NSE Symbol: | BSE Code: | ISIN: | Sector:
- Add to Portfolio
- Add to Watchlist
- Add to Alert
The Directors have pleasure in presenting their Forty First Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2016.
REVIEW OF THE ECONOMY
The global economic activity remained subdued in year under review. Growth in emerging market which accounts for over 70% of global growth declined for the fifth consecutive year, while a modest recovery continued in advanced economies. Three key transitions continue to influence the global outlook: (1) the gradual slowdown and rebalancing of economic activity in China away from investment and manufacturing toward consumption and services, (2) lower prices for energy and other commodities, and (3) a gradual tightening in monetary policy in the United States in the context of a resilient U.S. recovery as several other major advanced economy central banks continue to ease monetary policy. On this backdrop global economy is estimated to have grown at 3.1% in 2015.
Global growth is projected at 3.4% in 2016 and 3.6% in 2017 as per the World Economic Outlook (WEO) update released by the International Monetary Fund (IMF). In advanced economies, a modest and uneven recovery is expected to continue, with a gradual further narrowing of output gaps. The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016–17.
The Central Statistics Office (CSO) has estimated that Indian economy is likely to grow at 7.6% in 2015–16, higher than growth of 7.2% achieved in 2014–15. The growth in agriculture, industry and services is estimated at 1.1%, 7.3% and 9.2% in 2015–16 as opposed to (–) 0.2%, 5.9% and 10.3% respectively in 2014–15. This shows a pick–up in industrial growth, driven by manufacturing which is estimated to have grown at 9.5% in 2015–16, as compared to 5.5% registered in 2014–15. This year witnessed the continuation of the reform momentum built in 2014–15, aiming at aiding growth and macroeconomic stability. The reforms that were initiated last year for debottlenecking the economy, removing structural constraints, promoting industry and enterprise via Make–in–India initiative and the attempted measures to improve the ease of doing business, improving "programme delivery", through direct benefit transfer and other measures, encouraging saving and financial linkages through deepening of banking services and liberalising foreign direct investment policy in various sectors have been taken forward this year.
The Indian economy has emerged as a bright spot in the world economy, becoming one of the fastest growing large economies in the world. It is noteworthy that this growth is estimated to be achieved despite subdued global demand that dampened India's exports significantly, and two consecutive below–normal monsoons that impacted farm output and productivity.
The Company recorded a subdued performance during the year. Revenue from Operations decreased by 9% to Rs. 1,424.64 crore for FY 2015–16 as against Rs. 1,571.36 crore in the previous year. The decline was primarily driven by lower sales price realization while maintaining the volume. The slide in the prices witnessed during last year continued unabated during the current year due to excess capacity and fierce competition. The global demand for graphite electrodes has remained subdued owing to limited incremental demand for steel. Furthermore, falling iron ore prices have made the Electric Arc Furnace route less economical as compared to the Blast Furnace route in the recent past. Reduction in input costs has compensated to some extent the fall in electrode prices. However, the reduction was not sufficient to compensate for the falling price of finished goods which resulted in stagnant margins. The PAT of Rs. 82.38 crore for current year was slightly higher in comparison to Rs. 82.19 crore of previous year.
The Company's Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 91% of the total revenue.
Glass Reinforced Plastic Pipes division performed better during the year in comparison to previous year. Steel division's performance during the current year was similar compared to previous year.
The business environment in all segments has become intensely competitive. In order to sustain and survive through this difficult phase, the Company has taken extraordinary measures in ensuring efficient management of all resources, innovative approach to cost reduction and high level of operating efficiencies.
The performance of the German subsidiaries continues to suffer due to unremunerative selling prices and weak demand scenario in Europe. However, the industry continues to be optimistic of a recovery in the medium term.
The Directors recommend dividend @ Rs. 2 per equity share on 19,53,75,594 equity shares for the financial year ended 31st March 2016 (inclusive of interim dividend paid @ Rs. 2 per equity share).
MANAGEMENT DISCUSSION AND ANALYSIS
(i) Industry's structure and developments
A. Graphite and Carbon Segment Graphite Electrodes
Graphite Electrode is used in electric arc furnace based steel mills for conducting current that melts scrap iron and steel and is a consumable item for the steel industry. The principal manufacturers are based in USA, South America, Europe, India, China, Malaysia and Japan.
