Primo Chemicals Ltd
Directors Reports
Your Directors are pleased to present their
48th Annual Report on the business and operations of the Company together with
Standalone and Consolidated Audited Financial Statements (Ind AS based) for the Financial
Year ended 31st March, 2023 and the report of the Auditors thereon.
Financial Highlights
The financial results of the Company for
the year ended 31st March, 2023 are summarised below:-
(Rs. In Crores)
Particulars Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Revenue from Operation and Other Income 733.54
469.22 733.54 469.22
Finance Costs 8.07 8.82 8.07 8.82
Depreciation 23.95 17.46 23.95 17.46
Total Expenditure excluding Finance Costs
and Depreciation, etc. 515.02 367.41 515.02 367.41
Profit before tax 186.50 75.53 186.50
75.53
Tax Expenses 52.52 18.81 52.52 18.81
Profit after tax 133.98 56.72 133.98
56.72
Share of Profit of Associates - - 3.41
2.49
Net Profit for the period after Associates 133.98
56.72 137.40 59.21
Earnings per Share (EPS) of Rs. 2/- 5.53
2.50 5.67 2.61
Basic and Diluted (in Rs. )Performance
Review & State of Company's Affairs
The Chlor-Alkali Sector performed well
supported by higher realizations despite high captive energy costs. During the year under
review, the Company's performance was exceptionally good, particularly in the first three
quarters of the year, driven by strong volume and realizations. The highlights of the
Company's performance for the year ended 31st March, 2023 are as under:
The Company has recorded an EBITDA of Rs.
218.52 crores during the Financial Year ended 31st March, 2023 as compared to
Rs. 101.82 crores in the previous financial year resulting in an increase of 115%.
The Company has produced 1,34,977 MT of
Caustic Soda Lye (CSL) at a capacity utilization of 91% (on enhanced capacity of 1,48,000)
during the financial year ended 31st March, 2023. The Net Sales Turnover from
operations has increased by 48.80% to Rs. 650.16 crores during the financial year ended 31st
March, 2023 as against Net Sales Turnover from operations of Rs. 436.93 crores during the
previous financial year. The Company has earned Net Profit before Tax of Rs. 186.50 crores
for the financial year ended 31st March, 2023 as against Net profit before tax
of Rs. 75.54 crores during the previous financial year.
The landed cost of raw material PMT of
Caustic Soda Lye has increased from Rs. 5,305/- during the financial year ended 31 st
March, 2022 to Rs. 6,350/- during the financial year ended 31st March,
2023 mainly because of an increase in
landed cost of Salt, Barium Carbonate, Soda Ash and Sulphuric Acid. Despite this
significant increase in cost of raw materials, the Company has delivered significant
growth in its operations and financial performance.
The combined average sales realization (net
of GST) has increased to Rs. 50,045/- per ECU in the Financial Year under review from Rs.
39,661/- per ECU in the preceding Financial Year denoting an increase of 26%.
The performance of the Company aligns with
its commitment to consistent growth through expansion plans, optimisation of resources and
cost- effectiveness.
Associate Company
As on 31st March, 2023, the
Company has only one Associate Company namely Flow Tech Chemicals Private Limited (FTCPL),
a Promoter Group Company. The total Revenue of FTCPL was Rs. 246.56 crores with Profit
before tax of Rs. 9.43 crores as compared to the Revenue of Rs. 166.18 crores with Net
Profit of Rs. 11.33 crores in the previous year. There are no Subsidiary or Joint Venture
Companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").
Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules,
2014, the Statement containing salient features of the financial statements of the
Associate Company in Form AOC-1 is given in Annexure - I, forming part of this Report.
Change in Capital Structure
During the period under review, the Company
did not undertake any issuance or allotment of shares. As a result, there has been no
change in the paid-up share capital of the company.
Performance at the Consolidated Level
During the Financial Year ended 31st
March, 2023, the Company has increased its stake from 27.90% to 49% in the Associate
Company which is primarily engaged in the manufacturing of Chlorinated Paraffin (CP) a
widely used Plasticizer and Hydrochloric Acid. FTCPL is one of the major customers of
Chlorine,
therefore Primo Chemicals Limited is
substantially dependent on its Associate company for the disposal of Chlorine and
sustainable operations.
