The Directors have great pleasure in presenting before you the 36,h Annual Report of your Company together with the audited financial statements and Auditors'''' Report for the financial year ended 31st March, 2017.
You will be happy to know that despite sluggish market conditions, your Company has achieved several milestones during the year under report, as detailed below:
PERFORMANCE HIGHLIGHTS Physical Performance
- Bauxite Mines has achieved highest ever production with Bauxite transportation of 68.25 lakh MT (achieving 100% capacity utilization) and has surpassed previous best of 63.40 lakh MT achieved in last financial year registering a growth of 7.65%. Bauxite excavation of 68.25 lakh MT during the year is also highest ever since inception surpassing the previous best of 62.89 lakh MT achieved in 2015-16.
- Alumina Refinery has achieved highest ever production with alumina hydrate production of 21.00 lakh MT (10C% of normative capacity) and has surpassed previous best of 19.53 lakh MT achieved in last financial year registering a growth of 7.53%. Steam Generation Plant (SGP) achieved highest ever net power generation of 453 MU surpassing previous best of 438 MU achieved last year
- Aluminum Smelter achieved cast metal production of 3.87 lakh MT registering a growth of 4.03 % over previous year.
- CPP achieved ‘Net Power Generation'''' of 6,066 MU, registering a growth of 3.85% over previous year.
- Wind Power: 3 wind power units at Gandikota, Andhra Pradesh, Devikot, Rajasthan & Jaisalmer, Rajasthan have generated 206 MU against 156 MU achieved last year, registering a growth of 32.05%.
The Company achieved total chemical sale of 12,94,900 MT in 2016-17 compared to 12,19,926 MT achieved during 2015-16. This includes Calcined Alumina Export of 12,43,103 MT made during 2016-17 as compared to 11,74,224 MT export made during 2015-16.
The total metal sales during 2016-17 was 3,85,518 MT as compared to 3,72,424 MT during 2015-16. Total metal sale consists of domestic sale of 2,84,926 MT and metal export of about 1,00,591 MT The total metal inventory at the end of financial year 2016-17 was about 3,092 MT.
The detailed sales break-up is as follows:
Year Ending 31.03.2017
Year Ending 31.03.2016
Alumina & Hydrate
Total Metal Sale
Total Chemical Sale
Out of total domestic metal sales of 2,84,926 MT, sale of 1,89,416 MT was effected from Smelter plant at Angul and sale of 95,510 MT was effected from eleven stockyards located at Kolkata, Baddi, Jaipur, Faridabad, Bhiwandi, Silvassa, Bangalore, Chennai, Vizag, Vadodara and Delhi.
The details of financial performance are given below: Rs, in crore
Revenue from Operations(Gross)
Cost of materials consumed
Power & Fuel
Employee benefits expenses
Depreciation & amortization expenses
Profit Before Exceptional items
Profit before Tax
Profit After Tax
Note: Previous year''''s figures has been re-casted in compliance with Ind AS.
Metal and mining industry has borne the brunt of China slow down (2013 to 2016). Capacity overhang globally as a result of China slow down has pushed production slow down and low price regime. In case of Aluminum, factors such as continuous supply overhang, increasing export barriers on Chinese Aluminum and increasing pollution control restrictions in China could result in capacity shut down in China some of which has already taken place. This could result in demand supply deficit in global markets.
However, India is likely to benefit from emerging global mega trends as technology adoption, climate and regulatory changes, infrastructure built up, shift in economic power, demographic shifts and urbanization will create domestic demand. Increased use of metal in automobiles, building and construction sector, railways, white goods and solar power etc. would spur the demand in domestic market. It is expected that both Aluminum and Alumina price to remain range bound over next five to seven years, as few producers, especially in USA and EU may resume production.
Dividend and Appropriations
A Dividend Distribution Policy has been formulated and approved by the Board of Directors and the same is available in the Company''''s website
Your Company has paid dividend of Rs,2.80 per share for the financial year 2016-17. The total dividend payout for the financial year 2016-17 works out to Rs,541.22 crores as against Rs,467.13 crores (Rs,2.00 per share) for the previous year. Dividend including dividend distribution tax works out to a payout of 97.44% of PAT.
It is proposed not to transfer any amount to the General Reserve for the financial year 2016-17.
The dividend for the year 2016-17 was declared in line with the DIPAM guidelines.
Based on financial performance and achievement of other parameters laid down, your Company is likely to be rated "Excellent” as per the Memorandum of Understanding (MoU), signed with the Government of India for the financial year 2016-17.
Signing of MoU with Ministry foi 2017-13
Raw Material Securitisation
- Utkal D and E Coal blocks have been allotted to NALCO in May, 2016 by Ministry of Coal.
- Terms of Reference for grant of Mining Lease of Pottangi bauxite mine was received from Government of Odisha in July, 2016. NALCO has submitted the acceptance of conditions in August, 2016.
- Bridge Linkage of Coal was sanctioned upto 8.9 lakh MTPA, valid from 2016-17 till 2018-19.
- G-8 grade coal linkage (2 lakh MTA) was booked from M/s. NCL for Refinery for a period of 5 years equivalent to 2.73 Lakh MTA G-12 & G-13 grade coal through linkage auction.
- Mining lease of Panchpatmali Bauxite Mines (Central & North Block) has been extended upto 16.1 1.2032 from existing 31.03.2020 by Government of Odisha.
- All regulatory clearances for opening of South Block, Panchpatmali bauxite mines have been obtained.
