IFGL Refractories Ltd Management Discussions

Dear Shareholders,

Your Directors take pleasure in presenting Statement of Accounts, both on Consolidated and Standalone basis, for Financial Year (FY) 2022-23 together with Report of the Auditors forming part thereof.

Financial Results

Financial Results for FY 2022-23 are summarized below : ( Rs. in Millions)

Revenue from Operations	13,865.03	8,333.66
Other Income	131.49	122.03
Total Income	13,996.52	8,455.69
Profit before Depreciation, Interest and Tax (PBDIT)	1,660.94	1,341.30
Depreciation and Amortisation	555.55	442.85
Finance Cost	48.40	45.59
Profit before Exceptional Items and Tax	1,056.99	852.86
Exceptional Items	-	-
Profit before Tax	1,056.99	852.86
Tax Expense	264.93	241.12
Profit for the year after Tax	792.06	611.74
Other Comprehensive Income/(Loss) for the year, Net of Tax	170.38	0.39
Total Comprehensive Income for the year	962.44	612.13
Basic and Diluted Earnings per Share (Rs.)	21.98	16.97
Disclosures under Regulation 34(3) read with Clause B of Schedule V of Securities
and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (SEBI LODR, 2015)
i) Debtors Turnover Ratio *	4.46:1	4.38:1
ii) Inventory Turnover Ratio **	2.93:1	2.85:1
iii) Interest Coverage Ratio	22.84:1	19.71:1
iv) Current Ratio	2.71:1	2.98:1
v) Debt Equity Ratio	0.16:1	0.18:1
vi) Operating Profit Margin (%)	7.02%	9.32%
vii) Net Profit Margin (%)	5.71%	7.34%
viii) Return on Net Worth(%)	7.88%	9.83%

* Debtors Turnover Ratio = Revenue from Operations/Average Trade Receivables ** Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory.

Total Income on Consolidated and Standalone basis, have increased by 9.74% and 5.52% respectively for the year compared to that of preceding year. Profit before Tax and Profit for the year have however remained more or less similar to that of preceding year primarily because of increased cost of inputs including raw materials both indigenous and imported, which has to some extent been offset by price increases negotiated and received from customers over the year. Full effect of such price increases will be felt in current Financial Year i.e. FY 2023-24 although such endeavor is continuing and price of key raw materials have more or less stabilized. Considering market situation and macro economic factors prevailing in India and abroad and having influence on producers of Iron and Steel, your Company primarily being supplier to them, performance of your Company for the year appears to be satisfactory to your Directors. It is however continued endeavor of your Directors to improve performance of your Company and in this regard, several measures have been taken and this will continue.

Dividend

Following Dividend Distribution Policy of your Company, copy whereof is available at https://ifglgroup.com /wp-content/uploads/2023/04/Dividend-Distribution-Policy.pdf , your Directors are pleased to recommend payment of Final Dividend of 70% i.e. Rs. 7 per Equity Share for FY 2022-23 subject to your approval at ensuing Annual General Meeting and deduction of Tax at Source.

Industry Review, Future Outlook and Expansion Plans

In general, Refractory Industry is performing well. Barring weakness in Europe because of Macro Economic factors and Russia-Ukraine war affecting them, overall demand for Iron and Steel continues to persist. In fact, Steel Industry in India is on expansion mode to cater to ever increasing demand because of Governments initiatives for bolstering infrastructure building and capital goods manufacturing. India has emerged as the 5th largest Economy in the World. It is also projected that India will become 20 trillion USD Economy by 2047, if it manages to achieve a sustained growth of 7 to 7.5 percent over the next 25 years. India is most populous country in the world with demographics of young people. All these have led and leading to increased demand for products and services of your Company and to meet the same, your Company has taken several steps for expanding capacity at its manufacturing facilities. For this purpose, your Company has also acquired few plots of land neighboring its Kalunga (Odisha) and Kandla (Gujarat) manufacturing facilities, construction work whereat is going on. Capacity at your Companys manufacturing facility at Vizag (Andhra Pradesh) has been/is being enhanced. On 24th February 2023, your Companys UK Step Down Subsidiary, Monocon International Refractories Limited acquired 100% shareholding of Sheffield Refractories Ltd (SRL), UK engaged in manufacture and installation of Monolithic Refractory products with a specific interest in Blast Furnace Cast House products, Shotcreting Materials and an extensive range of other specialist Monolithic Product for use in the Iron and Steel, Cement, Incineration and Waste to Energy Industries. Acquisition of SRL will enable your Company and its Subsidiaries to offer bigger basket of products to Customers.

