Mar 31, 2023
The Directors present their 37th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2023.
The highlights of the financial results for the year are given below:
(Rs. in Crore) |
||
DESCRIPTION |
2022-23 |
2021-22 |
Profit Before Interest, |
97.44 |
532.49 |
Depreciation and Tax* |
||
Interest |
8.45 |
9.06 |
Depreciation |
21.79 |
18.83 |
Profit Before Tax |
67.20 |
504.60 |
Provision for Taxation |
16.39 |
127.91 |
Profit After Tax |
50.81 |
376.69 |
Total Comprehensive |
52.17 |
375.00 |
Income |
* including exceptional items Operational Highlights
Total Income during the year was '' 1,056 crore, about 28% lower than the '' 1,461 crore in 2021-22. Continuing the previous year''s trend, the international and domestic market conditions were favorable till the second quarter of the year under review. However, unlike in 2021-22, sales volumes and values of your Company dropped significantly from the third quarter and more imports dumped into the market at cheaper prices. With the Russia-Ukraine conflict and other global markets fearing recession, prices were continuously dropping, and the volumes were also affected. During the 4th quarter of FY 2022-23, even though the demand was slightly better than the previous two quarters but still the prices were at the pre-pandemic levels. In sum, though the overall sales volume was relatively similar to that of the previous year, product prices have reduced drastically to pre-pandemic levels which eroded our margins during the financial year under review.
During the year total additions to fixed assets was '' 33.48 crore, mainly comprising plant and equipment.
The project for capacity augmentation of Propylene Glycol is in progress. Out of the proposed additional capacity of 50,000 TPA, in the first phase 32,000 TPA would be added, within 18-21 months from the start date. Necessary regulatory clearances were obtained from MoEF & CC and the State Pollution control Board. Detailed engineering activities have been completed close to 70% and floating of offer for civil jobs under initiation.
The Company continues to source power from TANGEDCO. Due to shortage of coal, power supply by third party got withheld from August 2022 and as an alternate power consumed through IEX was about 11.43% of the power on consumption was sourced. This has impacted significantly, resulting in lower savings. As a long-term measure your company planned to source power from Renewable Energy from Group Captive power / 3rd party power and necessary agreements have been executed subsequent to the close of the financial year.
R-LNG supplies to Plant 1 continued, but contrary to the expectations, supplies to Plant 2 did not commence during the year under review and have now been rescheduled to FY 2023-24. The delay is attributed to completing the pipeline for extending the supplies, which would pass through railway lines, highways and some private properties, requiring additional approvals by IOCL.
During the year, the Finance cost has reduced from '' 9.06 crore in FY 2021-22 to '' 8.45 crore. The Finance Cost on lease reduced from '' 6.63 crore in FY 2021-22 to '' 6.48 crore. The actual interest and related payout for the year was only '' 1.97 crore against '' 2.42 crore in previous year.
As in the earlier years, capital expenditure for projects including for the PG expansion Project are being/will be met from internal sources and your Company has been operating without any longterm debt.
Credit Rating
During September 2022, Care Ratings Limited re-affirmed the ratings for banking facilities aggregating to '' 100 crore. For long term bank facilities of '' 50.00 crore, the rating has been reaffirmed at CARE A ; Stable (Single A Plus; Outlook: Stable) and CARE A1 (A One Plus) for short-term bank facilities of '' 50.00 crore.
Your Company has a consistent dividend track record of 17 years till the last year and follows a consistent dividend policy to ensure that dividend payments are sustained even when the earnings are relatively lower. In this regard, parameters for distribution of dividend have been outlined in the Dividend Distribution Policy approved by the Board, pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, as amended (âthe Regulationsâ). The policy can be accessed on the website of the Company in the link: https://www.manalipetro.com/ investors/policies/.
As regards the distribution for the year under review, to determine the amount that could be paid out to the shareholders as dividend, the Directors have followed the guidelines enumerated in the said policy and also considered other relevant factors, such as profitability of the relevant financial year, plans for long term deployment of the funds
- including projects under implementation, drastic changes in the domestic and global market scenario
- throwing up questions on the sustenance of the sales, pricing and higher margins and similar facts.
Considering all these developments, your Directors are happy to recommend a dividend of 15% i.e., seventy-five paise per equity share of '' 5/- each fully paid-up, for the year 2022-23, aggregating to '' 12.90 crore, subject to applicable withholding tax. Industry Structure and Development Your company operates in the Polyurethanes (PU) industry. In chemical terms PU is a polymer containing carbamate or urethane linkage formed by reaction of Isocyanates with polyol. It is a mixture of compounds containing urethane, urea, Isocyanates, allophanates etc.
PU is a versatile plastic polymer available in various forms right from rigid foam, flexible foam to strong and hard elastomers. PU can be customized in various combinations and structures for applications in a wide range of products for improving energy efficiency and improved physical and chemical properties.
PU is used in wide variety of consumer and industrial applications such as thermal insulation in buildings, refrigerators, household furniture, shoes, packaging plastics etc.
PU offers unique properties like good abrasion and wear resistance, elongation, resilience, flexibility, scratch resistance, mechanical strength, adhesion,
low temperature, thermal insulation, electrical insulation etc. Owing to these, PU can be moulded to any shape to enhance its industrial applications by providing comfort, style and convenience to one''s needs. Due to wider range of properties and forms, it finds applications in rigid and flexible foam, fibre, film, composites, elastomers, coatings, adhesives and mainly caters to industries like Automotive, Appliances, Building & Construction, Energy, Defence, Paints and Coatings, Soft furniture, etc.
PU is becoming popular in construction and infrastructure activities owing to its characteristics such as durability, low thermal conductivity, ability to withstand external impacts, etc. Increasing expectations of high performance, lightweight interior components and cushion foams in automotive parts to achieve energy saving also contribute for further polyurethane market growth.
Your Company specializes in manufacture of Propylene Glycol, Polyether Polyol and related substances. Your Company is the only domestic manufacturer of Propylene Glycol. Also, it is the first and largest Indian manufacturer of Propylene Oxide, the input material for the aforesaid derivative products.
Polyols are made in four grades, viz., Flexible Slabstock, Flexible Cold Cure, Rigid and Elastomers and used in the automobile, refrigeration and temperature control, adhesive, sealant, coatings, furniture and textile industries. Use of Polyols is g aining popularity in footwear and roofing applications in India.
Propylene Glycol (PG) is a colourless, clear, nearly odourless, viscous liquid with a faint sweet taste chemical produced by reaction of propylene oxide with water. It is chemically neutral and so does not react with other substances. PG when mixed with water, chloroform and acetone can form a homogenous mixture and it tends to absorb moisture from air. PG remains without affecting the properties of the substances that are required to react. Thus, it is useful in mixing contrasting elements and is also consumed as solvent in a wide variety of applications.
PG is used most commonly as drug solubilizer in tropical, oral and injectable medications, stabilizer for vitamins and also as a water miscible co solvent. The Food and Drug Administration (FDA) has recognized PG as a safe additive for human consumption, especially for pharmaceutical and
food formulations. In addition to the above, PG is also used as moisturizer in cosmetic products and as a dispersant in fragrances. PG also has industrial applications like manufacture of resins and other products.
PG is widely utilized in pharmaceuticals, food & flavor and fragrance industries and also for manufacture of polyester resins, carbonless paper and automobile consumables like brake fluid and anti-freeze liquid. Some of the major applications of PG include medicines, canned food, body sprays, perfumes, cosmetics, soaps and detergents. The offtake of PG for industrial purposes is generally low due to availability of alternate cheaper materials. Your Company supplies more of food and pharmaceutical grade PG to the Indian market, which like the Polyols is dominated by imports. In addition to PG, the by- products such as DPG are also bought by smaller players for food, flavors and related applications mainly as preservatives.
The other products of your Company include Propylene Glycol Mono Methyl Ether (PGMME), an environment-friendly solvent used in paints and coatings and electronics industries.
To mitigate the dependency on Propylene Oxide, the company is investing in setting up a plant to produce polyester polyol which doesn''t require Propylene oxide as feed stock. It is expected to be commissioned by December 2023.