PROJECTS UNDER IMPLEMENTATION
5th Stream of Alumina Refinery
Your Company is in the process of setting up 5th Stream in its existing
Alumina Refinery which shall add 1.0 MTPY to its existing capacity of 2.275
MTPY, at a Capital expenditure of Rs, 5,540 crores, based on improved Medium Pressure Digestion technology of M/s. RTAIL (Rio Tinto Alcan International Limited).
Your Company has obtained major statutory clearances like Environmental Clearance by MoEF & CC and Consent to Establish (CTE) from Odisha State Pollution Control Board. Thyssenkrupp Industrial Solutions (India) Private Ltd. has been appointed as EPCM consultant for the project. Pottangi Bauxite Mines
Pottangi Bauxite mines (75 Million Tons) has been reserved by Government of India in favour of Your Company. Government of Odisha issued the terms and conditions for issuance of mining lease in favour of NALCO in July, 2016 and Your Company conveyed its acceptance to Government of Odisha in August, 2016. Activities are undertaken for complying with various conditions to obtain the mining lease.
Utkal D & E Coal Blocks
Utkal D & E Coal blocks (200 Million Tons) have been allotted by Government of India in favour of Your Company in May, 2016. Your Company is in process of transfer of land & other statutory clearances for Utkal D from prior allottee in its favour. Terms of Reference (TOR) has been issued by MoEF & CC against Environmental Clearance application for Utkal D & E Coal blocks. Mining Plan for Utkal-D & E submitted to MoC for approval. 100 MW Wind Power projects
Your Company has commissioned its Wind Power Plant of capacity 50 MW & 50.4 MW in the state of Rajasthan & Maharastra respectively at a Capital Expenditure of Rs, 669 crores.
Retrofit Conversion of Flat Bottom Tank to HRD-DCW in Streams #
1, 2 & 3 at Alumina Refinery
Your Company is going for retrofit Conversion of Flat Bottom Tank to HRD-DCW in Streams # 1, 2 & 3 of its existing Alumina Refinery, to improve operational efficiency, at an estimated cost of Rs, 355 crores. Order has been placed on M/s. RTAIL as a Technolo^ Licenser. M/s. EIL has been appointed as PMC (Project Management Consultant) for the project.
Roof Top Solar Power project
Your Company commissioned 50 KWp Rooftop Solar Power plant at NRTC (NALCO Research and Technology Centre), Bhubaneswar, in November, 2016, with a total project cost of Rs, 37.30 Lakhs.
BPTG #5 Project
To reduce dependency on power supply from the grid, BPTG-5 project was envisaged. The project has achieved mechanical completion during the year and expected to be commissioned shortly.
- Your Company has formed a JV Company named Angul Aluminium Park Pvt. Ltd. (AAPPL)'''' in association with Odisha Industrial Infrastructure Development Corporation (IDCO) in 2010 to promote downstream and ancillary industries in Odisha. The project has been approved by Dept. of Industrial Policy & Promotion (DIPP), Ministry of Commerce, Government of India under Modified Industrial Infrastructure Up gradation Scheme (MIIUS). NALCO and IDCO hold 49% and 51% equity in the JV Company. Your Company''''s equity contribution to AAPPL till March, 2017 is Rs, 14.70 crores.
- Caustic Soda Project in JV with Gujarat Alkalies and Chemicals Ltd. (GACL): Your Company has formed a JV Company "GNAL” with GACL in Dec, 2015 to set up 2.7 lakh TPA caustic soda plant along with 130 MW captive power plant at Dahej in Gujarat. Pre-project activities like land acquisition, bidding for Boiler Turbine Generator (BTG) package & Balance of Plant (BOP) package and Technology selection for the caustic soda plant is underway.
- Your Company plans to setup a 20 MW Solar Power Plant in Madhya Pradesh. The project is registered with MPNRED (Madhya Pradesh New & Renewable Energy Dept.) and 55.62 Ha land has been transferred to MPNRED in November, 2016. Application for grid connectivity permission was submitted to MPPKVVCL (Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd.) in November 2016.
- Company plans to set up another Wind Power Plant of 50 MW capacity at any suitable location in India. Techno-commercial bids for selection of wind power developer were opened in December 2016 and price bid is in the process of being opened.
- Company has issued NIT for selection of developer for EPC for 50 MW Solar Power Project at any suitable location in India.
- Establishment of Gajamara Power Project: Company has signed an MoU with NTPC to form a JV Company for establishment of 3X800 MW coal based Power Plant at Gajamara, Dhenkanal, Odisha for supplying power to Smelter expansion projects.
- Establishment of Coal Tar distillation plant: Your Company has signed an MoU with Neelachal Ispat Nigam Ltd. (NINL) for setting up a Coal Tar distillation plant in JV mode for production of Coal Tar pitch.
- Establishment of Aluminium Alloy manufacturing plant: Your Company has signed an MoU with Mishra Dhatu Nigam Ltd. (MIDHANI) for establishment of Aluminium Alloy manufacturing plant for meeting the requirement of defence, aerospace, automotive and transport sector under the "Make in India” initiative of Government of India.
CAPITAL EXPENDITURE (CAPEX)
During the year, the capital expenditure of the Company was Rs, 876.09 crores which includes Rs,38.47 crores towards equity contribution to Joint Venture Companies.
RISK MANAGEMENT POLICY
A Risk Management Policy has been formulated and approved by the Board of Directors and the same is available in the Company''''s website www.nalcoindia.com.
