IFGL Refractories Ltd Directors Report

Dear Shareholder^

Your Directors take pleasure in presenting Statement of Accounts, both on Consolidated and Standalone basis, for Financial Year (FY) 2023-24 together with Report of the Auditors forming part thereof.

Financial Results

Financial Results for FY 2023-24 are summarized below : (Rs. in Millions)

	Consolidated	Standalone
Revenue from Operations	16,394.89	8,930.30
Other Income	187.74	165.61
Total Income	16,582.63	9,095.91
Profit before Depreciation, Interest and Tax (PBDIT)	1,731.40	1,313.49
Depreciation and Amortisation	642.73	472.12
Finance Cost	110.37	99.11
Profit before Exceptional Items and Tax	978.30	742.26
Exceptional Items	-	-
Profit before Tax	978.30	742.26
Tax Expense	161.56	91.14
Profit for the year after Tax	816.74	651.12
Other Comprehensive lncome/(Loss) for the year, Net of Tax	105.61	(2.07)
Total Comprehensive Income for the year	922.35	649.05
Basic and Diluted Earnings per Share (Rs)	22.66	18.07
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 *	4.86:1	4.58:1
ii) Inventory Turnover Ratio **	3.15:1	2.83:1
iii) Interest Coverage Ratio	9.86:1	8.49:1
iv) Current Ratio	2.68:1	2.63:1
v) Debt Equity Ratio	0.16:1	0.18:1
vi) Operating Profit Margin (%)	5.50%	7.57 %
vii) Net Profit Margin (%)	4.98%	7.29 %
viii) Return on Net Worth(%)	7.62%	9.84 %

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

Your Directors are of the view that financial performance achieved both on Consolidated and Standalone basis for FY 2023-24 is satisfactory. Geo political conflicts prevailed in several parts of the world, which adversely affected macro-economic dynamics leading to increased cost of energy, freight, raw materials etc. Profitability both on Consolidated and Standalone basis for the year also reduced because one of the customers of the Company opted for Preventive Restructuring under laws of Czech Republic and as a matter of abundant precaution and prudence, the Company making following accounting adjustments in FY ended 31st March 2024.

(Rs. in Millions)

	Consolidated	Standalone
Provision for Trade Receivables	332.7	317.0
Provision for Goods sold but in Transit	78.5	78.5
Reversal of Commission	14.8	14.8

Nevertheless, continued endeavor of your Directors is to improve performance of your Company and in this regard, several measures have been taken and this will continue unabated.

During FY 2023-24, your Company received several accolades at customers end, some of which are the following :

• Helped SAIL, Bhilai Steel Plant achieve highest ever Tundish Sequence.

• Highest ever performance with Purging Refractories at JSW Bellary SMS-3.

• Record breaking performance with newly developed trough castables.

• Successful commissioning of LSG 90 System at JSPL, Angul Phase II.

Dividend

Your Directors are happy to recommend payment of Final Dividend of 70 % i.e. 7 per Equity Share for FY 2023-24 subject to your approval at ensuing Annual General Meeting and deduction of tax at source. Dividend recommended is in accordance with the Dividend Distribution Policy of the Company, which is available on the Website of the Company at https://ifglgroup.com/wp-content/ uploads/2023/04/Dividend-Distribution-Policy.pdf . Dividend if approved by you will result in cash outflow of 252.28 millions.

Industry Review, Future Outlook and Expansion Plans

In general, Refractory Industry is performing well. Barring weakness in Europe and Americas because of geo-political conflicts leading to worsening macro-economic factors, overall demand for Iron and Steel continues to be positive. 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, the most populous country in the world with demographics of young people. All these have led and are leading to increased demand for products and services of your Company.

During FY 2023-24, your Company has had several events, which have already or are going to have positive impacts. Some of those are mentioned below :

a) Re-classification/De-classification of Companys Foreign Promoter, Krosaki Harima Corporation, Japan to Public Category following purchase of whole of their shareholding of about 15.51% in your Company by Holding Company, Bajoria Financial Services Pvt Ltd, being part of the Indian Promoter Group of your Company.

b) Inauguration of State-of-Art Research Centre at your Companys Kalunga (Odisha) manufacturing facilities.

c) New manufacturing facility in the process of being set up in Odisha for Continuous Casting Refractories with installed capacity of 240,000 pcs per annum at a capital outlay of 150 Crores.

d) Introduction of new and extended product lines for RH Degasser Snorkel, EAF Deltas, Magnesia Carbon Bricks, Casting Flux, Tube Changer Mechanism, Ladle Slide Gates etc.

e) Introduction of project GATI (SAP S4 HANA) for improving operational efficiency as well as decision making.

f) Commencement of a new Business vertical in the non-ferrous refractory market brings new products for customers in sectors like cement, glass, coke, lime and coal gasification.

g) Rationalization of manufacturing facilities including shifting and consolidation of manufacturing in Peoples Republic of Czechoslovakia to that in Germany.

