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Thirumalai Chemicals

BSE: 500412|NSE: TIRUMALCHM|ISIN: INE338A01024|SECTOR: Chemicals
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Directors Report Year End : Mar '19    Mar 18

To,

DIRECTORS'' REPORT

With Management Discussion & Analysis

The Members,

Thirumalai Chemicals Limited

Your Directors are pleased to present to you the Forty Sixth Annual Report & the Audited Statement of Accounts of the Company for the year ended March 31, 2019. The Management Discussion and Analysis has also been incorporated into this report.

Standalone Financial Results - Summary

Rs, In Million)

Particulars

Year Ended

31 Mar 2019

Year Ended

31 Mar 2018

Revenue from Operations

9,943

10,372

Other Income

142

100

Total Revenue

10,085

10,472

Gross Profit / (Loss) before Interest, Finance Charges and Depreciation (EBITDA)

1,690

2,390

Interest and Finance Charges

(107)

(109)

Profit / (Loss) before Depreciation and Tax

1,583

2,281

Depreciation

(152)

(104)

Profit / (Loss) before Tax (PBT)

1,431

2,177

Provision for Tax

(445)

(737)

Profit / (Loss) after Tax

986

1,440

Add : Provision for Deferred Tax

(25)

-

Profit / (Loss) after Tax (PAT)

961

1,440

- The Net Revenue including Export Earning (FOB) during the year was '' 1,000 Million (Previous Year: '' 1,430 Million).

Consolidated Financial Results

C In Million)

Particulars

Year Ended

31 Mar 2019

Year Ended

31 Mar 2018

Revenue from Operations

12,610

13,376

Other Income

116

68

Total Revenue

12,726

13,444

Gross Profit / (Loss) before Interest, Finance Charges and Depreciation (EBITDA)

2,175

2,963

Interest and Finance Charges

(122)

(128)

Profit / (Loss) before Depreciation and Tax

2,053

2,835

Depreciation

(364)

(305)

Profit / (Loss) before Tax (PBT)

1,689

2,530

Provision for Tax

(483)

(740)

Profit / (Loss) after Tax

1,206

1,790

Provision for Deferred Tax

(70)

(86)

Profit / (Loss) after Tax (PAT)

1,136

1,704

Dividend

Based on the Company''s performance, the Directors are pleased to recommend for approval of the members, a dividend of '' 2/- per share of Re.1 face value, for the year ended March 31, 2019.

In the previous year ended March 31, 2018, a dividend of '' 20/per share was paid on each share of '' 10 face value, which was thereafter split into 10 shares of Re.1 face value each.

The final dividend on equity shares, if approved by the shareholders, would involve a cash outflow of '' 247 Million, including dividend taxes.

Subsidiaries

Cheminvest Pte Ltd. Singapore is a 100 % investment subsidiary of your company and it has a step-down manufacturing subsidiary viz. Optimistic Organic Sdn. Bhd., Malaysia (OOSB) in Malaysia; and another Lapiz Europe Ltd in the United Kingdom. Lapiz Europe Limited is a subsidiary of your company that handles REACH registration and regulatory compliance for the marketing of the groups products in the EU.

TCL Global BV is a Netherlands based 100% subsidiary of your company which has been established to facilitate the business, marketing, regulatory and investment requirements of your company overseas.

Business Performance

Your company has 2 principal product groups in its business portfolio; these are all presently manufactured in Ranipet, and from next year we will begin manufacturing in Gujarat, starting with our major commodity product Phthalic Anhydride.

The year started out well, but in H2 we faced market challenges.

In our commodities businesses the trading environment saw a sharp downturn in Q3 and Q4 of the year in important sectors affecting markets both of your company and those of the subsidiary in Malaysia.

While this had a number of causes, these were aggravated by the volatility in crude oil and related Petrochemical prices, the slowdown in the Far East, and the US trade restrictions that affected the Chinese and Far East markets- these caused a sharp drop in product prices.

Demand for many related commodities fell due to market apprehensions over these volatile prices, and volumes and margins shrank in India and in key export markets. In spite of excellent performance in the first two Quarters, the overall performance of your company for the year was below expectations.

A reversal in these factors is already being seen in the first Quarter of the current year. Prices have firmed up and the offtake has steadily increased since the beginning of the first Quarter.