HUMAN RESOURCES MANAGEMENT
Presidential Directives on SC/ST reservation
Your Company fully complies with all applicable Presidential Directives and other guidelines in matters of reservation for SC/ST/OBC and other categories like the PWD, Ex servicemen etc. Out of total manpower strength of 6,938 as on 31.03.2017, there were 1,129 SCs (16.27%), 1,278 STs (18.42%), 803 OBCs (11.57%), 86 PWDs (1.24%) and 18 ESMs (0.26%) on roll. There were a total of 354 lady employees in the Company as on 31.03.2017.
The positive Industrial Relations climate of the Company throughout the year helped in achieving excellent all-round performance during 2016-17. The Workers'''' Participation in Management continued to remain a fulcrum of the Industrial Relations practice of the Company. Creation of a culture conducive to sustainable development on all fronts including a focus on improving happiness index through various employee friendly actions remained the highlight of the year. Long pending issues like Special Financial Package for non-executive employees of Mines, medical related issues and the issue of rationalization of NPS contribution of executives were settled amicably.
Social Accountability 8000
For creating and maintaining a decent work place, your Company continues to implement SA 8000 Standard successfully.
All the units including Corporate Office have been certified to SA 8000-2008 Standard. Your Company is in the process of transition to SA 8000:2014 (revised) Standard from SA 8000-2008 Standard.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility has been core to the philosophy of the Company. Accordingly, the Company has been taking up different Peripheral Developmental activities, CSR Projects and Programmes since its inception. The CSR Projects/Programmes are identified based on the internal assessment in periphery area directly by your Company and the recommendation of Rehabilitation and Peripheral Development Advisory Committee (RPDAC) and through its CSR arm, Nalco Foundation as well as feedbacks received from different stakeholders.
For achieving the Corporate Social Responsibility (CSR) objectives through the implementation of meaningful and sustainable CSR Programmes, your Company has spent Rs, 3,000.80 Lakh in FY 2016-17 towards CSR activities against the mandated spending of Rs, 2,756.55 Lakh as per the CSR policy and Section 135 of the Companies Act, 2013.
The CSR policy is developed in line with the Companies Act, 2013 which aims to support the disadvantaged/marginalized cross section of the society by providing opportunities to improve the quality of life, demonstrating care for the community through its focus on education, Health care and Sanitation, measures for environmental sustainability, providing safe drinking water, protection of National heritage, art and culture skill development of local youth to enhance their employment capability, etc.
Some of the unique CSR initiatives taken during the year besides the rural infrastructure development;
- Under protection of environment, your Company has ventured for massive avenue plantation and joined green energy revolution by installing 50 Kw Roof top Solar System installed at Nalco Research and Training Center (NRTC), Bhubaneswar and installed solar street light in eight remote periphery villages of M&R complex, Damanjodi.
- Under the Government of India call for Swachh Iconic Shrine development, your Company joined hands as a multi stake partner for Development of Iconic Shrine, Puri and transform it to a Swachh Pilgrimage Place.
- Under efforts to promote education, your Company continued to sponsor 755 students from tribal dominated area of Koraput for their education at three (03) residential Schools, extended financial support to 181 poor and meritorious girl students from periphery villages of Angul & Damanjodi to continue their study under the Scheme of "Nalcora Aliali Jhia” (Nalco Ki Ladli), in line with Government of India "Beti Bachao & Beti Padhao”. Your Company also provided education to 4,129 periphery students at Company aided School "Saraswati Vidya Mandir” both at Angul and Damanjodi.
- Your Company continued to provide better health-care services to inhabitants of 163 periphery villages at Mines & Refinery Complex, Damanjodi, who are mostly tribal people, by operating 4 Mobile Health Units (MHUs). Similarly, 3 Mobile Health Units (MHUs) and one Specialist OPD is operating since November, 2017 in Smelter & Power Complex, Angul, covering 39 periphery villages. In the year 2016-17, around 1,12,809 patients have availed free healthcare services at their door-steps in the periphery villages of both the production units.
- Action has been initiated to make eleven (1 1) villages Open Defecation Free (ODF). Construction of Indian House Hold Toilets (IHHT) have been started in two mines periphery Villages of M&R Complex, Damanjodi.
A detailed report on CSR activities prepared in line with various applicable provisions of the Companies Act, 2013 is attached at Annexure-I.
VISIT OF PARLIAMENTARY COMMITTEES
The following Parliamentary Committees visited the Company during the year 2016-17, as under:
- Visit of the Department related Parliamentary Standing Committee on Industries between 25.06.2016 to 27.06.2016.
- Study visit of the Committee on Subordinate Legislation, Rajya Sabha between 16.07.2016 to 17.07.2016.
SCOPE Excellence Award in Institutional Category form Hon’ble President of India
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Management Discussion & Analysis report in line with Regulation 34(3) read with Schedule-V of the SEBI (LODR) Regulations, 2015 is placed at Annexure-II to this report.
The report also contains:
(a) various initiatives undertaken to further business development.
(b) the details of risk management initiatives, the details in respect of adequacy of internal financial controls with reference to the financial statements.
(c) various initiatives taken up in the field of Environment Management at different units of your Company.
Your Company continued its efforts in taking advantage of latest developments in the Information Technology by suitably using them in the day-to-day functioning of the Company. In that direction, the Company has taken various steps as detailed below:
SAP ERP has been implemented for Procurement, Inventory Management, Finance & Controlling, Sales & Distribution, Production and Human Resource Management. Your Company has centralized Payroll, Attendance, Perquisites and Leave System on legacy platform. A centralized Hospital Management System is being implemented for the Company hospitals at Angul and Damanjodi.
