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Panama Petrochem Ltd Directors Report

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Oct 11, 2024|03:32:18 PM

Panama Petrochem Ltd Share Price directors Report

Dear Members,

Your Directors have pleasure in presenting the FORTY SECOND Annual Report of the Company together with the Audited Statement of Accounts for the Financial Year ended MarcRs.31, 2024.

FINANCIAL HIGHLIGHTS

Standalone Consolidated
Name of the company Financial Year 2023-24 Financial Year 2022-23 Financial Year 2023-24 Financial Year 2022-23
Revenue from operations 1,724.92 1,708.24 2,356.74 2,248.72
Other income 11.27 6.22 14.48 6.58
Total income 1,736.19 1,714.46 2,371.22 2,255.30
Expenses
Operating expenditure 1,535.97 1,456.11 2,102.66 1,939.75
Depreciation and amortization expense 6.63 6.10 9.83 9.43
Total expenses 1,542.60 1,462.21 2,112.49 1,949.18
Profit before finance costs, exceptional item and tax 193.59 252.25 258.73 306.12
Finance costs 16.72 10.10 17.96 11.57
Profit before exceptional item and tax 176.87 242.15 240.77 294.55
Exceptional item - - - -
Provision towards legal claim - - - -
Profit before tax 176.87 242.15 240.77 294.55
Tax expense 45.62 61.58 45.62 61.58
Profit for the year 131.25 180.57 195.15 232.97
Opening balance of retained earnings 658.10 531.97 821.92 648.63
Closing balance of retained earnings 741.03 658.10 962.66 821.92

OPERATIONAL PERFORMANCE

• Earnings before Interest, Depreciation, and Tax & Amortization (EBIDTA) on a standalone basis for F.Y. 202324 was RS.200.22 Crore, which has resulted in a decrease of 22.50 % in comparison with the previous years EBIDTA.

• The Net profit after tax for F.Y.2023-24 was RS.131.25 Crore, as against H180.57 Crore in the previous year, resulting in 27.31 % decrease.

• The Companys standalone revenue from operations for F.Y. 2023-24 was RS.1,724.92 Crore which is an increase of 0.98% over the previous years revenue.

• Additionally, the consolidated revenue from operations of the Company for the year ended MarcRs.31, 2024 was RS.2,356.74 Crore which has increased by 4.80% on a Year on Year basis.

• Net Profit of the Company on a consolidated basis was RS.195.15 Crore which has decreased by 16.23% as that of the previous year.

• EPS on standalone basis is RS.21.70 as against RS.29.85 in the previous year.

• Furthermore, EPS on consolidated basis is RS.32.26 from RS.38.51

DIVIDEND

The Board of Directors at its meeting held on May 27, 2024, has recommended payment of RS.4/- (200%) per equity share of the face value of RS.2/- each as final dividend for the financial year ended MarcRs.31,2024. The payment of final dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company.

During the year under review, the Board of Directors of the Company at its meeting held on November 08, 2023, declared an Interim dividend of RS.3/- (150%) per equity share of RS.2/- each. The total dividend amount for the financial year 2023-24, including the proposed final dividend, amounts to 7/- (350%) per equity share of the face value of RS.2/- each.

The dividend payout ratio of the Company for the year under review is 21.70% The total outflow towards dividend on Equity Shares for the year would be RS.30.25 Crore

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), the Board of Directors of the Company has in place a Dividend Distribution Policy which aims to maintain a balance between profit retention and a fair, sustainable and consistent distribution of profits among its Members. The said Policy is available on the website of the Company: http://panamapetro.com/wp-content/ uptoads/2021/08/ddp-web.pdf

TRANSFER TO RESERVES

The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriations.

CREDIT RATING

Based on the financial and operational performance of the Company for the year under review, CARE Ratings Limited has reaffirmed the rating on Long Term Bank Facilities to CARE A+; Stable and upgraded the rating on Short Term Bank Facilities to CARE A1+ from CARE A1.

ICRA Ratings Limited has reaffirmed its rating on fund based bank facilities to [ICRA]A+(Stabte) and on non-fund based bank facilities to [ICRA]A1 +

SHARE CAPITAL

The paid up Equity Share Capital as on MarcRs.31, 2024 was RS.12.10 Crore. During the year under review, the Company has not issued any shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.

MATERIAL CHANGES AFFECTING THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report. There has been no change in the nature of business of the Company.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As on MarcRs.31, 2024 your Company has only one subsidiary, PanoL Industries RMC FZE, UAE which is registered outside India.