At Consolidated Level, Profit after Tax of
the Company was Rs. 137.40 crores during the Financial Year 202223 as against Rs. 59.21
crores in the previous year.
In view of the fund requirements for the
expansion plan and various ongoing Projects of the Company, the Directors regret their
inability to recommend any dividend for the financial year 2022-23. The Company believes
that investment of the available funds in the expansion and upcoming Projects would be
able to boost the investment made by the stakeholders.
Dividend Distribution Policy
In terms of Regulation 43A of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 201 5, the Board of Directors of the Company has formulated and adopted the
Dividend Distribution Policy, which is available on the website of the Company at https://
www.primochemicals.in/ page/investors.
Finance
Your Company has availed financial
facilities from the Banks for meeting its fund's requirement for Working
Capital/Operational Capital and/or for expansion and new Projects. The details of which
form part of Notes of the Financial Statements.
Deposits
During the year under review, the Company
has not accepted any deposit from the public within the meaning of Section 73 of the Act
read with the Companies (Acceptance of Deposits) Rules, 2014.
Material Changes and Commitments affecting
the Financial Position of the Company
There had been no material changes and
commitments during the period from the end of the Financial Year under review till the
date of this Report which may be affecting the financial position of the Company.
Current Operations & Outlook
Being one of major producers of Caustic
Soda in Northern India, Primo Chemicals proudly boasts a substantial capacity of 500 TPD,
which can be further expanded as keeping in view the demand-supply scenario. Notably, the
Company has successfully commissioned its Stable Bleaching Powder (SBP) plant with an
annual capacity of 33,000 MT.
Primo's ongoing expansion plans, including
the 35 MW Coal and Biomass based Power Plant, Aluminium Chloride Project and Caustic
Flaker unit, are developing as planned and it is anticipated that these projects will have
a positive impact on the company's revenue and profitability in FY 2023-24.
To strengthen the Company's downstream
portfolio, amplify product profitability, decrease energy expenses, and bolster Chlorine
consumption for heightened Caustic Soda production. The Company has already acquired 49%
stake in Flow Tech Chemicals Private Limited its Promoter Group Company till 30th
June, 2022. The Company plans to acquire up-to 100% equity stake in FTCPL by 31st December,
2024. Post this acquisition, FTCPL will become wholly-owned Subsidiary of the Company.
Credit Rating
The details of Credit Rating are disclosed
in the Corporate Governance Report, which forms part of this Annual Report.
Particulars of Loans, Guarantees or
Investments
Pursuant to Section 186 of the Act read
with the Companies (Meetings of the Board and its Powers) Rules, 2014, disclosures
relating to loans, guarantees and investments as on 31st March 2023 are given
in the Notes to the Financial Statements.
Environment and Energy Conservation
The Company accords high priority to carry
out its operations in an environment-friendly fashion and has been taking appropriate
steps for pollution control,
safety measures and good house-keeping
across all its Plants. The Company has in place the Online Monitoring System at Works
connected with Central Pollution Control Board server showing Real Time data of all
parameters specified by them. A Safety Audit of the Plant was conducted during the
financial year 2022-23 by the National Safety Council and its recommendations are being
implemented.
The improvement in energy efficiency is
vital for the sustainable growth of the Company. The Company continues to place a great
emphasis on energy efficiency. Energy Audit is conducted on a regular basis through
various agencies, active in the field. Various activities & modifications in the plant
process are being implemented which are directed towards achieving the Targeted Specific
energy Consumption
- e., Energy Consumption Per Metric Tonne of Caustic
Production, as set by Bureau of Energy Efficiency.
The information relating to the
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as
required to be disclosed pursuant to the provisions of Section 1 34 (3) (m) of the
Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 201 4, is
given in Annexure-II forming a part of this report.
Listing
The Equity Shares of the Company are listed
on the BSE Limited. The Annual listing fee for the year 202324 has been paid to BSE
Limited.
Corporate Social Responsibility
During the year under review, the Company
had to spend Rs. 67.60 lacs based on the average net profit of the last three years on CSR
Activities. Accordingly, the amount was spent on various CSR Activities as per the Policy.