Your Company has taken many more steps for expanding capacity at its manufacturing facilities. For this purpose, plots of land neighboring Companys Kalunga (Odisha) and Kandla (Gujarat) manufacturing facilities have been acquired, construction work whereat

is either going on or will commence soon. Capacity at your Companys manufacturing facility at Visakhapatnam (Andhra Pradesh) is also being enhanced.

Your directors firmly believe that future is exceptionally promising and prosperous, barring unforeseen events.

Subsidiaries

The Companys Subsidiaries have performed well against the prevailing winds mentioned earlier with Consolidated Revenue of your Companys immediate subsidiary, IFGL Worldwide Holdings Limited, increasing by 22% compared to the preceding FY 2022-23. Additionally, Profit before Tax has increased by 13%.

Form AOC-1, containing financial information of subsidiary companies, form part of this Report as Annexure D. Your company does not have any Indian Subsidiary. Shareholders who wish to obtain the complete Statement of Accounts and detailed information about subsidiary companies can send their requests to the 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 .

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 the Annual Report. Consolidated Financial Statements have been prepared considering Financial Statements of Subsidiary Companies and Reports of Auditors relating thereto wherever applicable.

Cash Flow Statement

As required under Regulation 34 of the SEBI LODR, 2015, Cash Flow Statement for FY 2023-24 forms part of the Annual Report.

Business Responsibility and Sustainability Report

As per provisions of Regulation 34(2)(f) of SEBI LODR, 2015, Business Responsibility and Sustainability Report is annexed hereto as Annexure A. A copy of such Report is also appearing at https://ifglgroup.com/wp-content/uploads/2024/07/Business Responsibility Sustanability Report.pdf

Corporate Governance/Vigil Mechanism etc

Corporate Governance Report (CG Report) conforming to 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 Workplace (Prevention, Prohibition and Redressal) Act, 2013 are also in place and functioning.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, Annual Return as on 31st March 2024 is available at Companys Website at https://ifglgroup.com/wp-content/uploads/2024/07/Annual Return.pdf

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The prescribed particulars relating Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Annexure C hereto.

Transactions with Related Parties

During FY 2023-24, your Company entered into transactions with Related Parties in ordinary course of its business at arms length. Since none of the transaction with Related Parties fell under the scope of Section 188(1) of the Act, disclosure of related party transactions as required Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2023-24 and hence does not form part of this Report.

Deposits from Public

Your Company did not accept any Deposits from the Public and accordingly no amount of principal or interest on Deposits from the Public was outstanding as on 31st March 2024.

Internal Controls of the Company

The Company has in place an established Internal Control system designed to ensure proper recording of financial and operational information and compliance with various internal controls and other regulatory and statutory requirements. Internal Control systems commensurate with size and nature of Companys Business with the help of external and internal Auditors functioned well and effectively. Said Systems were periodically reviewed and changes were made wherever and whenever necessary.

Internal Financial Controls : Your Company has in place adequate Internal Financial Control systems.

Disclosures

Your Company has neither given Loans or Guarantees nor made Investments under Section 186 of the Act.

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 contains details of meetings of the Board of Directors and Committees thereof held during FY 2023-24 and attendance thereat.

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 India and Chief Financial Officer of the Company.

Your Company continued to place 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 2023-24 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

Companys CSR initiatives and activities are aligned to requirements of Section 135 of the Act. CSR Policy of your Company and the initiatives undertaken by the Company on CSR activities during the year are included in Annual Report prepared in compliance of the Companies (Corporate Social Responsibility Policy) Rules, 2014, which form part hereof as Annexure E. Other details relating to Companys CSR are forming part of CG Report.

Details 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 an remuneration policv2018.pdf. Said Policy inter-alia provides 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 2023-24, 7 (seven) persons (including Executive Directors) employed with the Company received remuneration of 102 lakhs per annum or more or 8.5 lakhs per month or more. As on 31st March 2024, the Company had directly employed 1,312 people worldwide including 1,009 in India.

With 5S initiative, everyone in the Company has been involved and exemplified Companys commitment to inclusivity and continuous improvement. Its a practice that not only enhances your Companys operational efficiency but also fosters a sense of ownership and engagement among all team members.

