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IG Petrochemicals Ltd.

BSE: 500199 | NSE: IGPL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE204A01010 | SECTOR: Chemicals

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

To the Members

The behalf of the Board of Directors of your Company, it gives me pleasure in presenting the Twenty Ninth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2018:

1. FINANCIAL RESULTS

(Rs. in Lakhs)

2017-18

2016-17

Total Revenue

117,489.21

113,892.91

Profit before interest, depreciation and tax

27,142.41

17,162.93

Finance Cost

1,487.96

1,824.07

Depreciation and Amortization expenses

2,569.58

2,112.25

Profit before tax

23,084.88

13,226.61

Provision for tax

8,430.39

3,033.02

Profit for the year

14,654.49

10,193.59

Balance brought forward from previous year

30,823.94

23,371.63

Profit available for appropriations

45,478.43

33,565.22

Earnings per share

47.59

33.10

2. DIVIDEND

Your Board of Directors have recommended a dividend of Rs. 4/- per equity share having face value of Rs. 10/each (40%) for the year ended 31st March, 2018. The total outgo (including dividend distribution tax) for the current year amounts to Rs. 1,484.99 lakhs (Rs. 1,111.92 lakhs).

3. FINANCIALS

During the financial year 2017-18, the total revenue of your Company was Rs. 117,489.21 lakhs against Rs. 113,892.91 lakhs in the previous year registering a marginal growth of 3.16%. The finance cost continues to be under constant review which has now been brought down by apprx. 18.43% from Rs. 1,824.07 lakhs in the previous year to Rs. 1,487.96 lakhs during the year. The continuous efforts of the Company to focus on operational efficiency at all levels has helped in the increase of margins on a sustained basis. The profit before interest, depreciation and tax increased from Rs. 17,162.93 lakhs to Rs. 27,142.41 lakhs during the current year and the profit after tax increased from Rs. 10,193.59 lakhs to Rs. 14,654.49 lakhs registering a growth of over 43%.

During the year, the export turnover of the Company was Rs. 21,677.53 lakhs as against Rs. 23,139.61 lakhs in the previous year.

4. OPERATIONAL REVIEW

The Phthalic Anhydride (PA) market continues to witness the momentum in its demand across all sectors where it finds its application thus benefiting the PA industry as such. The PA prices remained buoyant through most of the year which resulted in higher realization and better margins supported by the economical cost of production. The Company’s derives operational benefit by its self-sufficiency in steam/power which economize expensive furnace oil for operation.

The Asia-Pacific region is the largest market for PA for industries using it in plasticizers, alkyd resins, unsaturated polyester resins, etc. and India is one of the fastest growing PA markets. Rising private and government spending in infrastructure has pushed up demand for PVC, which in turn, has spurred PA demand.

The acquisition of Maleic Anhydride (MA) business from Mysore Petro Chemicals Limited has given a more value addition to the existing portfolio. Further there is high operating leverage from this acquisition due to the fact that raw material for MA viz. wash water is a derivative of PA.

5. EXPANSION

During the year under review, the Company has embarked on an expansion which is expected to come on stream in the next fiscal. The domestic consumption of PA continues to grow and the Company’s operational capacities are optimally utilized. Your Company is also simultaneously working to foray into the downstream products. With all the plants at the same location (including the undergoing expansion), this will create economies of scale and enhance the Company’s competitiveness in the PA market which is expected to further improve its performance in the years to come.

The expansion will also lead to the improvement in the revenue and margins from the operation of MA.

6. CONTRIBUTION TO THE EXCHEQUER

The Company has contributed Rs. 24,106.24 lakhs to the exchequer by way of excise duty, central sales tax, income tax, customs duty, goods and service tax, etc.

7. INDIAN ACCOUNTING STANDARDS (IND AS)

The Company has adopted Ind AS with effect from 1st April, 2017 and accordingly the financial statements of the Company (along with its subsidiaries) for the year ended 31st March, 2018 were prepared in compliance with Ind AS.

8. SUBSIDIARIES/ASSOCIATES/JOINT VENTURES

IGPL International Limited and IGPL (FZE) are the wholly owned subsidiaries of the Company.

The JV entered into between IGPL (FZE) and M/s Dubai Natural Gas Co. Ltd. for the manufacture of Maleic Anhydride is under implementation.

Pursuant to the provisions of Section 136 of the Companies Act, 2013 (“the Act”), the audited accounts of subsidiaries are placed on the website of the Company and available for inspection by the members of the Company. A copy of the audited accounts shall be made available to the member upon request.

The consolidated financial statements of the Company are prepared in accordance with the applicable Ind AS together with the report of the Auditors’ thereon forms part of this Annual Report.

A statement containing salient features of the financial statements of the subsidiary in Form AOC-1 is available in this Annual Report.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

In accordance with the provisions of Section 135 of the Act and the Rules framed thereunder, the CSR Committee reviews and monitors the projects and expenditures incurred by the Company which are mainly for education, old age homes, environment, etc. The Report on CSR activities containing prescribed details are annexed to the Directors’ Report as “Annexure-A”

During the year, the Company spent Rs. 143.70 lakhs towards CSR activities as against the budged allocation of Rs. 146.42 lakhs. The Company has initiated some projects which are under implementation.

10. VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism Policy in place to report instances of actual or suspected unethical behavior, fraud, etc. The details of the Vigil Mechanism has been elaborated in the Corporate Governance Report and posted on the Company’s website www.igpetro.com

11. transfer of shares to iepf

In compliance with the provisions of Section 124(6) of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the IEPF Rules”) and amendments thereto, the Company has transferred shares to IEPF Authority in respect of shares on which dividend has not been paid or claimed for seven consecutive years.

