As on: Sep 27, 2023 07:10 AM
Dear Members,
Your Board of Directors have pleasure in presenting the 37th Annual Report on the business and operations of the Company together with audited financial statements for the Financial Year ended March 31, 2022.
1. Standalone Financial Results
The financial performance of your Company on standalone basis is summarized below: (Rs. in Crore)
2. Operations
The Company is engaged in manufacture of Urea and it has three plants located at Gadepan, District Kota, Rajasthan (i.e. Gadepan-I, Gadepan-II and Gadepan-III) with aggregate annual production capacity of around 3.4 million Metric Tons ("MT") of Urea. Apart from manufacture of Urea, the Company markets other fertilisers such as Di-Ammonium Phosphate ("DAP"), Muriate of Potash ("MOP"), NPK fertilisers, Specialty Plant Nutrients and Crop Protection Chemicals. The Financial Year 2021-22 started with the onset of new variant of Novel Corona Virus ("COVID-19") which once again disrupted life in India and some other countries. The new wave of COVID-19 infections came when the country was recovering from the impact of COVID-19 pandemic and it turned out to be more lethal with high number of fatalities. While the world was grappling with the COVID-19 pandemic, other challenges like increase in prices of feedstock / raw material and port restrictions & congestions also emerged on the horizon. The prices of fertilisers had started moving upward around the end of the previous financial year and this trend accelerated during the Financial Year 2021-22. The cost of inputs such as natural gas, ammonia, phosphoric acid and potash continuously rose which led to increase in prices of all grades of fertilisers. The increase in prices and change in trade flows due to higher demand mainly in Latin America and United States of America coupled with restrictions on imports from China had impacted the availability of fertilisers for Indian market. In view of these factors, there was substantial reduction in sales volumes of major fertilisers like DAP and MOP in India during the Financial Year 2021-22 in comparison to the previous year. The geo-political situation arising due to Russia-Ukraine conflict had added to the challenges of the business and industry across the globe. The Company was not untouched by the volatility in the prices and demand supply mismatches in the international market which had impacted Company’s sales volumes of DAP and MOP during the Financial Year 2021-22. In the face of challenges in DAP and MOP market, the Company used the opportunities available in other products and it was able to increase the sales volumes of NPK fertilisers during the year under review. The Company continued its focus on specialty plant nutrients and crop protection chemicals and achieved best ever revenue and profitability from these products thereby partly compensating for lower sales of DAP and MOP. The higher product prices also resulted into higher working capital deployment. However, regular payment of subsidy by the Government of India and healthy market collections had supported the Company in keeping its working capital under control. During the year under review, the Urea production of the Company was marginally lower in comparison to the previous year due to short interruptions in the plants which were caused due to technical reasons. The Company continued to take appropriate measures to maintain the reliability of the plants in the long run. The Government of India had allowed the Company to make additional production of Urea from Gadepan-III plant of the Company during the Financial Year 2021-22. In view of this, Gadepan III plant achieved the highest ever annual production during the Financial Year 2021-22. The production of ammonia in the Company is in excess of its requirement for manufacture of Urea due to technical reasons and such excess ammonia is sold by the Company in the market. As there was strong demand due to global supply disruptions, the Company had achieved highest ever sales of ammonia during the year under review. The Company has evaluated options to better utilize the ammonia instead of selling it in the market and decided to set up a plant for manufacture of Technical Ammonium Nitrate ("TAN Project") at the existing site of its plants at Gadepan, District Kota, Rajasthan, with a capacity of approximately 2,20,000 MT per annum and estimated cost of approximately Rs. 1170 Crore. The TAN Project will also include a plant to manufacture approximately 1,80,000 MT per annum of weak nitric acid which is an intermediate and will largely be utilized for manufacture of Technical Ammonium Nitrate. TAN Project is estimated to be completed within 36 months and implementation thereof is subject to necessary statutory and other approvals. The Company had been continuously monitoring the situation arising on account of COVID-19 pandemic considering both internal and external factors and its production, dispatches, sales and market collections remained unaffected. The Company was able to continue its operations at normal levels. The detailed information on the business operations of the Company, the Industry in which the Company operates and other relevant information is given in the Management Discussion and Analysis Report attached as Annexure "A" to this Report.