The detailed report as per Section 135 of the Companies Act, 2013 read with the Companies
(CSR Policy) Rules, 201 4 has been attached as Annexure III.
The particulars of the Corporate Social
Responsibility Committee constituted by the Company pursuant to the provisions of Section
135 of the Companies Act, 201 3 and the rules made thereunder are included in the
Corporate Governance Report annexed and forming part of this Report.
Human Resources
The relationship with the workmen and staff
remained cordial and harmonious during the year and management received full cooperation
from employees. The process of development and upgradation of human resources continued.
The Particulars of Employees and Managerial
Remuneration under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2)
& (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, are given in Annexure - IV forming a part of this Report.
As per the requirement of the first proviso
to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid
information is being sent to the members of the Company which will be available for
inspection at the Registered Office of the Company during working hours. Members
interested in obtaining the said information will be furnished the same upon receipt of
the request.
Policy on Prevention of Sexual Harassment
at the Workplace
The Company has zero tolerance for Sexual
Harassment at Workplace and has in place a "Policy on Sexual Harassment at
Workplace" pursuant to Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 201 3 and Rules made thereunder. The Policy aims to
provide protection to employees at the Workplace and prevent and redress complaints of
sexual harassment. The Policy has been framed with the objective of providing a safe
working environment, where employees feel secure.
Internal Complaints Committee has been
setup to redress complaints regarding sexual harassment. During the year under review, the
Company has not received any complaint under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.
Management Discussion and Analysis &
Corporate Governance Report, Business Responsibility & Sustainability Report
- Management Discussion and Analysis
As per SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report
for the financial year 2022-23 is annexed as Annexure - V forming part of this report.
- Corporate Governance Report
The Company has complied with the
Corporate Governance Code as stipulated under the Listing Regulations. The Corporate
Governance Report for the financial year 2022-23 and Auditors' Certificate regarding
compliance of conditions of Corporate Governance are also annexed as Annexure - VI forming
part of this report.
- Business Responsibility & Sustainability Report
The Business Responsibility and
Sustainability Report (BRSR) for the year ended 31st March, 2023 as stipulated
under Regulation 34(2) (f) of SEBI Listing Regulations is annexed as Annexure VII which
forms part of this Annual Report.
Compliance with Secretarial Standards
During the year under review, your Company
is in compliance with the applicable Secretarial Standards specified by the Institute of
Company Secretaries of India relating to the meetings of the Board and General Meetings.
Directors & Key Managerial Personnel
As on 31 st March, 2023, the
total Board strength comprises of 8 Directors out of which 2 Directors are Executive
Directors, 2 are Non-Executive Non-
Independent Directors and 4 are
Non-Executive Independent Directors.
Declaration of Independent Directors
As on 31st March, 2023, the
Company has four Independent Directors on its Board including a woman Independent
Director. All the Independent Directors have met the requirements specified under Section
149 (6) of the Act, 2013 regarding holding the position of Independent Director' and
the necessary Declaration from each Independent Director under Section 149(7) of the Act
has been received.
In the opinion of the Board, there has been
no change in the circumstances which may affect their status as Independent Directors of
the Company and the Board is satisfied of the integrity, expertise, and experience
(including proficiency in terms of Section 150(1) of the Act and applicable rules
thereunder) of all Independent Directors on the Board. In terms of Section 1 50 read with
Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 201 4,
Independent Directors of the Company are registered on the Independent Director Databank
maintained by the Indian Institute of Corporate Affairs (IICA).
Meeting of Board of Directors
Six meetings of the Board were held during
the year under review. For details, please refer to the Corporate Governance Report, which
is a part of this Report.
Board Evaluation
Pursuant to the provisions of the Companies
Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations,
201 5, the Board has carried out an Annual Performance Evaluation of its own performance,
its Committees and all the Directors individually.
The performance of the Independent
Directors was evaluated by the entire Board except the person being evaluated.
The evaluation of Non-Independent
Directors, Chairman and the Board as a whole was done at a separate meeting by the
Independent Directors.