The Consolidated Financial Statements of the Company and its subsidiary are prepared in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS).

The Consolidated Financial Statements of the Company and its subsidiary, form part of the Annual Report and are reflected in the Consolidated Financial Statements of the Company.

The Company has adopted a Policy for determining Material Subsidiaries in terms of Regulation 16(1](c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

The Policy, as approved by the Board, is uploaded on the Companys website: http://panamapetro.com/wp-content/uptoads/2015/12/msp.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the accompanying Financial Statements.

PERFORMANCE AND FINANCIAL POSITION OF PANOL INDUSTRIES RMC FZE

Net sales of PanoL Industries RMC FZE have increased from RS.540.48 Crore in the previous year to RS.631.82 Crore during FY 2023-24. Net profit during the period has increased by 21.92% to RS.63.90 Crore., as compared to a net profit of RS.52.41 Crore in the previous year.

During the year under review, PanoL Industries RMC FZE, has transferred RS.6.09 Crore in General Reserve out of retained earnings.

PanoL Industries RMC FZE, UAE, is a wholly owned subsidiary of the Company. The Company has a manufacturing facility in Ras AL Khaimah (UAE) with the objective of manufacturing petroleum specialty products to cater to the GCC & MENA regions.

There has been no material change in the nature of the business of the subsidiary. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

The plant enjoys logistic advantage since it is situated on the port and has direct dedicated pipelines to receive and discharge raw material and finished products directly to bulk vessels.

During the year under review, no Company has become or ceased to be a subsidiary of the Company. The Company does not have any associate or joint venture companies. A statement containing the salient features of the financial position of the subsidiary companies is detailed in Form AOC.1, annexed as Annexure A.

RELATED PARTY TRANSACTIONS

ALL Related Party Transactions that were entered into during the financial year were on an arms Length basis, in the ordinary course of business and were in compLiance with the appLicabLe provisions of the Act and the Listing ReguLations.

No materiaL ReLated Party Transactions were entered during the financiaL year by the Company. AccordingLy, the discLosure of Related Party Transactions, as required under Section 134(3)(h) of the Act in Form AOC-2 is not appLicabLe to the Company and hence not provided.

No person or entity belonging to the promoter/promoter group, hoLds 10% or more sharehoLding in the Company, hence discLosure of transactions entered into with any such persons/ entities is not appLicabLe to the Company.

ALL ReLated Party Transactions are pLaced before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are pLanned/ repetitive in nature. Related Party Transactions entered into pursuant to omnibus approvaL so granted are pLaced before the

Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The Company has adopted a Related Party Transactions Policy. The Policy, as approved by the Board, is uploaded on the Companys website at the web link:http://panamapetro.com/wp- content/uptoads/2022/04/Retated-Partv-Transaction-Poticv.pdf

Details of the transactions with Related Parties are provided in the accompanying financial statements.

RISK MANAGEMENT

Risks being uncertain events that materially impact the organizational objectives. They are inherent in all business activities and must be balanced while assessing returns. Successfully managing risks is therefore the key to achieving Company objectives and ensuring long-term sustainable growth of the Business. With this in mind and in accordance with the provisions of the Act and Regulation 21 of the Listing Regulations your Company has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) approving the Companys Risk Management Framework and (b) Overseeing all the risks that the organization faces such as strategic, financial, liquidity, security, regulatory, legal, and other risks that have been identified and assessed to ensure that there is a sound Risk Management Policy in place to address such concerns/risks. The Risk Management process covers risk identification, assessment, analysis and mitigation. The Audit Committee has additional oversight in the area of financial risks and controls.

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 21 of the Listing Regulations.

DIRECTORS

As on MarcRs.31, 2024, your Companys Board comprised of 10 Directors with considerable experience in their respective fields. Of these, 4 are Executive Directors and 6 Non-Executive (Independent) Directors. The Chairman of the Board is an Executive Director.

APPOINTMENT & CESSATION OF DIRECTORS

In accordance with the provisions of Section 152 of the Act and the Companys Articles of Association, Mr. Amirali Rayani (DIN:00002616), Director retires by rotation and, being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the forthcoming Annual General Meeting.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on May 27, 2024, considered and recommended to the shareholders the appointment of Ms. Almas Nanda (DIN: 05329210), as an Independent Director of the Company, at its forthcoming Annual General Meeting, to hold office for a term of 5 (Five) consecutive years commencing from February 13, 2025. Ms. Almas Nanda, based on the requisite declarations and disclosures submitted to the Board and the NRC Committee of the Company, meets the criteria of directorship and Independence as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Ms. Almas Nanda is not debarred from holding the office of Director by virtue of any order passed by SEBI or any other authority.

