TGV SRAAC Ltd.
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ISIN No INE284B01028 52Wk High (Rs.) 90 BV (Rs.) 40.36 FV (Rs.) 10.00
Bookclosure 27/09/2017 52Wk Low (Rs.) 23 EPS (Rs.) 3.22 P/E (X) 11.32
Mkt Cap. (Rs. Cr.) 335.13 P/BV (X) 0.90 Div Yield (%) 0.00 Mkt Lot 1
2016-03

DIRECTORS’ REPORT

Dear Members,

(Equity & CRP Shareholders)

The Directors' have pleasure in presenting the Annual Report and the Audited statements of Accounts of the Company for the year ended 31st March, 2016.

Operations

The turnover for the year under review is Rs.86556 lakhs as compared to Rs.83784 lakhs in the previous year. The 3.31% marginal increase is on account of the following changes in respective Divisions performance.

Division / Segment Wise Operations

The Caustic unit has produced 139536 MTs of Caustic Soda as against 141336 MTs for the previous year representing a marginal decrease of 1%. As against net sales of Rs.42627 lakhs for previous year, the current year sales comes to Rs. 40582 lakhs representing a decrease of 5%.

The Potassium plant has produced 17249 MTs of Potassium Hydroxide as against 11508 MTs for the previous year representing a increase of 50%. As against net sales of Rs. 8877 lakhs for previous year, the current sales comes to Rs.11989 lakhs representing an increase of 35% which is attributed to favorable marker and better performance.

As regards Chloromethane Plant the company has declared 26/03/2016 as the commercial production starting date. During the short period of 6 days in the financial year the plant has produced 84 MT of Methylene Chloride, Chloroform. Full effects of the plant operation will be experienced in the next year 2016-17.

The Castor Oil Plant has processed 9583 MTs of oil as against 11709 MTs for the previous year representing a decrease of 19%. As against net sales of Rs.11200 lakhs for the previous year, the current year sales stood at Rs.9012 lakhs representing a decrease of 20%, which is mainly attributed to adverse market.

The Fatty acid plant has processed 26842 MTs for the current year as against 18852 MTs for the previous year representing an increase of 42%. The net sales of this plant has increased from Rs.11102 lakhs to Rs.14420 lakhs representing an increase of 30%, which is mainly attributed to favourable market and better performance.

There are no commercial operations at Bellary Power Plant due to expiry of Power Purchase Agreement (PPA) by KPTCL. The Company is looking out for other options including its sale or relocation of the Plant.

The Wind Farm at Ramagiri has generated 28.90 lakh/KWH power in the current year as against previous year generation of 25.91 lakh/KWH representing an increase of 12% when compared to previous year. The power generated in the farm is wheeled through State Grid to the Company for captive use. The generation of Power depends upon Wind velocity.

Outlook For The Current Year

Segment-wise discussion is furnished in Management Discussion and Analysis annexed to this report in “ANNEXURE - E”.

FINANCIAL RESULTS YEAR ENDED

_(Rs. In lakhs)

31.03.2016

31.03.2015

Profit before Finance Costs & depreciation

11221.28

10724.94

Less: Finance Cost

3810.47

3339.51

Profit before Depreciation

7410.81

7385.43

Less: Depreciation

3546.61

3643.19

Profit (Loss) before Exceptional items and Tax

3864.20

3742.24

Less: Exceptional items

Profit/Loss Before Tax

3864.20

3742.24

Tax Expense:

Less: - Current Tax

763.10

696.35

- Deferred Tax

80.16

247.52

Profit for the period from continuing operations

3020.94

2798.37

Less : Loss from discounting operations

579.23

583.22

Profit for the period

2441.71

2215.15

Less: Dividend and Dividend Tax on Preference Shares

3.21

Add: Balance Carried from Previous year

3579.75

2864.60

Profit available for Appropriation

6018.25

5079.75

Less: Transfer to General Reserve

1500.00

1500.00

Surplus carried to Balance Sheet

4518.25

3579.75

Profit for the Current year at Rs. 2438.50 Lakhs shows an increase of 10% compared to previous year Profit of Rs.2215.15 Lakhs. The increase in Profit is on account of better performance and absence of exceptional items and reduction in loss from discontinued operations.

