I G Petrochemicals Ltd Directors Report.
To The Members,
On behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Thirtieth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2019:
1. FINANCIAL RESULTS
|(Rs. in lakhs)|
|Profit before interest, depreciation and tax||23,370.48||27,142.41|
|Profit before tax||18,630.54||23,084.88|
|Provision for tax||6,982.39||8,430.39|
|Profit for the year||11,648.16||14,654.49|
|Balance brought forward from previous year||42,366.51||30,823.94|
|Profit available for appropriations||50,529.68||45,478.43|
|Earnings per share||37.82||47.58|
The Board of Directors have recommended a dividend of Rs. 4/- per equity share having face value of Rs. 10/- each (40%) for the year ended 31st March, 2019 aggregating to Rs. 1,484.99 lakhs (including dividend distribution tax).
The revenue from operations grew by 14% to Rs. 131,128.07 lakhs during the financial year 2018- 19. The total expenditures rose by 18.15% mainly on account of higher raw material prices which led to the fall in the profit before tax by 15.18% at Rs. 18,630.54 lakhs. Profit Rs. 11,648.16 lakhs is lower than the previous year on account of the volatility in oil price movements during the year. There were no material changes or commitments that have occurred between the end of the financial year and the date of this Report which affects the financial statements of the Company in respect of the reporting year.
4. OPERATIONAL REVIEW
The Orthoxylene prices remained volatile for most part of the year due to crude prices thus affecting the overall conversion cost of Phthalic Anhydride (PA).
The anti-dumping duty levied on imports of PA from Taiwan, Korea and Israel was removed during the year and this led to the intensified competition in the domestic market. As a result of this, the conversion of PA has come down because of competition on account of import from the overseas market.
The above factors contributed to the sustained pressure on margins throughout the year and eventually leading to the drop in profitability of the Company by 20.61% to Rs. 11,648.16 lakhs.
The brownfield expansion of PA plant by 53,000
MTPA is on and is expected to get commissioned in the current year. With this, the Company shall become one of the largest producer of PA at a single location globally and will achieve substantial economies of scale. The expansion will also provide the Company with additional raw materials for the production of MA, which will improve the overall revenue and margins of the Company. The downstream expansion into specialty plasticizers is also expected to commission in the current year.
6. CONTRIBUTION TO THE EXCHEQUER
The Company has contributed Rs. 26,906.24 lakhs to the exchequer by way of income tax, customs duty, goods and service tax, etc.
7. SHARE CAPITAL & FINANCE
7.1 Share Capital
The Companys paid-up Equity Share Capital remained unchanged at Rs. 3,079.81 lakhs as at 31st March, 2019. The shareholdings of the after tax at Promoters and Persons Acting in Concert with Promoters are 68.90%.
The Company optimally utilizes its working capital facilities and continuously monitors its receivables, inventories, etc. The Company has raised external commercial borrowings of 15.77 million from the foreign lenders and a term loan upto Rs. 75 crores to partially fund the expansion of plant. The debts (including interest) are being serviced regularly.
7.3 Credit Ratings
The Credit Ratings of the Company are IND A+ (long term) and IND A1+ (short term) issued by India Ratings & Research.
During the year, the Company has not accepted or invited any deposits from the Public.
7.5 Particulars of Loans, Guarantees or
Details of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
8. TRANSFER TO GENERAL RESERVES
The Company proposes to transfer an amount of Rs. 2,000.00 lakhs to the General Reserves.
9. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES
IGPL International Limited and IGPL (FZE) are the wholly owned subsidiaries of the Company.
The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride has been called-off during the year due to it becoming economically unviable.
The financial statements of subsidiaries are placed on the website of the Company and available for inspection by the members of the Company. A copy of the audited accounts shall be made available to the member upon request.
The consolidated financial statements of the Company are prepared in accordance with the applicable Ind AS together with the report of the Auditors thereon forms part of this Annual Report. A statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is attached with this Annual Report.
10. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
In accordance with the provisions of Section 135 of the Companies Act, 2013 (the Act) and the Rules framed thereunder, the CSR Committee reviews and monitors the projects and expenditures incurred by the Company which are mainly for education, old age homes, environment, etc. The Report on CSR activities containing prescribed details are annexed to the Directors Report as Annexure-A.
During the year, the Company spent Rs. 136.16 lakhs towards CSR activities as against the budgeted allocation of Rs. 293.24 lakhs. The Company has initiated some projects which are under implementation.
11. ANNUAL RETURN
The Annual Return of the Company in Form MGT-7 for the year 2018-19 is available on the website of the Company and can be accessed at www.igpetro.com
12. VIGIL MECHANISM POLICY
The Company has a Vigil Mechanism Policy in place to report instances of actual or suspected unethical behavior, fraud, etc. The Audit Committee reviews the functioning of the Policy. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Companys website www.igpetro.com
13. TRANSFER OF SHARES TO IEPF
In compliance with the provisions of Section 124(6) of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the IEPF Rules) and amendments thereto, the Company had, during the financial year 2017-18, transferred 779,342 shares to IEPF Authority in respect of shares on which dividend has not been paid or claimed for seven consecutive years.
Members whose shares are so transferred can claim their dividend and shares from the IEPF authority by filing Form IEPF-5 available at www.iepf.gov.in. Member should also note that only one consolidated claim can be filed in a financial year as per the IEPF Rules. Members are advised to claim any unencashed dividends.
The Company Secretary of the Company has been designated as the Nodal Officer who can be contacted for any guidance/assistance to claim the dividend and shares from IEPF Authority.
14. DIRECTORS & KEY MANAGERIAL PERSONNEL
Upon the recommendation of the Nomination and Remuneration Committee and in accordance with the provision of the Act read with the Rules framed thereunder, Shri Nikunj Dhanuka was re-appointed as Managing Director & Chief Executive Officer of the Company for a period of three years with effect from 27th April, 2019. Shri M M Dhanuka retires by rotation and being eligible offered himself for re-appointment.
Shri Rajesh Muni, Shri P H Ravikumar and Dr. A K A Rathi were appointed as Independent Directors of the Company by the members at an Annual General Meeting held on 26th July, 2014 for a term of five years, each with effect from 26 th July, 2014. In accordance with the provisions of Section 149 of the Act, the Independent Directors shall be eligible to seek re-appointment for a second term of five years subject to the approval of the members by special resolution. The said Independent Directors have given their consent for re-appointment.
The Company has received notices under Section 160 of the Act, from a Member proposing the re-appointment of Shri Rajesh Muni, Shri P H Ravikumar and Dr. A K A Rathi as Independent Directors of the Company. Approval of the Members are being sought by special resolutions for reappointment as Independent Directors for a second term of five consecutive years.
All Independent Directors of the Company have furnished declarations under Section 149(7) of the Act confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Shri R Chandrasekaran resigned as Chief Financial Officer of the Company with effect from 7th February, 2019 and Shri Pramod Bhandari is appointed as Chief Financial Officer of the Company with effect from 7th February, 2019.
During the year, four meetings of the Board of Directors and Audit Committee were held as more particularly disclosed in the attached Report on Corporate Governance.
14.2 Board Evaluation
The Board of Directors have carried out its annual performance evaluation as well as of the Directors individually and their respective Committees as required under the Act and SEBI Listing Regulations. The details of which are disclosed in the Corporate Governance Report.
14.3 Remuneration Policy
The details of the Remuneration Policy forms part of the Corporate Governance Report. The information relating to remuneration as required pursuant to Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the Rules) are given below:
a) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year Shri Nikunj Dhanuka, Managing Director & CEO 45:1 Shri J K Saboo, Executive Director 7:1
b) The percentage increase in the remuneration of Managing Director, Chief Financial Officer and Company Secretary for the Financial Year Shri Nikunj Dhanuka, Managing Director & CEO (16%)@ Shri R Chandrasekaran, Chief Financial Officer N.A*Shri Sudhir R Singh, Company Secretary 10% @ decline in commission due to lower profits.