For close monitoring of various initiatives, an online Capital Expenditure Monitoring System, Departmental Action Plan & Dashboard Monitoring System, Fund Monitoring System, Audit ATR Monitoring System have been implemented. Implementation of Revenue Expenditure Monitoring System is in progress.
To enable transparent and efficient procurement practice, procurement of goods is done through SAP SRM7 and services are sourced through Central Public Procurement portal. Further a Bill Tracking System is being developed to enable vendors to track invoices and know the payment details. To facilitate monitoring of all contracts across the company, an online Contract Labour Management System is being implemented. Further, plans have been initiated to implement analytics as decision support tools.
Digitization of documents and records has been taken up at various Offices and Units. It is planned to introduce the e-Office Document Management System. Knowledge Management will also be a key area of activity.
The network which is the backbone of IT has been revamped with 10 Gbps backbone and 1 Gbps access technology and advanced routing, sequestering and queuing technologies, resulting in efficient and fast throughput across the network. The Wide Area Network connecting plants and offices has been completely migrated to MPLS technology Critical locations have been provided with dual circuits for fault tolerance.
For computing infrastructure that is nearing completion of life cycle, action is underway for replacing with current and scalable technology, also building a central cloud infrastructure that caters to the server requirements organization wide. Focus is towards use of virtualization in servers to leverage the flexibility of virtualized server provisioning. Disaster recovery coverage is now being extended to all the legacy applications and services. Your Company has taken steps to reinforce and secure its IT infrastructure and ecosystem by formulating an IT Security Policy and framework to implement an effective Information Security Management System leading to ISO 27001 certification. This will be an assurance to all stake holders regarding the Confidentiality, Integrity and availability of our IT infrastructure, including parties who are transacting digitally with the Company. In security implementation, sensitization has been carried out against threat of Ransom ware and preventive and corrective action required thereof. Current roadmap of activities includes digital office for document storage and retrieval as well as work flow automation, social platforms for in-house as well as for public. The e-governance processes cover in-house services to employees and services like online application systems for recruitments to the general public. Implementation of employee self service modules such as centralized Loans and Reimbursement is in the pipeline. This provides an online platform for employee participation, quicker service and uniformity in business logics followed across the enterprise.
IT Audit by C&AG
Comptroller & Auditor General of India (C&AG) has selected your Company to undertake IT audit of ERP system (SAP) during 2016-17. The audit coverage includes examination of the system development process and the procedures followed at various stages involved therein, review of the security of the IT systems, data integrity along with evaluation of general and application controls of the IT systems to gain assurance about their adequacy and effectiveness, evaluation of the main process involved in different modules of the system and evaluation of performance of the system.
The observations by C&AG on access controls, master data maintenance has already been addressed by the management through appropriate control mechanism and guidelines on maintenance of master data.
TOTAL QUALITY MANAGEMENT
Your Company has taken following major initiatives during the year under
Business excellence is a concept that believes in "outstanding practices in managing the organization and achieving results”, through a systematic and structured actions those lead to increased performance. With active involvement of top Management, your Company implemented the BE programs at Smelter & Alumina Refinery units.
- Smelter Plant: Business Excellence initiative was launched at Smelter during the year. The BE Star Recognition on Operation Excellence Model was taken up for implementation. A 3-day training and assessment session was conducted on the Operational Excellence Framework during 3rd to 5th January, 2017 with faculty support from CM Institute of Quality,
* Alumina Refinery: Business Excellence (BE) initiative that launched earlier at Alumina Refinery was further enhanced with introduction of the comprehensive Cll- Exim Bank Business Excellence Model. This model is based on the latest EFQM (European Foundation of Quality Management) Excellence Framework i.e. EFQM 2013. This comprehensive model was launched at Alumina Refinery during August, 2016. Subsequently, top level Councils were formed and training of core team members was taken up. Drafting of position report for Cll Exim-Bank Business Excellence assessment, is in progress.
integrated Management System
Recertification Audits and Surveillance Audits were conducted at all the units within scheduled time and the units i.e. Alumina Refinery, Mines, Smelter, CPIRs, Vizag Port Facilities are operating with valid ISO 9001 : 2008, ISO 14001 : 2004 &OHSAS 18001:2007 Certificates, which are issued with international accreditation from RVA, Netherlands/ UKAS, U.K.
Energy Management System
Recertification Audit of Alumina Refinery for ISO 50001 System was successfully completed and the unit is recertified to ISO 50001, with the certificate issued with international accreditation from RVA, Nether and. The other two energy intensive units i.e. Smelter & CPP covered in PAT are also operating with similar valid certificates.
Perform, Achieve & Target (PAT) Scheme
Mines & Refinery Complex and Smelter & Power Complex were notified as Designated Consumers by M/s. Bureau of Energy Efficiency (BEE), Ministry of Power, Government of India, in the PAT scheme. During the year a total of 36,119 Energy Savings Certificates (EScerts) were issued by M/s. BEE to the organization in recognition of performing better than the assigned targets during the completed PAT Cyde-1. The certificates were issued based on independent audit report submitted by accredited Energy Auditors of M/s. BEE and subsequent verification by the administrative body.
Quality Circles and Kaizens
- 53 Quality Circles across the organization have completed 51 projects during the year. 557 Kaizens were also completed during the year.
- 14 Quality Circles from different units of the Company participated in the National Quality Circle Convention organized by QCFI at Raipur. Out of these, eight QCs achieved recognition as "Par-Excellence” performers, the top-category award in the national level competition.