3. Dividend
The Board of Directors of the Company declared an interim dividend of Rs. 4.50 per equity share of Rs. 10 each @ 45% (Previous Year Rs. 3 per equity share @ 30%) during the Financial Year ended March 31, 2022. Further, the Board of Directors recommended final dividend of Rs. 3 per equity share of Rs. 10 each @ 30% (Previous Year Rs. 4.50 per equity share @ 45%) for the Financial Year 2021-22 which shall be paid after approval of shareholders at the ensuing Annual General Meeting of the Company. The total dividend for the Financial Year 2021-22 amounts to Rs. 7.50 per equity share of Rs. 10 each (Previous Year Rs. 7.50 per equity share) with total outgo of Rs. 312.16 Crore (Previous Year Rs. 312.16 Crore) on account of interim and final dividend. The Dividend Distribution Policy of the Company is available on the website of the Company and can be accessed at the weblink: http://www.chambalfertilisers.com/pdf/Final-Dividend-Distribution-Policy.pdf. There has been no change in this policy during the year under review. The interim and final dividend declared/recommended by the Board of Directors are in accordance with the Dividend Distribution Policy of the Company.
4. Consolidated Financial Statements
In pursuance of the provisions of the Companies Act, 2013, the rules framed thereunder, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and the applicable accounting standards, the Company has prepared Consolidated Financial Statements. The audited Consolidated Financial Statements alongwith Auditor’s Report and the Statement containing salient features of the financial statements of subsidiaries/joint venture (Form AOC - 1) forms part of the Annual Report.
5. Corporate Governance Report and Code of Conduct
Your Directors are committed to maintain the high standards of transparency and Corporate Governance which are always given high priority by the Company. The Corporate Governance Report for the Financial Year 2021-22 is attached as Annexure "B" to this Report. All the Directors of the Company and senior management personnel have confirmed the compliance of Code of Conduct and Ethics of the Company. The declaration of the Managing Director confirming compliance with the Code of Conduct and Ethics’ of the Company is enclosed as Annexure "C" to this Report and Auditor’s Certificate regarding compliance with the conditions of Corporate Governance is enclosed as Annexure "D" to this Report.
6. Subsidiaries and Joint Venture
The details of the subsidiaries and joint venture are given below:
(a) Subsidiaries
CFCL Ventures Limited ("CVL") is a subsidiary of your Company in Cayman Islands. ISGN Corporation in United States of America and ISG Novasoft Technologies Limited ("ISGN, India") in India are subsidiaries of CVL. There was no business activity in these subsidiaries during the year under review.
Chambal Infrastructure Ventures Limited is a wholly owned subsidiary of the Company in India. There was no business activity in this subsidiary during the year under review.
Inuva Info Management Private Limited ("Inuva") was a subsidiary of ISGN, India. The National Company Law Tribunal, Kolkata Bench, vide its order dated May 03, 2021, had approved dissolution of Inuva upon voluntary liquidation. Accordingly, Inuva stands dissolved from May 03, 2021 and ceased to be a subsidiary of ISGN, India, CVL and the Company.
(b) Joint Venture: Indo Maroc Phosphore S. A. - IMACID
Indo Maroc Phosphore S. A. - IMACID ("IMACID") is a joint venture of your Company in Morocco with Tata Chemicals Limited and OCP S.A., Morocco. Each partner is having equal stake in the joint venture (33.33% each). IMACID is engaged in the manufacture of phosphoric acid in Morocco.