* Since resigned during the year
c) The percentage increase in the median remuneration of employees in the
Financial Year 9.80%
d) Number of permanent employees on the rolls of the Company 413
e) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year was 11.50% whereas the increase in the managerial remuneration was 8.25%. The increase in the remuneration is on account of commission paid.
It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.
The information under Rule 5(2) of the Rules will be provided to the members upon request in terms of the first proviso to Section 136 of the Act.
15. DIRECTORS RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Companies Act, 2013, we state: a. that in the preparation of the annual financial statements for the year ended 31st March 2019, all the applicable accounting standards have been followed and no material departures have been made from the same; b. that appropriate accounting policies have been selected and applied consistently and have 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 ended 31st March, 2019 and of the profit of the Company for that year; c. that proper and sufficient for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing/ detecting fraud and other irregularities; d. that the annual financial statements have been prepared on a going concern basis; e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
16. RELATED PARTY TRANSACTIONS
All transactions entered into with related parties during the year were on arms length basis and in the ordinary course of business.
There were no material related party transactions. The necessary disclosures regarding the transactions are given in the notes to accounts. The Company has formulated a policy on dealing with the Related Party Transactions and necessary approval of the Audit Committee and Board of Directors were taken, wherever required, in accordance with the Policy.
17. INTERNAL CONTROL
The scope of Internal Audit is reviewed by the Audit Committee at regular intervals. A framework of the audit is generally defined at the beginning of the year based on the discussion with the Internal Auditor. The Internal Auditor submits its report to the Audit Committee. The Companys internal control systems commensurate with its nature of business, size and operations. The Internal Audit strives to evaluate the efficacy and adequacy of internal control system and processes, accounting policies and procedures, compliance with laws and regulations concerning the operations of the Company. The internal control mechanism of the Company enables it to identify, assess and mitigate the risk related to its business. Risks are being evaluated on various parameters and these parameters are being care has been taken reviewed at regular intervals.
18.1 Statutory Auditors
M/s ASA & Associates LLP and M/s Uday & Co. are the Statutory Auditors of the Company appointed by the members of the Company at the annual general meetings.
18.2 Cost Auditors
M/s Krishna S & Associates, Cost Accountants have been appointed as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2019-20. A resolution seeking Members ratification the remuneration payable to M/s Krishna S & Associates is included in the Notice convening the Annual General Meeting.
18.3 Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) to conduct the Secretarial Audit and their Report on the Secretarial Audit for the year 2018-19 is annexed herewith as Annexure-B. There are no qualifications in the said report.
19. ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure-C.
20. CORPORATE GOVERNANCE
The Company has complied with the requirements of Corporate Governance and a report on the same along with the Auditors Certificate compliance is attached with and forms part of this report.
A report on Management Discussion and Analysis forms an integral part of this report.
21. PREVENTION OF SEXUAL HARASSMENT
The Company is an equal opportunity provider and has zero tolerance in any form or manner towards the sexual harassment of women at workfor place. In accordance with the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a policy on prevention, prohibition and redressal of sexual harassment of women at work place.
The Internal Complaints Committee has been constituted with majority of them being female who is also the Presiding Officer. The Committee meets as and when required. No complaints pertaining to sexual harassment of women employees were received during the year.
22. ISO 9001 : (2008) AND ISO 14001 (2004)
Your Company continued to be certified under ISO
9001:2008 for quality management systems and ISO 14001:2004 for environment management systems by Bureau Veritas.
Your Directors convey their sincere appreciation to the business partners for their unstinted support and contribution and thank the customers, members, dealers, employees, bankers and all stakeholders for their co-operation and confidencereposed in the Company.
For and on behalf of the Board of directors confirming
|M M Dhanuka|
|Mumbai, 22nd May, 2019||Chairman|