We remain concerned over the negative impact on Indian Industry, of declining Chinese growth and the US-China trade dispute - these create large idle capacities in the Far East that depend on the Chinese market : affected producers naturally seek other markets: which better than IndiaRs,

To compound this, in thousands of industrial products the FTA''s concluded 12-15 years ago have steadily led to zero import duties for products from major economies like S.Korea and the Asean.

This is a major reason why Investment in India in the chemical sector (and in many others) has been so anaemic for a decade -it became far more profitable to import for India, than to make in India.

This has led to poor employment growth and worsening trade balance.

We are working closely with the Government to ensure fair trade in this uncertain environment. I am happy to say that the Government''s approach is very positive.

The Indian market is growing well and we are confident that policy changes under discussion will help encourage greater investment in manufacturing in India. As you are aware, in the last 2 years we have taken steps to invest in modernization of our manufacturing units and expand.

The GST has settled down and the impact has been a positive for Medium and Large scale companies. The recent and proposed changes will remove the difficulties faced by small and tiny units.

The large defaults and major scams that have blown open in these two years is a scandal that exposes the corruption and cronyism that had become endemic. There are bound to be more failures among stressed companies and groups.

We have to hope that the efforts of the regulators and this Government to expose these and bring these promoters and bankers to book, will not stop, but help create a more robust framework in our financial and governance systems.

It has made borrowing difficult and expensive even for genuine investments and companies. This is a matter for concern and need to be addressed to avoid throttling them.

The recent US announcement withdrawing preferential treatment for Indian goods will not affect most of our products.

Our Fine Chemicals products were affected by the integration difficulties of the plant improvements that took longer than expected and led to lower volumes. These have settled down only by the end of Q1-FY 2019-20.

The Market remains robust and Indian demand is growing well.

Your company has continued to work on major initiatives in growth, operating efficiencies, costs, marketing, HR and project management.

Phthalic Anhydride Business:

The division posted robust performance during Q1 and Q2 and was able to minimize the effects of downturn Q3 and Q4. During these two latter Quarters, demand for the product in

Asia and India slowed as a result of price uncertainties; margins between the raw material & final product shrunk sharply in tandem. This resulted in poor performance during these two Quarters.

The Company had to contend with imports, including off-spec products into the Country. In order to manage the situation, we have initiated many steps to mitigate this risk of dumping by distressed foreign suppliers. We are fully confident of handling these temporary issues effectively, and grow.

However, on the demand side, Asia with India in particular, continues to be the fastest growing region in the world. Our company is well placed to take advantage of this factor because of its established reputation across markets for over four decades and our technical and commercial competence in these segments.

Besides sales, effective management of inventory and receivables is critical to our health, especially in this volatile environment. The good systems and hard work on these in the last few years, helped us maintain positive cash flows without strain to fund our operations and investments in growth.

The company''s investment at Dahej in Gujarat received environment clearance and consent to establish during the year, but much later than was expected. Construction has commenced in Q3 and is in full swing. The plant is expected to be ready for operations by Q4 of 2019-20.

The modernization project envisaged at Ranipet is in its final stage of completion and is under commissioning currently in Q1 of 2019-20.

These two projects - the modernization of the technology / revamp in the existing plants, and the creation of New capacity in western India - will help the company improve efficiencies in Cost, supply-chain, Process operations and in Environmental & Safety performance. These will also provide a continuous and reliable supply of the product and address the growing market. The project in Dahej located close to customers and suppliers, will particularly help the company improve services to its customers with quick response times.

Food Ingredients and Fine Chemicals:

Food Ingredients

The demand for our products grew well and especially so in the domestic market; we were able to sell all our volumes promptly in India, the EU and start market seeding in North America. These are naturally produced and present in fruits and in all mammals & humans and are critical for metabolism. These make them among the safest of ingredients for foods, juices & beverages.

The company has been in these products since 1992, when we developed these in our R&D and commercialized them.

Being products for human consumption, and the stringent regulatory and approval processes, access into EU earlier from 1993 and more recently into the US and to global users, customer specific product development exercises that were started in recent years have enabled us to meet the needs of prestigious new customers in the market globally. This has helped us acquire prime new customers in the US and EU during the year.

