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DIRECTOR'S REPORT

Alkyl Amines Chemicals Ltd.

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Market Cap. (₹) 2162.02 Cr. P/BV 5.72 Book Value (₹) 185.35
52 Week High/Low (₹) 1107/653 FV/ML 5/1 P/E(X) 25.11
Bookclosure 06/08/2019 EPS (₹) 42.22 Div Yield (%) 0.75
Year End :2018-03 

Dear Shareholders,

The Directors take pleasure in presenting the 38th Annual Report on the business and operations of your Company together with Audited Statement of Accounts for the financial year ended March 31, 2018.

1. FINANCIAL RESULTS:

The financial performance of your Company is as summarized below for the year under review:

2017-18 Rs. In Lakhs

2016-17 Rs. In Lakhs

Revenue from operations

62482

54179

Other Income

316

113

Total Income

62798

54292

Profit before interest, depreciation & taxation

11959

9628

Finance costs

815

806

Depreciation

1567

1429

Profit before tax

9577

7393

Provision for tax

3148

2357

Net Profit after tax

6429

5036

Other Comprehensive Income

(47)

(66)

Total Comprehensive Income

6382

4970

Opening balance in retained earnings

18925

13969

Profit available for appropriations

25307

18939

Other adjustments due to IND AS:

- Impact of adjustment in derivatives financial instruments

63

9

- Amalgamation of subsidiary

0

(23)

Dividends paid for the year 2016-17

(1020)

-

Tax on dividends

(207)

-

Closing balance in retained earnings

24143

18925

The Company has adopted Ind AS with effect from 1st April, 2017 with a transition date of 1st April, 2016. Accordingly, results for the year ended 31st March, 2018 have been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India. Previous periods figures have been restated as per Ind AS to make them comparable.

2. PERFORMANCE HIGHLIGHTS:

During the year under review, total Income increased from Rs.54292 lakhs to Rs. 62798 Lakhs, an increase of 16%.

Profit before tax for the year was Rs.9577 Lakhs compared to Rs.7393 lakhs of the previous year (an increase of 30%) and Profit after tax was Rs. 6429 Lakhs as against Rs.5036 lakhs of the previous year (an increase of 28%).

Further details of operations are given in the Management Discussion and Analysis Report annexed (Annexure 1).

3. DIVIDENDS:

Your Directors are pleased to recommend for your approval dividend of Rs. 7/- on Equity Share of Rs.5/- each for the year ended March 31, 2018 (Previous Year: Dividend of Rs.5/- per share of Rs.5/- each). The total amount of dividend including Income tax thereon amounts to Rs. 1718 Lakhs (Previous Year Rs.1227 Lakhs). You are requested to approve the same.

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in this Annual Report. (Annexure 1)

5. NEW PROJECTS:

We axe pleased to report that our Methylamines Plant at Dahej was commissioned on March 24, 2018. Commissioning of the project was delayed due to unexpected heavy rains at Dahej.

Our proposed capital expenditure includes:

a) Enhancing aggregate capacity of aliphatic amine hydrochloride at various locations;

b) Enhancing DEHA capacity at Kurkumbh;

c) Enhancing capacity of Acetonitrile;

d) Adding to hydrogenation capacity; and

e) Investment in environment sustainability and safety aspects.

6. SUBSIDIARY/ASSOCIATE COMPANIES

a. Alkyl Speciality Chemicals Limited:

Application for merger of this subsidiary company with our Company was approved by National Company Law Tribunal and the Subsidiary Company is merged with this Company with effect from April 1, 2016.

b. Diamines & Chemicals Limited, Vadodara:

Diamines and Chemicals Ltd., Vadodara, our associate company, has achieved a total income (net) of Rs.3994.29 Lakhs as against Rs. 3882.38 Lakhs of the previous year. They made a profit after tax of Rs. 708.90 Lakhs as against Rs.479.81 Lakhs of the previous year. They have declared a dividend of Rs.2.50 per equity share of Rs.10/- each for the year ended March 31, 2018.

Pursuant to IND AS 110, Consolidated Financial Statements presented by the Company include the financial information of Diamines and Chemicals Ltd.

7. RESPONSIBLE CARE®:

Responsible Care is a voluntary initiative of International Council of Chemical Associations, implemented in India by Indian Chemical Council to safely handle the products from inception in the research laboratory, through manufacture and distribution, to ultimate reuse, recycle and disposal, and to involve the public in the decision making processes. We have got our company recertified for Responsible Care®in Sept 2017. Several programs and studies related to safety, environment and health have been taken up and are being implemented.

