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DIRECTOR'S REPORT

Andhra Petrochemicals Ltd.

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Market Cap. (₹) 376.00 Cr. P/BV 1.66 Book Value (₹) 26.65
52 Week High/Low (₹) 99/36 FV/ML 10/1 P/E(X) 5.38
Bookclosure 10/07/2019 EPS (₹) 8.22 Div Yield (%) 3.39
Year End :2019-03 

Dear Shareholders,

The Directors have pleasure in presenting the Thirty Fifth Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2019.

CORPORATE OVERVIEW:

Your Company is the sole manufacturer of Oxo-Alcohols in India. The Oxo-Alcohols consist of the products viz., 2 Ethyl Hexanol, Normal Butanol and Iso Butanol. Your Company is an associate of The Andhra Sugars Ltd., and has its Regd. Office at Venkatarayapuram, Tanuku - 534 215, W.G.Dist.

FINANCIAL RESULTS:

Performance of the Company for the Financial Year ended 31st March, 2019 is summarised below:

(Rs. in lakhs)

2018-19

2017-18

Net Sales (excl. Excise Duty)

66586.22

51820.00

Profit / (Loss) before Interest & Depreciation

11140.39

6861.79

Less: Interest

591.81

1186.54

Depreciation

1049.48

949.27

Profit / (Loss) after Interest and Depreciation before Extra-ordinary item

9499.10

4725.98

Exceptional items

--

--

Profit / (Loss) before Tax

9499.10

4725.98

Provision for:

Current Tax

2071.12

1000.28

Adjustment of Tax Expense for earlier years

27.18

--

Deferred Tax

417.44

(924.37)

Profit / (Loss) after Taxation

6983.36

4650.07

Other Comprehensive Income

(101.27)

(231.42)

Total Comprehensive Income for the period

6882.09

4418.65

Balance brought forward from previous year

4332.83

(85.82)

Profit carried forward to next year

11214.92

4332.83

OPERATIONAL AND FINANCIAL PERFORMANCE:

During the Financial Year 2018-19, the Plant produced 82,791 MTs (previous year 76,257 MTs) of Oxo Alcohols which works out to 113.4% (approx.) capacity utilization. Sales during the year were 82,818 MTs (previous year 78,049 MTs). Company posted a Net Profit of Rs.68.82 crores during the Financial Year 2018-19 as compared to Net Profit of Rs.44.19 crores during the previous year.

DIVIDEND:

Your Directors are pleased to inform that the Board of Directors has recommended a Dividend of Rs.1.50 paise [Normal Dividend Re.1/- and Special Dividend 50 paise in view of completion 25 years of production] per share (@15% Dividend on 8,49,71,600 Equity Shares of Rs.10/- each)] for the Year 2018-19 commensurate with the Profit earned. The outflow towards payment of Dividend would amount to Rs.15.36 crores inclusive of tax thereon. Dividend, if approved by the shareholders, will be paid to all the eligible shareholders.

CAPITAL & RESERVES:

Authorised and Paid-up Capital:

The Authorised Capital of the Company is Rs.125.00 crores and the Paid-up Capital is Rs.84.97 crores.

Reserves:

The total Reserves position as on 31.3.2019 stood at Rs.141.51 crores against Rs. 72.69 crores in the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS:

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The year 2018-19 was reasonably a good year as Plant could operate at more than 113% capacity and Company could market products at a reasonably good price.

For the year Company posted a Net Profit of Rs.69.83 crores (after Tax).

OPPORTUNITIES AND THREATS:

Estimated demand of Oxo-Alcohols at 2,50,000 MTPA, with healthy growth rate of 8% to 10% per annum, in general, is a good opportunity for the Company with existing capacity of 80,000 MTPA, considering the huge demand-supply gap in the country. With Hindustan Petroleum Corporation Limited (HPCL) able to meet full Propylene requirement it is expected that there will be no constraints in the Company’s production capability. Sales realisation is also expected to improve on account of Anti-Dumping Duties imposed by Govt. of India on imports from certain countries.

Over and above the imports from existing destinations, imports from newer destinations like Taiwan, Brazil, USA and Japan has become a challenge to the Company.