Members whose shares are so transferred can claim their dividend and shares from the IEPF authority by filing Form IEPF-5 available at www.iepf.gov.in. Member should also note that only one consolidated claim can be filed in a financial year as per the IEPF Rules. Members are advised to claim any unencashed dividends.

The Company Secretary of the Company has been designated as the Nodal Officer who can be contacted for any guidance/assistance to claim the dividend and shares from IEPF Authority.

12. DIRECTORS & KEY MANAGERIAL PERSONNEL

At the forthcoming annual general meeting, Shri J K Saboo retires by rotation and being eligible has offered himself for re-appointment.

AllIndependent Directors of the Company have furnished declarations under Section 149(7) of the Act confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) (“SEBI Listing Regulation”).

There is no change in the Key Managerial Personnel.

12.1 Meetings

During the year, four meetings of the Board of Directors and Audit Committee were held as more particularly disclosed in the attached Report on Corporate Governance.

12.2 Board Evaluation

The performance evaluation of Directors individually vis-a-vis the Board and its Committees have been carried out, the details of which are disclosed in the Corporate Governance Report.

12.3 Remuneration Policy

The details of the Remuneration Policy forms part of the Corporate Governance Report.

The information relating to remuneration as required pursuant to Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (“the said Rules”) are given below:

a) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year -

Shri Nikunj Dhanuka, Managing Director & CEO - 65:1

Shri J K Saboo, Executive Director - 8:1

b) The percentage increase in the remuneration of Managing Director, Chief Financial Officer and Company Secretary for the Financial Year

Shri Nikunj Dhanuka, Managing Director & CEO - 672%

Shri R Chandrasekaran, Chief Financial Officer - 157%

Shri Sudhir R Singh, Company Secretary -21%

c) The percentage increase in the median remuneration of employees in the Financial Year - 8%

d) Number of permanent employees on the rolls of the Company - 211

e) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year was 8% whereas the increase in the managerial remuneration was 283%. The increase in the remuneration is on account of commission paid.

It is hereby affirmed that the remuneration paid during the year is as per the Remuneration Policy of the Company.

The information under Rule 5(2) of the said Rules will be provided to the members upon request in terms of the first proviso to Section 136 of the Act.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Act, we state:

a. that in the preparation of the annual financial statements for the year ended 31st March, 2018, allthe applicable accounting standards have been followed and no material departures have been made from the same;

b. that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2018 and of the profit of the Company for that year;

c. that proper and sufficient care has been taken 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/detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

14. RELATED PARTY TRANSACTIONS

All transactions entered into with related parties during the year were on arm’s length basis and in the ordinary course of business.

There were no material related party transactions. The necessary disclosures regarding the transactions are given in the notes to accounts. The Company has formulated a policy on dealing with the Related Party Transactions and necessary approval of the Audit Committee and Board of Directors were taken wherever required in accordance with the Policy.

15. RISK ASSESSMENT

The internal control mechanism of the Company enables it to identify, assess and mitigate the risk related to its business. Risks are being evaluated on various parameters and these parameters are being reviewed at regular intervals.

The Company monitors its risk assessment programs to identify and curb the extent of exposure which the risk poses.

16. AUDITORS

16.1 Statutory Auditors

M/s ASA & Associates LLP and M/s Uday & Co. were appointed as Statutory Auditors of the Company by the members of the Company at the respective annual general meetings.

Pursuant to the amendment to Section 139 of the Act vide Companies (Amendment) Act, 2017, the proviso relating to the ratification of the appointments of the Statutory Auditors at every annual general meeting has been removed.

In accordance with the above provisions, the ratification of the appointments of the Statutory Auditors shall not be placed at the annual general meeting.

16.2 Cost Auditors

M/s Krishna S & Associates, Cost Accountants was appointed as the Cost Auditor to conduct an audit of the cost records of the Company for the year 2018-19.

16.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Makarand M Joshi & Associates, Practicing Company Secretaries (Membership No. 5533) to conduct the Secretarial Audit and their Report on the Secretarial Audit for the year 2017-18 is annexed herewith as “Annexure-B” There are no qualifications in the said report.

17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, are given in the notes to the Financial Statements.

18. DEPOSITS

The Company has not accepted any deposits from the public during the year under review.

19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as “Annexure-C”.

20. EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 is attached herewith as “Annexure-D” and forms part of this report.

21. CORPORATE GOVERNANCE

The report on Corporate Governance along with the Auditors’ Certificate confirming thereon are attached to this report.

22. PREVENTION OF SEXUAL HARASSMENT

The Company has adopted a policy on prevention and redressal of sexual harassment at work place in accordance with the provisions of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. No complaints of sexual harassment were received during the year.

23. ISO 9001 : (2008) AND ISO 14001:(2004) CERTIFICATION

Your Company continued to be certified under ISO 9001:2008 for quality management systems and ISO 14001:2004 for environment management systems by Beaureu Veritas.

24. ACKNOWLEDGEMENTS

Your Directors convey their sincere appreciation to the business partners for their continued support and contribution and thank the customers, members, dealers, employees, bankers and all stakeholders for their co-operation and confidence reposed in the Company.

For and on behalf of the Board of directors

Mumbai M M Dhanuka

28th May, 2018 Chairman

Director’s Report