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IFB Agro Industries Ltd.

BSE: 507438 | NSE: IFBAGRO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE076C01018 | SECTOR: Breweries & Distilleries

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30-Day
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Annual Report

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Director’s Report

Dear Members, The Directors have pleasure in presenting the Annual Report together with the Audited Financial Statements for the year ended 31st March, 2015. Economic Environment: The year under review (2014-15) was characterized by slow growth across the globe. Europe was under severe recession and quantitative easing (QE) as deployed by the Central Bank has impacted the EURO and it was traded at multi-year low against US$. The stronger US economy was the only positive point and US$ strengthened against most emerging market currencies. Commodity prices declined across the board with crude oil declined the most. The decline in crude oil prices has helped the emerging market economies, especially India. In India, the inflation has eased as compared to the previous financial year (2013-14). Current account deficit have also improved due to the falling crude prices. It is expected that Indian Economy will have robust growth in 2015-16 (as per World Bank report). Financial Results & Performance Review The financial results for the year and for the previous year are summarized below: FINANCIAL RESULT (Rs in Lakhs) Year Ended Year Ended 31.03.2015 31.03.2014 Revenue from Operations 59,505 50,689 Profits prior to finance charges and depreciation 4,470 4,888 Less: Finance Charges 17 37 Depreciation 1,862 930 Profit before exceptional item 2,591 3,922 Exceptional items 2,100 Profit Before Tax 2,591 6,022 Less: Provision for Taxation Current Tax 117 1,368 Deferred Tax 820 486 Income Tax adjustment for earlier years 96 Profit After Tax 1,557 4,168 During the year under review your Company has recorded net operational revenue of Rs 59,505 lakhs (as against Rs 50,689 lakhs in 2013-14) recording a growth of17.4%. Your Company has achieved a profit before tax of Rs 2,591 lakhs (as against Rs 6,022 lakhs in 2013-14 which included extraordinary item of Rs. 2,100 lakhs) and net profit of Rs 1,557 lakhs (as against Rs 4,168 lakhs in 2013-14). Higher depreciation related to recently commissioned DDGS and Captive power plant has impacted the overall financial performance during the current year. Your Company remained debt free as on 31st March, 2015. INDUSTRY STRUCTURE AND DEVELOPMENT IFB Agro Industries Ltd is engaged primarily in two segments : Alcohol & Bottling and Marine. Alcohol & Bottling: Your Company operates a grain-based distillery in West Bengal at Noorpur. The plant based on ''multi-pressure-distillation'' process is capable of distilling alcohol from multiple feed stock such as rice, wheat, barley, jowar etc. The grain distillery along with carbon-di-oxide plant operated at optimum capacity during the current year. The DDGS and captive power plant were commissioned during the year. The captive power plant resulted in savings in power and fuel costs. The expected benefit from DDGS plant was not realized during the current year due to the lower soybean prices. Your Company has undertaken a modernization drive that will double the present capacity at existing facility. It is expected that with this expansion, cost per unit of production will reduce. The total capital outlay for this expansion will be approx. Rs 5,300 lakhs. The increased capacity will be available from fourth quarter of 2015-16, subject to all the regulatory approvals. Indian Made Indian Liquor (IMIL) division is characterized by excess capacity at the market place. The increased competition has resulted in higher retailer schemes and extended door delivery facility which has impacted operating margin. The increased credit facility is impacting the cash flow. During the year under review, your Company has started operations from a third party bottling facility at Kandi, Murshidabad (West Bengal). Marine: Marine exports have registered 27 % growth in revenue during the current year. The export division was successful in penetrating new geographical areas and this augurs well for the future. The operating margin was under pressure due to sudden drop in realisation during the second half of the year under review due to economic turmoil in some of our major markets. During the current year (2015-16), your Company will start processing and exporting from an outsourced processing plant in Andhra Pradesh. In Marine feed, turnover has increased by 61% during the year under review but operating margin reduced due to the inability in passing the input cost increases. Sales of Marine domestic food business have grown by 18% during the year under