The performance of IMACID is summarized below:
The prices of phosphoric acid continuously rose during the year under review. The overall improvement in demand and high prices of phosphoric acid in international market augured well for IMACID. The plant of IMACID has performed well to achieve much higher production in comparison to the previous year. The higher production and buoyancy in international market with better margins enabled IMACID to achieve highest ever annual sales, revenue and profit after tax. The Company does not have any material subsidiary as per the provisions of the Listing Regulations.
The performance of the subsidiaries of the Company is summarized in Form AOC - 1 attached to the Financial Statements of the Company in pursuance of Section 129 of the Companies Act, 2013. The contribution of subsidiaries and joint venture to the overall performance of the Company is also provided in Note no. 48 to the Consolidated Financial Statements.
The Company shall place the financial statements of subsidiaries on its website in pursuance of Section 136 of the Companies Act, 2013.
Except as mentioned above, no subsidiary, associate or joint venture has been acquired or ceased/ sold / liquidated during the Financial Year 2021-22.
7. Health, Safety, Quality and Environment Protection
Your Company is committed towards maintaining high standards of Health, Safety, Security, Environment Protection and Quality of products & processes while conducting its business operations. In order to fulfil this commitment, the Company had implemented Health, Safety, Security, Environment & Quality Policy. The Company has also established an Integrated Management System based on ISO-45001:2018, ISO-14001:2015 and ISO- 9001:2015. The brief details of the initiatives of the Company in this regard are as under:
(a) Health & Hygiene
Your Company has strong focus on the health assessment and occupational disease monitoring of employees and contractor work force which is carried out through periodic medical examinations and hygiene monitoring at work place.
A well-equipped health center at Gadepan operates round the clock to provide health services to employees and their families, contractor workforce and villagers in the vicinity of the plants. Well equipped ambulances are available at Gadepan which also cater to the requirements of villagers in medical emergencies. The Company also facilitates employees to consult a Company affiliated doctor to ensure the well-being of the employees. The Company also organizes training and awareness programs on health and hygiene related matters from time to time. The health center at Gadepan also geared up to provide oxygen support to employees and their family members in severe cases of COVID-19 infection. The Company has been taking all the preventive measures for protection against COVID-19 pandemic. The awareness sessions on preventive measures of COVID-19 pandemic like social distancing, wearing mask, hand sanitization, hygiene, etc. were regularly organized amongst employees, contractor workforce and residents of township at Gadepan. Almost all the employees, their eligible family members and contractor workers have been vaccinated against COVID-19.
(b) Safety Management
In order to ensure the highest levels of health and safety of the employees and contractor workforce, there is a well-defined health and safety management system in place in your Company. A strong process safety management system is also in place to take care of safety in operation of plants and maintenance of equipment and machinery.
Award for Excellence in Safety 2021 has been conferred on the Company by The Fertiliser Association of India.
In order to take care of safety aspects, a cross functional team reviews the maintenance jobs on daily basis at its plants at Gadepan and ensures that all recommended actions are taken to prevent hazards in execution of maintenance work. In order to maintain and strengthen the safety systems and promote a safe working environment, trainings and drills are conducted on regular basis by internal and external experts and "Near-Miss" and "Make-to-Good" reporting schemes are in place. The Company has a well-defined "Onsite Disaster Management Plan" and "Mutual Aid and Response Group" arrangement with neighboring industry which works for the mutual benefit of all participants. The dedicated fire tenders of the Company at Gadepan are available round-the-clock which are also provided to the neighboring villages in case of any fire emergency. As a step towards raising the safety standard, your Company had engaged an external expert to conduct the safety diagnostic survey at the plant site and actions are being taken in the identified areas.
(c) Environment Protection
Your Company gives utmost importance to the protection of environment and conservation of natural resources. There is a strong focus on optimization of resource consumption (including raw materials, fuels and water) and reduction of waste generation and emissions to the atmosphere. Your Company has a robust mechanism in place to ensure that all the environmental parameters are maintained within the permissible limits. The Company is fully conscious of its responsibility towards environmental sustainability. As a step towards use of renewable energy, the Company is in the process of installing roof top solar units in Gadepan complex having capacity of approximately 1000 Kilo Watt peak power. This will enable the Company to replace around 13.7% of grid power being utilized by the Company in its Gadepan complex.