Post pandemic, Indian PU industry has been growing steadily thanks to rapid urbanization, higher disposable incomes and flexible financing options. In the present age, refrigerators, mattresses and similar life style goods have come to be considered as essentials.
PU is a preferred material in the coatings segment on account of its superiority and other advantages over similar products. Thus, there has been major growth in the demand, but the Indian market has been dominated by imports.
Indian PG market also has all along been dominated by imports, except during the pandemic period.
During the year under review, for the most part, demand for Polyols and PG continued to fluctuate, with imports reaching the pre-pandemic levels. Logistics issues have been sorted out with ease of material availability at cheaper prices. Initially, downturn started with higher inflation arising from the Russia-Ukraine stand-off, China''s zero covid
policy, weakening rupee etc. Later on, with European countries fearing recession and economic turmoil in Sri Lanka and other neighboring countries impacted heavily on our pricing as more imports came into the market at cheaper prices and brought down our margins considerably from second quarter onwards and it was even worse in the third and fourth quarters.
Opportunities and Threats
Polyurethane materials, due to their versatility, perform extremely well as part of any application that is subject to dynamic stress. They provide many advantages including resilience, high tear resistance, and low heat build-up. Polyurethane can be used for varied applications like building insulations, refrigeration, furniture, footwear, automotive, coatings and adhesives, sealants etc. The development of polyurethane materials is still evolving, and new applications are regularly being created. It is a polymer that helps in smart designing and achieving more with less. So, its popularity has been on the rise for the past several years with infinite opportunities.
Increasing demand for lightweight and durable products in the automotive, construction, and electronics industries and PU applications for insulation purposes in various end-use industries are the major factors aiding the growth of PU market.
The alignment of Notedome and Penn-White''s (Company''s WOS) green tech product focus, along with Company''s commitment to Environmental, Social and Governance (ESG) goals, offers synergistic potential for shared strategy and global achievement.
Technology and Knowledge transfer from the acquisition of subsidiaries could unlock the growth potential in burgeoning markets in the Eastern world. This strategy has already been implemented with the production of Notedome''s Polyurethane in Chennai, India, enabling access to South-East Asian markets.
It has been reported that the global polyurethane market size was valued at USD 75.19 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 4.4% from 2023 to 2030. Reports suggest that increased use of polyurethane in refrigeration applications and the revival of the bedding segments are driving the market growth rate. Furthermore, the numerous applications
provided by flexible foam, such as upholstered furniture, rigid foam for insulation in walls and roofs, TPU used in medical devices and footwear, to coatings, adhesives, sealants, and elastomers used on floors and automotive interiors, will pave the way for market growth.
The Asia Pacific accounted for the largest revenue share of more than 45.10%. The construction application segment dominated the global market and accounted for more than 25.0% share of the global revenue.
In India, PU Market and application developments continue to be dominated by automotive, whitegoods, furniture and insulation segments. Potentials exist in the footwear and building segments, but these are yet to mature fully. So, Indian PU market would continue to be dependent more on the traditional segments and it may take a few more years for the other sectors to go for higher PU usage.
The major threat to your Company has been lower margins due to imports. To overcome the problems posed by imports, options for imposition of AntiDumping Duty on imports from certain countries has been resorted to. However, there had been little relief as the suppliers manage to bear the additional burden themselves. Your Company continues with the actions for cost reduction and product development, but these have inherent limitations and hence it may take a longer time to reap the benefits.
The complicated landscape of geo-political dynamics has introduced challenges for manufacturers worldwide, in securing raw materials for production. Such uncertainties may impact operational efficiency, potentially impacting the anticipated returns. The strategic acquisition of subsidiaries offer a spectrum of strengths and opportunities, such as innovation leadership, diversification and sustainability alignment. These advantages, however, must be managed within the context of intensified competition and geopolitical uncertainties, urging a prudent strategic planning and adaption.
Risk Management Policy and Process
The Company has established a structured framework for addressing business risk management issues. A risk management plan has been framed, implemented and monitored by the
Board through the Risk Management Committee of Directors (RMC).
The Company has two employee-level Committees viz., a sub-committee and an Apex Committee, headed by the Wholetime Director to review and assess the risks that could affect the Company''s business. The Sub-Committee brings out the matters that could affect the operations and the Apex Committee determines the issues that could become business risks. The mitigation actions are also suggested by the Committees and the report of the Head of the Apex Committee is submitted to the RMC. The RMC meets periodically, reviews the reports, recommends and monitors actions to be taken in this regard.
During the year based on market capitalization as on 31st March 2022, it became mandatory for the Company to have a Risk Management Committee under the Regulation. The RMC constituted by the Board already fulfils the requirements and so there was no need for changing the composition of then existing Committee. The details of the composition of the Committee, meetings and other relevant information are furnished in the Corporate Governance Report (CGR) annexed to this Report. As per the amended Regulations, a Risk Management Policy has been framed and the roles and responsibilities of the Committee are as prescribed under the Regulations. As required under Section 177 of the Act, the Audit Committee also reviews the risk management process periodically.
Barring a few quarters in 2021 and 2022, the Indian Polyol and PG markets have always been dominated by imports. High-capacity composite PU plants established by major players like DOW, Sadara, BASF, across the world enjoy subsidies from the local governments. They have been offering Polyols to Indian market at very low prices. Imposition of Anti-Dumping Duties has not been very effective, as the MNCs either supply the materials from places not covered under ADD or able to bear the additional cost continue the dumping. The PU industry is concentrated globally, and a major portion of the supplies are controlled by smaller number of producers. Across the globe, the top manufacturers control over 60% of the total PU production giving them enormous control over product pricing and other strategies. Such major multinationals enter into strategic alliances across countries to ensure
that they have an upper hand in select regions. These arrangements jeopardize the interest of the smaller, domestic players in the industry with modest facilities. The domestic refiners have been mulling proposals for tie-up with MNCs to enter the Polyol segment. If these plans are implemented, the product availability would go up further and create more pressure on the margins, unless demand increases, and imports also get curtailed.
In addition to the market threats, the chemical and petrochemical segments face issues from frivolous actions with ulterior motives by the self-styled environment protectors. Without understanding the ground realities and the economic contributions that these units bring in for overall growth of the country, sensational reports are released which gain attention through social media propaganda. Some of them go to the extent of opposing the applications of the industries for statutory clearances without any basis. This delays the process as the applicants are burdened with the task of disproving something which do not exist. Unworkable suggestions, like ZLD processes are mooted, which could actually endanger the industries due to huge and unviable capital outlays and operating cost. In view of the above, the Company is unable to enhance the capacity of the feedstock for the derivative plants and hence there could be stagnation of the production capacity, giving room for more imports. This could affect the pricing power of the Company in the medium and long run. To overcome this, the Company has been exploring possibilities to make Polyols without PO for which it is taking up a polyester polyol project and also signed up with Econic, UK to explore the possibility of switching over to CO2 for polyol production. The new and improved process for effluent treatment developed by the Company continues to meet the stipulated norms for marine discharge. Being biological based, sustainability in the long run could be an issue, though the Company is closely monitoring the developments in this area. Further, the norms are upgraded periodically by the Regulators, imposing tougher conditions. The Company would have to be very watchful on these developments and may be required to allocate additional resources to meet exigencies arising therefrom. The case filed with the Southern Zonal Bench (SZB) of the National Green Tribunal (NGT) against the marine disposal of the treated effluent by an association of fishermen was disposed off by the Bench in February 2022. The allegations of the petitioner were not substantiated,
but the Bench, citing higher COD/BOD values in the past ordered the Company to pay '' 2 crore as interim environment compensation and also made certain other directions, which have been duly complied with.
Based on some unverified news reports about stack emission violations by industries in Ennore - Manali area, the NGT-SZB has filed a Suo Moto application on certain industries, including on the Company. The Company filed its statement to prove that the allegations are wrong and sought discharge from the case based on facts. Further the report of an independent agency commissioned by the Bench as also shown that the Company is in compliance with the emission norms. During July 2023, the National Green Tribunal, Southern Zone, Chennai issued its judgment on the Suo Motu case filed against the industries at the Manali location (including the Company) in relation to an environmental issue for the period from April 2019 to December 2020. In the said judgment, the Tribunal has given certain directions/recommendations to the industries at Manali, Tamilnadu Pollution Control Board and Central Pollution Control Board which include collection of environmental compensation and creation of corpus fund for the improvement of environmental standards in Manali Industrial area.