We continue to be the preferred & exclusive supplier to most customers in the domestic market; and a key supplier to many MNC customers in the European market. We have built up an excellent reputation in the markets we serve and the competence to deliver to the requirements of demanding customers across geographies.

The domestic market is still very fragmented and the company has set up an effective distribution network to serve the many small and tiny users across the country for different applications.

The new technology developed in-house for these products was commercialized and stabilized during the year and continues to be operated at the modernized facility. There were some production interruptions and losses during the implementation of these changes. These are since in full operation.

Your company has taken steps to obtain Indian and global patents for the same.

With these, we have laid the foundations to grow these businesses further with the project now under planning.

The Phthalic derivatives products performed steadily. Subsidiary - Optimistic Organic Sdn Bhd, Malaysia :

There were sharp fluctuations in feedstock and product prices in Asia, which led to below targeted volumes and margins. Again this was mainly in H2 of the year but impacted the whole year''s performance. Despite this, the company was able to maintain profitable performance during the year.

Our subsidiary also initiated restructuring of Maleic Anhydride sales across various markets in South East Asia, India, Middle East and Europe for maximizing its margins.

The MA derivatives project was recently commissioned. Trial production to stabilize the operations is underway. These are used as additives in water-based coatings, adhesives, emulsions, etc. Our product quality meets international standards and is under trials at various customers for acceptance and placement of orders. This project was fully funded by the subsidiary''s internal cash flows - a result of their working capital management initiatives.

During H2, the Board of the subsidiary revamped it''s management team; a new Managing Director Mr. Ambrish Maheswari took charge- he has over 35 years of experience in Technology, Projects, and Business Management at senior levels in a global environment. He joined us from the Aditya Birla group, where he was the Managing Director of one of the group''s companies in Thailand.

Besides him, they have inducted a new Manufacturing head & executive team, and have also set up a Technology & Project group.

These will help the company improve operations; and to implement a further expansion in capacity in Maleic Anhydride that they are now planning.

STANDALONE FINANCIAL RESULTS OF THE SUBSIDIARY (OOSB)

Year Ended 31 Mar 2019

Year Ended 31 Mar 2018

Revenue from Operations

42.40

51.65

Other Income

0.55

0.03

Total Revenue

42.95

51.68

Gross Profit / (Loss) before Interest, Finance Charges and Depreciation (EBITDA)

6.94

9.39

Interest and Finance Charges

0.08

0.60

Profit / (Loss) before Depreciation and Tax

6.86

8.79

Depreciation

3.13

3.23

Profit / (Loss) before Tax (PBT)

3.73

5.56

Provision for Tax

0.42

-

Profit / (Loss) after Tax

3.31

5.56

Add : Provision for Deferred Tax

0.57

(1.36)

Profit / (Loss) after Tax (PAT)

2.74

4.20

GROWTH AND NEW PROJECTS :

While there are many challenges current and new, our abilities to manage these we have a strong base and a good reputation with our suppliers, customers and stakeholders, built over many decades.

The Management and Operating teams are highly motivated and capable. We are further strengthening our teams and our systems to manage the planned growth and challenges ahead.

The markets for our products are strong, and we are creating the needed diversity in products, customers and geographies to address vagaries.

Two years ago we started on investments in modernization in our older plants in India & Malaysia, and growth in product range and capacity in Malaysia and now in western India.

We are confident of prospects, despite the increased volatility worldwide.

Phthalic Anhydride:

The company will cater to the growing demand of the product from its modernized facility in Ranipet in Tamil Nadu and from its new facility in Dahej, Gujarat now under implementation. These will improve efficiencies and cost competitiveness, besides serve our major customers in western India more effectively.

Efforts are on with the Government of India by the chemical industry to address the injury caused to domestic production by unfavorable FTAs and Trade Policies and the surging imports of various products.

Subsidiary - Optimistic Organic Sdn Bhd., Malaysia:

The plants at OOSB need to be expanded & modernized to deliver higher production and to deliver the cost efficiencies of modern plants, with current global standards of safety and reliability.

The initial design work is in progress. They propose to fund this project over the next two years largely with their internal cash flows, supplemented by borrowing. It will add over 50% to their capacity, and bring down costs, both due to technology and scale.

Additional production of Maleic Anhydride will be sold to the customers in Europe, Middle East, India, South East Asia and Japan catering to the growing demand in these market segments.