Your Company has participated in developing Product Safety and Stewardship and Product distribution code as a part of initiative taken by Indian Chemical Council (ICC) along with other chemical companies. The objective was to update codes after rigorous implementation of Responsible Care program and findings of audits.

7.1. ENERGY CONSERVATION AND TECHNOLOGY ABSORPTION:

The information on conservation of energy, technology absorption and other details stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith in ‘Annexure 2”.

7.2. SAFETY, HEALTH AND ENVIRONMENT:

Keeping in line with the core values of being a responsible corporate citizen, an Integrated Management System to ensure an effective Environment Management and Occupational Health Management has been established by your Company.

In the new manufacturing site at Dahej, which was commissioned recently, safety and Environment management systems, similar to those followed in Kurkumbh and Patalganga are being implemented. Safety performance would be monitored regularly on monthly basis in monthly review meetings.

(a) Safety: We encourage a high level of awareness of safety issues among our employees and strive for continuous improvement. All incidents are investigated by team and discussed in safety committee meetings and corrective actions, wherever necessary, are taken immediately. Employees are trained in safe practices to be followed at workplace. Compliance of safety training has improved over the years and there is active participation from employees. Safety Professional meetings are organized by Industrial Association in Mutual Aid scheme in the respective industrial areas. We are one of the leading members of Local and District Crisis Group and have earned reputation amongst society around and statutory authorities for prompt support during Disaster Management events.

External safety audit is carried out by outside agencies and the audit recommendations are being implemented. No major deviation has been observed.

Safety promotional activities such as celebration of National Safety Week, World Environment Day, Fire Service Day are celebrated with active participation of employees and contract workers. Competition are held and prizes are awarded to successful participants. Persons from neighboring industries and Govt. officers are invited for closing safety week ceremony.

The Company conducts scheduled mock drill for emergency scenarios with the active involvement of its staff and occasionally in the presence of external stakeholders. The gaps, if any, are immediately addressed for closure. To strengthen the Emergency Response, the company conducts truncated drills and table top exercises to assess the performance of emergency responders. Daily tool box talks and safety talks to officers and contractors are done by the company staff.

The Company has a Disaster Management Plan within the Company, either in the form of providing risk information to the community or responding in case of any emergency, as a part of its social responsibility.

Online deviation reporting system has been installed with access to all employees including contract employees. The deviations recorded are promptly corrected by Area in-charge and closed. Employees are rewarded for good suggestions. This system encourages involvement of employees at all levels.

The Safe employee and Safe contractor awards initiated in 2015-16 were distributed accordingly in 2017-18

There have been no major incidents in any site during the year 2017-18 Minor incidents are recorded and investigated regularly. Walkthrough rounds by senior managers are conducted monthly and each area of the factory is visited regularly. Observed deviations are recorded and closed immediately. Special budget is allocated to Site Head for this activity.

(b) Health : Health of employees is of utmost importance. Periodic check up of employees is done to monitor their health. Regular work area monitoring to check concentration of chemicals, noise level, and quality of ambient air is done. We also have well equipped Occupation Health Centers with a Doctor, appropriate staff and own AMBULANCE Vehicle at manufacturing sites at Patalganga and Kurkumbh. We have team of employees trained as FIRST AIDERS who contribute their skills while on duty as well as away from duties to serve the society. Occupational Health and Safety issues are continuous focus points for your Company. Both sites are certified to BS OHSAS 18001:2007.

New employees undergo medical check up before they join duty. Training programs are arranged on lifestyle diseases by eminent doctors. Health camps (including blood donation camps) are arranged. Drivers are provided training on health issues. Occupational health Centres have been upgraded and modern equipments are provided. Health promotional activities, such as celebrating International Yoga day at all our sites and conducting Yoga training of our employees and contractors were done.

(c) Environment:

In line with our Alkyl Policy, we give utmost importance to Environment protection and adherence to pollution control norms. Environmental Management System at Patalganga and Kurkumbh are certified to ISO 14001:2015. We have successfully completed the upgradation to ISO 14001:2015 in August 2017.

i) Air Emissions - We monitor regularly emissions from various sources and are very particular about compliance with statutory requirement. Projects are undertaken for reduction of emissions. During the year, we have provided at Patalganga, sprinkler system at coal storage, conveyor and crusher area.

ii) Liquid Waste Treatment - We have integrated Effluent Treatment Plants and we maintain outlet standards within the prescribed limits by hydrocavitation method . Continuous efforts are made by improving the internal processes to minimize the quantity of effluent generated. During the year, we have enhanced the capacity of tertiary plant in ETP to bring down TSS. Our Company is also a member of the CETP located at Patalganga and Kurkumbh. We are also planning for zero discharge for our Kurkumbh Plant. First phase of the project has been commissioned. The remaining phase will be commissioned shortly.

