering the differential claims towards Material Damage & Business Interruption respectively. On hearing both the applications, the Hon’ble High Court of Delhi has passed an order favoring Arbitration through a sole Arbitrator, who is a retired Supreme Court judge for both the policies. The arbitration proceedings are progressing satisfactorily.

New Projects/Products:

With a view to focus on cost efficiencies and innovation, the Company’s R&D Centre at Shadnagar, near Hyderabad, continues to develop cost effective processes for manufacture of Active Ingredients (AIs)/Technical and Intermediates for Herbicides, Insecticides and Fungicides. To take advantage of the Make in India manufacturing initiative, processes for many generic products are under various stages of development for manufacturing by your Company.

Your Directors are pleased to inform that the R&D Centre has received the Certificate of Accreditation from the National Accreditation Board for Testing and Calibration of Laboratories (NABL).

The Company has strengthened its Registration department to cater to the growth opportunities in India and other countries. It has initiated the process of applying for registration of various Products in countries in Africa and South East Asia. Your Company presently has around 360 registrations in India and 84 for exports.

Environment Protection:

Your Company continues to maintain high standards in environmental management with its manufacturing facilities operating well within stipulated norms due to the efficient running of the Zero Liquid Discharge (ZLD) facilities in Srikakulam and Ethakota. Srikakulam manufacturing site has an online effluent and emission monitoring devices that continuously upload the data to Pollution Control Board website. These sites have also increased plantation area within the factory premises.

Your Company continues to enjoy the certifications ISO:9001:2008, ISO:140001 and OHSAS: 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Transfer to Reserves

The Company does not propose to transfer any amount to General Reserves for the financial year ended 31stMarch, 2018.

Share Capital:

a) During the year under review, your Company has allotted 1,64,376 fully paid equity shares, upon exercise of stock options by the eligible Employees of the Company pursuant to the ‘Nagarjuna Agrichem Ltd., -Employee Stock Option Scheme - 2015’ (‘ESOS-2015’) of the Company and these shares were duly admitted for trading on the stock exchange(s). Subsequent to the above allotment, the paid up capital of your Company stand increased from Rs, 15,61,44,008/-(comprising of 15,61,44,008 fully paid up equity shares of Rs, 1/per equity share) to Rs, 15,63,08,384/- (comprising of 15,63,08,384 fully paid up equity shares of Rs, 1/- per equity share).

b) During the year under review, the shareholders vide there resolution passed in their Extraordinary General Meeting held on 03rd February, 2018 approved the increase of Authorized Share Capital of the Company has been increased from Rs, 20,00,00,000/- (consisting

20.00.00.000 Equity shares of Rs, 1/- each) to Rs,

25.00.00.000/- (consisting 25,00,00,000 Equity shares of Rs, 1/-each).

Employee Stock Option Scheme:

Your Company implemented “Nagarjuna Agrichem Ltd., -Employee Stock Option Scheme - 2015” (hereinafter referred to as “ESOS-2015”) in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended from time to time and as approved by the members of the Company at their Annual General Meeting held on 28th September, 2015. In terms of the said ESOS-2015, the Compensation Committee is authorized and empowered to administer and implement the Company’s Employees Stock Option Scheme (ESOS-2015) including deciding and reviewing the eligibility criteria for grant, issuance of stock options under the Scheme, allotment of shares upon exercise of the options etc., with regard to the 11,50,000 (eleven lakhs fifty thousand only) options reserved under the ESOS-2015. During the previous years 2016-17 and 2017-18, 9,30,000 (nine lakhs thirty thousand only) and 60,000 (sixty thousand only) respectively, stock options were granted to the eligible employees with a vesting period spread over a period of five years. Each option would entitle the holders of the Option to apply for one equity share of the Company.

Upon exercise of the vested stock options by eligible employees under the ESOS-2015, 1,64,376 equity shares were allotted during the year under review. Applicable disclosures relating to Employees Stock Options as at 31stMarch, 2018, pursuant to Regulation 14 and other applicable Regulations of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time, are set out in the Annexure-I to this Report and the details are also placed on the website of the Company. There has been no material change in the said Scheme i.e., ESOS-2015 during the year under review.

Material Changes and Commitments:

There have been no material changes and commitments 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.