There was no environmental compensation levied on the Company as the Company was in adherence to the prescribed environmental norms. With regard to NGT recommendation on the creation of a Corpus fund, the Company is unable to quantify the impact of this judgment at this juncture, on the business and operations of the Company.
Company will continue to comply and adhere to the environmental obligations as required under the law.
During the year 2017, the period of lease relating to Plant 2 expired. Though the Company filed its request for extension well in advance with the Government of Tamilnadu, the same is yet to be renewed.
The update to World Economic Outlook(WEO) released in July 2023 by International Monetary Fund (IMF) stated that the global recovery is slowing amid widening divergences among economic sectors and regions. Global growth is projected to fall from an estimated 3.5 % in 2022 to 3.0 % in both 2023 and 2024. Global headline inflation is expected to fall from 8.7 % in 2022 to
6.8 % in 2023 and 5.2 % in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward. While the emerging market & developing economies are projected to grow at 4.0% and 4.1% in 2023 and 2024 respectively.
In case of India, Gross Domestic Product (GDP) to moderate to 6.1% in fiscal year FY 2023 and rise to 6.3% in FY 2024, driven by private consumption and stronger-than-expected growth in the fourth quarter of 2022 because of stronger domestic investment.
Inflation will likely moderate to 5% in FY 2023, assuming moderation in oil and food prices, and slow further to 4.5% in FY 2024 as inflationary pressures subside. However, geopolitical tensions and weather-related shocks are key risks to India''s economic outlook.
Subsidiaries
As on 31st March 2023, the Company has one Wholly Owned Subsidiary (WOS) and 5 (Five) Step Down Subsidiaries (SDS), all of which are incorporated outside India. The financials of all these subsidiaries have been consolidated as applicable and the financial and other information have been furnished in the Consolidated Financial Statement (CFS) attached to this Report.
AMCHEM, Singapore
AMCHEM Speciality Chemicals Private Limited, Singapore, set-up by the Company in 2015-16, to expand its global footprint, holds the foreign assets of the Company. The Company invested US$ 16.32 million ('' 110.32 crore) in the WOS to part fund the acquisition of Notedome Limited, UK and also for further exploratory work. During the year 2016-17 the WOS set up AMCHEM Speciality Chemicals UK Limited as its WOS which acquired Notedome Limited. Thus, AMCHEM, UK and Notedome are the SDS of MPL. As at 31st March 2023, AMCHEM, Singapore is a material subsidiary of the Company.
During the year under review, the Company made further investment of US$ 35 million (equivalent to about '' 288 crore) during November 2022. With this, the aggregate investment in the subsidiary is US$ 51.42 million (equivalent to about '' 398 crore).
For FY 2022-23, the total income of AMCHEM, Singapore was US$ 3.48 million ('' 28.03 crore) and the profit for the year was US$ 0.24 million ('' 1.95 crore). AMCHEM, Singapore continues to explore further opportunities for acquisition of overseas facilities for enhancing MPL''s global
presence, and also has interests in trading, transaction facilitations, business and project consultancy.
AMCHEM, UK
During the year, as part of group re-organisation, necessary filings and formalities for liquidation have been made with Statutory Authorities in UK by AMCHEM Speciality Chemicals UK Limited (AMCHEM, UK). As part of this process the entire shares (3916) of Notedome Limited, UK held by AMCHEM, UK have been transferred to AMCHEM, Singapore. With this AMCHEM Singapore has become direct holding Company of Notedome Limited, UK with effect from 19th January 2023. Liquidation approval is awaited from the authority. Notedome Limited, UK
Notedome, established in 1979, is a System House with more than 30 years'' experience, manufacturing Neuthane Polyurethane Cast Elastomers catering to customers across 45 countries. Neuthane polyurethanes are used in diverse range of industries and applications, in the automotive sector for anti-roll bar, suspension and shock bushes for buses, trucks and other high-performance vehicles, limit or bump stops, material handling etc. and in the agriculture sector for Rollers, Harvester components and idler wheels on track laying tractors. The total revenue of Notedome for the year was £ 10.32 million ('' 99.97 crore) and profit £ 0.35 million ('' 3.36 crore).
Penn Globe Limited, UK
The Company, through its WOS AMCHEM Speciality Chemicals Private Limited, Singapore acquired Penn Globe Limited, UK (PGL) on 30th November 2022 by acquiring its entire stake (100%) for a consideration of GBP 24.98 Million. With this acquisition by AMCHEM, SG, PGL along with its two subsidiaries in UK viz., Penn-White Limited and Pennwhite Print Solutions Limited have become wholly owned step down subsidiaries of the Company.
PennWhite Limited, based in Middlewich (UK) is a leading manufacturer of antifoam chemistry under the FoamDoctor® brand which is sold in more than 50 countries. A wide range of other speciality chemicals are also manufactured to service the needs of long-term customers in a wide range of applications, like food and food processing, wastewater treatment, upstream and downstream oil, and increasingly in the coatings and adhesives industry.
Pennwhite Print Solutions Limited, UK (PPSL) -printing solutions company - is a manufacturer of a range of high performance silicone emulsions, antistatics and consumables developed specifically for the needs of commercial printers.
The consolidated revenue for Penn Globe Group for the reporting period (30th November 2022 to 31st March 2023 was £ 4.83 Million ('' 48.30 Crore) and reported a profit of £ 0.62 Million ('' 6.19 Crore)
As part of Group''s restructuring plan, the trade, assets and liabilities of Pennwhite Print Solutions Limited (PPSL) as at 31st March 2023 were transferred to PennWhite Limited (PWL) and the directors of Pennwhite Print Solutions intend to liquidate the company during the financial year 2023-24. As at 31st March 2023 there are no assets or liabilities.
After the close of the FY, the Company has incorporated a WOS in India viz., Manali Speciality Private Limited on 23rd June 2023 which will be engaged in the business of Speciality Chemicals. Similarly, the Company''s overseas step-down subsidiary Notedome Limited, UK has incorporated a wholly owned subsidiary in Germany viz., Notedome Europe GmbH which will be engaged in the business of Chemicals including Polyurethane Casting Elastomer systems and related products and services.
Environment and Safety
Your Company has laid down clear policies for quality, environment and safety and has set-up various teams and committees to monitor and improve observance of the said policies. Besides periodical in-house reviews and audits, surveillance audits of ISO 9001 and ISO 14001 have been done regularly, ensuring proper adherence to the quality, environment and safety requirements. World Environment Day is celebrated and to mark the occasion tree planting and similar activities are undertaken.
The Company has also taken up a project for planting about 10,000 trees in and around Manali area, under the social afforestation programme of the Government. Your Company pays special attention to safety of men and material and various competitions are held during the Safety Week to create awareness among the employees about the need to adhere to safe manufacturing practices. Training is provided to the employees in safety related matters and first aid and mock
drills are conducted to ensure that the systems and processes are in place to meet any eventualities. In addition to strictly adhering to all the prescribed safety standards, your Company has, Suo Moto, taken additional safety measures for handling hazardous chemicals like chlorine at a cost of about '' 1.50 crore.
The details about the Committee are furnished in the Corporate Governance Report (CGR). All the recommendations of the Committee were accepted by the Board.
Vigil Mechanism
As required under Section 177 of the Act and Regulation 22 of the SEBI Listing Regulations 2015, the Company has established a vigil mechanism for directors and employees to report their genuine concerns through the Whistle Blower Policy is available on the website of the Company. As prescribed under the Act and the SEBI Listing Regulations 2015, provision has been made for direct access to the Chairperson of the Audit Committee in appropriate/exceptional cases.
Human Resources
Your Company believes that perpetual succession is indispensable to move forward in highly competitive business conditions and has taken various efforts to improve diversity, equity and inclusiveness factor in all business functions and employed capable young female professionals with relevant expertise and deployed them in core technical functions.
Your company has ensured to implement and meet all basic safety and welfare needs of these young workforce, on leadership front, a capable talent development effort has paved way to enable next generation of young leaders take over various functions in the organisation.