New state-of-art Technology Center at your Companys Kalunga (Rourkela) facility is going to be operational during Current Financial Year. Such Technology Center will bring efficiencies, both direct and indirect, to your Company.

Yours Directors are of the view that your Company has an extremely bright and prosperous future going forward barring unforeseen circumstances.

Subsidiaries

Performance of your companys Subsidiaries have been excellent in as much as Consolidated Revenue of your Companys immediate Subsidiary, IFGL Worldwide Holdings Limited, for the Year has increased by 23% over that of preceding FY 2021-22. Profit before Tax and Profit for the Year also increased by 45% and 51% respectively. The recent acquisition of SRL will further fuel performance of your Companys Subsidiaries.

Business Responsibility and Sustainability Report

Provisions relating to Business Responsibility and Sustainability brought in by Securities and Exchange Board of India (hereon ‘SEBI) are applicable from FY 2022-23 as the Company was one of the top 1000 Companies by Market Capitalization as on 1st April 2022. Your Companys Business Responsibility and Sustainability Report for FY 2022-23 following guidance being received from one of the top four consulting firms with regard to matters relating to Environment Sustainability and Governance (ESG), as per provisions of Regulation 34(2)(f) of SEBI LODR, 2015 is annexed hereto as Annexure‘A. A copy of such Report is also appearing at https://ifglgroup.com/investor/ meetings-reports/

Corporate Governance/Vigil Mechanism etc

Corporate Governance Report (CG Report) conforming provisions of Regulation 34 of the SEBI LODR, 2015, amended to date and notifications, circulars, clarifications etc issued by SEBI from time to time form part of this Report and is annexed as Annexure ‘B. Your Company has in place Policies including Vigil Mechanism (Whistle Blower), Prevention of Sexual Harassment, Insider Trading and Risks Management etc commensurate to nature and size of business of the Company. Said Policies are also appearing at https://ifglgroup. com/investor/policy/. No complaint and/or alert was received under said Policies. Internal Complaints Committee following provision of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 are also in place and functioning.

Disclosures

As required by Section 92(3) read with Section 134(3)(a) of the Act, Annual Return has been hosted at https://ifglgroup.com/wp-content/ uploads/2023/07/Annual_Return.pdf. Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure ‘C. During FY 2022-23, your Company entered into transactions with related parties in ordinary course of business at arms length. Accordingly, Form AOC-2 has not been annexed hereto with particulars of such transactions. Your Company has neither given loans or guarantees or made investments under Section 186 of the Act. Your Company also did not accept deposits. Evaluation of performance of your Companys Board of Directors and its Committees and individual Directors including Independent Directors and Chairman of Board has been carried out. Outcome is that the Board and its Committees have been functioning satisfactorily and flow of information has been commensurate to the nature of business and size of your Company. Your Directors received briefings on key matters including regulatory, which went on their performance. Following announcement of Quarterly and Annual Results, your Company made presentations, did conference calls and interacted with investors at large for enhanced confidence. 9.91% of your Companys Equity Shares as on 31st March 2023, was held by Mutual Funds. A statement in Form AOC-1 having financial information of Subsidiary Companies form part of this Report as Annexure ‘D. Your Company does not have any Indian Subsidiary. Shareholders of the Company who are desirous of having complete Statement of Accounts and related detailed information of Subsidiary Companies, may send their request therefor to the Companys Registered Office. They are available for inspection electronically to the members during working hours on working days (excluding Saturday) provided prior request therefor is sent at investorcomplaints@ifgl.in and are also available on Companys website : www.ifglgroup.com.