Environment Protection Award 2021 for a Nitrogenous Fertilizer Plant (Runner Up) has been conferred on the Company by The Fertiliser Association of India.
The Company has developed and maintained a dense green belt at Gadepan campus which also comprises variety of fruit trees. It provides a soothing environment to the employees and their families and also helps in maintaining the ecological balance in the area. The green belt is maintained with lot of care and augmented through regular plantation. Only treated waste water is used for maintaining the green belt through irrigation network spread all over the Gadepan complex. The Gadepan-III plant of the Company is a zero liquid discharge plant. E_uent from Gadepan-III plant is treated in reverse osmosis-zero liquid discharge plant and permeate therefrom is used as make up water for cooling towers, which results in lesser intake of fresh water from the river. The Gadepan-III plant is most energy efficient and therefore consumes less natural resources.
The Company also operates Bio-Methanation plant at Gadepan to handle the kitchen waste of the canteen and township facilities and bio-gas is utilized in the kitchen facility of guest house at Gadepan complex.
(d) Quality Management
The Company always focused on providing quality products to its customers and continuously work towards improvement in product quality through process improvements and technological interventions. The quality is ensured at all stages of manufacturing processes, maintenance and support services. The urea manufactured by the Company is preferred in its marketing territory because of its quality. The Company sources the products marketed by it from the reputed manufacturers in India and abroad and appropriate measures are taken to ensure quality of the products. The customer feedback is collected through targeted surveys as well as other forms of customer engagements and given due importance by the Company in its business decisions related to quality of products and processes.
8. Corporate Social Responsibility
The Company has always been conscious of its responsibility towards society and its Corporate Social Responsibility ("CSR") projects and programmes have made a positive impact on the society through holistic and sustainable interventions over the years. The Company continue to extend its support to improve quality of life of the people in rural areas.
The CSR projects and programmes of the Company cover the areas of Education including Technical and Vocational Education, Rural Development, Health care and Sanitation, Employability and Empowerment, Environmental Sustainability, Animal Welfare and Soil Health, Disaster Management and Promotion of Sports. The highlights of the CSR projects and programmes of the Company are as under:
a) Project Akshar - Pre-Primary & School Education
Your Company is making consistent efforts to improve standard of education in Government schools through integration of technology into regular curriculum, development of quality infrastructure, promotion of co-curricular activities and enhancing community participation. During the Financial Year 2021-22, additional 9 Government schools and 6 Aanganwadi centers were adopted by the Company, taking the total to 53 Government schools and 47 Government Aanganwadi centers adopted by the Company in Kota and Baran districts of Rajasthan. Your Company has also extended its support to 34 Government schools in Punjab, Haryana and Madhya Pradesh. During the Financial Year 2021-22, large number of students and Aanganwadi children in the states of Rajasthan, Madhya Pradesh, Haryana and Punjab had benefitted from the Company’s CSR initiative.
The Company had been focusing on promotion of science curriculum in schools in recent years. Accordingly, 4 mini science centers and 4 science laboratories were developed in adopted Government schools. CFDAV School is being run in collaboration with Dayanand Anglo Vedic College Trust & Management Society wherein majority of students are from nearby villages.
b) Project Saksham - Technical and Vocational Education
The Company strives to equip rural youth with technical skills required in various sectors through quality training, infrastructure development, industry exposure, etc. Your Company is supporting 5 Industrial Training Institutes and one Government Polytechnic College near its plants at Gadepan. The second phase of planned infrastructure development in Government Polytechnic College, Baran was successfully completed during the Financial Year 2021-22. After reduction in cases of COVID-19 infection, the institutes had started focusing on regular classroom contact programme, practical sessions and on campus placement drives to provide job opportunities to students.