Mr. Madan Mohan Jain and Mr. Mukesh Mehta, Independent Directors of the Company ceased to be the Directors of the Company upon completion of their final term on MarcRs.31,2024.

The company places on record their deep appreciation for the contributions made by them during their association with the Company.

Members at the 41st Annual General Meeting of the Company held on August 29, 2023 had approved the appointment of Mr. Arif Rayani as the Whole-time Director of the Company for a period five (5) consecutive years and Mr. Ashok Mukhi and Mr. Arvind Shah as Independent Directors of the Company, to hold office for a term of five (5) consecutive years, upto July 31,2028.

Mr. Amin Rayani, Managing Director and CEO, resigned from the directorship of the Company, consequently, Mr. Samir Rayani was re-designated as the Managing Director and CEO of the Company effective October 01,2023.

Brief profile of the directors seeking appointment/re-appointment have been given in the Notice convening this Annual General Meeting.

The Company has received disclosures from all the Directors of the Company as mandated under Section 164(2) and Section 184(1) of the Companies Act, 2013. Additionally, the Independent Directors of the Company have submitted declarations confirming that they meet with the criteria of Independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

The Board of Directors, based on the declaration(s) received from the Independent Directors, have verified the veracity of such disclosures and confirm that the Independent Directors fulfil the conditions of independence specified in the Listing Regulations and the Act and are independent of the Management of the Company.

The Board is of the opinion that the Independent Directors of the Company hold highest standards of integrity and possess requisite qualifications, experience and expertise in the fields of science and technology, human resources, strategy, auditing, corporate governance, etc.

The Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

In terms of Regulation 25(8) of the Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

Details of Familiarisation Programme for the Independent Directors are provided separately in the Corporate Governance Report.

APPOINTMENTS/RESIGNATIONS OF THE KEY MANAGERIAL PERSONNEL

Mr. Amin Rayani, Managing Director and CEO, resigned from the directorship of the Company, consequently, Mr. Samir Rayani was re-designated as the Managing Director and CEO of the Company effective October 01,2023.

Members at the 41st Annual General Meeting of the Company held on August 29, 2023 had approved the appointment of Mr. Arif Rayani as the Whole-time Director of the Company.

No other Key Managerial Personnel of the Company has resigned or has been appointed during the Financial Year 2023-24.

BOARD AND COMMITTEE MEETINGS

Your Companys Board of Directors met five times during the financial year under review. A calendar of Meetings is prepared and circulated in advance to your Directors.

The Audit Committee of the Company as constituted by the Board was headed by Mr. Madan Mohan Jain with Mr. Samir Rayani and Mr. Mukesh Mehta as Members.

Mr. Madan Mohan Jain and Mr. Mukesh Mehta, ceased to be the Directors of the Company upon completion of their final term on MarcRs.31, 2024, as a result the Company appointed Mr. Ashok Mukhi as Chairman of the committee and Mr. Kumar Raju Nandimandalam was inducted as a member of the committee w.e.f. April 01,2024.

There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.

Details of the composition of the Board, its Committees and the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Act and the Listing Regulations.

PROCEDURE FOR NOMINATION AND APPOINTMENT OF DIRECTOR:

The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.

The Nomination and Remuneration Committee conducts a gap analysis to refresh the Board on a periodic basis, including each time a Directors appointment or re-appointment is required.

The Committee is also responsible for reviewing and vetting the resume of potential candidates vis-a-vis the required competencies and meeting potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.

CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR:

The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations.

Independence: In accordance with the above criteria, a Director will be considered as an Independent Director if he/ she meets with the criteria for Independent Director as laid down in the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

Qualifications: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, and gender. It is also ensured that the Board has an appropriate blend of functional and industry expertise. While recommending the appointment of a Director, the Nomination and Remuneration Committee considers the manner in which the function and domain expertise of the individual will contribute to the overall skill-domain mix of the Board.

Positive Attributes: In addition to the duties as prescribed under the Companies Act, 2013, the Directors on the Board of the Company are also expected to demonstrate high standards of ethical behavior, strong interpersonal skills and soundness of judgment. Independent Directors are also expected to abide by the Code for Independent Directors as outlined in Schedule IV to the Act.