Internal Control System with the help of external and internal auditors functioned well and effectively. It continued to be commensurate with size and nature of Companys Business. Said System was periodically reviewed and changes were made wherever and whenever necessary. Internal Financial Controls were also adequate.

Other disclosures including those to be made as per Section 134(3) of the Act read with Rules framed for the purposes thereof and those in SEBI LODR, 2015 have been included in Annexures forming part of this Report and also in audited Statement of Accounts and Notes thereto. For the sake of brevity they have not been reproduced again. CG Report contained details of meetings of the Board of Directors and Committees thereof held during FY 2022-23 and attendance thereat. There has not been any material change and/or commitment affecting financial position of your Company between end of FY 2022-23 and date of this Report. None of the regulators or courts or tribunals passed any Order likely to impact going concern, status or operations in future of your Company. Following Regulation 17(8) read with Part B of Schedule II of SEBI LODR, 2015, Certificate on Financial Statements has been received from Director and Chief Executive Officer and Chief Financial Officer of the Company.

Your Company placed utmost importance to IT security and have strengthened the same including by introducing checks and balances.

Directors Responsibility Statement

Your Directors state that : a) in preparation of Annual Accounts, applicable Accounting Standards have been followed. b) Accounting Policies selected and applied are consistent and judgments and estimates made 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 FY and of the Profit and Loss of the Company for that period. c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with provisions of the Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities. d) the Annual Accounts have been prepared on a Going Concern basis. e) Internal Financial Controls i.e. policies and procedures for ensuring orderly and efficient conduct of business, including adherence to Companys Policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information, have been laid down and that such controls are adequate and operating effectively. f) Proper systems to ensure compliance with provisions of all applicable laws have been devised and that such systems are adequate and operating effectively.

Financial Statements for FY 2022-23 have been audited in accordance with Accounting Principles Generally Accepted in India as indicated in Report of the Statutory Auditors.

CSR, Human Resource and Industrial Relations

Annual Report in compliance of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 form part of this Report as Annexure ‘E. Other details relating to Companys CSR are forming part of CG Report.

Similarly, particulars of Nomination and Remuneration Committee (NRC) are also existing in CG Report. Nomination and Remuneration Policy adopted by your Directors based on recommendation of NRC is available at https://ifglgroup.com/wp-content/uploads/2023/04/ nomination_anfiremuneration_policy2018.pdf. Said Policy inter-alia provide for matters concerning Directors appointment and remuneration including criteria for determining qualifications, positive attributes, Independence of Directors and those provided in Section 178(3) of the Act. An Annexure having information following provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report as Annexure ‘F.

During FY 2022-23, 5 (five) persons (including Executive Directors) employed with the Company received remuneration of Rs. 102 lakhs per annum or more or Rs. 8.5 lakhs per month or more. As on 31st March 2023, the Company had employed 1275 people worldwide including 948 in India.

Industrial Relations continued to remain cordial in your Company. Conducive working environment was provided to employees and trainings imparted thereby helping the employees to increase their skills and productivity. Compensation and benefits provided to the employees have also been no lesser than and comparable with those of the peers. This continued to motivate employees at large resulting in low attrition.

Consolidated Financial Statements

In accordance with IND AS 110 and other relevant provisions particularly Section 129(3) of the Act, Consolidated Financial Statements duly audited by Statutory Auditors, M/s S R Batliboi & Co. LLP (Regd No. 301003E/E300005) form part of this Annual Report. Consolidated Financial Statements have been prepared considering Financial Statements of Subsidiary Companies and Reports of Auditors relating thereto.