However commissioning of BPCL Oxo-Alcohols plant at Cochin in 2019/2020, downturn in product price scenario internationally and dumping of the products and currency fluctuations may impact the Company’s performance and recovery process to some extent.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

As required by the provisions of Companies Act, 2013, Internal Control Systems Report has been appended to Independent Auditor’s Report given by Statutory Auditors regarding Financial Year 2018-19. The Company has internal control systems commensurate with the size of the business operations. A Chartered Accountants firm is engaged to carry out internal audit covering the entire operations. The audit firm submits internal audit report periodically with their suggestions and /or corrections. Audit Committee critically deliberates and reviews such internal audit reports and ensures effectiveness of the control systems through necessary recommendations.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:

In the area of Human Resources, the employees are being trained to meet the Plant requirements from time to time by motivating them in a positive way and the industrial relations continue to be cordial throughout the year.

The total number of employees employed as on 31.03.2019 is 297.

FUTURE OUTLOOK:

Company’s performance capability is expected to be good as the Propylene supply from HPCL is good. Company has signed Natural Gas (NG) term sheet supply agreement with GAIL. Natural Gas (NG), which is expected to be available in the last Quarter (Q4) of 201920, may likely to bring down the cost of production. However, the cost benefit will be based on the NG prices which are going to be fixed once in six months. Mainly, the Company’s performance to a large extent is dependent on international supply and demand for these products and their prices which are influenced by crude prices, exchange fluctuations and dumping by sources other than those covered by Anti-Dumping Duty.

RISKS AND CONCERNS:

The Company is dependent on a single source - HPCL Visakha Refinery for its major raw material i.e., Propylene. Crude prices, exchange rate fluctuations and political instability in the Gulf area are of major concern.

CAUTIONARY STATEMENT:

The statements describing the Company’s outlook, estimates or predictions may be forward-looking statements based on certain assumptions of future events. Actual results may differ materially from those expressed or implied, since the Company’s operations are influenced by external or internal factors. Your Company closely monitors all major developments likely to affect the operations and will respond to meet the potential threats and to gain from any possible opportunities.

DEPOSITS:

During the year under review, your Company did not accept any deposits within the meaning of provisions of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

SAFETY, HEALTH AND ENVIRONMENT:

Company has evolved Safety, Health and Environment Policy.

Safety:

Company has completed 13 million accident free man hours in the last 10 years.

Total 8500 man-hours used for conducting Safety trainings for employees including contract workmen induction as well as refresher trainings.

Safety of Human and Plant assets are of top priority to the Company. Continuous training of personnel at various levels on safety and strict compliance of regulations is ensured which resulted in another accident-free year.

- Company has been awarded with Winner (Gold Trophy) for lowest Average Frequency Rate (2013, 2014, 2015 and 2016) and in achieving accident-free year - 2016 in National Safety Awards (NSA) presented by the Directorate General Factory Advice Services and Labour Institute (DGFASLI), Govt. of India on 17.09.2018 at New Delhi.

Health:

Health monitoring of all employees including contract labour and canteen workers is done on regular basis.

Environment:

On line emission, Ambient air and effluent monitoring systems are in place. Data is being transmitted to CPCB and APPCB for monitoring.

INSURANCE:

All the insurable assets of the Company including Plant and Machinery, Buildings and Inventories are insured on reinstatement value basis.

LAND TAKEN ON LEASE FROM VISAKHAPATNAM PORT TRUST

Company has taken on lease 75.00 Acres of land from Visakhapatnam Port Trust on which Oxo-Alcohol Plant has been established. The land is located adjacent to HPCL, Visakha Refinery which supplies major Raw Materials. In this connection, a Lease Agreement was entered into on June 27, 1989 with Visakhapatnam Port Trust for a period of 30 years which expires on June 26, 2019. Your Company has initiated necessary steps to enter into a fresh Lease Agreement for a period of 30 years for continuation of the Lease.

LISTING:

The Equity Shares of your Company are listed on the Bombay Stock Exchange. Listing fees has been paid.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure - “A” and forms an integral part of this report.

DIRECTORS:

Sri Surinder Kumar Kapoor ceased to be Director, consequent upon his sad demise on 7.6.2018. Your Directors place on regard their commendable appreciation of the valuable guidance rendered by him during his tenure as Director of the Compay.

Sri M R B Punja, Chairman, demitted his office as Director with effect from 5.8.2018. Your Directors place on record their commendable appreciation of the valuable guidance rendered by him during his tenure as Director of the Company.

Dr. P Kotaiah, Independent Director, was appointed as Chairman of the Company with effect from 5.8.2018.

Sri P Narendranath Chowdary was appointed as Managing Director of the Company with effect from 5.8.2018.

Smt. Y V Anuradha, I.A.S., Nominee Director of APIDC, resigned on 18.4.2019. Your Directors place on record their commendable appreciation of the valuable guidance rendered by her during her tenure as Director of the Company.