Short term vocational training courses were offered to rural youth through vocational training centers in nearby villages. These centers are offering short term courses on motor driving, tie & dye techniques, embroidery training, solar panel assembling & maintenance, beauty services, soft toys making, jewellery making, block printing, food processing and advance tailoring, to rural youth.
c) Project Saakar - Rural Development
Your Company has undertaken several initiatives to improve basic amenities in villages in the vicinity of its plants at Gadepan to improve standard of living of the community members. The Company has undertaken development of rural infrastructure facilities including construction of cement concrete roads, interlocking tiles pathways, community halls, crematoriums, etc. and installation of street lights. These initiatives have brought ease and convenience in the day to day life of villagers and improved their standard of living.
d) Project Arogya - Health care and Sanitation
Your Company aims to improve healthcare facilities and access of medical services in rural areas. The Company had adopted 3 Government Primary Health Centers at Gadepan, Simliya and Kundanpur of Kota district and renovated these adopted centers during the Financial Year 2021-22. Additional healthcare facilities like pathological test facilities, X-ray machines, new born child care machines, etc. were provided in these health centers. The Company had also organised general and specialized health checkup camps and awareness sessions in villages in the vicinity of its plants at Gadepan and 12 villages of the states of Punjab, Haryana and Madhya Pradesh during the Financial Year 2021-22. Various healthcare awareness sessions organized by the Company have brought a positive change in the attitude and behavior of the community members. The healthcare facilities were also extended in the remote villages of Dehradun and Tehri districts in Uttarakhand.
e) Project Pragati - Employability and Empowerment
With the objective of socio-economic empowerment of community members, especially women and youths in rural areas, the Company has supported various entrepreneurial activities through women self-help groups which enable them to earn a decent income from various activities. Your Company has also supported rural women in their livelihood earning initiatives of making of school uniforms, school bags, reusable carry bags, etc. Your Company is also facilitating small and marginalized farmers to adopt modern agriculture practices and optimize farm input cost to improve the farm income.
The Company is continuously assisting the community to avail the benefits of various social security schemes like pension scheme, affordable housing, employment cards, pradhan mantri ujjwala yojana, etc.
f) Project Bhoomi - Environmental Sustainability, Animal Welfare and Soil Health
The Company continues to provide its support to farming community, especially small and marginalized farmers through its agriculture development laboratory. The laboratory provides soil testing reports to farmers for balanced usage of fertilizers and also provides advisory services to optimize farm inputs. During the Financial Year 2021-22, crop residue management work was successfully completed in 75 selected villages in the states of Punjab and Haryana, with the objective of preventing crop stubble burning and adopting alternate methods for crop residue management and the farmers were sensitized to adopt alternative methods of crop residue management.
g) Disaster Management
During the second wave of COVID-19 pandemic, the country had seen unprecedented shortage of medical oxygen. In order to ensure availability of medical oxygen in nearby community health centers, your Company had provided 10 pressure swing adsorption oxygen plants in Kota and Baran districts of Rajasthan and also made available oxygen concentrators. Apart from this, medical equipment, face masks and other items were also provided to the community health workers and community members to _ght against COVID-19 pandemic. Intensive information, education and communication activities were undertaken to sensitize community members in nearby villages towards COVID-19 vaccination.
h) Promotion of Sports
During the Financial Year 2021-22, the Company had taken initiative for the development of sports stadium in the Sangod Block of Kota District. This shall create sports ecosystem and nurture rural youth to increase their participation in state and national level sports events.
The composition and terms of reference of Corporate Social Responsibility Committee are given in the Corporate Governance Report. The Corporate Social Responsibility Policy of the Company is available on the website of the Company at http://www.chambalfertilisers.com/csroverview. The Annual Report on Corporate Social Responsibility (CSR) Activities for the Financial Year 2021-22 (including the details of the development and implementation of the Corporate Social Responsibility Policy) as prescribed under Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure "F" to this Report.