Your company has taken various initiatives to improve its ability to prepare the workforce through cultural and behavioural interventions in promoting inclusive decision-making culture. The industrial relations have generally been cordial, except in relation to a wage dispute with the workmen from 2001, being contested earlier in the Supreme Court and now in the Madras High Court. The Management''s efforts to settle the issue through dialogue have succeeded largely with most of the workmen, barring a few, accepting the offer. The minority workmen are persisting with the case which is pending before the Madras High Court.
To focus on betterment of health and safety of the employees, various health awareness sessions and fitness programs were offered to improve awareness and promote a healthy lifestyle. As on 31st March 2023, your company had 386 employees on its roll at different locations including Executive Directors, Senior Management Personnel, Engineers, Technicians and Trainees.
Related Party Transactions
During the year under review, there were no transactions not at arms'' length within the meaning of Section 188 of the Act. The policy on related party transaction is available on the website of the Company viz., https://www.manalipetro.com/ wpcontent/uploads/2022/02/RPT-Policy-2022.pdf As required under Regulation 23(2) of the SEBI Listing Regulations 2015, approval of the Members was obtained for transactions with Tamilnadu Petroproducts Limited during the year 2022-23 at the 36th Annual General Meeting. Based on professional advice and for administrative convenience, it has been proposed that such prior approvals could be for 12 months from October to September and hence a fresh proposal seeking prior approval of the Members for the same is being placed for consideration of the Members at the ensuing AGM. Board of Directors and related disclosures
As on the date of the Report, the Board comprises of ten directors including three Woman directors. There are six Independent Directors, and all of them have furnished necessary declaration under Section 149(7) of the Act and under Regulation 25(8) of the Regulations. As per the said declarations, they meet the criteria of independence as provided in Section 149(6) of the Act and the SEBI Listing Regulations 2015. All of them have confirmed that they have registered themselves with the Indian Institute of Corporate Affairs under Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended and all of them have been exempted from or passed the proficiency test.
The Board met five times during the year under review and the relevant details are furnished in the CGR. The Board has approved a Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC), which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.
The following changes took place in the composition of the Board and KMPs since the last AGM held on 28th September 2022 until the date of this report.:
a. Mr. Anis Tyebali Hyderi, Chief Financial Officer of the Company resigned with effect from close of work on 12th October 2022.
b. Mr. R Chandrasekar (DIN: 06374821) was appointed as a Whole Time Director (in the capacity of an Additional Director) and Chief Financial Officer of the Company on 2nd November 2022 by Board of Directors w.e.f. 3rd November 2022. Subsequently he was appointed as a Director by the Members through postal ballot on 28th December 2022 for a period of three years.
c. Mr. R Kothandaraman, Company Secretary was relieved from the service of the Company from close of business hours on 02nd November 2022, consequent to his retirement.
d. Mr. R Swaminathan was appointed as the Company Secretary of the Company on 2nd November 2022 by the Board of Directors with effect from 03rd November 2022.
e. Members approved the Reappointment of Mr. Govindarajan Dattatreyan Sharma (DIN: 08060285) as an Independent Director of the Company for the second term with effect from 5th February 2023 by way of postal ballot on 28th December 2022.
f. Ms. Devaki Ashwin Muthiah (DIN: 10073541) was appointed as an Additional Director of the Company on 25th May 2023 by Board of Directors. Subsequently she was appointed as a Director liable to retire by rotation by the Members through postal ballot on 05th August 2023.
g. Mr. M Karthikeyan (DIN: 08747186), Wholetime Director (Operations), has retired from the services of the Company on conclusion of his tenure i.e., on the closing of business hours of 27th May 2023.
h. Mr. Muthukrishnan Ravi (DIN: 03605222), Managing Director has retired from the services of the Company on conclusion of his tenure i.e., on the closing of business hours of 28th July 2023.
The Board places on record its appreciation for the invaluable services rendered by KMP''s during their association with the Company.
Annual Evaluation of the Board, Committees and Directors
The formal evaluation of the Board was done taking into account the various parameters such as the structure, meetings, functions, risk evaluation, management of conflict of interests, stakeholder value & responsibility, corporate culture & value, facilitation to the Independent Directors to function impartially and other matters. The evaluation of the Committees was done based on the mandate, composition, effectiveness, structure and meetings, independence and contribution to the decisions of the Board.
The evaluation of the individual directors, including the independent directors was done taking into account their qualification, experience, competency, knowledge, understanding of their respective roles (as a Director, Independent Director and as a Member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc. In compliance with the requirements of Schedule IV to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year under review.
Directorsâ Responsibility Statement Pursuant to the requirement of sub-sections 3(c) and 5 of Section 134 of the Act it is hereby confirmed that:
a. in the preparation of the annual accounts for the financial year ended 31st March 2023, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.
b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.
c. the Directors had 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.
d. the Directors had prepared the accounts for the financial year ended 31st March 2023 on a âgoing concernâ basis.
e. 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 and
f. 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.
Details of Unclaimed Share Certificates In accordance with the requirements of Clause 5A of the erstwhile Listing Agreement, during the year 2012-13 shares remaining unclaimed even after 3 reminders have been transferred and held in a separate demat account. As per the information provided by the Registrars and Share Transfer Agent, out of the 82,649 shares, which remained unclaimed by 349 shareholders at the beginning of the FY, 2,700 shares were released to 9 shareholders during the year. Further, 7,425 shares relating to 38 shareholders were transferred to the Investor Education and Protection Fund in compliance with the requirements of Section 126(6) of the Act. As at the end of the FY, 72,524 shares remained unclaimed by 302 shareholders. As specified under the Regulations, the voting right on the above shares remain frozen.
Brahmayya & Co., Chartered Accountants, Chennai were Re-appointed as the Auditors of the Company for the second term at the 36th Annual General Meeting held on 28th September 2022 for a period of five years, viz. till the conclusion of 41st AGM.
Maintenance of Cost Records & Cost Audit
The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and is also covered under Cost Audit, which are duly complied with. M Krishnaswamy & Associates, Cost Accountants, Chennai were appointed as the Cost Auditors of the Company for the financial year 2022-23 on a remuneration of '' 3.00 lakh plus applicable taxes and reimbursement of out-of-pocket expenses which was ratified by the Members at the AGM held on 28th September 2022.
Based on the recommendation of the Audit Committee, Board has reappointed the said Firm as the Cost Auditors for the year 2023-24 to hold office till 30th September 2024 or submission of the report for the year 2023-24, whichever is earlier. The remuneration will be '' 3.00 lakh, plus applicable
taxes and reimbursement of out of pocket expenses subject to ratification of the Members at the ensuing AGM.
Adequacy of Internal Financial Controls
Your Company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by Internal Audit and management review with documented policies and procedures. In the past the system was also reviewed by an external agency, and no major weaknesses were reported. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings discussed by the Audit Committee and with the Statutory Auditors. The Statutory Auditors of the Company have also furnished certificates in this regard, which are attached to their Reports.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance stipulated under the Regulations. A Report on Corporate Governance is given in Annexure A. Declaration of the Whole Time Director on compliance with the Code of Conduct of the Board and Senior Management and compliance certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance are given in Annexure B. Secretarial Audit Report as required under Section 204 of the Act, was issued by Ms. B Chandra, Company Secretary in Practice is annexed to this Report as Annexure C.
Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
a. The ratio of remuneration of Whole Time Director to the median remuneration of other employees of the Company was 12.22.
b. The increase in remuneration of Whole Time Director, Company Secretary and Chief Financial Officer during the year was 3.93%, 9.34% and 1.67% respectively.
c. The increase in the median remuneration of the employees was 9.49%.
d. As at the year end, there were 353 permanent employees, including MD and WTD and excluding trainees.
e. During the year, the average increase in the salaries other than managerial remuneration
was 3.98% and the increase in managerial remuneration was 13.91%. Considering the performance of the Company and respective individuals during the year under review, the increases in managerial and other remuneration are deemed reasonable which have been determined based on the appraisal process adopted by the Company.
f. Information stipulated under Rule 5(2) are given in Annexure D to this Report.
g. The remuneration paid to the employees are as per the remuneration policy of the Company.
Note: Wages to workmen covered under the wage
settlements have not been considered for (c) and (e)
above.