Dividend

Cumulative Redeemable Preference Shares (CRPS)

The Board of Directors recommended the declaration & payment of accrued Dividend (2002-03 to 2014-15) and current Year dividend (2015-16) @ 0.01 % per year on Cumulative Redeemable Preference Shares.

Equity Shares

In view of liquidity constraints and future plans your Directors have not recommended any dividend on Equity Shares.

Capital Expenditure

During the year the Company has incurred an amount of Rs.13231.71 Lakhs on Capital Expenditure which is mainly towards Chloromethane Project and other normal capital expenditure. The funds required for the above is met from Term loans and internal accruals.

Safety and Environment Protection

Your Company gives utmost importance to safety as well as development of green environment. All out effort are made to ensure safety in all activities of the company. The steps taken by the management to develop green environs around the factory has given desired results. A separate cell has been entrusted with the responsibility of ensuring safety with a team of officials working with the motto of continuous “SAFETY FOR MEN, MACHINE AND MATERIAL”. The Company is conducting mock drills and proper training to staff at regular intervals in the safety aspects.

Commercial Production of Chloromethane Project

The Key Managerial Personnel (KMP) Committee has decided 26th March, 2016 as the starting date of commercial production of Chloromethane Project. Your Directors are optimistic about the performance of the unit which certainly uplift the overall performance by its contribution.

Listing Fees

The Company has paid Listing Fee for the year 2016-17 to Bombay Stock Exchange vide its letter dtd. 19.04.2016.

PREFERENTIAL ALLOTMENT

1) Preferential allotment of Convertible Share Warrants: After obtaining Shareholders approval in the Annual General Meeting held on 16.09.2015 and on receipt of in-principle approval from BSE vide their letter Ref No. DCS/PREF/MN/FIP/643/2015-16 dt. 06.01. 2016, the Board Allotment Committee in its meeting held on 13.01.2016 has allotted 1,30,95,272 Convertable Share Warrants (1st Tranche - 41,43,202; 2nd Tranche - 43,61,265; 3rd Tranche - 45,90,805) in 3 Tranches to M/s. Brilliant Industries Private Ltd being one of the Promoter Group Company at an issue price of Rs.17.02 per warrant in pursuance to SEBI (ICDR) Regulations 2009.

2) Allotment of Equity Shares on Conversion of 1st Tranche Warrants : 1st Tranche Convertible Share Warrants were converted into 41,43,202 Equity Shares in the ratio of 1:1 by the Board in its meeting held on 29.01.2016. The Company has obtained Trading approval for the said shares from BSE vide their letter DCS/PREF/MN/FIP/2944/2016-17 dtd.27.05.2016 and the same were credited to the Allottee M/s. Brilliant Industries Private Limited in Demat mode by NSDL vide their letter dtd. 13.05.2016 with lock-in provision upto 21.06.2019.

Insurance

Assets of the Company are adequately insured.

Fixed Deposits

The Company has not accepted any fixed deposits during the year and there are no fixed deposits outstanding as on 31.3.2016.

Directors and Key Managerial Personnel

Sri T. G. Venkatesh (DIN : 00108120) and Smt V. Surekha (DIN : 06953161) are retiring by rotation at the ensuing Annual General Meeting (A G M) being eligible for re-election, they have given their consent for re- election. Sri O.D. Reddy (DIN : 00101729) has resigned as Director from the Board to be effective from 13.10.2015 due to his ill health. Subsequently on 30.10.2015 he succumbed to death after great fight. The Board of Directors has appreciated his contribution during his tenure as Director on the Board for the growth of the company.

Dr. M. Asha Reddy (DIN : 07328122) has been co-opted as Additional Director on the Board of the company on 29.01.2016 upon the recommendation of Nomination and Remuneration Committee meeting held on 02.11.2015 whose term will expire on the date of this Annual General Meeting. The Company has received necessary deposit from a shareholder proposing Dr. M. Asha Reddy as independent Director for a term of 2 years.

Sri T.G. Venkatesh has submitted his resignation for the post of Managing Director to be effective from the closing hours of 31.05.2016 due to his pre-occupation. He continues to be Non-Executive Chairman and Director on the Board of the Company.

Appropriate resolutions are placed in the notice of Annual General Meeting for members approval.

Industrial Relations

Your Company's Industrial Relations continue to be harmonious and cordial.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars required to be disclosed under Section 134 of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto as Annexure - A to this report.