For the purpose of Section 135 of the Companies Act, 2013, the amount equivalent to 2% of the average net profits of the Company made during the immediately preceding three financial years works out to Rs. 27.90 Crore. As against this, the Company had spent Rs. 27.997 Crore on CSR projects / programmes during the Financial Year 2021-22.
9. Directors and Key Managerial Personnel
The Board of Directors of the Company was having nine directors as on March 31, 2022 with eight Non-Executive Directors including five Independent Directors and a Managing Director.
The members of the Company at the Annual General Meeting held on September 16, 2021 had approved the appointment of Mr. Gaurav Mathur (DIN: 07610237) as Managing Director of the Company for the period from April 16, 2021 to January 05, 2025.
Mr. Anil Kapoor (DIN: 00032299) completed his tenure as Managing Director of the Company on April 15, 2021 and ceased to be the Managing Director and Director of the Company with effect from April 16, 2021. The second consecutive term of Mr. Marco Philippus Ardeshir Wadia (DIN: 00244357) and Ms. Radha Singh (DIN: 02227854), Independent Directors shall expire on September 14, 2022. Accordingly, they are not eligible for re-appointment as Independent Directors of the Company in terms of Section 149 (11) of the Companies Act, 2013. The Board of Directors expresses its sincere gratitude and appreciation of the contributions made by Mr. Marco Philippus Ardeshir Wadia and Ms. Radha Singh as Independent Directors of the Company. There was no change in Chief Financial Officer and Company Secretary of the Company during the year under review.
Mr. Shyam Sunder Bhartia (DIN: 00010484) is due for retirement at the forthcoming Annual General Meeting and has offered himself for re-appointment.
All the Independent Directors have submitted declarations that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013, the rules framed thereunder and the Listing Regulations. In terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, the names of all the Independent Directors of the Company have been included in the data bank maintained by the Indian Institute of Corporate Affairs. During the Financial Year 2021-22, Mr. Anil Kapoor and Mr. Gaurav Mathur had not received any commission or remuneration from any subsidiary of the Company.
Five meetings of the Board of Directors were held during the Financial Year 2021-22.
Other information on the Directors and the Board Meetings is provided in the Corporate Governance Report attached as Annexure "B" to this Report.
A certificate obtained by the Company from a company secretary in practice, confirming that none of the Directors on the Board of Directors of the Company have been debarred or disqualified from being appointed or continuing as director of companies by the Securities and Exchange Board of India /Ministry of Corporate Affairs or any such statutory authority, is enclosed as Annexure "E" to this Report.
10. Internal Financial Controls
The Company has internal financial controls commensurate to the size and nature of its business. The Company has policies and procedures in place for ensuring orderly and efficient conduct of its business and operations including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The details of internal control system are also given in the Management Discussion and Analysis Report attached as Annexure "A" to this Report.
11. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act, 2013 and Listing Regulations, the Company has formulated a Remuneration Policy. The Remuneration Policy, inter-alia, includes the appointment criteria & qualification requirements, process for appointment & removal, retirement policy, remuneration structure, etc. of the Directors including Managing Director and Whole Time Director(s), Key Managerial Personnel ("KMP") and other senior management personnel of the Company. As per the Remuneration Policy of the Company, a person proposed to be appointed as Director, KMP or other senior management personnel should be a person of integrity with high level of ethical standards. In case of appointment as an Independent Director, the person should fulfill the criteria of independence prescribed under the Companies Act, 2013, rules framed thereunder and the Listing Regulations. The Remuneration Policy also contains provisions about the payment of fixed & variable components of remuneration to the Managing Director and Whole Time Director(s) and payment of sitting fee & commission to the Non-Executive Directors and describes fundamental principles for determination of remuneration of senior management personnel and other employees which are as follows:
a) demand-supply relationship of the concerned job expertise;
b) need of organization to retain and attract talent and its ability to pay;
c) employees’ social aspiration for enhancing standard of living; and
d) compensation trends in the industries in which the Company operates.
There has been no change in the Remuneration Policy during the year under review. The Remuneration Policy of the Company is available on the website of the Company at the weblink: http://chambalfertilisers.com/pdf/RemunerationPolicy.pdf.