Retirement by Rotation
In accordance with the provisions of the
Articles of Association of the Company, read with Section 152 of the Companies Act, 201 3,
Shri Naveen Chopra, Managing Director of the company, retires by rotation at the ensuing
Annual General Meeting and being eligible has offered himself for re-appointment.
Re-appointment of Managing Director &
Executive Director
Approval of the Members is being sought in
the ensuing Annual General Meeting (AGM) for the reappointment of (i) Shri Naveen Chopra,
Managing Director of the Company for the period of five consecutive years effective from
29th October, 2023 in the ensuing Annual General Meeting whose tenure is going
to end on 28th October, 2023 and (ii) Shri Jatin Dahiya, Executive Director of
the Company for the period of five consecutive years effective from 1st April,
2024 in the ensuing Annual General Meeting whose tenure is going to end on 31 st
March, 2024 as recommended by Nomination & Remuneration Committee and Board of
Directors.
Necessary Resolutions for the
appointment/re- appointment of aforesaid Directors, wherever applicable, have been
incorporated in the Notice convening the ensuing AGM. As required under the listing
regulations and Secretarial Standards on General Meetings issued by ICSI, the relevant
details of Directors retiring by rotation and/or seeking appointment/re-appointment at the
ensuing AGM are furnished as Annexure A' to the Notice of AGM.
Committees of the Board
Pursuant to the requirements under the
Companies Act, 2013 and the Listing Regulations, the Board has constituted the following
committees:
- Audit Committee
- Stakeholders Relationship cum Share Transfer Committee
- Nomination & Remuneration Committee
- Corporate Social Responsibility (CSR) Committee
- Risk Management Committee
The details of the Committees viz.
Composition, number of meetings held and attendance of the Committee Members in the
meetings are given in the Corporate Governance Report forming part of this Annual Report.
Key Managerial Personnel (KMP')
There has been no change in Key Managerial
Personnel of the Company during the year.
As on 31st March, 2023, the
Company has the following Key Managerial Personnel as per Section 2(51) of the Companies
Act, 2013:
- Shri Naveen Chopra, Managing Director
- Shri Jatin Dahiya, Executive Director
- Shri Arun Kumar Kaushal, Chief Financial Officer
- CS Sugandha Kukreja, Company Secretary and Compliance
Officer.
Internal Financial Control with Respect to
Financial Statements
The Company has in place adequate Internal
Financial Controls with respect to financial statements. No material weakness in the
design or operation of such controls was observed during the financial year 2022-23.
Directors' Responsibility Statement
Pursuant to Section 1 34(5) of the
Companies Act, 2013, the Directors confirm that:
- In the preparation of the annual accounts for the financial
year ended 31st March, 2023, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
- 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 of the Company for the period under review;
- 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;
- The Directors have prepared the annual accounts for the
financial year ended 31st March, 2023 on a going concern' basis;
- 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;
- 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.
Related Party Transactions
Consequent upon acquisition of the PACL by
new management in October 2020, the Companies with which PACL was already dealing with and
had already entered into Agreements have become related parties. The transactions entered
into by the Company with Related Parties were in the ordinary course of business and were
at arm's length price. All the contracts /arrangements /transactions with Related Parties
during the year were in the ordinary course of business and/or the same were at arm's
length, the Company has also entered into material related party transactions during the
year under review. Information on material transactions with related party pursuant to
section 1 34(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014
are also annexed in Form AOC-2 and the same forms part of this report.
During the year, all related party
transactions were placed before the Audit Committee and Board of Directors for approval.
Prior Omnibus approval of the Audit
Committee has been obtained for related party transactions, which are repetitive in
nature. The transactions entered into pursuant to Omnibus approval so granted are reviewed
on a quarterly basis by the Audit Committee.
In terms of Regulation 23 of the SEBI
Listing Regulations, the Company submits details of related party transactions on
consolidated basis half-yearly as per the specified format to BSE Limited.
In line with the requirements of the
Companies Act, 2013 and the SEBI Regulations, the Company has formulated a Policy on
Related Party Transactions which can be accessed on the Company's website at
https://www.primochemicals.in/page/investors.
Detailed Disclosure on Related Party
transactions has been provided under the Notes on Financial Statements.