Food and Feed Ingredients

Production from the revamped facility in India, will enable the company to address the growing requirements both in the domestic and international markets in the ensuing year FY-20. It will also help in ensuring market seeding and in-depth development for the product in the US and Europe ahead of the project being evaluated.

This project under final stages of evaluation, is designed to produce these food ingredients & fine chems and their intermediates, in the US; this is proposed in an integrated unit, based on the large volumes of low-cost raw material from shale gas, available locally.

Your company is in the final stages of studying the project viability. Negotiations for the site, raw materials, state incentives and other aspects are nearing a final stage and your company expects to be ready to start investing in the project within the next few months. This investment will substantially increase the footprint of your company as a player in these products globally, and prepare the basis for future growth in bulk chemical products and these and many other fine chemicals, based out of the best feedstock location worldwide.

Funding - for Operations and Investments Our Balance Sheets on a stand-alone & consolidated basis are robust and our cash flows over the last few years have been good. This has given us the resources and the confidence to invest in the future - in India and overseas. We remain conservative in borrowings and leverage.

Risk Management:

Two years ago, we improved the rigour of risk management approach - with an external specialist, supervised by a subcommittee which includes experienced Directors and members from the management team.

A large number of major and minor prospective risks have been identified both internal and external to the company. These include strategic, supply chain, business, financial, safety, fraud, efficiency, competition, succession and a host of other aspects. These are evaluated based on priorities, and a structured programme of mitigation and review being put in place. This is an ongoing exercise.

Our People

We are fortunate to have a deeply motivated team of managers and staff, across the company.

As we informed you last year, your Company started a revamp of the management structure and Teams in 2012.

Over these years, this has led to improved competence in Manufacturing & Technology, in supply chain, Business & Marketing, and in Finance, Safety, Sustainability and Compliance.

To manage future growth, a programme of staff & leadership development and succession planning was initiated two years ago, aligned with ongoing performance improvement programmes. This has started showing initial results.

On your behalf and on behalf of the Board, we thank all our employees for their hard work and outstanding commitment to your Company.

Our Associates

We have a close relationship with the many associates in our business- our Customers, Bankers, Regulatory Agencies, Suppliers, Distributors, and the many service providers and many specialist consultants. We treat them as partners in our business and developed into rewarding and close relationships with them.

BOARD AND MANAGEMENT

The Board of your Company consists of

- The Chairman & Managing Director - Mr. R. Parthasarathy

- Two Executive Directors: -

- Mr. P.M.C. Nair: Director (Manufacturing & Projects)

- Ms. Ramya Bharathram: Director-Strategic Initiatives and Chief Financial Officer

- Six Independent Non-Executive Directors:

- Mr. R. Ravi Shankar

- Mr. N. Subramanian

- Mr. Raj Kataria

- Mr. Dhruv Moondhra

- Mr. Arun Ramanathan

- A Non-Executive Director:

- Mr. R. Sampath - Chairman - Ultramarine and Pigments Ltd.

- An Additional Director:

- Mr. Rajeev M Pandia They are supported closely by

- Mr. C.G. Sethuram - Chief Executive Officer

- Mr. T. Rajagopalan - Company Secretary And the Business and Functional Heads

- Mr. S.V.S Rama Raju - President

- Mr.S. Venkatraghavan - President

- Mr. Sanjeev Gokhale - Vice President-International Marketing

- Mr B. Krishnamurthy - Sr. General Manager-Finance During the year, your Board has inducted (at its meeting held on 24th July, 2018) Mr. Rajeev M Pandia as an Additional Director. As his term of appointment expires on the conclusion of the ensuing Annual General Meeting, the Board recommends his appointment as an Independent Director of the Company under Sec.149 of the Companies Act, 2013.

The term of appointment of the Chairman and Managing Director, Mr. R. Parthasarathy will be expiring as on July 31, 2019, and the Board recommends his re-appointment as the Chairman and Managing Director of the Company for a further period of three years from August 01, 2019.

The term of four Independent Directors of the Company ends on August 5, 2019. Hence it is proposed to reappoint them at the ensuing Annual General Meeting.

Your Directors play a very active role in the Company. They bring in expertise in Business Strategy and Management, Technology, Finance & Accounting, Governance, Project Appraisal & Management, Government Relations.