Directors’ Responsibility Statement

As required by the provisions of Section 134 of the Companies Act, 2013, Directors' Responsibility Statement is attached as Annexure - B.

Corporate Governance - Regulation 17 read with Schedule II of SEBI (LODR) Regulations, 2015.

A separate report on Corporate Governance (Annexure - C) is being incorporated as a part of the Annual Report along with a certificate from the Auditors of the Company (Annexure

- D) regarding compliance of the conditions of Corporate Governance. The” Annexure C and D” are attached to this report.

Management Discussion and Analysis Report

Further to comply with Regulation 34 (2) (e) Schedule -V of SEBI (LODR) Regulations, 2015. “Management Discussion and Analysis” has been given as “Annexure - E” to the Directors' Report.

Auditors

M/s. Brahmayya & Co., Chartered Accountants, Adoni were appointed as Statutory Auditors for a term of 3 years upon the recommendation of Audit Committee in its meeting held on 30.07.2014 by the Board in its meeting held on 30.07.2014 subject to the Members' ratification every year to comply with the provisions of Section 143 of the Companies Act, 2013. Accordingly, a Resolution for ratification by the Members placed in the notice of this AGM which will be effective up to the next AGM.

Cost Audit

Products manufactured by the Company are coming under Central Govt. order Letter Ref. No. 52/26/CAB-2010 dated 06.11.2012. To comply with statutory provisions, Cost Audit Report has been filed in Form-CRA-4 in XBRL format vide SRN: S 41675612 dt.15.10.2015 with MCA portal for the financial year 2014-15.

Audit Committee

An Audit Committee continues to function to comply with provisions of Regulation 18 of SEBI (LODR) Regulations, 2015 and other statutory provisions. The Audit Committee was reconstituted on 29.01.2016 with the following members Sri Badri Srinivasa Rao, Sri G. Krishna Murthy and Dr. M. Asha Reddy as members with Sri P.N. Vedanarayanan as Chairman of the Audit Committee.

Material changes and commitment if any affecting the financial position of the Company occured between the end of the financial year to which this financial statements relate and the date of the Report

There are no material changes which are to be affected to the financial position of the company according to the information provided by the Management to the Board between the date of Financial year and the date of its Report.

Statement concerning development and implementation of Risk Management Policy of the Company

A Special Team with Senior Executives has been formed which has entrusted with the responsibility to assist Chairman and Managing Director in (a) Overseeing and approving the Company's enterprise wide risk management framework, and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

The Company Manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Management and business of the Company.

The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across Companywide Risk Management, Internal Control and Internal Auditor methodologies and processes.

Details of Policy developed and implemented by the Company on its Corporate Social Responsibility initiatives

The Company has taken various Corporate Social Responsibility (CSR) activities around the Factory site since its inception. The Company has taken appropriate steps to the possible extent to implement CSR activities for the development of areas surrounding the Company in particulars and other areas in general. Since its inception, a well documented CSR Policy has been drafted by a Team of Senior Executives of the Company and the same was approved by the Board in its meeting held on 12.04.2016. For the financial year ending 31.03.2016, the Company has to spend Rs.60.72 Lakhs as against this the Company has spent Rs.60.40 Lakhs. The marginal short fall in CSR expenditure (Rs.32,000/-) will be covered during the financial year 2016-17. The CSR activities implementation will be a continuous process as far as the Company is concerned and the Team of Senior Executives taking all necessary steps for its implementation under the guidance of C.S.R. Committee. A Board sub-committee has been formed by the Board on 26.05.2014 under the name “Corporate Social Responsibility Committee to monitor the implementation of C.S.R. activities. The CSR Committee was reconstituted by the Board in its meeting held on 29.01.16. Sri G. Krishna Murthy is the Chairman and Sri K. Karunakar Rao and Sri Gopal Krishan are the members of the committee.

Details of C.S.R. activities are given as “Annexure - G”. Particulars of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013

- Not applicable - .