Graphite Electrode demand is primarily linked with the global production of steel in electric arc furnaces. Between the two basic methods for steel production – (1) Blast Furnace (BF); and (2) Electric Arc Furnace (EAF) – the share of EAF route to steel production is estimated at about 26% at the global level. This is expected to grow further in years to come due to its inherent favourable characteristics of (a) an environment friendly and less polluting production process; (b) low capital cost; and (c) faster project (commissioning) time. Fresh investments in EAF steel mills are characterized by large furnace capacities requiring large diameter UHP Electrodes. It is expected that the demand for UHP Electrodes too will grow synchronously. These industry features coupled with an increasing proportion of EAF steel share in total crude steel production in future should proportionately augment the demand for Graphite Electrodes in long term.
Stagnant demand, intense competition and sliding sales price continued to pose challenges during the year. This is compounded by liberalisation of import tariff for these items by the Government in the FTA regime. Recent Anti Dumping measures on import of graphite electrodes from China had some positive impact to stop the unabated imports from China.
Calcined Petroleum Coke and Paste
The Coke Division in Barauni, Bihar, is engaged in the manufacturing of Calcined Petroleum Coke, Carbon Paste and Electrically Calcined Anthracite Paste and is one of the several backward integration initiatives of the Company. In Calcined Petroleum Coke (CPC), two grades – aluminium and graphite – are produced. It is primarily used for manufacture of anodes for use in aluminium smelters, manufacture of graphite electrodes and also used as carburiser in steel. The division also manufactures four grades of Paste i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) & Tamping Paste based on either CPC or ECAC. Electrode Paste is used in Ferro Alloy Smelters and Tamping Paste is used as a lining material in submerged arc furnaces.
This division could not perform to expectations because of poor demand, low realization, competition and constraint in getting its basic raw material i.e. Green / Raw Petroleum Coke.
Impervious Graphite Equipment
The Impervious Graphite Equipment (IGE) Division is engaged in design, manufacture and supply of Impervious Graphite Heat and Mass transfer equipment and Turnkey systems. The product range includes Graphite Heat Exchangers in Shell & tube type and Polyblock type construction, Turnkey systems like HCl Synthesis units and Dry Gas generation units, Absorbers and Absorption systems, Graphite Columns, H2SO4 Dilution and Cooling units, Vacuum Ejector systems, Graphite Bursting Discs and accessories.
Impervious graphite is an ideal material of construction for corrosive process fluids and finds wide application in industries like Chlor Alkali, Chlorinated Organic Chemicals, Phosphoric Acid, Fertilizers, Steel Pickling, Metal Processing, Polymers like VCM, Polycarbonate and Caprolactam, Drug Intermediates, etc.
Over the years the Company has built this product line into a reliable brand with a reputation for prompt service, good quality and consistent performance through investing in strengthening the core competencies. Compared to previous three years, division's sales were lower primarily due to low order book brought forward from last year. Domestic order booking has been consistent but export market continues to be challenging, though there is some improvement in export order booking compared to last year.
Power constitutes one of the major costs of Electrode Production. For captive consumption, the Company has an installed capacity of 31.5 MW of power generation through Hydel route (18 MW) and through multi–fuel route (13.5 MW). Power generation through Hydel Power Plant was 41.00 million units as against 48.48 million units in the previous year. The multi–fuel power generating sets remained as a stand–by facility as adequate power was available from the Grid.
B. Steel Segment
Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches and special form tools. HSS cutting tools are essentially utilised in – (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterised by one good quality manufacturer of HSS viz. PSD and several other small manufacturers who cater to the low end of the quality spectrum in the retail segment. On the demand side, the industry is broadly divided into large and small cutting tool manufacturers who use both domestic and imported HSS. PSD faces competition from small domestic producers and imports from large overseas manufacturers.
PSD's expectations for growth and consequent improvement in demand for its HSS products did not materialize during 2015–16 due to overall depressed industrial environment in India. This also resulted in lower demand for the special grades developed for a domestic customer. Currently, PSD is developing a new grade which is expected to be approved during 2016–17. During the year, special sections of squares and flats in M2 grade were successfully developed for the domestic market. Exports were affected due to weak economic conditions in the Division's overseas markets.
C. Other Segments
Glass Reinforced Plastic Pipes and Tanks (GRP)
GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes and Pipe liners for rehabilitation of old pipes. Product is manufactured by continuous filament winding process with computerized, advanced technology comparable to other plants worldwide. These pipes find application in diverse fields such as bulk water supply projects, power plants, sewerage disposal schemes, industrial effluent disposal, etc. For sea water it is the most recommended alternative.