- The 21st All Odisha Quality Circle Convention was organized by the Company on 20th & 21st April, 2016. This premier State level convention had participation of 25 units i.e. industries, mines operating in Odisha.
- The Inter-Unit Quality Circle Competition was held on 10th November, 2016 at M&R Complex, where ten Quality Circles from different units participated. The winners of Essay, Slogan & Poster competition and the Inter-Unit QC competition were felicitated in the function.
5S system was introduced at Alumina Refinery, Mines, Smelter & CPP in total seven identified areas. Subsequently, the implementation was also assessed by the external assessors from QCFI, Hyderabad. Based on their assessment, six of these areas were rated as "Excellent Implementation”. Alumina Refinery has further rolled out this initiative in additional areas in the unit.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
As per the Official Language Act, 1963 and Official Language Rule, 1976, implementation of Hindi has been done in your Company.
- To promote use of Hindi in official work, Hindi Fortnight was observed from 01-09-2016 to 14-09-2016 at Corporate Office and at
S & P Complex, Angul. Several Hindi Competitions were organized separately for Hindi speaking and Non-Hindi speaking employees and students. Likewise Hindi Week was observed at M & R Complex, Damanjodi where various competitions were held among employees and students.
- Hindi Teaching Program was implemented at Corporate Office, S&P Complex and M&R Complex and the employees who do not have working knowledge of Hindi, were nominated for Praveen & Pragya courses under Hindi Teaching Scheme of Government of India and after passing the examinations, incentives and cash awards were given as per rules.
- Two Meetings of Town Official Language Implementation Committee (Undertaking) Bhubaneswarand Town Official Language Implementation Committee, Angul each was held during the chairmanship of NALCO. Joint Hindi Workshops organized for employees of all the member
- One Special Hindi Workshop was organized with the faculty assistance of Dr.(Smt.) Vinay Sarangi Rajaram, Member of Hindi Advisory Committee of Ministry of Mines, Government of India and reputed Hindi scholar.
- Website of Company www.nalcoindia.com is made Bilingual and
being regularly updated both in Hindi and English.
- During the year, your Company has provided Faculty Assistance on the subject "Unicode and Technical Facilities in Computer and Mobile phones in Hindi & Regional Languages” in the workshops organized by different CPSUs and at Rajbhasha Sammelans.
- Bilingualisation of online applications like Payroll, Leave application, Employees rolls in SAP are being implemented under Digital India Movement.
Your Company continues to promote sports and sports person in the country. As the part of promotion of sports, your Company sponsored Hockey India League (HIL). Your Company also sponsored NALCO Cup State Hockey Championship, NALCO Cup State Open Tennis Tournament and NALCO Cup Basket Ball Championship.
As matter of policy to encourage young sports person, your Company felicitates sports person of the State participating and excelling in the field of sports.
Mr. Sukhram Majhi and Md. Jafar Iqbal, team member of Indian Blind Cricket Team, who won the World Cup - 2016, were felicitated on 1st April, 2017 in the occasion of Utkal Divas.
Your Company also offered job to four women Hockey players from the State who participated in the Rio Olympics, as a policy to encourage young sports person.
Broad details of the Vigil Mechanism, established in your Company are given below:-
- Your Company has a well established vigilance organization in the Company headed by a Chief Vigilance Officer (CVO) who is appointed on deputation from Government of India. Other vigilance officers who assist the CVO are selected on deputation basis in consultation with and concurrence of CVO. NALCO has its vigilance set up at three locations, i.e. Corporate Office, Bhubaneswar, S&P Complex, Angul and M&R Complex, Damanjodi.
- The vigilance functions are generally in the nature of preventive, punitive, surveillance and detection.
The Vigilance Department functions in brief are;
- Investigating complaints.
- Surprise Checks in sensitive areas.
- Study of contract/purchase/sales files and Internal Audit Reports which are good source of information for vigilance cases.
- Suggesting system improvements.
- Circulation of CVC Circulars/ guidelines.
- Giving vigilance clearances to various employees for various purposes, viz. NOC for issue of Passport, Promotion, Resignation/ Superannuation/ Voluntary Retirement, Conferment of Award, Foreign Assignment, Deputation and appointment of officers to Board level etc
- Scrutiny of Property Returns.
- Advising on rotation of officials in sensitive posts.
- Advising CMD on vigilance matters and matters relating to disciplinary procedures.
- Liaoning with CBI etc.
- Implementation of Integrity Pact.
- Conducting training programmes for awareness among employees and general public as a part of preventive vigilance mechanism.
Functions of CVO
The functions of CVO are as follows:
- Maintaining a good link with CVC and CBI besides organizing structured review meeting with CBI.
- Furnishing of various return/ report to ministry/CVC/CBI.
- Assisting CVC in selection of Independent External Monitors (IEMs) for
I.P (Integrity Pact).
- Assisting management in formulation/updating of anti-corruption policies/ measure.
Whistle Blower Policy
Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior.
The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing to prohibit managerial personnel action. It protects employees wishing to raise a concern about serious irregularities within the Company.
Details of the policy are available in the website of your Company.
No fraud has been reported by the Auditors under Section 143(12) of the Companies Act, 2013 during the year under report.
The company has a Board approved Fraud prevention Policy and the same is placed in the Company''''s website wwwinalcoindia.com.
RIGHT TO INFORMATION
In order to address the provisions of Right to Information Act (RTI), one Public Information Officer and nine Assistant Public Information Officers responsible for providing information sought by stakeholders has been appointed. The following are the details of the RTI applications and appeals during 2016-17.