Their interaction with the management team is frequent and intense, at the Board and Committees, through reviews, suggestions, criticisms & advice to the management team over the last 7 years.

The executive management team in turn has been very transparent in presenting and discussing initiatives & plans and failures, issues & responses.

This healthy and open interaction has been of immense value to the governance, health and growth of the company.

The Committees in the Board, especially the Business Review Committee and the Audit Committee met often and participated in depth by setting goals, reviewing performance, correcting slippages and monitoring execution.

The Nomination & Remuneration Committee, Stakeholders Relationship Committee and the Corporate Social Responsibility Committee have been active in their respective roles.

Further details of these are given in the Corporate Governance Report.

SOCIAL RESPONSIBILITY

Your Company continues to play an active and important role in the welfare of the local communities.

The Founders of your Company, Mr.N.S. Iyengar and Mr. N.R. Swamy had set up the Thirumalai Charity Trust (TCT)in 1970, and the Akshaya Vidya Trust (AVT) in 1994.

We support them financially and through management reviews and in their infrastructure planning & development process.

The TCT works in Vellore district where our main Indian manufacturing site is located, since 1983, providing services in Community Healthcare, Women''s Empowerment, Disability, De-addiction, and Village Development.

The TCT founded and operates the Thirumalai Mission Hospital, which provides primary healthcare in 315 villages, covering over 160,000 people. The Hospital provides both out-patient and in-patient services through departments of General Medicine, Emergency services, Intensive Medical Care, General Surgery, Pediatrics, Obstetrics, Gynecology, Orthopedics, ENT, Dentistry, Physiotherapy, De-addiction & Rehabilitation.

With our company''s support, the Thirumalai Mission Hospital has set up a separate center for Non-Communicable Diseases such as Cardiovascular, Diabetes, Thyroid disorders, Endocrinology, Obesity, Osteoporosis, etc.

This addresses a critical need of the community.

The Vedavalli Vidyalaya Schools (with 3 schools at 2 campuses), managed by the Akshaya Vidya Trust, have around 2,600 students, out of whom 70% are from rural families.

Their performance is reviewed periodically by the Company''s CSR Committee.

Industrial Relations:

Industrial Relations during the year under review continued to be very cordial.

Finance

All taxes and statutory dues have been paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. Your Company has not collected any Fixed Deposits during the Financial Year.

Contribution to the Exchequer:

The amounts paid to the Central and State Exchequer by way of GST, Customs duties (incl. paid to supplier), Income Tax and other taxes, is about '' 1,828 Million on Gross Sales of about '' 9,943 Million (Previous Year '' 2,346 Million on Gross Sales of about '' 10,372 Million).

Contribution to the Exchequer is about 18.38 % of your Company''s Sales.

Exports:

Calculated on FOB basis, Exports amounted to '' 1,000 Million (previous year '' 1,430 Million)

Particulars of loans, guarantees or investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Related Party Transactions

All transactions entered into with Related Parties (as defined under the Companies Act, 2013) during the financial year were in the ordinary course of business and on an arm''s length pricing basis, and do not attract the provisions of Section 188 of the Companies Act, 2013 and were within the ambit of Reg. 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There were no materially significant transactions with related parties during the Financial Year which were in conflict with the interests of the Company. Suitable disclosure as required by the Accounting Standards (Ind As 24) has been made in the notes to the Financial Statements.

The Board has approved of a policy for related party transactions which has been uploaded on the Company''s website.

Directors'' Responsibility Statement:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

i) In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii) We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit or loss of the Company for that period.

iii) We have taken proper and sufficient care to maintain 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) We have prepared the Annual Accounts on a going concern basis.

v) Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Business Risk Management

Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks. The Company has constituted a Business risk management Committee and the details of the Committee are as under:

Sl. No.

Name of member

Category

1

Mr. Dhruv Moondhra

Independent Director

2

Mr. R. Parthasarathy

Managing Director

3

Mrs. Ramya Bharathram

Executive Director/CFO

4

Mr. C.G.Sethuram

Chief Executive Officer

5

Mr. P.M.C. Nair

Executive Director

6

@Mr. P. Krishnamooorthy

Chief Financial Officer

@ till 31.05.2018

Vigil Mechanism / Whistle Blower Mechanism

The Company has a vigil mechanism to deal with instances of fraud and mismanagement, if any. The details of the Policy are explained in the Corporate Governance Report and also posted on the website of the Company.