Particulars of Contracts or Arrangements made with Related Parties

During the course of its business, the Company is dealing with the Group Companies and other entities which are Related Parties pursuant to the Section 188 of the Companies Act, 2013, Accounting Standard 18 and SEBI (LODR) regulations, 2015 for Sale, Purchase, Lease Rental Transactions, services availed / provided and monetary values of its transactions are mentioned in Notes to Accounts. All the related party transactions are entered with prior approval of the Board and Audit Committee. Audit Committee will give Omnibus approval on yearly basis and actual related party transactions are submitted to the Audit Committee and Board on quarterly basis. Details of these transactions are given in Form AOC-2 as an “Annexure-EA” to this report to comply with provisions of Companies Act, 2013. All the Related party transactions were on arms-length basis.

Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Auditors and the Secretarial Auditor in their Reports

Statutory Auditors of the Company and the Secretarial Auditor, who have conducted statutory audit and Secretarial Audit, have not made any adverse comments on the activities of the Company for the financial year 2015-16.

Company’s Policy relating to Directors appointment, payment of Remuneration and discharge of their duties

The Nomination and Remuneration Committee has been re-constituted by the Board in its meeting held on 29.01.2016 to ensure the appointment of persons having vide exposure in their fields, having independence as defined in the Act to be available for appointment as Director. The Committee always keeps a list of eminent persons having independence available for Company's requirement depending upon vacancy on the Board. As regards remuneration payable to whole-time Directors including Chairman and Managing Director, the Board will take collective decision within the parameter of various statutes including Companies Act, 2013 and the provisions of SEBI (LODR) Regulations, 2015. The Committee will follow the Company's policy to discharge its duties whenever necessity arises. It will not be out of place to mention that the set policy being followed since inception of the Company to ensure transparency.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Secretarial Auditor

The Board in its meeting held on 13.06.2016 has appointed M/s. CSB Associates represented by Sri C. Sudhir Babu as Secretarial Auditor for the year 2015-16. Secretarial Audit

Report for the year ending 31.03.2016 has been Annexed to the Directors' Report as “Annexure - I” to comply with statutory provisions of the Companies Act, 2013 and other applicable provisions of other Acts. The Secretarial Auditor Report does not contain any qualification, reservation or adverse remark.

Annual Return in Form MGT-9 format

The details of Annual Return in Form MGT-9 format is enclosed as “Annexure - F”.

Subsidiaries, Joint Ventures and Associate Companies

The Company is not having any Subsidiaries, Joint Ventures and Associate Companies and hence the details are not applicable.

Declaration of Independent Directors

The Company has received the necessary declaration from each Independent Director in accordance with the provisions of Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub-section

(6) of Section 149 of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Evaluation

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual Directors by seeking their inputs on various aspects of Board/Committee Governance.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfillment of Directors' obligation and fiduciary responsibilities, including but not limited, to, active participation at the Board and Committee meetings.

The Chairman of the Board had one-on-one meetings with the Independent Directors and the Chairman of the Nomination and Remuneration Committee had one-on-one meetings with the Executive and non-Executive Directors. These meetings were intended to obtain Directors' inputs on effectiveness of Board/Committee processes.

The Board considered and discussed the inputs received from the Directors.

Further, the Independent Directors at their meeting, reviewed the performance of Board, Chairman of the Board and of Non Executive Directors.

Disclosure as per the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under.

The Company has no such cases of sexual harassment at workplace.

Vigil Mechanism

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the provisions of Regulation 22 of SEBI (LODR) Regulations, 2015 includes an Ethics and Compliance Task Force comprising Senior Executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on Vigil Mechanism and whistle blower policy may be accessed on the Company's website at the link: http://www.tgvgroup.com.

Provision of voting rights to Equity and CRP Shareholders

Pursuant to Section-47 of the Companies Act, 2013 voting rights have been provided to Equity Shareholder as well as CRP Shareholder to cast their votes on all the Resolutions placed in the notice.

Acknowledgement

Your Directors wish to express their sincere thanks to Financial Institutions, Bankers, Distributors and Customers for their continued support to the Company. The Directors also acknowledge with gratitude the continued help and support received from the various departments of the Government of India and the Government of Andhra Pradesh and Government of Telangana.

The Directors place on record their appreciation of the sincerity, commitment and contribution made by the Employees at all levels and this was mainly responsible to carry on the business of the Company during the year.

On behalf of the Board of Directors

Sd/-

Place : Hyderabad CA K. KARUNAKAR RAO

Date : 11th July, 2016 Executive Director & CEO