Subsidiary Companies and Consolidation of Financial Statements:

Pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), along with other applicable provisions of the Act, and as per Indian Accounting Standards (IND AS 110 - “Consolidated Financial Statements”), which is applicable to the company from the year under review. The Audited Consolidated Financial Statements for the year ended on 31st March, 2018 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s.LR Research Laboratories Private Limited and M/s. Nagarjuna Agrichem (Australia) Pty, Ltd (which are yet to commence their operations) with its financial statements on line by line basis. The investments of the Company in M/s. Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with IND AS 28-“Investments in Associates and Joint Ventures”.

The Audited Annual Accounts and related information of Subsidiaries and Associate as applicable will be made available upon request. The Statement required under Section 134 of the Act is attached as Annexure - II (Form AOC-1) to this Directors’ Report.

No other Company has become/ceased to be subsidiary or joint venture or associate Company during the financial year. There has been no material change in the nature of business of the aforesaid Subsidiaries and Associate. The Company has no Subsidiary which can be considered as material in terms of the Listing Regulations.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013 (‘Act’) read with Regulation 46 of the Listing Regulations the following have been placed on the website of the Company www.naclind.com:

a) Annual Report of the Company, containing therein its standalone and the consolidated financial statements; and

b) Annual accounts of each of the subsidiary Companies.

Internal Financial Control Systems and their adequacy:

The Company has in place adequate internal financial controls commensurate with the size and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedure in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company’s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company’s policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and regulations, and safeguarding of assets from unauthorized use.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board and Committees including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2017-18.

Indian Accounting Standards (Ind AS):

The Ministry of Corporate Affairs vide its notification dated 16th February, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. The Company has adopted Indian Accounting Standards (“Ind AS”) from April 01, 2017 with transition date of April 01, 2016 and accordingly these financial statements have been prepared in accordance with the recognition and measurement principles laid down in the Indian Accounting Standard (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and other accounting principles generally accepted in India, as applicable.

Auditors: a) Statutory Auditors and Audit Reports:

M/s. Deloitte Haskins & Sells LLP, (Deloitte) Chartered Accountants, Secunderabad (Firm Registration No.117366W/W100018), Chartered Accountants, were appointed as Statutory Auditors of the Company at the 30thAnnual General Meeting held on 05th August, 2017, for a period of 5 years commencing form the conclusion of 30th Annual General Meeting till the conclusion of 35th Annual General Meeting to be held in the year 2022, subject to the ratification of such appointment by shareholders every year.

The Audit Report of Deloitte on the Financial Statements of the Company for the Financial Year 2017-18 is a part of Annual Report and the report does not contain any qualification, reservation, adverse remark or disclaimer.

The audit committee and the board of directors recommend to the shareholder the ratification of appointment of M/s.Deloitte Haskins & Sells LLP, (Deloitte) Chartered Accountants, Secunderabad (Firm Registration No.117366W/W100018), Chartered Accountants, as statutory auditors of the Company from the conclusion of the 31st Annual General Meeting till the conclusion of 32nd Annual General Meeting.

b) internal Auditors:

The Board of Directors of the Company have appointed M/s. M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad, as Internal Auditors to conduct internal audit of the Company for the financial year ended 31st March, 2018 and their reports are reviewed by the Audit Committee from time to time.

c) Cost Auditors:

M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct cost audits relating to Insecticides (Technical Grade and Formulations) of the Company for the year ended 31st March, 2018. Pursuant to the provisions of Section 148 of the Act read with Rules made thereunder, members are requested to consider the ratification of the remuneration payable to M/s. K.Narasimha Murthy & Co., Cost Accountants, Hyderabad for the financial year 2018-19. As a matter of record, relevant cost audit report for financial year 2017 were filed with the Central Government, within a stipulated timeline.

d) Secretarial Auditor and Secretarial Audit Report:

As per the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K.V. Chalama Reddy, Practicing Company Secretary to carry out secretarial audit in terms of the Act for the financial year 2017-18. The secretarial audit report issued by Mr.K.V.Chalama Reddy, in form MR-3 is enclosed to this report as Annexure - III. The Secretarial Auditor has not expressed any qualification or reservation in his report and the report is self-explanatory.