GOVERNANCE GUIDELINES

The Company has adopted Governance Guidelines on Board Effectiveness. The Governance Guidelines encompasses aspects relating to composition and role of the Board, Chairman and Directors, Board Diversity, Definition of Independence, Term of Directors, and Committees of the Board. It also covers aspects relating to Nomination, Appointment, Induction and Development of Directors, Directors Remuneration, Subsidiary oversight, Code of Conduct, Board Effectiveness Review and Mandates of Board Committees.

ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OF DIRECTORS:

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors.

The Boards functioning was evaluated on various aspects, including inter alia structure of the Board, qualifications, experience and competency of Directors, diversity in Board and process of appointment; Meetings of the Board, including regularity and frequency, agenda, discussion and dissemination of information; functions of the Board, including strategy and performance evaluation, corporate culture and values, governance and compliance, evaluation of risks, grievance redressal for investors, stakeholder value and responsibility, conflict of interest, review of Board evaluation and facilitating Independent Directors to perform their role effectively; evaluation of managements performance and feedback, independence of management from the Board, access of Board and management to each other, succession plan and professional development; degree of fulfillment of key responsibilities, establishment and delineation of responsibilities to Committees, effectiveness of Board processes, functioning and quality of relationship between the Board and management.

Directors were evaluated on aspects such as attendance and contribution at Board/Committee Meetings and guidance/ support to the management outside Board/Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including setting of the strategic agenda of the Board, encouraging active engagement by all Board members, motivating and providing guidance to the Managing Director & CEO.

Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings. The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors. The Chairman of the Board provided feedback to the Directors on an individual basis, as appropriate. Significant highlights, learning and action points with respect to the evaluation were presented to the Board on regular intervals.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

REMUNERATION POLICY

Your Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and Senior Management, pursuant to the provisions of the Act and Listing Regulations.

The philosophy for remuneration of Directors, Key Managerial Personnel of the Company is based on the commitment of fostering a culture of leadership with trust. The Remuneration Policy of the Company is aligned to this philosophy.

The remuneration policy can be accessed at: http://panamapetro.com/wp-content/uploads/2015/12/Nomination- and-Remuneration-policy.pdf

The Nomination and Remuneration Committee has considered the following factors while formulating the Policy:

(i) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors to perform in a manner of the quality required to run the Company successfully;

(ii) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(iii) Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

Details of the Remuneration Policy are given in the Corporate Governance Report.

LISTING OF SHARES

Your Companys shares are listed on the BSE Limited and National Stock Exchange of India Limited. The Company has paid the listing fees for the financial year 2023-2024. The GDRs of the Company are listed on Luxembourg Stock Exchange.

CORPORATE GOVERNANCE

Your Company has implemented all the mandatory requirements pursuant to Listing Regulations. A separate report on Corporate Governance is given as a part of the Annual Report along with the certificate received from the Practicing Company Secretary, M/s. Milind Nirkhe & Associates, Company Secretaries, confirming the compliance.

PUBLIC DEPOSITS

During the year under review, your Company did not accept any deposits from the public.

INSURANCE

Your Company has taken adequate insurance cover for all its assets.

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls with reference to financial statements. Your Company has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness

of the accounting records and the timely preparation of reliable financial disclosures.

The Audit Committee has satisfied itself on the adequacy and effectiveness of the internal financial control systems laid down by the management. The Statutory Auditors have confirmed the adequacy of the internal financial control systems over financial reporting.

CORPORATE SOCIAL RESPONSIBILITY

As an integral part of our commitment to good corporate citizenship, your Company strongly believes in adopting steps to improve the quality of life of the people in the communities around us.

Founded on the philosophy that society is not just another stakeholder in its business, but the prime purpose of it, the Company, across its various operations is committed to making a positive contribution towards achieving long-term stakeholder value creation.

As the operations have expanded, your Company has retained a collective focus on the various areas of corporate sustainability that impact people, environment and the society at large.

The Company has adopted a Corporate Social Responsibility (CSR) Policy in compliance with the provisions of the Companies Act, 2013. As part of its CSR initiatives, the Company has undertaken projects in the areas of promoting health care and education.

The above projects are in accordance with Schedule VII of the Act. The Company has spent RS.4.30 Crore towards the CSR projects during the current Financial Year 2023-24.

A brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure B of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.