-Including one case transferred to other Public Authorities.
NALCO has been aligned with the Online RTI portal of Department of Personnel and Training (www.rtionline.gov.in) with effect from 18.01.2017. The RTI requests are received and replied through this online portal also. LISTING IN STOCK EXCHANGES & PAYMENT OF LISTING FEES The equity shares of your Company continued to be listed on BSE Limited and National Stock Exchange of India Ltd, the premier stock exchanges of the country, having nationwide trading terminals. The listing fees for the year 2016-17 were paid to these stock exchanges on time.
Buy-back of Shares
Based on the decision of the Board of Directors and approval of the shareholders by a special resolution through postal ballot on 14.07.2016,
your Company had bought back 64,43,09,628 number of equity shares of ''''5/- each on 21.09.2016 representing 25% of the total number of equity shares in the paid-up equity share capital of the Company. These shares were extinguished on 26.09.2016. The buy-back offer was at a price of Rs, 44/- per share for an aggregate consideration of Rs, 2,834.96 crores. The paid-up capital of the Company has come down from Rs, 1,288.62 crores to Rs, 966.46 crores. After the buy-back, the shares held by the President of India has come down to 74.58% from 80.93% of the total paid-up capital of the Company.
Subsequent to the buy-back of shares, public shareholding in the Company has gone up to 25.42% thereby complying with the requirement of minimum public shareholding, as mandated by Ministry of Finance for all listed CPSEs. Offer for Sale (OFS)
The Government of India sold 14,24,55,941 shares to non-retail investors and 3,56,13,986 shares to retail investors on 19th April, 2017 and 20th April, 2017 respectively through stock exchange mechanism comprising in total, 9.2125% of the paid-up capital of the Company. The Government of India received a consideration of Rs, 1,193.09 crores through this Offer for Sale (OFS). Post OFS, the total shares held by the President of India have come down from 74.58% to 65.36% of the total paid-up capital of Rs, 966.46 crores.
SERVICES TO SHAREHOLDERS
All matters relating to transfer/transmission of shares, issue of duplicate share certificates, payment of dividend, de-materialization and re-materialization of shares and redressal of investors grievances are carried out by the Company''''s RTA i.e. M/s. Karvy Computershare Pvt. Ltd., Hyderabad.
PAYMENT OF ANNUAL CUSTODY/ISSUER FEES TO DEPOSITORIES
Annual connectivity fees and custody fees/issuer fees for the year 2016-17 were paid to both M/s. National Securities Depository Ltd. and M/s. Central Depository Services (India) Ltd. on time.
BUSINESS RESPONSIBILITY REPORT
In line with Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, a Business Responsibility Report for 2016-17 describing various initiatives taken by the Company on social, environmental and governance perspective, is attached at Annexure-III which forms part of this Annual Report.
Reports on Sustainable Development
- Business Responsibility Report addressing the requirements of economic, environmental, social & governance aspects based on the National voluntary guidelines, a mandatory requirement of SEBI, is prepared and published in the Annual Report.
- The stand alone Sustainable Development Report based on international guidelines (GRI G4) was also prepared as a voluntary annual disclosure and the same was approved by Management for review at the headquarters of the international body i.e. GRI at Amsterdam. The submitted report with minor modifications were also finally accepted by GRI.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Research & Development
- 150m3 per batch Effluent Water Treatment Plant with Emrion Nano Technology of Eesavyasa Technology Pvt Ltd, first of its kind in the world was commissioned at Smelter Plant and is in operation. After completion of the Defluoridation Plant based on the nano technology trial was completed on 30.11.2016 successfully.
- After development of the process, High Speed Extrusion Alloy (HSA) billet, a value added product, the New Product Grade CH-90 added to NALCO''''s standard product list. Commercialization of High Speed Extrusion Alloy (HSA) billet was done 25.01.2017, with dispatch of the 1st consignment.
- Under the MOU agreement with CHALIECO/ Guiyang Aluminum Magnesium Design & Research Institute Co. Ltd. (GAMI), China lab scale study for extraction of iron concentrate from red mud, a waste of Alumina Refinery Plant has been completed. Conventional High Gradient Pulse Magnetic Separation and a new technology-Disperse Magnetic Calcinations & Magnetic Separation was attempted for extraction of iron concentrate from Red mud.
- A study was undertaken to establish suitability for iron recovery and 100% utilization of Red Mud (Plant waste) with M/s. Shenwu Group, China. Lab scale study has been successfully completed and the test report has been received.
- MOU has been signed with Bhabha Atomic Research Centre (BARC), Mumbai on 10th May, 2016 for development of chemical method and technologies for value added processes and product in aluminum industry. Under the agreement two studies have been under taken
A report on Corporate Governance in line with Regulation 34 read with Schedule-V of SEBI (LODR) Regulations, 2015 and DPE guidelines is prepared and placed at Annexure-V to this report.
The Statutory Auditors of the Company have issued a certificate on Corporate Governance which is appended to the Corporate Governance Report.
The Policy on Related Party Transactions has been approved by the Board and placed in the Company''''s website which can be accessed at www.nalcoindia.com.
NALCO Head Quarters
by BARC i.e. (i) development of Gallium extraction technology from Bayer''''s Liquor of Alumina Refinery process and (ii) Use of red mud in nuclear reactors.
- MOU agreement was signed with ‘The Energy and Resources Institute'''' (TERI) for (i) Generating new knowledge on mining rehabilitation methods and technologies, (ii) Sustainable Rehabilitation of Red mud areas, and (iii) Capacity building of relevant officials.