Directors and Key Managerial Personnel (KMPs)

Ms Anita Gupta and Mr Gaurav Swarup were appointed Independent Directors of your Company on and from 12th October 2022, for a period of 5 (five) years. Your Directors are of the opinion that both of them possess adequate integrity, expertise and experience to function as Independent Directors of the Company. Mr Rajesh Agarwal, who was holding the office of Company Secretary, was elevated and appointed as Director – General Counsel on 12th November 2022, for a period of 3 (three) years. Effective 12th November 2022, Mrs Mansi Damani was appointed as Company Secretary.

Mr K S B Sanyal, who tendered resignation and ceased to hold the office of Independent Director of your Company on and from 28th May 2022, due to age and health related issue, passed away on 13th February 2023.Your Directors placed on record deepest condolences and pray that his departed soul remain in peace. Your Directors following recommendation of the Nomination and Remuneration Committee and subject to your approval have re-appointed Mr Kamal Sarda (DIN - 03151258) as Whole-time Director of the Company for the period 1st June 2023 to 30th November 2024, both days inclusive, on terms and conditions including remuneration, perquisites and other entitlements similar to that of his appointment in place as on 27th May 2023, and ending on 30th September 2023, which will stand superseded on and from 1st June 2023. Mr Sarda will also retire by rotation at forthcoming Annual General Meeting (AGM) and being eligible, has offered himself for re-appointment for further period liable to retire by rotation. Accordingly a Special Resolution has been included in the Notice of forthcoming AGM for your approval for re-appointment of Mr Kamal Sarda as Whole-time Director of the Company on and from 1st June 2023. Your Directors recommend passing of said Special Resolution being in the interest of your Company. Since the Company has operations in multiple locations, effective 1st June 2023, Mr Sarda has been designated as Director and CEO India.

Particulars of the Companys Key Managerial Personnel, are appearing at Note 36 of Audited Statement of Accounts as per Section 203 of the Act. All Independent Directors have given their Statement of Declaration under Section 149(7) of the Act and continue to fulfil independence criteria and other conditions specified in the Act and SEBI LODR, 2015. All of the Directors and Senior Management Personnel as on 31st March 2023, have confirmed compliance of Code of Conduct for Board of Directors including Independent Directors and Senior Management Personnel of the Company. This Code continues to help the Company maintain standard of ethics and ensure compliance of legal requirements applicable.

Cost Auditor

To the extent provisions of Section 148 of the Act are applicable, your Company maintained accounts and records during FY 2022-23. M/s Mani & Co., Practicing Cost Accountant have been re-appointed as Cost Auditors of the Company for FY 2023-24. Your approval for payment of remuneration not exceeding Rs. 5 lakhs to them is being sought inasmuch as Ordinary Resolution has been included in Notice of forthcoming AGM.

Secretarial Auditor

Secretarial Audit Report in Form MR-3 following provisions of Section 204 of the Act of M/s S M Gupta & Co., Practicing Company Secretaries form part hereof as Annexure G. Following Regulation 24A of SEBI LODR, 2015, Secretarial Auditor have also carried out Secretarial Compliance Audit for FY 2022-23. Both Report and Certificate are free of qualification, reservation or adverse remark.

Auditors Report and Auditors

Report of the Statutory Auditors, M/s S R Batliboi & Co. LLP (Regd No. 301003E/E300005), Chartered Accountants on Statement of Accounts for FY 2022-23 on Standalone and Consolidated basis are self-explanatory. Their Reports have no qualification, reservation, adverse remark or disclaimer except 2 (two) Emphasis of Matters. They have also not reported any fraud under Section 143(12) of the Act. Their appointment will come to an end on conclusion of 17th AGM and have confirmed that they continue to comply with all requirements and criteria specified and are qualified to act as Auditors of the Company.

Acknowledgement

Your Directors thank all concerned particularly you the Shareholders for your continued support.

	On behalf of the Board of Directors
	S K Bajoria	James L McIntosh
Kolkata	Chairman	Managing Director
27th May 2023	(DIN - 00084004)	(DIN - 09287829)