Sri P Venkateswara Rao was co-opted by the Board at its Meeting held on 5.11.2018 as Additional Director under Independent category. His appointment as Independent Director is being placed for the approval of shareholders at the ensuing 35th AGM.

The present term of Sri A A Krishnan as Independent Director expires at the conclusion of 35th AGM. Your Directors propose his appointment for second term as mentioned in the relevant Resolution.

Sri M. Gopalakrishna, I.A.S., (Retd.,) was co-opted by the Board at its meeting held on 25.5.2019 as Additional Director under Independent category. His appointment as Independent Director is being placed for the approval of shareholders at the ensuing 35th AGM.

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Directors Sri Mullapudi Thimmaraja and Sri Solomon Arokiaraj, I.A.S., retire by rotation at the ensuing 35th AGM and being eligible offer themselves for reappointment. Their reappointment is being placed for the approval of shareholders at the ensuing 35th AGM.

KEY MANAGERIAL PERSONNEL:

Details of Key Managerial Personnel of the Company are as under:

Sl No.

Name of the person

Designation

1.

Sri K Narasappa

President

2.

Sri P Ratna Rao

Senior General Manager (Finance) [CFO]

3.

Sri M V V S V Prasadu

Deputy Secretary & Assistant Manager

(w.e.f., 25.5.2019)

(Finance)

AUDIT COMMITTEE:

Audit Committee, which was reconstituted on 4.8.2018, comprises of Non-Executive Independent Directors, Sri A A Krishnan, Dr. P Kotaiah, and Dr (Smt) D Manjulatha and Sri Ravi Pendyala, Non-Executive Non-Independent Director, as its members. Sri A A Krishnan is the Chairman of the Committee.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed Nekkanti S R V V S Narayana & Co., Company Secretaries (CP No.7839), Hyderabad, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure - “B” and forms an integral part of this report.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Board has carried out a formal process of evaluation of the Board, its Committees and the individual Directors. The performance was evaluated based on the parameters such as effectiveness of Board / Committee process and functioning, contribution of Board / Committee members to overall effectiveness of the Board / Committee, avoiding conflict with Company’s interest, bonafide discharge of responsibilities in the interest of the Company and upholding ethical standards, integrity and probity etc.

Independent Directors met on 25.5.2019 wherein as per the Report of lead Independent Director the performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The evaluation process reflected valuable contribution of members of the Board / Committee thereof.

NUMBER OF MEETINGS OF THE BOARD:

The details of the Number of Meetings of the Board held during the Financial Year 2018-19 are given in the Corporate Governance Report which forms part of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY:

Your Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to financial statements.

WHISTLE BLOWER POLICY:

As per the provisions of the Companies Act, 2013 and Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has established a Vigil Mechanism / Whistle Blower Policy for Directors and employees to report genuine concerns on unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct in prescribed manner. The Policy provides adequate safeguards against victimisation of the complainant and direct access to the Chairman of the Audit Committee. The protected disclosures, if any, reported under this Policy will be appropriately and expeditiously investigated.

The Whistle Blower Policy may be accessed on the Company’s website at the link: http://www.andhrapetrochemicals.com/Whistle Blower Policy.pdf.

RISK MANAGEMENT:

Your Board of Directors at its Meeting held on 27.3.2015 framed and adopted a Risk Management Policy of the Company to identify and mitigate the risks. The risk management framework defines the risk management approach of the Company and includes periodic review of such risks and also risk mitigation measures and reporting mechanism of such risks. Risk Management Policy of your Company can be viewed by entering the url http://www.andhrapetrochemicals.com/POLICY ON CORPORATE RISK MANAGEMENT.pdf in the web browser.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:

As per the provisions of Section 135 & Schedule VII of the Companies Act, 2013 and Company’s CSR Policy, Company had spent an amount of Rs.10,72,767/- CSR expenditure for the Financial Year 2018-19. The report on CSR activities as required under Companies (CSR Policy) Rules, 2014 is set out as Annexure - “C” forming part of this report.

NOMINATION AND REMUNERATION COMMITTEE:

Nomination and Remuneration Committee, which was re-constituted on 4.8.2018, comprises of Dr. (Smt.) D Manjulatha, Independent Director, as Chairperson and Sri A A Krishnan, Independent Director, Sri Mullapudi Thimmaraja and Dr. V N Rao, Non-Independent Directors, as its members.