- Four Patent applications were filed during the year.
The particulars relating to Conservation of Energy, Technology^ Absorption,
Foreign Exchange Earnings and Outgo, as required to be disclosed under the
Companies Act, 2013 are given in the Annexure-IV to this report.
DIRECTORS’ RESPONSIBILITY STATEMENT
Your Directors'''' pursuant to the provisions of Section I34(3)(c) and 134(5) of the Companies Act, 2013, hereby confirm that;
- in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
- the directors had 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;
- the directors had 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 had prepared the annual accounts on a going concern
- the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
- the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. the members to Note No. 43 of the financial statements which sets out related party disclosures.
No contract has been entered with any related party during the year under report. However, a report in Form AOC-2 is attached at Annexure-VI to this report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance of the provisions of the Act, the Board of Directors have appointed the following as Key Managerial Personnel:
- Dr. T.K. Chand, Chairman-cum-Managing Director
- Shri N.R. Mohanty, Director (P&T) till 31.01.2017
- Shri K.C.Samal, Director (Finance)
- Ms. Soma Mondal, Director (Commercial) till 28.02.2017
- Shri V.Balasubramanyam, Director (Production)
- Shri Basant Kumar Thakur, Director (HR) (w.e.f. 04.07.2016)
- Shri S K Roy, Director (P&T) (w.e.f. 03.02.20I7)
- Shri K.N.Ravindra, Executive Director
- Company Secretary till 31.05.2017
- Shri N K Mohanty, Company Secretary w.e.f. 01.06.2017 Declaration of Independence by Independent Directors
The Company has received declaration from the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (LODR) Regulations, 20I5.
Meetings of the Board
During the year, eight Board meetings were held. Details of the meetings are available in the report on Corporate Governance (Annexure-V) placed in this Annual Report.
^ramous Sub-committees of the Board
The details of various Sub-committees of the Board including Audit Committee, their composition, terms of reference, details of meetings held are given in the Corporate Governance Report attached to this report. EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company in the prescribed Form MGT-9 is annexed herewith as Annexure-VII to this Report.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under report:
- Details relating to deposits covered under Chapter V of the Act.
- Issue of equity shares with differential rights as to dividend, voting or otherwise.
- Issue of shares, sweat equity shares and ESOS to employees of the Company.
- Neither CMD nor the Whole-time Directors of the Company receive any commission from the Company.
- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''''s operations in future.
Your Directors also state that no disclosure or reporting is required in respect of the following areas as they are exempted for Government Companies by Ministry of Corporate Affairs vide notification dated 5th June, 2015, as amended and notification dated 5th July, 20I7.
- Company''''s policy on Director''''s appointment and remuneration including criteria for determining qualification, attributes, independence, etc. as per Section I34(3)(e) and Section I78(2),(3) & (4).
- Manner in which formal Annual Evaluation of performance of Board, its Committees and individual Directors has been carried out as per Section I34(p) read with Rule 8 (4) of Companies (Accounts) Rules.
- Ratio of remuneration of each Director to the median remuneration of the employee and other prescribed details as per Section 197(12) read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules.
Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
During the year, one case was reported under the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 20I3, which has been closed as on date.
Particulars of loans, guarantees and investments
Particulars of loans, guarantees and investments form part of Notes for 10 and
12 respectively to the financial statements provided in the Annual Report.
Subsidiaries, Joint Venture Companies and Associated Companies
The Company does not have any subsidiary. Neither any company has become subsidiary, JV or associate company nor has any company ceased to be subsidiary, JV or associate company during the period under report. Particulars regarding joint venture companies and associated companies form part of Note 47 of the Consolidated Financial Statements provided in the Annual Report.
Salient features of JV/Associate companies in Form AOC-I (Note 48) forms integral part of the consolidated financial statement of the Company. Awards & Recognitions
- The Panchpatmali Bauxite Mines of NALCO has been conferred with the 5-Star Rating by the Ministry of Mines in February, 20I7 for its efforts and initiatives towards Sustainable Development Framework.
- Highest Export Award for its outstanding export performance in Minerals and Ores sector for the year 20I4-I5, by Chemical & Allied Products Export Promotion Council (CAPEXIL) in February, 20I7.
- Performance Excellence Award, from Indian Institution of Industrial Engineering (IIIE) in February, 20I7.
- SCOPE Meritorious Award for Corporate Social Responsibility & Responsiveness for the year 20I4-I5 in FY 20I6-I7.
- SCOPE Excellence Award in Institutional Category-I for Navratna and Maharatna Companies for the year 20I4-I5 in FY 20I6-I7.
- Ist Prize for safety & welfare for contractor''''s workers and Ist Prize for water management/monsoon preparation for Panchpatmali Bauxite mines, awarded by DGMS in July, 20I6.
Other Notable Awards
- India Pride Award for the year 20I5-I6 for CSR, Environment Protection & Conservation, instituted by the Dainik Bhaskar Group in April, 20I6.
- ‘Outstanding CSR Practices in Community Development Award'''', during the Odisha CSR Summit 20I6, jointly organized by KIIT School of Rural Management and Odisha LIVE at Bhubaneswar in April, 20I6.
- ‘CSR Excellence Award'''' in Gold category for the year 2015 by the Institute of Quality and Environment Management Services (IQEMS) in association with Rotary Club - Heritage, Bhubaneswar in May, 20I6.
- ‘Emerging Global Brand Award'''' by a leading web channel network Odisha Live, at Bhubaneswar in June, 20I6.