Other disclosures
a. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable are given in Annexure E.
b. Pursuant to Section 92(3) of the Act, the Annual Return filed during the year under review has been uploaded on the website of the Company under the link https://www.manalipetro.com/ annual-return/
c. The Company has not accepted any deposits from the public during the year under report.
d. The information under Section 186 of the Act relating to investments, loans, etc. as at the year end has been furnished in Notes to the Financial Statements.
e. The annual report on CSR is given in Annexure F.
f. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No cases were filed under the said Act.
g. The Company has complied with the requirements of all the applicable Secretarial Standards.
h. Significant changes in key financial ratios
During the year under review, net margin and the operating margin decreased by 81% and 60% respectively. The current ratio and inventory
turnover ratio decreased by about 21% and 9% respectively. The Return on Net worth decreased from 38.22% in 2021-22 to 7.19%. All these were as a result of reduction in price realizations during the year.
The complete details of Ratios along with Variance are provided in Note 50, clause xii of Standalone Financial Statements.
Acknowledgement
Your Directors express their sincere gratitude to the Government of India, the Government of Tamilnadu, the Promoters and the Banks for the assistance, co-operation and support extended to the Company. The Directors thank the Shareholders for their continued support. The Directors also place on record their appreciation of the consistent good work put in by all cadres of employees and especially for raising up to the occasion and ensuring sustained operations during the year, in spite of the challenges during the pandemic periods.
The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Company''s performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.
For and on behalf of the Board
Ashwin C. Muthiah Place: London DIN: 00255679
Date: 09-08-2023 Chairman
Mar 31, 2018
The Directors present their 32nd Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2018.
Financial Results
During the year the Company has adopted the Indian Accounting Standards (IndAS) in compliance in the Companies (Indian Accounting Standards) Rules, 2015. The highlights of the financial results for the year are given below:
(Rs. in crore)
DESCRIPTION |
2017-18 |
2016-17 |
Profit Before Interest, Depreciation & Tax |
94.92 |
73.52 |
Interest |
2.82 |
1.86 |
Depreciation |
8.25 |
9.19 |
Profit Before Tax |
83.85 |
62.47 |
Provision for Tax |
28.98 |
20.20 |
Profit After Tax |
54.87 |
42.27 |
Operational Highlights
Net revenue from operations during the year was about Rs. 634 crore against Rs. 577 crore during the year 2016-17, registering an increase of about 10%. The margins were better during the year under review compared to the previous year which had been affected by demonetization and inventory reduction at the year-end by major players on account of the imminent GST implementation scheduled from 1st July 2017.
During the year under review earnings before interest and depreciation was about 15% Vis a Vis 12% in 2016-17, resulting in significant increase in net profits.
The bio mass Captive Power Plant was not operated during the year, as it was more economical to use the furnace oil based energy. The Company continues to source power from third parties besides the power supplied by TANGEDCO.
During the year, additions to fixed assets was about Rs. 36 crore including for debottlenecking of the Polyol facilities which facilitated higher productivity and also revamp of the effluent treatment facilities.
Financial Review
The Indian financial markets have been in turmoil due to the overall risks of the banking sector elevating on account of asset quality concerns. Though the credit growth of the Scheduled Commercial Banks witnessed improvement during the first half, the public sector banks were lagging behind their peers in the private sector. There has been considerable raise in the gross non-performing assets ratio in the recent past, resulting from stricter norms imposed by the Reserve Bank.
On the credit disbursement, the Gross Bank Credit increased from Rs. 71,345 billion in March 2017 to Rs. 77,223 billion in March 2018, registering a y-o-y growth of 8.2% against 7.3% in the previous year. Credit off-take by industries sector recorded a growth of 0.70% vis-a-vis decline of 1.90% in 2016-17. However, the Petrochemical sector posted a decline of 23.7% against increase of 38.8% in the preceding year.
The interest rates hovered between 10% and 11% and no major changes were noticed during the year. The weighted average lending rates of the Public Sector banks was 10.75% in March 2017 and it reduced to 10.12% at the end of 2017-18. The WALR of private banks, foreign banks and other scheduled commercial banks were also in the same range, signifying that the interest rates were stable during the year under review.
During the year 2017-18, additional working capital facilities were sanctioned to the Company by new banks, providing flexibility to manage the funding requirements and also meet the capital initiatives, resulting in marginal increase in the finance cost.
The Company has been reaffirmed with ratings of CARE A- signifying âlow credit riskâ for long-term bank facilities and CARE A1 signifying âlowest credit riskâ for short-term bank borrowings upto Rs. 100 crore.
Dividend
Your Company has been following a consistent dividend policy, ensuring that the dividend payments are sustained even when the conditions are not favourable. You would be happy to note that the Company has an unbroken dividend track of 12 years till the last year.
In line with the above, your Directors recommend a dividend of 10% i.e. fifty paise per equity share of Rs. 5/- each fully paid-up, for the year 2017-18, aggregating to Rs. 8.60 crore, excluding dividend distribution tax.
Related Party Transactions
During the year under review, there were no transactions not at armsâ length within the meaning of Section 188 of the Act or any material transactions with the related parties in terms of the policy framed by the Audit Committee of the Company as published in the website of the Company viz., http://manalipetro.com/Policy_1.html.
Board of Directors and related disclosures The Board comprises of eight directors of whom four are independent including a woman director. All the Independent Directors have furnished necessary declaration under Section 149 (7) of the Act and as per the said declarations, they meet the criteria of independence as provided in Section 149 (6) of the Act and also the Listing Regulations. The Board met five times during the year under review and the relevant details are furnished in the CGR.
The Board has approved the Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC), which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.
The following changes took place in the composition of the Board since the last Annual General Meeting:
a. Mr. T K Arun (DIN: 02163427) who was a nominee of Tamilnadu Industrial Development Corporation Limited (TIDCO), resigned effective from 9th November 2017 consequent to his superannuating from TIDCO. He has been appointed as an Additional Director with effect from 5th February 2018, in the category of Non-Independent, Non-Executive Director. Pursuant to Section 161 of the Companies Act, 2013, (the Act) he holds office till the ensuing Annual General Meeting (AGM)
b. Mr. Kulbir Singh, (DIN: 00204829) Independent Director vacated office on 15th November 2017, due to operation of law.
c. At the meeting held on 5th February 2018, Mr. G D Sharma (DIN: 08060285) has been appointed as Independent Director for five years.
There has been no change in the Key Managerial Persons after the last AGM.
The following proposals would be considered at the ensuing AGM for consideration and approval of the Members:
a. Appointment of Mr. T K Arun as a Director under Section 160 of the Act for which proposal has been received from the proposed appointee and recommended by the Nomination and Remuneration Committee.
b. Appointment of Mr. G D Sharma as a director and approval for his appointment as an Independent Director for a period of five years from 5th February 2018.
c. Appointment of a Director in the place of Mr. C Subash Chandra Bose (DIN: 06586982) who retires by rotation and being eligible offers himself for re-election.
d. Approval for increase in remuneration of Mr. C Subash Chandra Bose, Wholetime Director (Works).
Pursuant to proviso to S. 160 (1) there is no requirement of any deposit for the proposals for the appointment of Mr. T K Arun as a Director and approval of appointment of Mr. G D Sharma as an Independent Director.
Annual Evaluation of the Board, Committees and Directors
The formal evaluation of the Board was done taking into account the various parameters such as the structure, meetings, functions, risk evaluation, management of conflict of interests, stakeholder value and responsibility, corporate culture and value, facilitation to the Independent Directors to function impartially and other matters. The evaluation of the Committees was done based on the mandate, composition, effectiveness, structure and meetings, independence and contribution to the decisions of the Board.
The evaluation of the individual directors, including the independent directors was done taking into account their qualification, experience, competency, knowledge, understanding of their respective roles (as a Director, Independent Director and as a member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc.
In compliance with the requirements of Schedule VII to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year.
Directorsâ Responsibility Statement
Pursuant to the requirement of sub-sections 3 (c) and 5 of Section 134 of the Act it is hereby confirmed that
a. in the preparation of the annual accounts for the financial year ended 31st March 2018, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.
c. the Directors had 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
d. the Directors had prepared the accounts for the financial year ended 31st March 2018 on a âgoing concernâ basis.
e. 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 and
f. 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.