12. Disclosures under the Companies Act, 2013, Rules thereunder and Secretarial Standards
a) Your Company has not issued any shares during the Financial Year 2021-22.
b) No significant and material orders have been passed by the regulators or courts or tribunals or statutory and quasi-judicial bodies impacting the going concern status and Company’s operations in future.
c) All related party transactions entered during the Financial Year 2021-22, were on arm’s length basis and in the ordinary course of business. No material related party transaction (in terms of the Company’s Policy on Related Party Transactions) was entered during the year by the Company and no contracts or arrangements were entered during the year with related parties which are required to be disclosed under section 134(3)(h) of the Companies Act, 2013 in Form AOC-2.
d) A copy of annual return of the Company is available on the website of the Company at the weblink: http://chambalfertilisers.com/annualreturns/
e) The following information is given in the Corporate Governance Report attached as Annexure "B" to this Report:
i) The performance evaluation of the Board of Directors, the Committees of the Board of Directors, Chairman of the Company and the individual Directors;
ii) The composition of Audit Committee; and
iii) The details of establishment of Vigil Mechanism/Whistle Blower Policy.
f) The particulars of loans and guarantees given, security provided and investments made, if any, under Section 186 of the Companies Act, 2013 are provided in Notes to the Financial Statements.
g) During the Financial Year 2021-22, the auditors, secretarial auditors and cost auditors have not reported any fraud under Section 143(12) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.
h) The Company has complied with the applicable Secretarial Standards prescribed under Section 118(10) of the Companies Act, 2013.
i) The Company has complied with the provisions relating to the constitution of Internal Complaints Committees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
j) 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 2021-22 and the date of this Report.
13. Directors Responsibility Statement
Your Directors hereby state that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;
b) the Directors have 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 March 31, 2022 and of the profit and loss of the Company for the year ended March 31, 2022;
c) the Directors have taken proper and sufficient care 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) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
14. Auditors and Cost Auditors
The Notes to the Financial Statements read with the Auditor’s Reports are self-explanatory and therefore, do not call for further comments or explanations. There has been no qualification, reservation, adverse remark or disclaimer in the Auditor’s Reports.
M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/ N500016) shall retire at the ensuing Annual General Meeting of the Company and, being eligible, has offered themselves for re-appointment as Auditor of the Company. On the recommendations of the Audit Committee, the Board of Directors recommends re-appointment of M/s. Price Waterhouse Chartered Accountants LLP as Auditor of the Company to hold office for a term of 5 (five) consecutive years from the conclusion of thirty-seventh Annual General Meeting of the Company till the conclusion of forty-second Annual General Meeting of the Company. The maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is required by the Company in respect of production of fertilisers and accordingly such accounts and records are made and maintained by the Company.
The Board of Directors of the Company has appointed M/s. K.G. Goyal & Associates, Cost Accountants for conducting audit of cost records of the Company, as applicable, for the Financial Year ending March 31, 2023. As required under the Companies Act, 2013 and Rules framed thereunder, your Directors are seeking rati_cation from the members of the Company for the remuneration payable to M/s. K.G. Goyal & Associates, Cost Accountants.
15. Secretarial Audit
The Board of Directors of the Company had appointed M/s. RMG & Associates, Company Secretaries for conducting secretarial audit of the Company for the Financial Year 2021-22. The Secretarial Audit Report issued by the aforesaid Secretarial Auditor is attached as Annexure "G" to this Report.
There has been no qualification, reservation, observation, disclaimer or adverse remark in the Secretarial Audit Report.
16. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
The conservation of energy can be achieved by using the energy more efficiently or by reducing the usage of energy. The Company continuously makes efforts to conserve energy in its manufacturing facilities and allied operations and look for avenues to use alternate sources of energy, to reduce its carbon footprint. Gadepan-III plant of the Company is more energy efficient in comparison to Gadepan-I and Gadepan II plants. The requisite information with regard to conservation of energy, technology absorption and foreign exchange earnings and outgo in terms of the Companies (Accounts) Rules, 2014 is set out in Annexure "H" attached to this Report.