Directors:

As on the date of this report, Company’s Board comprises of 8 (Eight) Directors, out of which, 2 (two) are Non-Executive, Non-Independent Directors (NEDs) including 1 (One) Woman Director. Further, out of the remaining Directors, 5 (five) are Non-Executive Independent Directors, and 1 (one) is an Executive Director.

a) Director(s) to retire by rotation:

In accordance with the provisions of Section 152 of the Act, and Articles of Association of the Company, Mrs.K.Lakshmi Raju, Director (DIN: 00545776) of the Company, retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer herself for re-appointment.

b) Key Managerial Personnel (KMP):

In terms of Section 203 of the Companies Act, 2013 the following are the Key Managerial Personnel of the Company:

i) Mr.V.Vijay Shankar, Managing Director

ii) Mr.R.K.S Prasad, Chief Financial Officer

iii) Mr.Satish Kumar Subudhi, Company Secretary & Head-Legal.

During the year no KMP has been appointed or has retired/resigned.

c) independent Directors:

In terms of Sections 149, 152, Schedule IV and all other applicable provisions of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force), the Independent Director can hold office for a term of up to five (5) consecutive years on the Board of Directors of the Company and shall not be liable to retire by rotation.

All the Independent Directors have given declaration that they meet the criteria of independence laid down under Section 149(6) of the Act read with Regulation 16(b) of Listing Regulations.

d) Evaluation of performance of the Board of Directors:

Pursuant to the provisions of the Act and Listing Regulations, the Board has carried out the evaluation of its own performance and Committees of the Board, the performances of Directors individually, the Executive Director, the Chairman of the Board etc. Various parameters including the guidance note issued by the Institute of Company Secretaries of India were considered for evaluation and after receiving the inputs from the Directors, the performance evaluation exercise was carried out. The parameters include attendance of Directors at Board and Committee meetings, integrity, credibility, expertise and trustworthiness of Directors, Board’s monitoring of various compliances, laying down and effective implementation of various policies, level of engagement and contribution of the Directors, safeguarding the interest of all stakeholders etc. The performance evaluation of the Board as a whole was carried out by the Independent Directors. The performance evaluation of each Independent Director was carried out by the Board. The Directors expressed their satisfaction with the evaluation process.

e) Familiarization Programme for the Independent Directors:

In compliance with the requirement of Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is available on the website of the Company i.e., www.naclind.com.

Through the Familiarization programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. These Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarized with Company’s vision, core values, ethics and corporate governance practices.

At the time of appointment of Independent Director, necessary information including various documents such as the information’s about Company, Memorandum and Articles of Association, Annual Reports for previous 2 years, Investor Presentations and recent Media Releases, Brochures, Organization policies are provided. Further, a formal letter of appointment has also given, explaining fiduciary duties, roles, responsibility and the accompanying liabilities that come with the appointment as an independent director of the Company.

Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior

Management Personnel

Your Company has laid down well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel.

Criteria for making payment to Non-Executive Directors of the Company.

Your Company has laid down well-defined criteria for making payment to Non-Executive Directors of the Company. The details of the same are available at the Company’s website at www.naclind.com.

Directors’ Responsibility Statement:

Pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

b) it has 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 as at 31st March, 2018 and of the Profit/Loss of the Company for the year ended on that date;

c) it has 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;

d) it has prepared the Annual Accounts of the Company on a ‘going concern’ basis;

e) it has 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) it has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Transfer of un-claimed Dividend:

Pursuant to Section 124 and other applicable provisions of the Act as amended from time to time, the following un-claimed dividends were transferred to the Investors Education and Protection Fund during the year under review:

a) Unclaimed dividend amount of '' 10,68,609/- pertaining to the final dividend paid during the year 2009-10.

b) Unclaimed dividend amount of '' 6,30,108/- pertaining to the interim dividend paid during the year 2010-11.

Corporate Social Responsibility:

Corporate Social Responsibility (CSR) has been an integral part of your Company’s culture and it has been associated, directly or indirectly, for contributing towards society’s development. For the year under review, Company did a number of CSR activities in and around Srikakulam and Ethakota where the Company’s factories are situated. Such activities includes ongoing drinking water supplies to villages and maintenance of the Company installed RO plants in the neighboring villages, contribution to Vidhya Volunteer Scheme, street lightning and bore-well maintenance, development of school facilities, community centers and bus shelters in the surrounding villages of the factories, providing medical services and vocational courses, conducting various medical camps, etc. These projects are largely covered under Schedule VII of the Companies Act, 2013 (‘Act’).