iii) Solid Waste Management - Solid wastes are disposed of to secured landfill or sent for incineration at the Hazardous waste disposal facility.The manufacturing sites at Patalganga, Kurkumbh and Dahej are members of the Authorized Common Hazardous Waste Transport, Storage & Disposal Facility namely; Mumbai Waste Management Limited, Taloja, Maharashtra Enviro Power Limited, Ranjangaon and Bharuch Enviro Infrastructure Ltd. respectively. We have a program in place for waste management using reduction/ recycle/ reuse/ recovery techniques. These programs are continuously reviewed for monitoring their progress and effectiveness.

iv) Green belt - Tree plantation inside and outside the factory premises is given utmost importance and is done on a regular basis

v) Non conventional Renewable Energy and Natural Resource conservation -

Our 2 MW Solar Power Plant at Bhoom, Maharashtra, is working satisfactorily. Solar Water heaters have been installed at the staff colony. Use of water from the Sewage Treatment Plant for gardening, and number of GO GREEN activities were undertaken at the plant and staff colony.

vi) New storm water drainage system has been constructed in Kurkumbh to regulate flow of water to outside factory premises.

8. CORPORATE SOCIAL RESPONSIBILITY:

Your Company works with a deep sense of social commitment and contributes towards the welfare of the society that it is part of. Your Company’s concerns are focused on Environment Sustainability & Rural Development, Health/Women Empowerment, Education/Sports and others. The Annual Report on CSR activities is annexed herewith as ‘Annexure 3”.

9. DIRECTORS:

Mr. Suneet Kothari retires by rotation at the Annual General Meeting and, being eligible, has offered himself for re-appointment. Your Directors recommend his reappointment.

9.1 Board Evaluation

Pursuant to the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the annual evaluation has been carried out by the Board of its own performance and that of its Committees and individual Directors by way of individual and collective feedback from Directors. The Directors expressed their satisfaction with the evaluation process.

9.2 Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy can be viewed on the company’s website.

9.3 Meetings

During the year four Board Meetings and five Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

9.4. 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:

a. that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

10. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were at an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website.

Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm’s length basis, form AOC-2 is not applicable to the Company.

11. CODE OF CONDUCT:

The Board of Directors has laid down a Code of Conduct applicable to the Board of Directors and Senior Management, which is available on the company’s website. All Board Members and Senior Management personnel have affirmed compliance with the code of conduct.

12. INSIDER TRADING POLICY:

As required under the new Insider Trading Policy Regulations of SEBI, your Directors have framed new Insider Trading Regulations and Code of Internal Procedures and Conduct for, regulating monitoring and reporting of trading by insiders. For details please refer to the company’s website.

13. FIXED DEPOSITS:

The Company has not accepted any fixed deposits from the public within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

14. INSURANCE:

The Properties and Assets of the Company are adequately insured.

15. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

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

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY:

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013, wherever applicable, are given in the notes to financial statements.

17. AUDITORS:

17.1 Statutory Auditors

Messrs. N. M. Raiji & Co., Chartered Accountants (ICAI Firm Registration Number 108296W) Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and beling eligble have offered themselves for reappointment. Your Board recommends their reappointment. We have received a certificate from them to the effect that they are eligible to be reappointed as per provisions of Section 139 of The Companies Act, 2013.

17.2 Cost Auditors

The Board of Directors has re-appointed Messrs. Hemant Shah & Associates, as Cost Auditor for the year 2018-19. Their reappointment as Cost Auditors for the year 2018-19 is sought under Item No. 5 of the Notice convening the Annual General Meeting.

17.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Prashant S. Mehta, Practising Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as ‘Annexure 4 ”.

18. CORPORATE GOVERNANCE

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section (Annexure 5) on corporate governance practices followed by the Company, together with a certificate from the Company’s Secretarial Auditors confirming compliance forms an integral part of this Report.

19. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with relevant IND AS 110 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

20. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as ‘Annexure 6”.

21. PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed thereunder is enclosed as ‘Annexure 7” to the Board’s Report. The information in respect of employees of the Company required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Companies Act 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company (except Saturdays and Sundays) up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

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

In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has set up Complaints Committees at its workplaces. No complaints have been received during the year 2017-18.

23. CAUTIONARY STATEMENT

Statements in the Board’s Report and the Management Discussion & Analysis describing the 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 and industrial relations.

24. ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation of the continuous support received by the Company from the investors, Bankers, Central/State Government Departments, its Customers and Suppliers.

For and on behalf of the Board

Place: Mumbai YOGESH M. KOTHARI

Dated: May 18, 2018 Chairman & Managing Director

(DIN: 00010015)

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