The Company has a good track record of supplying large diameter pipes and their successful commissioning. Its pipes are in use for many years in several infrastructure projects in private as well as in public sector. Few of the competitors have either shut down or are in difficult position due to unsustainable strategy adopted by them. This will give edge to the units which are in quality production. However project cost overruns, delay in completion of projects, disputes on contractual defaults and non–receipt of receivables have still remained as inherent risks in the business. The Company's policy of picking up orders selectively has paid off and the unit has performed better than previous year on these parameters. Further rationalisation and consolidation in the industry is expected.
1.5 MW Hydel Power Facility
Power generated from this facility is sold to Karnataka Power Grid under a Power Purchase Agreement. Generation of power is entirely dependent on monsoon.
(ii) Opportunities and threats
India is the fourth largest producer of steel in the world. India's crude steel production for 2015 was 89.6 Mt, up by 2.6% on 2014. Indian steel industry has witnessed a sharp downfall after riding high in 2007–08. Sub optimal level of capacity utilization, lower realization due to abundant cheap imports from China, Korea and Russia has adversely impacted the performance. In addition the highly leveraged position with no adequate profitability has put stress on liquidity position of the industry. The situation has been viewed seriously by the Government and effective measures have been taken in the recent past with an objective to bring the industry on track. The recent imposition of Safeguard Duty and Minimum Import Price (MIP) in respect of Chinese imports has shown some initial positive results. Chinese imports to India for January / February 2016 have been on declining trend. Also Chinese domestic Hot Rolled Coil prices have rebound sharply of late from the lows in December 2015 which have resulted in increased steel prices in domestic market. However, the sustainability of the same needs to be established.
India holds third position in consumption of steel. Make in India initiative, investment in railway sector, opening of defense industry for private sector and various other initiatives taken by the Government will give further boost to the steel demand. In the medium to long term, this augurs well for the Graphite Electrode industry.
The short–term challenges which still exist are: (a) uncertain and uneven global growth; (b) highly detoriated financial health of steel industry; and (c) production of steel through BF route due to lower prices of iron ore. It may also put on hold some of the investment / expansion plans.
There is a gap between demand and supply of Graphite Electrodes. Surplus supply has resulted in price pressure on Graphite Electrodes. Closure of unprofitable electrode manufacturing facilities is expected to give some relief in the medium to long run.
Volumes and business prospects, in general, would be impacted by factors like: (a) Uncertainty about the economic recovery in 2016–17; (b) doubts about the early resolution of the crisis in the euro zone and China; (c) doubts about the pace of hike in interest rates in the United States; (d) revival of commodity and oil prices to a sustainable level.
While the Company is equipped and geared to face these business challenges, it is hopeful of realising its business goals, subject to a positive revival of the business environment.
(iii) Segment–wise Performance Revenue of the Company
The revenue from operations amounted to Rs. 1,424.64 crore as against Rs. 1,571.36 crore in the previous year. Aggregate Export Revenue of all divisions together was Rs. 671.70 crore as against Rs. 761.01 crore in the previous year.
Graphite and Carbon Segment
Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 62,022 Mt against 66,525 Mt in the previous year.
Production of Calcined Petroleum Coke during the year was 20,162 Mt as against 21,668 Mt in the previous year.
Production of Carbon Paste during the year was 5,405 Mt against 8,408 Mt in the previous year.
Production of Impervious Graphite Equipment (IGE) and spares at 1,070 Mt was lower as compared to that of 1,114 Mt in the previous year.
Power generated from captive Hydel Power Plant of 18 MW capacity amounted to 41.00 million units during the year as against 48.48 million units in the previous year. Multi–fuel generating facilities remained as stand–by and were not operated due to adequate availability from the grid.
The Segment Revenue declined to Rs. 1,290.75 crore from Rs. 1,393.73 crore in the previous year. Domestic and Export sales in terms of volume and realization were impacted adversely due to severe competition during the year. The profitability of the segment slightly increased from Rs. 142.46 crore in FY 2014–15 to Rs. 143.34 crore in FY 2015–16.
Production of HSS and Alloy Steels was 1,275 Mt during the year as against 1,554 Mt in the previous year.
The GRP Division produced 6,132 Mt as against 10,350 Mt in the previous year.