POLICY ON PREVENTION, PROHIBITION AND

REDRESSAL OF SEXUAL HARASSMENT AT

WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. With the objective of ensuring a safe working environment, where employees feel secure, the said Policy aims to provide protection to all its employees at the workplace and redress complaints of sexual harassment and for matters connected or incidental thereto. The Company has also constituted an Internal Complaints Committee, to deal with the complaints of sexual harassment and recommend appropriate action there upon.

The Company has not received any complaint of sexual harassment during the financial year 2023-24.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013, the amounts of dividend remaining unpaid or unclaimed for a period of seven years from the date of its transfer to the unpaid dividend account of the Company, are required to be transferred to the Investor Education and Protection Fund (IEPF) set up by the Government of India. Consequently, no claim shall lie against the Company in respect of any such amounts.

The amount of unpaid/unclaimed dividend up to the financial year 2015-2016 has been transferred to IEPF. Members who have not yet encashed their dividend warrant(s) for the financial year ended MarcRs.31,2017 and for any subsequent financial years, are requested to make their claims to the Company without any delay, to avoid transfer of their dividend/shares to the Fund/IEPF Demat Account.

Members are also requested to note that, pursuant to the provisions of Section 124 of the Act and the IEPF Rules, the Company is obliged to transfer all shares on which dividend has not been paid or claimed for seven consecutive years or more to an IEPF Demat Account.

Members/claimants whose shares, unclaimed dividend, have been transferred to the IEPF Demat Account or the Fund, as the case may be, may claim the shares or apply for refund by making an application to the IEPF Authority in Form IEPF- 5 (available on iepf.gov.in) along with requisite fee as decided by the IEPF Authority from time to time.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors, employees and other stakeholders of the Company, to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization who avail the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company have been denied access to the Audit Committee.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

AUDITORS

• STATUTORY AUDITORS

Pursuant to Sections 139 & 142 of the Companies Act, 2013, and the Rules made thereunder, JMR & Associates LLP, Chartered Accountants, (Registration No.106912W/ W100300) Mumbai, was appointed as Statutory Auditors of the Company to hold office for a period of 5 (Five) consecutive years from the conclusion of the Annual General Meeting (AGM) held in 2020 until the conclusion of the Annual General Meeting to be held in the year 2025.

The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

The Auditors Report for the financial year ended MarcRs.31, 2024 on the financial statements of the Company is a part of this Annual Report.

• COST AUDITORS

The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Act, read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, and accordingly such accounts and records are made and maintained in the prescribed manner.

Based on the Audit Committee recommendation at its meeting held on May 27, 2024, GMVP & Associates LLP (LLPIN:-AAG-7360) has been appointed by the Board as the Cost Auditors of the Company for conducting an audit of the cost accounting records of the Company for the financial year commencing from April 01,2024 to MarcRs.31, 2025.

A Certificate from GMVP & Associates LLP, has been received, confirming that they are free from the disqualifications, as specified in the provisions of Section 141 of the Act and Rules framed thereunder.

Pursuant to the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Members are requested to consider the ratification of the remuneration payable to GMVP & Associates LLP.

• SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, CS. Milind Nirkhe, Practicing Company Secretary (Proprietor), practicing under the name & style M/S Milind Nirkhe & Associates, CP No: 2312 has been appointed as Secretarial Auditor of the Company. The Secretarial Audit Report for the year under review is annexed as Annexure C.

The Auditors Report and the Secretarial Audit Report for the financial year ended MarcRs.31, 2024 do not contain any qualification, reservation, adverse remark or disclaimer.

SECRETARIAL STANDARDS OF ICSI

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditor have not reported to the Audit Committee, any instances of frauds committed in the Company, by any of its Officers or Employees, under Section 143(12) of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of Energy:

The Company is aware of energy consumption and environmental issues related to it and is consistently making sincere efforts towards conservation of energy. The Company is in fact engaged in the continuous process of further energy conservation through improved operational and maintenance practices.

The Company has taken adequate actions to conserve the energy by introducing technically improved blending system resulting in reduction of process time.

(i) Steps Taken or Impact on Conservation of Energy:

Aligned with the Companys dedication to energy conservation, all plants continue to focus on enhancing energy efficiency through innovative measures, minimizing wastage, and optimizing consumption. Below are some initiatives undertaken by the Company in this regard:

1. The Company has enhanced its conventional mixing technology, leading to significant energy savings.

2. Automation upgrades in the Companys processes have resulted in considerable energy conservation in comparison to previous practices.