In accordance with the CSR provisions in the Act, the Company has formed a CSR Committee and a CSR Policy is in conformity with the provisions of the Act. The CSR Policy can be accessed on the Company’s website at http://www.naclind.com. The Annual Report of CSR activities are annexed herewith as Annexure-IV and forming part of this Report.

Change in the nature of business:

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators or Courts:

During the year the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future.

Particulars of Loans, Guarantees or investments:

The details of Loans, Guarantees and Investments made during the financial year ended 31st March, 2018 in compliance with the provisions of Section 186 of the Act read with the Companies (Meetings of the Board and its Powers) Rules, 2014 have been disclosed in the Financial Statements forming part of this Annual Report.

Extract of Annual Return:

The Extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure-V to this Directors Report.

Number of Board Meetings:

During the year under review, five (5) Board Meetings were held during the year under review. The details of the same are given in Corporate Governance Report which forms part of this Annual Report. The provisions of Act and the Listing Regulations were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee comprising of Mr.D.Ranga Raju as the Chairman and Mr. Sudhakar Kudva, Mr.K.Raghuraman, Mr.Raghavender Mateti as the members. The details about

Audit Committee including the brief description of its terms of reference and number of meetings held during the year are mentioned in the Corporate Governance Report.

Risk Management Policy:

Pursuant to the provisions of Section 134 and other applicable provisions if any, of the Act and Listing Regulations, the Company constituted the Risk Management Committee and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Meeting of independent Directors:

The details on the separate meeting of the Independent Directors are reported in the Report on Corporate Governance.

Related Party Transactions:

All the related party transactions are entered into during the financial year were on arm’s length basis and in the ordinary course of Company’s business and are in compliance with the applicable provisions of the Act and Regulation 23 of Listing Regulations. The Company has not entered into any contract, arrangement or transactions with any related party which could be considered as material within the meaning of Regulation 23 of the Listing Regulations. Related Party Transactions under Accounting Standard-18 (AS-18) are disclosed in the notes to the financial statement.

As there are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel’s etc., which may have potential conflict with the interest of the Company at large, the disclosure in Form AOC-2 is not applicable. Necessary disclosures and the statement of all related party transactions is presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions. All Related Party Transactions are approved by the Audit Committee and omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company’s website www.naclind. com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company has implemented Whistle Blower Policy to deal with any fraud, irregularity or mismanagement in the Company. The policy enables any employee or Director to directly communicate to the Chairman of the Audit Committee to report any fraud, irregularity or mismanagement in the Company. The policy ensures strict confidentiality while dealing with concerns and also that no discrimination or victimization is meted out to any whistleblower. The Whistle Blower Policy as approved by the Board is uploaded on the Company’s website www.naclind.com. During the year under review, your Company has not received any complaints under the said policy of the Company. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Act, the Company has adopted a policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and as Listing Regulations. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Corporate Governance:

In compliance with Regulation 34 read with Para-C of Schedule V of Listing Regulations, a separate report on Corporate Governance has been included in this Annual Report together with the Auditor’s Certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations. All the Board members and the senior management personnel have affirmed compliance with the Company’s “Code of Conduct for Board and Senior Management Personnel” for the financial year 2017-18.

A certificate signed by the Managing Director and Chief Financial Officer (CFO) certifying the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations, forms part of this Annual Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 16(b) of the Listing Regulations, is presented in a separate section forming part of this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a “Policy on Sexual Harassment of Associates” in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Policy aims to provide protection to employees at the workplace, and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed the policy with the objective of providing a safe working environment, where employees feel secure. There were no cases reported during the financial year 2017-18 under the said Policy.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions/ trade practices.

Fixed Deposit:

Your Company has not accepted any fixed deposits from the public during the year under review, and no such amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-VI to this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the Section 134(3)(m) of the Act relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of Rule 8 of the Companies (Accounts) Rules, 2014, are set out in a separate statement attached hereto as Annexure-VII and forms part of this report.

Acknowledgement:

Your Directors thank the Company’s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government/Nongovernment Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

N.Vijayaraghavan V.Vijay Shankar

Director Managing Director

(DIN:02491073) (DIN:00015366)

Place : Hyderabad

Date : 19th May, 2018

Director’s Report