Sale of power from 1.5 MW Link Canal facility was 3.39 million units as against 3.90 million units in the previous year.
World crude steel production reached 1,622.80 Mt for the year 2015, down by –2.8% compared to 2014. Annual production in Asia during 2015 was 1,113.80 Mt of crude steel, a decrease of –2.3% compared to 2014. India's crude steel production for 2015 was 89.6 Mt, up by 2.6% compared to 2014.
The economic environment facing the steel industry continues to be challenging with China's slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices. While we expect contraction of demand in China, slow but steady growth is visible in some other key regions including NAFTA and EU. Growth for steel demand in all markets except China is expected in 2017. No major recovery is expected in EAF in the short term owing to relatively more favourable economics of BF route.
Indian economy will outgrow China and its BRICS peers with a GDP growth of 7.5 % as per the IMF report. The oil and commodity price fall will continue to benefit Indian economy. The Government initiatives for infrastructure development, including railway projects, implementation of smart city project and Make in India' initiatives should boost demand of steel in India. This will increase graphite electrode demand in the domestic market.
The imposition of Safeguard Duty and MIP on various grades of steel should augur well for the domestic steel industry and should provide a boost for higher level of capacity utilization.
In spite of current adverse economics of EAF steel as compared to BF route, it is expected that EAF steel production will grow in the long term due to its inherent advantages like low capital requirement and low emission levels.
With its competitive cost structure, strong technical product features and a well diversified customer base, the Company has established its presence in the global Graphite Electrode market as a global player.
(v) Risks and Concerns
The Company is exposed to the threat of the cyclical nature of the steel demand as also to the risks arising from the volatility in the cost of input materials. Over the last couple of years steel industry across the globe is undergoing tremendous stress due to reduced steel demand, increasing export of steel from China and slowing down of development in the Middle East due to lower crude oil prices. In addition, due to reduced price level of iron ore and coking coal, the BF route for producing steel has become more economical and hence is being preferred by steel producers. Combined result of these developments has reduced capacity utilization of EAF steel industry for the last 2–3 years. This has resulted in surplus supply in the market leading to reduction in electrode price level. The electrode business will continue to be at risk till significant restructuring takes place in the global electrode industry.
Economic slowdown and/or cyclical recession in certain major steel consuming industries may adversely impact the demand–supply dynamics as also the profitability and your Company too is vulnerable to these changes.
Disproportionate increase in taxes and other levies imposed periodically by the Central and State Governments, especially on essential inputs, may increase the cost of manufacture and reduce the profit margins.
Exports to specific regions may get severely affected by trade barriers in the form of crippling import duties or anti dumping duties or countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist/ restrictive impositions. Devaluation or appreciation of currency may impact business prospects.
There are serious concerns caused by the Eurozone crisis at the centre stage, compounded further by the political turmoil seen in many countries particularly in the Middle East and other recent setbacks to the global economic growth.
The main raw materials are either petroleum based or coal based. Increase or decrease in oil and commodity price will directly impact cost of product and margins. The further increase in price of crude and coal and its direct impact on its derivative materials like Needle Coke, Pitch, Furnace Oil, Met Coke, etc. will all tend to inflate the input cost in a major way.
The Company has a mixed exposure of exports, imports and foreign currency debt portfolio. So, volatility in foreign currency market directly impacts the company's prospects. Inherent natural hedge of various balancing exposures may mitigate the risk up to an extent.
Due to rapid urbanization close to the industrial zones, the Pollution Control Authorities are imposing strict conditions resulting in additional capital expenditure.
(vi) Internal control systems and their adequacy
The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured.
(vii) Discussion on financial performance with respect to operational performance
Revenue from Operations recorded Rs. 1,424.64 crore as against Rs. 1,571.36 crore in the previous year.
Global financial dynamics during the year has centered around lower crude oil and commodity prices, tightening / possible tightening of interest rates in USA and liquidity enhancing measures in Europe and Japan. While US Dollar (USD) had strengthening bias across major currencies, mainly Euro and Yen during major part of the year, it has shown some trend reversal in the recent past. The global operating environment continued to be characterized by uneven economic recovery across the regions, lower capacity utilizations and lower inflation in the face of growing uncertainty. Liquidity management through proactive management of resources and close monitoring of credit risk, country risk and commodity price risk required focused attention of the Management.