Details of unclaimed Share Certificates In accordance with the requirements of the Clause 5A of the erstwhile Listing Agreement, shares remaining unclaimed even after 3 reminders have been transferred and held in a separate demat account. As per the information provided by the Registrars and Transfer Agent, out of the 15,84,501 shares, which remained unclaimed by 6,548 shareholders at the beginning of the year, 9,825 shares were released to 27 shareholders during the year. Further, 13,39,894 shares relating to 5,877 shareholders were transferred to the Investor Education and Protection Fund in compliance with the requirements of S. 124 (6) of the Act. As at the end of the year 2,34,782 shares remained unclaimed by 644 shareholders. As specified under the Regulations, the voting right on the above shares remain frozen.
Auditors
M/s Brahmayya & Co., Chartered Accountants, Chennai were appointed as the Auditors of the Company at the 31st Annual General Meeting held on 25th July 2017 and they will hold office for a period of five years.
The proposal for remuneration to the Auditors for the year 2018-19, as recommended by the Audit Committee is being placed before the Members for their consideration and approval at the ensuing AGM.
Cost Audit
Mr. S Gopalan, Proprietor, S Gopalan & Associates, Cost Accountants, Chennai was appointed as the Cost Auditors of the Company for the financial year 2017-18 on a remuneration of Rs. 3.50 lakh plus applicable taxes and reimbursement of out of pocket expenses which is to be ratified by the Members at the 32nd Annual General Meeting. The Cost Auditor holds office till 27th September 2018 or submission of his report for the year 2017-18, whichever is earlier.
Adequacy of Internal Financial Controls Your Company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audit and management review with documented policies and procedures. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings discussed by the Audit Committee and with the Auditors. The Auditors of the Company have also furnished certificates in this regard, which are attached to their Reports. Corporate Governance
Your Company has complied with the requirements of Corporate Governance stipulated under the Regulations. A Report on Corporate Governance is given as Annexure A along with a Certificate from a Practising Company Secretary.
Secretarial Audit Report
As required under Section 204 of the Act, the Secretarial Audit Report issued by Mrs. B Chandra, Company Secretary in practice is enclosed to this Report as Annexure B.
Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
a. The ratio of remuneration of Mr. C Subash Chandra Bose, Wholetime Director (Works) to the median remuneration of the employees of the Company, was 8.37.
b. The percentile increase in remuneration of the Company Secretary was 11% and the Wholetime Director (Works) was 8%
c. The percentage increase in the median remuneration of the employees (other than workmen who are covered under wage settlement for which a litigation is pending before the Madras High Court) was 5%
d. As at the year-end there were 262 permanent employees, including MD and WTD but other than trainees.
e. During the year the average percentile increase in the salaries other than managerial remuneration was 6% and the increase in managerial remuneration was 8%
f. Information required under Rule 5(2) are given in Annexure C to this Report.
g. The remuneration paid to the employees are as per the remuneration policy of the Company.
Other disclosures
a. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable are given in Annexure D.
b. The extract of the Annual Return in Form MGT-9 is given in Annexure E.
c. The Company has not accepted any deposits from the public during the year under report.
d. The information under Section 186 of the Act relating to investments, loans, etc. as at the year-end has been furnished in notes to the Financial Statements.
e. The CSR Policy related disclosures are given in Annexure F.
f. No cases were filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
g. The Company has complied with the requirements of all the applicable Secretarial Standards.
Acknowledgement
Your Directors express their sincere gratitude to the Government of India, the Government of Tamilnadu, the Promoters and the Banks for the assistance, co-operation and support extended to the Company. The Directors thank the shareholders for their continued support.
The Directors also place on record their appreciation of the consistent good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Companyâs performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.
For and on behalf of the Board
Ashwin C Muthiah
Chennai DIN : 00255679
May 16, 2018 Chairman
Mar 31, 2017
The Directors present their 31st Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2017.
Financial Results
(Rs. in crore)
DESCRIPTION |
2016-17 |
2015-16 |
Profit Before interest & depreciation |
70.79 |
77.66 |
Interest |
1.86 |
2.52 |
Depreciation |
7.84 |
5.88 |
Profit Before Tax |
61.09 |
69.26 |
Provision for Taxation |
20.66 |
21.05 |
Profit After Tax |
40.43 |
48.21 |
Operational Highlights
Gross revenue from operations during the year was Rs. 643.35 crore against Rs. 642.46 crore during the year 2015-16. Unlike in the previous year, there were no major production cuts due to natural calamities and the Company could improve its capacity utilization with the removal of the restrictions on the production. Though the sales volume improved during the year, due to stiff competition from the overseas suppliers, the realizations were affected and so the revenue remained at similar level in spite of higher production. The impact of demonetization also affected the sales, as some of the user industries operate in unorganized sector doing business more in cash and so there was a fall in demand during the last two quarters. The gross profit margin came down to about 9.30% against 10.60% during 2015-16. It could also be seen that the net profit for the year at Rs. 41.28 crore was 15% lower than the previous year, signifying the squeezed margins.
The bio mass Captive Power Plant was not operated during the year, as it was more economical to use the furnace oil based energy. The Company continues to source power from third parties besides the power supplied by TANGEDCO.
Financial Review
During the year under review no changes were made to the Cash Reserve Ratio by RBI but the Statutory Liquidity Ratio was reduced from 21.50% to 20.50%. The Bank Rate which was 7.75% in March 2016 was reduced to 6.75% in March 2017. The deposit rates remained the same, but the lending rates came down marginally. The rupee appreciated significantly against the US Dollar and the forward premia also registered considerable reduction Vis a Vis at the beginning of the year. The average inflation during the year was 2.33% against 4.97% in the previous year. The finance cost for the year at Rs. 1.86 crore was lower by about 26% Vis a Vis the previous year through better treasury management.
The Company has been reaffirmed with ratings of CARE A- signifying âlow credit risk'' for long-term bank facilities and CARE A1 signifying âlowest credit risk'' for short-term bank facilities for borrowings upto Rs. 100 crore.
Dividend
With the margins in the domestic market shrinking year on year, the Company has embarked on global acquisitions for better growth. The capital expenditure plans to improve the domestic sales and profitability as also to upgrade the effluent treatment process to higher standards are also carried on to the required extent and so the Company needs to preserve its resources to meet the long term funding requirements.
In the light of this and as per the policy to sustain the dividend track record, your Directors recommend a dividend of 10% i.e. fifty paise per equity share of Rs. 5/- each fully paid-up, for the year 2016-17, aggregating to Rs. 8.60 crore, excluding dividend distribution tax. The Board is happy to highlight that your Company has been declaring dividend continuously for the past twelve years. Industry structure and development:
Your company operates in the Polyurethanes (PU) industry. PU is one of the most versatile polymers available in the current age and in many forms, ranging from soft foams to very rigid and tough materials. This provides opportunity for almost infinite applications, which are evolving continuously. During 2010 to 2016, the global PU market has grown by over 30% to nearly 18,000 KMT from 13,650 KMT and the aggregated revenue has enhanced by over 68% to 55.5 billion from 33 billion.
Your Company specializes in manufacture of propylene glycol and polyether polyol and is the only Indian manufacturer of Propylene Oxide, the input material for the aforesaid derivative products.
Polyols are made in four grades, viz., Flexible Slabstock, Flexible Cold Cure, Rigid and Elastomers. These find application in the automobile, refrigeration and temperature control, adhesive, sealant, coatings, furniture and textile industries.
Propylene Glycol is widely used in pharmaceuticals, food, flavour and fragrance industries and also for manufacture of polyester resins, carbonless paper and automobile consumables like brake fluid and anti-freeze liquid. Some of the major applications of PG include medicines, canned food, body sprays, perfumes, cosmetics, soaps and detergents. The off-take of PG for industrial purposes is generally low due to availability of alternate cheaper materials.
Your Company also produces Propylene Glycol Mono Methyl Ether (PGMME), an environment-friendly solvent used in the paints and coatings, electronics industries and as clouding agent in drilling applications.