NOMINATION AND REMUNERATION POLICY:

The Board of Directors of your Company has, on recommendation of the Nomination & Remuneration Committee, adopted a Nomination & Remuneration Policy which lays down the framework in relation to the criteria for selection and appointment of Board members and remuneration of Directors / Key Managerial Personnel and Senior Management of the Company. This Policy can be accessed on the Company’s website at the link: http://www.andhrapetrochemicals.com/NOMINATION REMUNERATION POLICY.pdf.

AUDITORS:

M/s C V Ramana Rao & Co., Chartered Accountants, Visakhapatnam, were appointed as Statutory Auditors of the Company for the five Financial Years from 2017-18 to 2021-22. Fixation of their remuneration payable for the Year 2019-20 is being placed at the ensuing 35th AGM for the approval of Members. The total fees paid by the Company for the year 2018-19 to the Statutory Auditors for all services rendered by them is Rs. 6.25 lakhs.

COST AUDITORS:

M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad, were appointed by the Board as Cost Auditors of the Company for the year ended 31st March, 2019. Cost Auditors’ Report in respect of Financial Year 2017-18 has been filed with the Ministry of Corporate Affairs on 20th August, 2018, i.e., within the stipulated time.

COST RECORDS:

Company has complied with the requirement with regard to maintenance of cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with the Rule 8 (3) of Companies (Accounts) Rules, 2014 are given below:

I) CONSERVATION OF ENERGY

1. Steps taken or impact on conservation of energy:

a) ETP aerobic high pressure plant air (6.5 kg/cm2) replaced by low pressure air (0.5 mg/cm2) by installing 60 kw Air Blower. Energy saved till 31st March, 2019 is around Rs.12.00 lakhs and expected energy savings per annum would be around 6,13,200 units equivalent to Rs.37.00 lakhs per annum.

b) VFD s’ installed on P-856 A/B pumps and Boiler feed water pumps. Energy saved till 31st March, 2019 is around Rs.13.00 lakhs and expected energy savings per annum would be around Rs.16.00 lakhs per annum.

c) Replaced 600 Nos. 40W Flurocent tubes by 20 W LED bulbs, 150 Nos. CFL tubes (36 W) by 18 W LED tubes, 130 MV lamps (125 W) by 45 W LED fittings. Expected energy savings for the above replacement would be around Rs. 6.50 lakhs/annum

2. Steps taken by the Company for utilising alternative source of energy.

Company could not take up any steps in this regard in view of the non-viability.

3. Capital investment on Energy conservation equipments: Rs.17.00 lakhs.

II) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

a) Efforts made & Benefits: Technology has been fully absorbed and various innovative ideas enable the Company to operate the Plant even above 105% load.

b) Imported Technology: NIL

c) Expenditure incurred on R & D: NIL

III) Foreign Exchange earning and outgo: (On cash basis)

(Rs. in lakhs)

For the year ended

For the year ended

31.3.2019

31.3.2018

i. Earnings

--

--

ii. Outgo

775.84

433.74

PARTICULARS OF EMPLOYEES:

There is no employee of your Company drawing a remuneration requiring disclosure under Section 197 (12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016.

None of the employees holds (by himself or along with his spouse and dependent children) more than 2% of the Equity Shares of the Company.

DEMATERIALISATION OF SHARES:

As on 31st March, 2019, out of the total number of 8,49,71,600 Equity Shares, 7,79,98,194 Equity Shares constituting 91.79% stand dematerialised.

RELATED PARTY TRANSACTIONS:

As per the provisions of Regulation 23 of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has established a Policy on materiality of Related Party Transactions and on dealing with Related Party Transactions.

The Policy on Related Party Transactions as approved by the Board of Directors is available on the website of the Company. The weblink of the same is http://www.andhrapetrochemicals.com/POLICY ON RELATED PARTY TRANSACTIONS.pdf .

All transactions entered with Related Parties for the year under review were on arm’s length basis and in the ordinary course of business.

All Related Party Transactions are placed before the Audit Committee and the Board for approval. Omnibus approval is granted by the Audit Committee on yearly basis for transactions which are repetitive in nature. A statement giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and ratification on a quarterly basis.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

Your Company has in place a Prevention of Sexual Harassment Policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. In compliance with the provisions of the said Act, an Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment. During the year 2018-19, there were no complaints received by the ICC.