17. Risk Management
Your Company has developed and implemented a Risk Management Policy. The Risk Management Committee of the Company periodically reviews all risks, finalise the risk document and monitors various risks of the Company including the risks, if any, which may threaten the existence of the Company. The composition and terms of reference of the Risk Management Committee are given in the Corporate Governance Report.
The risk document containing Key and Non-Key risks including way forward for mitigation thereof, as approved by the Risk Management Committee, is also reviewed by the Audit Committee and the Board of Directors periodically.
18. Deposits
During the year, the Company had not accepted any deposits from the public under Chapter V of the Companies Act, 2013. There was no public deposit outstanding as at the beginning and end of the Financial Year 2021-22.
19. Particulars of Employees
Your Company always gives utmost importance to the well-being and development of its human resource, which is a strong factor in the success and growth of the Company. Your Company maintains a cordial work environment and encourages the employees to contribute their best. The information required to be disclosed in pursuance of Section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure "I" to this Report.
20. Employees Stock Option Scheme
The members of the Company had approved CFCL Employees Stock Option Scheme 2010, as amended and revised from time to time ("ESOS 2010") for grant of stock options exercisable into not more than 41,62,000 equity shares of face value of Rs. 10/- each to eligible employees and Whole Time Director(s)/ Managing Director of the Company. Each stock option when exercised would be converted into one fully paid up equity share of Rs. 10/- of the Company.
The Company has not granted any stock options during the year under review.
There has been no change in ESOS 2010 during the Financial Year 2021-22. ESOS 2010 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("ESOP Regulations") and implemented through CFCL Employees Welfare Trust ("Trust"). For the purpose of ESOS 2010, the Trustee of the Trust was holding 3,27,000 equity shares of the Company as on March 31, 2022 (5,81,000 equity shares as on March 31, 2021), being 0.08 % of the paid up share capital of the Company, which were equivalent to the outstanding stock options. The ownership of these shares cannot be attributed to any particular employee till he/ she exercises the stock options granted to him / her and the concerned shares are transferred to him / her. Hence, the concerned employees to whom the stock options were granted under ESOS 2010 cannot exercise voting rights in respect of aforesaid shares held by the Trustee of the Trust as such employees are not holders of such shares. The Trustee has not exercised the voting rights in respect of the aforesaid shares during the Financial Year 2021-22.
The disclosures required to be made under ESOP Regulations are given on the website of the Company at the weblink: http://chambalfertilisers.com/pdf/ESOP-Disclosure-2021-22.pdf. The disclosures in respect of ESOS 2010 are also given in the Notes to the Financial Statements.
21. Business Responsibility Report
In pursuance of the provisions of the Listing Regulations, the Business Responsibility Report for the Financial Year 2021-22, describing the initiatives taken by the Company from environmental, social and governance perspective, forms part of the Annual Report.
22. Investor Service Centre
The in-house Investor Service Centre of your Company is located in the Corporate Office of the Company at New Delhi which provides prompt and efficient service to the investors. The Company takes various initiatives for investor satisfaction including reminders to investors about unclaimed dividends and shares due for transfer to Investor Education and Protection Fund.
The equity shares of your Company are listed at National Stock Exchange of India Limited and BSE Limited. The Company has paid annual listing fees to these Stock Exchanges for the Financial Year 2022-23.
The members are requested to refer to general shareholders’ information given in Corporate Governance Report attached hereto.
23. Acknowledgements
The Board of Directors wishes to place on record its appreciation of the support and co- operation extended by all the stakeholders including the Department of Fertilisers, Government of India, Government of Rajasthan and other State Governments, Financial Institutions & Banks, investors and customers. The Board of Directors also conveys its appreciation of the services rendered by each and every employee with utmost commitment, hard work and dedication.