Indian PU market has been infiltrated by huge imports and world-over new Polyol capacities have come up in the past few years especially in Thailand and Singapore without corresponding demand for the product in their region. This coupled with the slowdown in China has further pushed the imports into India over the past few quarters. Pricing has been a major issue, wearing away the margins which may continue in future, unless there is any marked improvement in the global economic growth.
In order to encourage better employee participation, the Company conducts open houses and has introduced employees suggestions scheme for them to provide ideas for product/process improvements and cost control.
As on 31st March 2017, your Company had 359 employees on its roll at different locations including Senior Management Personnel, Engineers, Technicians and Trainees.
Related Party Transactions
During the year under review, there were no transactions not at arms'' length within the meaning of Section 188 of the Act or any material transactions with the related parties in terms of the policy framed by the Audit Committee of the Company as published in the website of the Company viz., http://www.manalipetro.com/wp-content/uploads/2016/08/Policy-on-Transactions-with-Related-Parties.pdf.
Board of Directors and related disclosures
The Board comprises of eight directors of whom four are independent including a woman director. All the Independent Directors have furnished necessary declaration under Section 149 (7) of the Act and as per the said declarations, they meet the criteria of independence as provided in Section 149 (6) of the Act.
The Board met six times during the year under review and the relevant details are furnished in the CGR.
The Board has approved the Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC), which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.
The term of office of Mr. G Balasubramanian, WTD (Works) ends on 27th May 2017 and the Board wishes to place on record its appreciation to Mr. Balasubramanian for his services during his tenure as a Director.
Mr. C Subash Chandra Bose has been appointed as an Additional Director and Whole time Director (Works) for a period of three years with effect from 28th May 2017.
Mr. Bose will hold office till the ensuing Annual General Meeting (AGM) and requisite notice and deposit have been received under Section 160 of the Act for his appointment as a Director at the AGM. The proposal for his appointment and remuneration as the Whole time Director (Works) has also been placed for consideration of the Members at the AGM.
The term of office of Mr. Muthukrishnan Ravi, (DIN:03605222) ends on 29th July 2017. The Board, at the meeting held on 31st January 2017 has reappointed him for a further period of three years, subject to the approval of the Central Government and the Members at the ensuing AGM. Mr. Ravi will not draw any remuneration from the Company and the proposal has been included in the notice of the AGM for consideration and approval by the Members by way of a special resolution. The Company has filed application with the Central Government for approval of the appointment of Mr. Ravi, as he has not been an Indian Resident for the 12 months preceding the reappointment, within the meaning of Schedule V Part I. Mr. Ashwin C Muthiah, [DIN: 00255679] Director retires by rotation and being eligible offers himself for re-election. There has been no change in the Key Managerial Personnel since the last Annual General Meeting.
Annual Evaluation of the Board, Committees and Directors
Board evaluated its performance taking the following aspects into account viz., Structure, Meetings, Functions, Risk Evaluation process adopted, grievance redressal mechanism, stakeholder value and responsibility, corporate culture and ethics and other matters. Board also took into account facilitation to the Independent Directors to function independently and perform their roles as another important parameter for the evaluation. The performance of each of the Committees was evaluated taking into account the clarity and disclosure of the composition, mandate & working procedures, effectiveness, structure and meetings, independence and contribution in decision making process.
The evaluation of the two Executive Directors was done based on their assigned roles and responsibilities. As regards the other Directors, including the independent directors, the evaluation was done taking into account the following parameters, viz., qualification, experience, competency, adequacy of knowledge about the Company and its sector of operation, understanding about the strategic direction, ethical behavior, participation in the risk evaluation process, resolving conflict of interests, attendance and participation at the meetings, ability to work as a team player and voluntary sharing of information for the larger benefit of the Company and the like.
In compliance with the requirements of Schedule VII to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year. Directorsâ Responsibility Statement Pursuant to the requirement of sub-sections 3 (c) and 5 of Section 134 of the Act it is hereby confirmed that
(a) in the preparation of the annual accounts for the financial year ended 31st March 2017, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.
(c) the Directors had 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
(d) the Directors had prepared the accounts for the financial year ended 31st March 2017 on a âgoing concernâ basis.
(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls were adequate and were operating effectively and
(f) 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.
Details of unclaimed Share Certificates In accordance with the requirements of the Clause 5A of the erstwhile Listing Agreement, shares remaining unclaimed even after 3 reminders have been transferred and held in a separate demat account. As per the information provided by the Registrars and Transfer Agent, out of the 15,93,201 shares, which remained unclaimed by 6,572 shareholders at the beginning of the year, 8,700 shares, were released to 24 shareholders during the year. As at the end of the year 15,84,501 shares remained unclaimed by 6,548 shareholders. As specified under the Regulations, the voting right on the above shares remain frozen.
Pursuant to the requirement under Section 125 of the Act, read with the relevant Rules, notices have been sent to the shareholders who have not encased any dividend for seven years, for transfer of the related shares to the IEPF. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai were appointed as the Auditors of the Company at the 30th Annual General Meeting (AGM) held on 21st September 2016 to hold office till the conclusion of 31st AGM. In compliance with the provisions for rotation of auditors, the Company is required to appoint new Auditors at the ensuing AGM.
In this connection, the Audit Committee has recommended the appointment of M/s Brahmayya & Co, Chartered Accountants, Chennai as the Auditors of the Company on a fee of Rs. 10.75 lakh plus applicable taxes and reimbursement of out of pocket expenses for approval by the Members. As per S. 139 (1), the new Auditors will hold office for a period of five years, viz., till the 36th AGM to be held in the year 2022, subject to ratification of the Members at every AGM to be held till the conclusion of their office.
Cost Audit
Mr. S Gopalan, Proprietor, S Gopalan & Associates, Cost Accountants, Chennai was appointed as the Cost Auditor of the Company for the financial year 2016-17 on a remuneration of Rs. 3.50 lakh plus applicable taxes and reimbursement of out of pocket expenses which was ratified by the Members at the 30th AGM held on 21st September 2016. The Cost Auditor holds office till 30th September 2017 or submission of his report for the year 2016-17, whichever is earlier.
Adequacy of Internal Financial Controls Your company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audits and management reviews with documented policies and procedures. The system was also reviewed by an external agency, and no major weaknesses were reported. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings discussed by the Audit Committee and with the Auditors. The Auditors of the Company have also furnished certificates in this regard, which are attached to their Reports.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance stipulated under the Regulations. A Report on Corporate Governance is given as Annexure A along with a Certificate from the Auditors is attached to this report.
Secretarial Audit Report
As required under Section 204 of the Act, the Secretarial Audit Report issued by Mrs. B Chandra, Company Secretary in practice is annexed to this Report (Annexure B).
Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
a. The ratio of remuneration of Mr. G Balasubramanian, Whole time Director (Works) to the median remuneration of the employees of the Company, was 13.
b. The percentile increase in remuneration of the Company Secretary was 10%
c. The percentage increase in the median remuneration of the employees (other than workmen who are covered under wage settlement for which a litigation is pending before the Madras High Court) was 6%
d. As at the year end there were 255 permanent employees, including MD and WTD but other than trainees and probationers.
e. During the year the average percentile increase in the salaries other than managerial remuneration was about 7% and there was no increase in the managerial remuneration.
f. Information required under Rule 5(2) are given in Annexure E to this Report.
g. The remuneration paid to the employees are as per the remuneration policy of the Company.
Other disclosures
a. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable are given in Annexure C.
b. The extract of the Annual Return in Form MGT-9 is given in Annexure D.
c. The Company has not accepted any deposits from the public during the year under report.
d. The information under Section 186 of the Act relating to investments, loans, etc. as at the year-end has been furnished in notes to the Financial Statement.
e. The CSR Policy related disclosures are given in Annexure F.
Acknowledgement
Your Directors express their sincere gratitude to the
Government of India, the Government of Tamilnadu, the Promoters and the consortium of Banks for the assistance, co-operation and support extended to the Company. The Directors thank the shareholders for their continued support. The Directors also place on record their appreciation of the consistent good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Company''s performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.
For and on behalf of the Board
Ashwin C Muthiah Chennai DIN : 00255679
May 16, 2017 Chairman
Mar 31, 2016
The Directors present their 30th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2016.