Vigil Mechanism and Whistle-Blower Policy
The Board of Directors of the Company has
in place the Policy on Vigil Mechanism and Whistle Blower. The same has also been placed
on the Company's Website at https://www.primochemicals.in/page/ investors.
Auditors & Reports Thereon
Statutory Auditors
M/s. S. Tandon & Associates, Chartered
Accountants (Regn. No. 006388N), Statutory Auditors of the company, have been appointed by
the shareholders in the Annual General Meeting held on 15th September, 2022 for
a period of five years i.e. from the conclusion of 47th Annual General Meeting
until the conclusion of the Annual General Meeting to be held in the year 2027, at such
remuneration as may be fixed by the Board of Directors.
The Report given by the Auditors on the
financial statements of the Company is part of the Annual Report. There has been no
qualification, reservation, adverse remark or disclaimer given by the Auditors in their
Report.
Cost Auditors
The Board of Directors of the Company at
its Meeting held on 26th May, 2023 has appointed M/s. Kabra & Associates,
Cost Accountant in practice, as Cost Auditors for the Financial Year 2023-24 as per the
provisions of the Companies Act, 2013 to
conduct the audit of Cost Records maintained by the Company at a remuneration of Rs.
70,000/- plus applicable GST besides the reimbursement of out of Pocket Expenses. As per
the provisions of the Companies Act, 2013, your Directors propose the Resolution in the
Notice in respect of remuneration payable to the Cost Auditors for the Financial Year
2023-24 for your ratification and approval. The Company maintains necessary cost records
as specified by the Central Government under sub-section (1) of Section 148 of the
Companies Act, 201 3 read with the Companies (Cost Records and Audit) Rules, 2014.
Secretarial Auditor
M/s. A. Arora & Co., Practising Company
Secretaries, were appointed as Secretarial Auditors of the Company for the Financial Year
2022-23. Their Secretarial Audit Report of the Company for the financial year ended 31st
March, 2023 is annexed as Annexure-VIII to this Report. The Report does not contain any
qualification. M/s. A. Arora & Co., Practising Company Secretaries have been
reappointed as Secretarial Auditors of the Company for the financial year 2023-24.
Annual Secretarial Compliance Report
The Company has obtained an Annual
Secretarial Compliance Report for the financial year ended March 31,2023 from M/s. A.
Arora & Co., Practising Company Secretaries in compliance with the Regulation 24A of
the SEBI Listing Regulations and the SEBI circular CIR/CFD/CMD1/27/2019 dated February 8,
201 9. The said Report for the financial year ended March 31,2023 has been submitted to
the BSE Limited within the prescribed statutory timelines.
Annual Return
Pursuant to Section 92(1 ) of the Companies
Act, 2013 read with Rule 11 of the Companies (Management and Administration) Rules, 201 4,
the Annual Return of the Company is placed on the Company's Website and can be accessed at
web link: https://www.primochemicals.in.com/page/investors.
Other Disclosures
- There is no change in the nature of business of the Company.
- There is no application made or any proceeding pending under
the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year.
- There was no instances of one time settlement with Banks or
Financial Institutions during the year.
- During the year under review, neither the statutory auditors
nor the secretarial auditor has reported to the audit committee, under Section 143 (12) of
the Companies Act, 2013, any instances of fraud committed against the Company by its
officers or employees, the details of which would need to be mentioned in the Board's
report.
- During the year, no unclaimed dividend was required to be
transferred in the Investor Education & Protection Fund of IEPF Authority.
- There are no significant and material orders passed by the
Regulators or Courts or tribunals impacting the going concern status and the Company's
operations in future.
Acknowledgements
The Board of Directors place on record its
deep sense of appreciation for the committed services rendered by the employees of the
Company at all levels.
The Board of Directors would also like to
express its deep sense of gratitude or the cooperation and support received from
Governments Authorities, Company's Bankers, financial institutions, stakeholders, business
associates, customers, vendors and members and look forward to their continued support in
future.
For and on behalf of the Board
Sd/-
(Sukhbir Singh Dahiya)
Place: Chandigarh Chairman
Date: 14th August, 2023 DIN:
00169921