Corporate Social Responsibility (CSR) Committee

The Committee recommended continuing support for the Thirumalai Charity Trust''s Health and Rural development projects and for the Akshaya Vidya Trust''s Educational programmes.

The composition of the Corporate Social Responsibility Committee is given below:

S.No.

Name of the Director

Category

1.

Mr. N. Subramanian

Independent Director

2.

Mr. Raj Kataria

Independent Director

3.

Mr. R. Sampath

Director (Promoter)

Total Expenditure on Corporate Social Responsibility (CSR) as percentage of profit after tax (%):

The Company''s total spending on CSR is 1.53% of the average profit after taxes in the previous three financial years towards

Health and Sanitation Programmes more details given in the Annexure - A.

Statement pursuant to Listing Agreement

Your Company''s shares are listed with the National Stock Exchange of India Ltd. and the BSE Ltd. We have paid the annual listing fees and there are no arrears.

Report on Corporate Governance

The Report on Corporate governance is annexed herewith. Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and under obligations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board carries out the annual performance evaluation of its own performance, of the Directors individually as well as the evaluation of working of its various Committees. A structured questionnaire is prepared after taking into consideration the inputs received from Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, board culture, execution and performance of specific duties, obligations and governance.

A separate exercise is carried out to evaluate the performance of individual Directors including the Chairman of the Board, who are evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and of its minority shareholders, etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors is carried out by the Independent Directors who also review the performance of the Secretarial Department.

The Directors expressed their satisfaction with the evaluation process.

Appraisal of Board''s performance

It includes setting individual and collective roles and responsibilities of its Directors, creating awareness among Directors about their expected level of performance and thereby improving the effectiveness of the Board.

Board evaluation contributes significantly to improved performance and aims at,

- Improving the performance of Board in line with the corporate goals and objectives.

- Assessing the balance of skills, knowledge and experience on the Board.

- Identifying the areas of concern and issues to be focused on for improvement.

- Identifying and creating awareness about the role of Directors individually and collectively as Board.

- Fostering team work among the members of the Board.

- Effective coordination between the Board and Management.

- Overall growth of the organization

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up by the Company to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Since the number of complaints filed during the year was Nil, the Committee prepared a Nil complaints report.

Statutory Auditors

M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. AAC-2085) were appointed as the statutory auditors of the Company for a period of five years at the Annual General Meeting (AGM) of the Company held on July 29, 2017, to hold office from the conclusion of the Forty Third AGM till conclusion of the Forty Eighth AGM to be held in the year 2021.

Internal Auditors

The Internal Auditors M/s. M.S. Krishnaswamy & Co have played an important role in strengthening the internal controls within the Company. The Company''s System Auditors M/s. Aneja Associates contributed significantly in improving our Business processes and our compliance & governance systems and practices.

Cost Auditors

Mr. G. Sundaresan, Cost Accountant, was appointed as Cost Auditor to conduct cost audit of the cost records maintained by our Company in respect of products manufactured during the Financial Year 2018-19. The Cost Audit Report was filed with MCA, Government of India, by the Company on August 16, 2018, well before September 30, 2018, the due date of filing for the Financial Year 2017-18.

Secretarial Audit

The Board appointed M/s. R.M. Mimani & Associates LLP, Company Secretaries, to conduct Secretarial Audit for the Financial Year 2018-19. The Secretarial Audit Report for the Financial Year ended March 31, 2019 is attached to this Report. The Secretarial Audit Report does not contain any qualification, or reservations or adverse remark.

Web link of Annual Return

Pursuant to provisions of section 92(3) and Section 134

(3) (a) of the Companies Act, 2013 a copy of Annual Return of the Company for the year ended March 31, 2019 will be placed on the website of the company at http://www. thirumalaichemicals.com

Personnel

In terms of the provisions of section 197(12) of the Companies Act, 2013 read with the rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the names and other particulars of employees are set out in the Annexure B to the Directors'' report.

PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES OF THE COMPANIES ACT, 2013:

a) The ratio of the remuneration of each Director to the median employee''s remuneration for the financial year and such other details as prescribed is as given below:

Name of Director Ratio

1. Mr. R. Parthasarathy (Managing Director) 95.72: 1

2. Mrs. Ramya Bharathram (Executive Director and CFO*) 41.08 : 1

3. Mr. P. Mohana Chandran Nair (Executive Director) 16.74 : 1

For this purpose, sitting fees paid to the Directors have not been considered as remuneration.

b) The percentage increase in remuneration of Managing Director, Chief Financial Officer, Company Secretary or Manager, if any, in the Financial Year:

Mr. R. Parthasarathy - (Managing Director) : (13.27)%

Mr. T. Rajagopalan - (Company Secretary) : (1.4)%

Mrs. Ramya Bharathram, Whole time Director, was appointed as the Chief Financial Officer of the Company on July 24, 2018. No additional remuneration was paid to her for functioning as CFO.

c) The percentage increase in the median remuneration of employees in the Financial Year: 0.37 %

d) The number of permanent employees on the rolls of Company: 487

e) The explanation on the relationship between average increase in remuneration and Company performance:

The Company''s PAT has declined from 1,440 Million to 961 Million, a decrease of 33% against which the average decrease in remuneration is 19%;

f) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company:

Name

Designation

Remuneration IN ''*

% Increase In Remuneration

PAT

in

Mn

%

decrease in PAT

Mr.R. Parthasarathy

Managing

Director

32,703,257

(13.27) %

964

( 33 )%

@Mr.P.

Krishnamoorthy

Chief

Financial

Officer

2,108,759

-

#Mrs. Ramya Bharathram

Whole Time Director and Chief Financial Officer

14,034,800

(2.06)%

Mr. T.Rajagopalan

Company

Secretary

3,129,200

(1.40) %

* It consists of Salary/Allowance & Benefits. @ CFO till 31.05.2018

# Appointed as a CFO on 24.07.2018

The remuneration of the Managing Director Mr. R. Parthasarathy includes the commission of '' 15 Mn, which works out to approximately 1.55 % to the net profit for the Financial Year ended March 31, 2019.

As per the Compensation Policy, the compensation of the key managerial personnel is based on various parameters including Internal Benchmarks, External Benchmarks, and Financial Performance of the Company.

g) Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the Current Financial Year and Previous Financial Year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

Date / Particulars #

Issued Capital (No. of Shares)

Closing Market Price per share ''

EPS

in Rs,

PE

Ratio

Market Capitalization ('' in Cr)

31.03.2018

102388120

170.26

14.06

12.11

1743.26

31.03.2019

102388120

88.30

9.03

9.77

904.09

Increase / (Decrease)

NA

(81.96)

(5.03)

(2.34)

(839.17)

% of

Increase/

(Decrease)

NA

(48.14)

(35.78)

(19.32)

(48.14)

Issue Price of the share at the last Pubic Offer (IPO)

1

Increase in market price as on 31.03.2019 as compared to Issue Price of IPO

87.30

Increase in %

8730

# figures recast to reflect corresponding to split of face value from 17th August 2018 (from '' 10 each to Re.1 each).

h) Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last Financial Year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration:

Average increase in remuneration 7.99% for Employees other than Managerial Personnel & 1.89 % for Managerial Personnel (KMP and Senior Management)

i) The key parameters for any variable component of remuneration availed by the Directors:

Except Mr. R. Parthasarathy (Managing Director), Mrs. Ramya Bharathram (Executive Director) and Mr. P. Mohana Chandran Nair, (Executive Director), no Directors have been paid any remuneration, as only sitting fees are paid to them. The said Directors have not been paid any variable remuneration. The Directors are eligible for a commission on Net Profits as per the provision of sec.197 of the Companies Act, 2013.

j) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid director during the year: Not Applicable k) If remuneration is as per the remuneration policy of the Company: Yes

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

The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-C.

Cautionary Statement

Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation, plant breakdowns, industrial relations, etc.

Acknowledgements

The Directors would like to place on record our sincere appreciation for the continued support given by the Banks, Internal Auditors, Government Authorities, Customers, Vendors, Shareholders and Depositors during the period under review.

The Directors also appreciate and value the contributions made by the employees of our Company at all levels.

For and on behalf of the Board of Directors

Mumbai R. Parthasarathy R. Ravi Shankar

6th May 2019 Managing Director Director

(DIN:00092172) (DIN:01224361)

Source : Dion Global Solutions Limited
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