- The Times of India Group felicitated NALCO for its CSR initiatives in August, 20I6.
- Best Exporter Awards consecutively for the years 20II-I2, 20I2-I3 and 2013-14, under metallurgical products category in September 20I6 at Bhubaneswar.
- Best Mother Plant award in the 30th Annual State Level Convention
- 20I6 organized by Odisha Assembly of Small & Medium Enterprises (OASME)”, on I2th August, 20I6.
IMPLEMENTATION OF GOODS AND SERVICES TAX (GST)
Goods and Services Tax (GST) was implemented by Government of India, effective from Ist July, 20I7. The Company was well prepared to migrate into GST regime on compliance of statutory provisions, reconfiguration of ERP system and training of personnel to address the business requirement in compliance to GST Law. The Company has also conducted vendor awareness programmes in its plants and offices.
The Company has successfully migrated into GST w.e.f. Is of July, 20I7 without any business disruption and is well equipped to address all the future changes those will be notified by the Government from time to time.
COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA ON THE FINANCIAL STATEMENT OF THE COMPANY
You will be pleased to know that your Company has received ‘Nil'''' comments from C&AG on the standalone financial statements of the Company. Further, C&AG has also given ‘Nil'''' comment on the supplementary audit conducted by them on the consolidated financial statements of the Company. Their comments are placed elsewhere in this Annual Report.
AUDITORS Statutory Auditors
M/s. ABP & Associates and M/s. Guha, Nandi & Co. were appointed as joint Statutory Auditors of your Company by the Comptroller and Auditor General of India for the financial year 20I6-I7.
The report of the Statutory Auditors is enclosed to this report. The observations made in the Auditors'''' Report are self-explanatory and therefore do not call for any further comments.
As per Cost Audit Orders, Cost Audit is applicable to the Company for the financial year 20I6-I7. In terms of the provisions of section I48 and all other applicable provisions of the Companies Act, 20I3, read with the Companies (Audit and Auditors) Rules, 20I4, M/s. Tanmaya S Pradhan & Co, have been appointed as Cost Auditors for the year 20I6 I7.
Your Company will submit its Cost Audit Report to the Ministry of Corporate Affairs within the stipulated time period.
In terms of Section 204 of the Act and Rules made there under, M/s. Saroj Ray & Associates, Practicing Company Secretaries have been appointed as Secretarial Auditors of the Company. The report of the Secretarial Auditors together with the explanations of the management on the qualifying remarks of Secretarial Auditors is enclosed as Annexure-VIII to this report. Internal Auditors
Your Company appointed the following CA firms for carrying out internal audit functions of your Company for the financial year 20I6-I7:
- M/s. SRB & Associates for Corporate Office, Bhubaneswar
- M/s. SCM & Associates for Smelter & Power Complex, Angul
- M/s. Rao & Kumar for Mines & Refinery Complex, Damanjodi & Port Facilities, Visakhapatnam
- M/s. Bhatia & Bhatia for Northen Regional Office, New Delhi
- M/s. Prabir Ranjan Datta & Co. for Eastern Regional Office, Kolkata
- M/s. Raghavan & Muralidharan for Southern Regional Office, Chennai
- M/s. MKPS & Associates for Western Regional Office, Mumbai DIRECTORS
The following changes took place in the Board of Directors of your Company since the last report:
- Shri Subhash Chandra, Joint Secretary, Ministry of Mines was appointed as Part-time Official Director w.e.f. 20.I0.20I6.
- Shri S K Roy was appointed as Director (P&T) of the Company w.e.f.
- Ms. Kiran Ghai Sinha was appointed as Part-time Non-official Director w.e.f. 03.02.20I7.
- Dr. Niranjan Kumar Singh, Joint Secretary, Ministry of Mines was appointed as Part-time Official Director w.e.f I5.03.20I7.
- Shri N B Dhal, Joint Secretary, Ministry of Mines ceased to be Part-time Official Director on the Board of your Company w.e.f 20.I0.20I6.
- Shri R Sridharan, Special Secretary, Ministry of Mines ceased to be Part-time Official Director on the Board of your Company w.e.f
- Shri N R Mohanty, Director (P&T), superannuated on 3I.0I.20I7.
- Ms. Soma Mondal, Director (Commercial) ceased to be associated with the Company w.e.f 0I.03.20I7.
Your directors wish to place on record their appreciation for the valuable services rendered by Shri N B Dhal, Shri R Sridharan, Shri N R Mohanty and Ms. Soma Mondal during their tenure on the Board of your Company.
Your Directors wholeheartedly place on record their appreciation for the continued and unstinted support of Government of India particularly from Ministry of Mines and other Ministries/Departments of the Government of India, Government of Odisha, Mahanadi Coalfields Ltd., Indian Railways, Comptroller and Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Kolkata, Statutory Auditors, Cost Auditors, Secretarial Auditors, Internal Auditors, Bankers, Solicitors and JV Partners, Business Associates, other Government agencies and CPSEs for the co-operation rendered by them during the year.
Your Directors also acknowledge the support extended by the valued and esteemed domestic and international customers, vendors, solicitors and also look forward for maintaining such mutually supportive business relationship in the coming years too.
Last but not the least, your Directors also place on record their appreciation for the dedication, commitment and sincere services rendered by the employees at various levels and due to the active support and co-operation received from the Trade Unions & Officers'''' Associations for sustained improvements.
For and on behalf of Board of Directors
Place : Bhubaneswar Dr. Tapan Kumar Chand
Date : I9.08.20I7 Chairman-cum-Managing Director