review. The sales and distribution network have been expanded and revamped during the current year. Expansion of distribution reach in traditional trade have improved the retail sales. Your Company is continuing its efforts to attain further efficiencies by reducing the wastage in all the divisions and ensuring optimal use of human resources on all fronts. OUTLOOK, OPPORTUNITIES, THREATS AND CONCERNS The current financial year will again be a year of tough business conditions and challenges. Spirit prices of other states such as Punjab and Uttar Pradesh continue to remain low which affects our pricing, coupled with the impact of spirit removal fee, distillery margins will remain under pressure. Your Company is continuing its efforts to attain further efficiencies by improving the yield at distillery, reducing the wastage in all the divisions and ensuring optimal use of human resources on all fronts. IMIL segment will have pressure on sales and margin, due to severe competitive pressures. Margin in marine export will be a concern due to competition from South East Asian Countries. Retail focus in the marine domestic market will be continued to improve sales and margin. The high level of fluctuation in the prices of raw materials and exchange fluctuations are the constraints faced by the Company during the past years. With the expectation of an improvement in the market conditions for ethanol procurement by oil companies coupled with the revenue from the DDGS and other by-products, the distillery operations of the Company will endeavor to perform better than last year. Competitive pressure from existing and new bottling plants will continue to keep IMIL operations under pressure. Marine exports will be under pressure in the financial year 2015-16 in view of the softening of global demand and prices; additional business from Andhra Pradesh plant is however expected to increase turnover over last year. During the year (2015-16), your Company will incur capital expenditures aggregating Rs 64 Crores and discussions are going on for possible expansion in marine business amounting Rs 100 Crores. These expansions need to fulfill its return expectation else there may be pressure on the balance sheet. RISKS & MITIGATING STEPS Pursuant to Clause 49 of the Listing Agreements, the Board has adopted a risk management policy whereby a proper framework is set up to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. Your Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Annual Report. DIVIDEND Your Company is a debt free Company. However, during the current year, your Company has outlined expansion at distillery, marine- exports and IMIL divisions. In order to conserve resources for the proposed capital investments, your Directors have decided not to recommend any Dividend for the financial year under review. TRANSFER TO RESERVE The company does not propose to transfer any amount to reserve. BOARD MEETINGS The details of the Board Meetings held during the financial year 2014-15 has been furnished in the Corporate Governance Report forming part of this Annual Report. EXTRACT OF ANNUAL RETURN The extracts of the Annual Return for the financial year 2014-15 as stipulated in MGT -9 pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014 is given in Annexure I which forms part of this Report. DIRECTORS Mr. Amitabha Kumar Nag, who retires by rotation at this Annual General Meeting and being eligible, offers himself for re-appointment. The three years term of Joint Executive Chairman, Mr Bikram Nag, is expiring on 26th January, 2016. It is proposed to re-appoint him for a further period of three years. On 31st March, 2015 the Nomination and Remuneration Committee recommended the induction of Dr. Lakshmishri Roy as an Additional Director of the Company. Dr Lakshmishri Roy also acts as a Woman Director in independent capacity on the Board pursuant to Section 161,149,152 and other applicable provisions of the Companies Act, 2013 read with Rules made thereunder and Clause 49 of the Listing Agreement. Dr. Lakshmishri Roy is a Graduate in Pharmacy from KMIPS, Rourkela, Sambhalpur University in the year 1994. She was awarded Gold Medal by Governor of Orissa for her outstanding performance in B.Pharm. She completed her M.Tech, (Life Science and Biotechnology) from Jadavpur University in the year 1998. She obtained her Ph.D. from IIT Kharagpur in the field of Agricultural and Food Engineering in the year 2013. Dr. Roy''s appointment is valid till the date of this Annual General Meeting ofthe Company. The Company has received a notice in writing from a member of the Company proposing her candidature for the office of Independent Director for a period of one year pursuant to Section 149(6), 160 and other applicable provisions of the Companies Act, 2013 read with Rules made thereunder and Clause 49 ofthe Listing Agreement. Appropriate resolutions seeking the appointment of Directors are appearing in the Notice convening this Annual General Meeting of the Company. The details about their qualification, other directorships etc. as per Clause 49 of the Listing Agreement is annexed to the Notice ofthe 33rd Annual General Meeting. DECLARATION BY INDEPENDENT DIRECTORS All the Independent Directors have given declaration to the Company stating their independence pursuant to Section 149(6) of the Companies Act, 2013 and the same have been placed and noted by the Board in its meeting held on 30th May, 2015. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS To familiarize the new Independent Directors with the strategy, operations and functions of our Company, the executive Directors / the senior managerial personnel make presentation to the inductees about the Company''s strategy, operations, product and service offerings, markets, finance, quality etc. Further, at the time of appointment of an Independent Director, the Company issues a formal letter of appointment outlining his/ her role, function, duties and responsibilities as a Director. The familiarisation programme are available at our website at the weblink http://www.ifbagro.in/pdf/Familiarisation-program.pdf ANNUAL EVALUATION OF BOARDS PERFORMANCE According to Clause 49 ofthe Listing Agreement and Schedule IV ofthe Companies Act, 2013, a meeting of the Independent Directors is required to be held to review the performance of the Non-Independent Directors and the Board as a whole. Accordingly, a separate meeting of Independent Directors was held on 23rd March 2015 wherein the performance of the Non-Independent Directors and the Board as a whole was evaluated. DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134(5) ofthe Act, the Directors state that: i. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss ofthe Company for that period; iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. The Directors had prepared the annual accounts on a going concern basis; and v. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. KEY MANAGERIAL PERSONNEL Induction The Board appointed Mr Dipak Sen as Chief Financial Officer of the Company w.e.f 10th December, 2014 on recommendation of Nomination and Remuneration Committee and approval of Audit Committee. The Board appointed Mr Ritesh Agarwal as Company Secretary of the Company w.e.f10th December, 2014 on recommendation of Nomination and Remuneration Committee. Resignations Mr. Shyamal Bandopadhyay resigned from the position of Sr VP Finance & Company Secretary with effect from 10th December, 2014. The Board accepted the resignation of Mr Bandopadhyay on recommendation of the Nomination and Remuneration Committee. The Board placed on record its appreciation for the contributions made by Mr. Bandopadhyay during his tenure. REMUNERATION POLICY A Nomination and Remuneration Policy has been formulated pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Rules made thereunder and Clause 49 of the Listing Agreement stating therein the Company''s policy on Directors''/Key Managerial Personnel/other employees appointment and remuneration by the Nomination and Remuneration Committee and approved by the Board of Directors at its meeting held on 23rd March, 2015. The said policy may be referred to, at the Company''s official website at http://www.ifbagro.in. REMUNERATION OF DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors is given in Annexure II which forms part ofthis Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loans, guarantees or made any investments exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more, as prescribed in Section 186 ofthe Companies Act, 2013. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES A Related Party Policy has been devised by the Board of Directors at its meeting held on 23rd March, 2015 for determining the materiality of transactions with related parties and dealings with them. The said policy may be referred to, at the Company''s official website at http://www. ifbagro.in. The Audit Committee reviews all related party transactions quarterly, if any. The Company has not entered into the following kinds of related party transactions: * Contracts/arrangements/transactions which are not at arm''s length basis. * Any Material contracts/arrangements/transactions. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE As required under Section 134(3)(m) of the Companies Act, 2013, read with rules made there under, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo is given in Annexure III which forms a part of this Report. UTILISATION OF PROCEEDS OF PREFERENTIAL ALLOTMENT The entire proceeds from Preferential allotment of fully paid up Equity Shares 3,62,000 of Rs 10 /- each issued at a premium of Rs 178/- each which was allotted to Promoter Group Company on preferential basis on 13th March, 2014 were utilized for the purpose for which the shares were issued. SUBSIDIARY/ASSOCIATES/JOINT VENTURE COMPANIES The Company does not have any subsidiary/associate/joint venture company for the year ended 31st March, 2015. HUMAN RESOURCES For the development of the human resources, number of training programme were organized during the year. Internal personnel as well outside faculty members undertook these programme. Your Company plans to organize more such training programme for the overall development of its people. Total number of employees in the Company was 328 as on 31st March 2015 as against 284 as on 31st March 2014. WEBSITE OF THE COMPANY The Company maintains a website www. ifbagro.in where detailed information of the Company and its products are provided. AUDIT COMMITTEE The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming part ofthis Annual Report. There has been no instance where the Board has not accepted the recommendations ofthe Audit Committee. VIGIL MECHANISM The Company has a Whistle Blower Policy in place for vigil mechanism. The said policy has been amended keeping in view of the amendments in the Companies Act, 2013 and Clause 49 ofthe Listing Agreement. The said policy may be referred to, at the Company''s official website at http://www.ifbagro.in/pdf/Whistle-Blower-Policy.pdf INTERNAL CONTROL SYSTEMS Your Company maintains a system of internal control designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial control, compliance with applicable laws and regulations. The internal control system of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board. LISTING WITH STOCK EXCHANGES Your Company is listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the said Exchanges. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Board of Directors constituted the CSR Committee at its meeting held on 31st October, 2014. The CSR policy was approved by the CSR Committee and adopted by the Board of Directors at its meeting held on 23 rd March, 2015. The said policy may be referred to, at the Company''s official website at http://www. ifbasro.in. The Company wishes to inform the Members that it is well aware of its responsibility towards fulfilling its social responsibility. To conserve the resources for capital expenditure projects, the Company made an expenditure of Rs 8.05 Lakhs only against the stipulated amount of Rs 77.66 Lakhs. The initiatives taken by the Company on CSR Activities is given in Annexure IV , which forms part ofthis report. CORPORATE GOVERNANCE Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors'' protection and maximizing long-term shareholders value. The certificate ofthe Auditors, M/s Walker Chandiok & Co LLP (Firm registration No 001076N/N500013), Chartered Accountants confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges forms part of this Annual Report. STATUTORY AUDITORS The Auditors of the Company M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No 001076N/N500013) have been appointed at the Annual General Meeting on 30th July, 2014 for a term of 3 years. The Company has received consent of the Auditors for continuation of office for the current year. Their appointment to the office is subject to the ratification by the Members at the each Annual General Meeting. The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. SECRETARIAL AUDITOR The provisions of Section 204 read with Section 134(3) of the Companies Act, 2013 mandates Secretarial Audit of the Company to be done from the financial year commencing on or after 1st April, 2014 by a Company Secretary in Practice. The Board in its meeting held on 23rd March, 2015 has therefore appointed Mr. Jitendra Patnaik, Practicing Company Secretary (Certificate of Practice No. 3102) as the Secretarial Auditor for the financial year ending 31st March, 2015. The Secretarial Auditors'' Report for the financial year ending 31st March, 2015 is given in Annexure V, which forms part of this report. ACKNOWLEDGEMENT Your Directors express their sincere thanks and place on record their deep appreciation for the patronage extended by the shareholders, valued customers, financial institutions, bankers, government authorities and the investors for their continued support and confidence in the Company. Cautionary Statement: Statement in the Directors'' Report and Management Discussion & Analysis Report describing the Company''s expectations may be forward-looking within the meaning of applicable securities laws & regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operation include global and domestic demands and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their costs, changes in government policies and tax laws. On behalf of the Board Bikram Nag Arup Kumar Banerjee Kolkata, 30th May, 2015 Joint Executive Managing Director Chairman

Director’s Report