During FY 2023-24, your Company embarked on the People First initiative in collaboration with Consulting Firm Deloitte, aimed at strengthening and redefining Companys HR system. This project prioritizes employee engagement, well-being, and professional development with pivotal focus on enhancing work-life balance. Compensation and benefits provided by the Company to employees have also been no lesser than those of the peers. This continued to motivate employees at large leading to low attrition.

Industrial Relations continued to remain cordial in your Company.

Directors and Key Managerial Personnel (KMPs)

Effective 1st March 2024, Whole-time Director, Mr Kamal Sarda (DIN : 03151258) designated as Director and Chief Executive Officer India ceased to hold his office due to resignation. Your Directors place on record appreciation for services rendered by him.

Your Board at its meeting held on Wednesday, 13th March 2024 following recommendation of the Nomination and Remuneration Committee, appointed Mr Arasu Shanmugam (DIN : 02316638) as a Whole-time Director of the Company for a period of 3 (three) years from 13th March 2024 to 12th March 2027. You, the shareholders have approved such appointment through postal ballot in accordance with Sections 108 and 110 and other applicable provisions of the Companies Act, 2013 (hereon the Act) read with applicable Rules, Secretarial Standards and SEBI LODR, 2015 with requisite majority, result whereof was declared on Wednesday, 15th May 2024.

Your Board following recommendation of the Nomination and Remuneration Committee and subject to your approval and that of the Central Government have re-appointed Mr James Leacock McIntosh (DIN : 09287829) as Managing Director of the Company on and from 1st September 2024 for a period of 3 (three) years ending on 31st August 2027 on terms and conditions including remuneration more fully stated in draft Agreement to be executed between the Company and Mr McIntosh. In this connection, a Special Resolution has been included in the Notice of ensuing AGM for your approval. Your Directors recommend passing of said Special Resolution being in the interest of your Company.

Mr McIntosh will also retire by rotation at ensuing Annual General Meeting (AGM) and being eligible, has offered himself for reappointment for further period liable to retire by rotation.

Particulars of the Companys Key Managerial Personnel are appearing at Note 36 of Audited Statement of Accounts as per Section 203 of the Act. Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI LODR, 2015. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

All of the Directors, Key Managerial Personnel Senior Management and other Management Personnel as on 31st March 2024, have confirmed compliance of Code of Conduct for Board of Directors including Independent Directors, Key Managerial Personnel, Senior Management and other Management Personnel of the Company. This Code continues to help the Company maintain standard of ethics and ensure compliance of legal requirements applicable.

Performance Evaluation

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 helped to enhance their performance.

Cost Auditor

To the extent provisions of Section 148 of the Act are applicable, your Company maintained accounts and records during FY 2023-24. M/s Mani & Co., Practicing Cost Accountants have been re-appointed as Cost Auditors of the Company for FY 2024-25. Your approval for payment of remuneration not exceeding 5 lakhs to them is being sought inasmuch as an Ordinary Resolution has been included in Notice of ensuing 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 2023-24. Both Report and Certificate are free of qualifications, reservations or adverse remarks.

Statutory Auditors

Reports of the Statutory Auditors, M/s S R Batliboi & Co. LLP (Regd No. 301003E/E300005), Chartered Accountants on Statement of Accounts for FY 2023-24 on Standalone and Consolidated basis are self-explanatory. Their Reports do not contain any qualification, reservations, adverse remarks or disclaimers except 2 (two) Emphasis of Matters. Their appointment as Statutory Auditors of your Company will come to an end on conclusion of ensuing 17th AGM of the Company. They have confirmed their willingness to be reappointed as Statutory Auditors for another term of five years and have confirmed that they continue to comply with all requirements and criteria specified therefor.

Report on fraud by Auditors

For the year under review, neither Statutory Auditors nor Cost Auditors nor Secretarial Auditors have reported any instances of frauds committed in your Company by its Officers and/or Employees, to the Audit Committee under Section 143(12) of the Act.

Material Changes and Commitments after the Financial Year

There have neither been any material changes and/or commitments since end of FY 2023-24 affecting your Companys financial position nor nature of your Companys business.

Significant and Material Orders passed by the Regulators/Courts/Tribunals

No significant or material orders have been passed by any of the Regulators, Courts or Tribunals that affect going concern status and future operations of your Company.

Acknowledgement

Your Directors express appreciation to all employees irrespective of level for their hard work, dedication, and commitment recognize continued support and co-operation received from all other stakeholders particularly you, the Shareholders.

On behalf of the Board of Directors of IFGL Refractories Limited

	S K Bajoria	James L McIntosh
Kolkata	Chairman	Managing Director
18th May 2024	(DIN - 00084004)	(DIN - 09287829)