The year was less volatile as compared to last year from the financial management perspective with some ease in liquidity, lower inflation and lower volatility in exchange rates vis–a–vis USD. However, it continued to be characterized by uneven global recovery uncertainty in the economic environment, lower capacity utilizations, political and economic turmoil seen in many countries and cross currency headwinds. In the face of growing export–import exposure, financial challenges like currency rate fluctuations, country risk and commodity price risks required focused attention and effective management of potential risks.
RBI had reduced repo rate by 1% and is presently at 6.5%. Softening of inflation rate, improvement in current account deficit and growth concerns have been the prime factors for reversal of RBI's stance. However, the benefit has not been fully trickled down to the borrowers. The year also witnessed considerable depreciation of rupee against USD and other currencies making export and domestic markets slightly favourable for the Company.
Profit after tax was Rs. 82.38 crore as against Rs. 82.19 crore in the previous year. Profit before tax was flat at Rs. 128.25 crore as compared to Rs. 129.44 crore in the previous year. The benefit of lower input costs has been negated by lower realization and lower investment income.
Borrowing at Rs. 179.92 crore was lower than Rs. 248.29 crore in the previous year and as a result the Finance Cost decreased to Rs. 7.41 crore from Rs. 12.23 crore in previous year.
Capital expenditure during the year amounted to Rs. 51.69 crore as against Rs. 31.66 crore in the previous year. The Company is a net foreign exchange earner.
The Company has repaid / prepaid balance portion of External Commercial borrowing during the year.
ICRA has reaffirmed the long term rating at [ICRA] 'AA+' (pronounced ICRA double A plus) which indicates that the outlook on the long term rating is stable. The short–term debt programme rating has been reaffirmed at [ICRA] 'A1+' (pronounced ICRA A one plus). This rating indicates highest–credit–quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility emanating from large liquid investment portfolio.
Details of contingent liabilities are given in Note 36 to the Financial Statements.
(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed
The HRD policies and practices focus on contemporary and pragmatic people centric initiatives, aligning it with business vision and objectives, which primarily help in creating robust organisational structure and aims at optimum utilisation of resources. In order to meet these objectives, the Company has revisited its HR processes, including the Performance Management System (PMS).
The Training & Development Programmes encompassing the competency building initiatives amongst employees continues to be an ongoing process. Besides, the leadership building at senior and middle management level, and the succession planning for critical positions continue to be a focus area. The involvement of employees in the operational initiatives at the manufacturing plants of the Company continues to be high. The Company has availed services of a competent consulting agency in the area of resource optimisation, employee cost control, and restructuring during the year and basis findings and recommendations of the consulting agency initiated appropriate steps improving the utilisation of human resources. The SAP HR payroll module and other Information Technology developments, provide the data analysis, and business opportunities based on the real time sharing of information and integration of systems, leading to efficient decision making process and impacting the internal communication positively.
The total number of permanent employees in the Company is 1981 as on 31st March, 2016.
The employee relations continue to be cordial and harmonious at all the locations of the Company.
Pollution Matter – Bangalore
Appeal filed by complainants before the Hon'ble National Green Tribunal South Zone at Chennai against the majority order dated 22.06.2013 passed in favour of the Company by the Hon'ble Karnataka State Appellate Authority at Bangalore is pending.
Research & Development
The Company's R&D commitment towards continual improvement, development of technology and development of import substitute materials is in line with the Government of India's Make in India policy and has consistently supported the Company in becoming one of the best quality and low cost producers of graphite electrode and carbon material.
R&D initiatives are in the area of raw materials, productivity, process development, reduction in carbon emission, etc.
Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Superior version of carbon brake pads for aircrafts is being developed.
State of art furnace was designed, fabricated, installed and successfully used to process carbon–carbon composite materials.
Many of the cost savings achieved were significant and in compliance with the "pollution control and clean environment norms". These R&D efforts were continuous and by bench marking the operational efficiencies of manufacturing facilities at different locations, steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards/norms.
Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.
The overseas subsidiaries recorded a turnover of Euro 35.17 Mn as compared to Euro 38.74 Mn in the previous year.
On the backdrop of prolonged economic slowdown, German subsidiaries did not do well due to low demand in Europe, high production costs and reduction in prices by competitors to capture volumes in the dwindling market. Due to these unfavourable factors the loss for the year was higher at € 4.75 Mn as against € 2.26 Mn in the previous year.
The Company earned by way of Royalty Rs. 2.81 crore during the year, as against Rs. 2.98 crore in the previous year, from overseas subsidiary.