3. Installation of solar power systems has contributed significantly to reducing overall energy consumption.

4. Various measures have been implemented at the Companys plants to optimize energy usage.

5. Deployment of energy-efficient motors and solar installations aims to maximize power utilization while reducing environmental impact.

(ii) Steps taken by the Company for utilizing alternate sources of Energy:

In addition to various initiatives around energy efficiencies, the Company is also focused on renewable sources of energy. Various steps have been taken for utilizing alternate sources of energy.

(iii) Capital Investment on Energy Conservation Equipment:

During the year, the Company has invested in various energy conservation equipment, which included, various energy efficient electric motors. The Company has also installed power efficient material handling and flowing system which has played a major role in energy saving.

The Company has also improved its thermo packs to get better fuel efficiency and lower emission stack.

B. Technology Absorption:

(i) Efforts made towards Technology Absorption:

Technology serves as a pivotal enabler and core facilitator, representing one of the strategic pillars of the Company. From the outset, your Company has remained at the forefront of harnessing technology to enhance the quality of the products and services offered to our customers.

Our Ankleshwar Plant hosts a state-of-the-art R&D Centre, playing a pivotal role in numerous breakthroughs in product development. This facility boasts modern testing and analytical equipment and is staffed by a team of highly qualified technocrats. Consequently, our in-house R&D unit has earned recognition from the Ministry of Science & Technology and the Department of Scientific and Industrial Research (DSIR). Our robust R&D capabilities, has empowered us to develop new products of superior quality and also assist in research for import substitution, energy conservation and control of pollution.

Furthermore, our commitment to R&D extends towards endeavors such as research for import substitution, energy conservation, and pollution control. Our technical center has successfully engineered a range of innovative products adhering to international quality standards, designed to minimize environmental impact. Notably, our de- aromatized low and high viscosity oils, compliant with European norms regarding PAH & PCA content, have been recognized both in domestic and international markets, finding utility in large rubber, ink, and textile industries. These products have not only reduced our reliance on imports but have also minimized environmental footprint.

In our pursuit of sustainable agriculture, we are in the process of developing eco-friendly pesticides with minimal residual impact, tailored for organic farming practices. To further advance our research in this domain, we plan to collaborate with renowned agricultural universities.

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution:

Technology has played a major role in ensuring high level of service delivery and has been a true strategic partner. The Company has derived many benefits from R&D and technology absorption which includes product development, product improvement & effective cost management.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

(a) the details of technology imported: The Company has not imported any technology during the last three financial years.

(b) the year of import: Not Applicable

(c) whether the technology has been fully absorbed: Not Applicable

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: Not Applicable

Expenditure on research & development

The expenditure on R&D activities incurred during the

year is given hereunder:

Particulars Rs. in Cr
Capital NIL
Revenue NIL
Total R&D Expenditure NIL
Total Turnover 1,724.92
Total R&D Expenditure as a Percentage of total turnover NIL

C. Foreign exchange earnings and outgo:

i. Export Activities: During the year under review the Company has made Import/Export as given in (ii) below.

ii. Foreign Exchange Earnings and Outgo:

Total Foreign Exchange Inflow 655.57
Total Foreign Exchange Outflow 1,269.93

PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and the information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure D forming part of this Report.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on MarcRs.31, 2024 is available on the Companys website at http://panamapetro.com/annual-return/

AUDITORS REPORT

Comments made by the Statutory Auditors in the Auditors Report are self- explanatory and do not require any further clarification.

MANAGEMENT DISCUSSION & ANALYSIS REPORT, BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT AND CORPORATE GOVERNANCE REPORT

The Management Discussion and Analysis Report, the Business Responsibility & Sustainability Report and the Report on Corporate Governance, as required under the Listing Regulations, forms part of this Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 134(3)(c) and 134(5) of the Companies Act, 2013, and to the best of their knowledge and belief and according to the information and explanations obtained by them and same as mentioned elsewhere in this Report, the attached Annual Accounts and the Auditors Report thereon, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance

with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

ACKNOWLEDGEMENT

We thank our Clients, Investors, Dealers, Suppliers and Bankers for their continued support during the year. We place on record our appreciation for the contributions made by employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

By Order of the Board of Directors
For Panama Petrochem Ltd.
Amirali E. Rayani
Date: May 27, 2024 Chairman
Place: Mumbai DIN:00002616

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