PARTICULARS OF REMUNERATION:

The information required under Section 197 of the Act and the Rules made thereunder in respect of employees of the Company, is as follows:-

(a) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the Financial Year: Our Directors draw remuneration only by way of sitting fees. The details of the same are provided in Corporate Governance which forms an Annexure to this report. No other remuneration is drawn by them. Managing Director does not draw any remuneration. Hence, the ratio of remuneration of each Director to the median remuneration is not required to be given.

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

Board of Directors at its meeting held on 5.11.2018 has approved enhancement of sitting fees from Rs. 10,000/- to Rs. 20,000/- for attending each meeting of Board and from Rs. 10,000/- to Rs. 15,000/- for attending each meeting of committee of the Board. Other details are as follows:

Name of the Person

% increase in remuneration

Sri K Narasappa, President

Sri P Ratna Rao, Senior General Manager (Finance) [CFO]

Sri M V V S Prasadu, Deputy Secretary & Asst. Manager (Finance)

14.76%

7.00%

Not applicable

(c) the percentage increase in the median remuneration of employees in the Financial Year: 0.93%

(d) the number of permanent employees on the rolls of Company: 297

(e) the explanation on the relationship between average increase in remuneration and Company performance;

On an average, employees received an increase of 0.93%. The increase in remuneration is in line with the market trends. The decreased percentage in the median remuneration compared to previous year is due to pay revision to non-executive cadre employees during the Financial Year 2017-18. A direct co-relation of employee remuneration and Company performance as envisaged in the rules is not feasible considering the qualitative factors involved in measuring performance.

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

Particulars

Rs. in lakhs

Remuneration of Key Managerial Personnel (KMP) during Financial Year 2018-19 (aggregated)

99.49

Revenue from operations

66858.17

Remuneration (as % of revenue)

0.15%

(g) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current Financial Year and previous Financial Year and percentage increase over 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 in case of listed companies, and in case of unlisted companies, the variations in the networth of the Company as at the close of the current Financial Year and previous Financial Year:

Particulars

Unit

As at 31st March, 2019

As at 31st March, 2018

Variation

Closing rate of share at BSE

Rs.

54.65

57.40

4.79%

EPS (Consolidated)

Rs.

8.22

5.47

50.27%

Market capitalisation

Rs./lakh

46436.98

48773.70

4.79%

Price Earnings ratio

Ratio

6.65

10.49

36.61%

Percentage in bracket represents negative percentage.

(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 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 2018-19 was 0.93%. Percentage increase in the managerial remuneration for the year was NIL.

(i) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company:

(i) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company:

Particulars

President

Chief Financial Officer

Company Secretary (w.e.f.18.3.2019)

Rs. in lakhs

Rs. in lakhs

Rs. in lakhs

Remuneration

Revenue

Remuneration (as % of revenue)

64.96

66858.17

0.10%

34.07

66858.17

0.05%

0.46

66858.17

(j) the key parameters for any variable component of remuneration availed by the Directors: Not applicable as Directors do not draw any remuneration except by way of sitting fees. No remuneration is drawn by Managing Director.

(k) 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 as Directors’ remuneration consists of only sitting fees. No remuneration is drawn by Managing Director.

(l) affirmation that the remuneration is as per the remuneration Policy of the Company:

The Company’s Remuneration Policy is driven by the success and performance of the individual employees and the Company. Through its compensation package, the Company endeavours to attract, retain, develop and motivate a high performance staff. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company affirms remuneration is as per the Remuneration Policy of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations.

DIRECTORS’ RESPONSIBILITY STATEMENT:

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

i) that in the preparation of the Annual Accounts for the year ended 31st March, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

ii) that Accounting Policies have been selected and applied consistently and that judgements and estimates made 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, 2019 and of the profit of the Company for the year ended on that date;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared 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; and

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.

REPORT ON CORPORATE GOVERNANCE:

As required under Regulation 34(3) of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the report on Corporate Governance and the Auditors’ Certificate on the compliance of Corporate Governance are annexed and form part of the Directors’ Report (Annexure “D”).

ACKNOWLEDGEMENTS:

Your Directors acknowledge the co-operation and continued valuable support received from Central and State Government authorities, the Promoters - The Andhra Sugars Limited and Andhra Pradesh Industrial Development Corporation Ltd., (APIDC), Financial Institutions, Banks, Shareholders, Customers, Hindustan Petroleum Corporation Ltd., (HPCL), Gas Authority of India Ltd., (GAIL) and other Suppliers. Your Directors also wish to place on record their deep sense of appreciation of the valuable contribution made by the employees at all levels.

On behalf of the Board

Hyderabad Dr. P. Kotaiah

25.5.2019 Chairman

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