Statement containing salient features of the financial statements of subsidiaries is enclosed – Annexure A
No Company has ceased to be a subsidiary of the Company during the year. The Company does not have any joint venture or associate companies.
The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per AS–21 forms a part of this Annual Report.
The Audit Committee comprises Mr. A. V. Lodha as its Chairman with Dr. R Srinivasan, Mr. N. Venkataramani and Mr. J. D. Curravala as its members.
All recommendations of the Audit Committee were accepted by the Board.
Information pursuant to Section 134 of the Companies Act, 2013
a. Extract of the annual return as provided under Section 92 (3) of Companies Act, 2013 is enclosed – Annexure 1
b. Four meetings of the Board of Directors of the Company were held during the year on 14th May, 2015, 11th August, 2015, 9th November, 2015 and 27th January, 2016.
c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.
d. Relevant extracts of the Company's policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178 (3) of Companies Act, 2013 is enclosed – Annexure 2
e. There is no qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.
f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed – Annexure 3
g. Particulars of contracts or arrangements with related parties referred to in Section 188 ( 1 ) of Companies Act, 2013 is enclosed – Annexure 4
h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed – Annexure 5
i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.
j. Corporate Social Responsibility (CSR)
As part of its CSR activities, the Company has initiated projects aimed at promoting education and employment enhancing vocational skills and livelihood enhancement projects through B D Bangur Endowment. The CSR policy has been displayed on company website www. graphiteindia.com and can be viewed on <http://www>. graphiteindia.com/View/ investor_relation.aspx
The CSR annual report for the year ended 31st March 2016 is attached separately and forms part of this report – Annexure 6
k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination & Remuneration Committee / Board.
l. The Company has adopted a Vigil Mechanism which has been posted on the Company's website and can be viewed on <http://www.graphiteindia.com/View/investor_> relation.aspx
m. The Company does not accept deposits from public.
n. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.
Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 7 and 8.
Mrs. Renu Challu resigned as director of the Company on 1st October, 2015. The Board has placed on record its sincere appreciation of the services rendered by Mrs. Renu Challu during her tenure as director of the Company.
Mrs. Shalini Kamath was appointed as an additional director effective 18th November, 2015 by the Board of Directors of the Company. She holds office up to the date of the ensuing AGM. Proposal for her being appointed as an Independent Director for a period of five years from the date of ensuing AGM is included in the notice convening the 41st AGM for approval of the members of the Company.
Mr. K. K. Bangur retires by rotation at the ensuing AGM and being eligible offers himself for re–appointment.
No director is related inter–se to any other director of the Company.
KEY MANAGERIAL PERSONNEL
Mr. K. C. Parakh retired as Chief Financial Officer (CFO) of the Company on 31st May 2015. The Board of Directors appointed Mr. S. W. Parnerkar as CFO from 1st June 2015.
The Company continues to enjoy the status of a Star Trading House. This year too, the Company received the following awards for export performance –
• from ECGC – DNB : Dun & Bradstreet Corporate Award 2015.
• from EEPC : National Award 2013–14 for star performance.
• from CAPEXIL : Special Export Award for 2012–13.
• from FIEO : Niryat Shree Award (Non MSME Category).
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that–
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed;
(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 at the end of the financial year and of the profit and loss of the Company for that period;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(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 were operating effectively; and
(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Corporate Governance Report
A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report –Annexure 9
Price Waterhouse, Chartered Accountants, existing Auditors of the Company were appointed for a period of three years by the members of the Company in the 39th AGM held on 12th August, 2014. Their appointment for the third year to audit the accounts for the financial year beginning on 1st April, 2016 to 31st March, 2017 requires ratification by the members. They are eligible and available for re–appointment
The due date for filing Cost Audit Report in XBRL mode for the financial year ended 31st March, 2015 was extended by Ministry of Corporate Affairs (MCA) vide its' circular no.
12/2015 dated 01st September, 2015 till 30th September, 2015.
Consolidated Cost Audit Report for FY 2014–15 was filed with the Ministry of Corporate Affairs, Government of India, on 30th September, 2015.
Secretarial Audit Report
The Board appointed M/s. P. S. & Associates, Practicing Company Secretaries, to conduct Secretarial Audit for FY 2015–16. The Secretarial Audit Report is annexed herewith –Annexure 10
Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.
On behalf of the Board Kolkata
K. K. Bangur
Date : May 12, 2016