Financial Results
(Rs. in crore)
Description |
2015-16 |
2014-15 |
Profit before interest & depreciation |
77.66 |
77.56 |
Finance cost |
2.52 |
2.48 |
Depreciation |
5.88 |
5.55 |
Profit Before Tax |
69.26 |
69.53 |
Provision for Taxation |
21.05 |
25.54 |
Profit After Tax |
48.21 |
43.99 |
Operational Highlights
Gross revenue from operations during the year was Rs. 642.47 crore against Rs. 814.13 crore during the year 2014-15. The lower sales was primarily on account of the fall in prices of polyol and other products due to drop in the crude prices, flooding of the plant during November/ December 201 5 and also restrictions on utilizing the augmented capacity. It may be noted that in spite of the lower sales, net profit for the year at Rs. 48.21 crore was about 10% higher than the previous year. The restrictions have since been removed and hence your Company expects to restore the capacity utilization to the optimum level in the current year and improve the performance.
With the oil prices remaining low and the fire wood prices ruling high, the bio mass Captive Power Plant was not operated during the year. Besides TANGEDCO power, the Company also entered into arrangements for third party power. Through the various cost cutting measures the overall expenses were brought down, enabling higher margins.
Financial Review
During the year 2015-16, no changes were made to the Cash Reserve Ratio or the Statutory Liquid Ratio. The Bank rate came down from 8.50% in March 2015 to 7.75% in March 2016. No visible changes were noticed in lending rates, but the rupee depreciated by about 6% against the Dollar as at the yearend vis-a-vis the previous year. Growth of credit off take by industries touched the lowest in twenty years in the June 2015 quarter, but signs of improvement could be seen towards the year-end. The year-on-year inflation in March''15 - March''16 was 5.51%, attributed to higher food prices during the year.
The Company has been reaffirmed with ratings of âCARE A-'' (single A Minus) signifying âlow credit risk'' for long-term bank facilities and âCARE A1â (A One) signifying âlowest credit risk'' for short term bank facilities for borrowings upto Rs. 100 crore.
Dividend
The Company continues with the capital expenditure plans to improve the domestic sales and profitability. Also, plans are afoot to enter the global business arena in the coming years and so the Company needs to plough back the profits to meet the funding needs of these proposals. In the light of this and as per the policy to sustain the dividend track record, your Directors recommend a dividend of 10% i.e. fifty paisa for every equity share of Rs. 5/- each fully paid-up, for the year 2015-16, aggregating to Rs. 8.60 crore, excluding dividend distribution tax. The Board is happy to highlight that your Company has been declaring dividend continuously for the past eleven years, in spite of the economic slowdown during some of the earlier years. It could be seen that the ratio of distribution has also been maintained at reasonable levels.
Subsidiary
During the year the Company has set up a Wholly Owned Subsidiary (WOS), AMCHEM Speciality Chemicals Private Limited, Singapore to expand its global footprint which will hold all the foreign assets of the Company. An investment of US$ 745,000 has been made in the equity shares of the subsidiary. The financial and other information on the subsidiary have been furnished in the Consolidated Financial Statement attached to this Report. The Subsidiary is in the process of identifying investment opportunities across the globe.
Environment and Safety
Your Company has laid down clear policies for quality, environment and safety and has set-up various teams and committees to monitor and improve observance of the said policies. Besides periodical in-house reviews and audits, surveillance audits of ISO 9001 and ISO 14001 have been done regularly, ensuring proper adherence to the quality, environment and safety requirements. World Environment Day is celebrated and to mark the occasion tree planting and similar activities are undertaken.
Your Company pays special attention to safety of men and material and various competitions are held during the Safety Week to create awareness among the employees about the need to adhere to safe manufacturing practices. Training is provided to the employees in safety related matters including first aid and mock drills are conducted to ensure that the systems and processes are in place to meet any eventualities.
Audit Committee
The details are furnished under the Corporate Governance Report (CGR) annexed to this Report. All the recommendations of the Committee were accepted by the Board.
Vigil Mechanism
As required under S. 177 of the Act and Regulation 22 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, (the Regulations) the Company has established a vigil mechanism for directors and employees to report genuine concerns through the whistle blower policy of the Company as published in the website of the Company. As prescribed under the Act and the Regulations, provision has been made for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.
Human Resources
Your Company believes that achievement of its goals is reliant on the abilities of its workforce to convert the plans into actions. Therefore, every effort is taken to retain the talents and also introduce newer ideas from the younger generation, for the success story to continue. Various HR initiatives are also taken to enhance the competency of the employees through inclusive decision making process by delegation, recognition, leadership development, etc. Your
Company imparts need based training to its employees with special focus on youngsters, stimulating them to play an important role in shaping the Company''s future. The industrial relations have generally been cordial, except in relation to a wage dispute with the workmen from 2001, being contested earlier in the Supreme Court and now in the Madras High Court. The Management''s efforts to settle the issue through dialogues are continued.
As on 31st March 2016, your company had 358 employees on its roll at different locations including Senior Management Personnel, Engineers, Technicians and Trainees.
Related Party Transactions
During the year under review, there were no transactions with related parties referred to in S. 188(1) of the Act and the transactions at arms'' length with such parties were not material in terms of the policy framed by the Audit Committee as published in the website of the Company viz., http://manalipetro.com/Policy_1.html
Board of Directors and related disclosures
The Board comprises of eight directors of whom four are independent including a woman director. All the Independent Directors have furnished necessary declaration under Section 149 (7) of the Act and as per the said declarations they meet the criteria of independence as provided in Section 149 (6) of the Act.
The Board met four times during the year under review and the relevant details are furnished in the CGR.
The Board has approved the Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC) which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.
There has been no change in the composition of the Board or the Key Managerial Personnel since the last Annual General Meeting. Mr. T K Arun, (DIN 02163427) Director retires by rotation and being eligible offers himself for re-election.
Annual Evaluation of the Board, Committees and Directors
The formal evaluation of the Board and its Committees was done taking into account the various parameters such as their roles and responsibilities, composition and the adequacy, decision making processes and related practices, focus on important and critical issues, progress monitoring, governance and the like.
The evaluation of the individual directors, including the independent directors was done taking into account their qualification and experience, understanding of their respective roles (as a Director, Independent Director and as a member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc.
In compliance with the requirements of Schedule VII to the Act and the Regulations a separate meeting of the Independent Directors was held during the year. Directorsâ Responsibility Statement
Pursuant to the requirement of sub-sections 3 (c) and 5 of Section 134 of the Act it is hereby confirmed that
(a) in the preparation of the annual accounts for the financial year ended 31st March 2016, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;
(c) the Directors had 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;
(d) the Directors had prepared the accounts for the financial year ended 31st March, 2016 on a âgoing concernâ basis;
(e) 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 and
(f) 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.
Details of unclaimed Share Certificates
In accordance with the requirements of the Clause 5A of the erstwhile Listing Agreement, shares remaining unclaimed even after 3 reminders have been transferred and held in a separate demat account. As per the information provided by the Registrars and Transfer Agent, out of the 16,02,351 shares which remained unclaimed by 6,612 shareholders at the beginning of the year, 9,150 shares were released to 40 shareholders during the year. As at the end of the year 15,93,201 shares remained unclaimed by 6,572 shareholders. As specified under the Regulations, the voting right on the above shares remain frozen.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai were appointed as the Auditors of the Company at the 28th Annual General Meeting held on 13th August 2014 to hold office till the conclusion of 30th Annual General Meeting.
In this connection, the Act has brought in provisions for rotation of auditors and your Company is also required to comply with the same. As per Section 139 (2) of the Act, in the case of Auditors, being a Firm, the tenor can be 2 terms of five years each. Initially a transition period of 3 years from the date of commencement of the Act had been provided for changing the Auditors who have been in office for periods exceeding the limits and accordingly the Company at the 28th AGM appointed the existing Auditors to hold office till the ensuing AGM. However, the transition period has been extended and the change of Auditors could now be considered at the first AGM to be held three years after the commencement of the Act. Accordingly, the existing Auditors can continue till the conclusion of the next AGM to be held in the year 2017.
In the light of the above, the Audit Committee has recommended the reappointment of M/s. Deloitte Haskins & Sells as the Auditors to hold office from the conclusion of the 30th AGM till the conclusion of the 31st AGM on a fee of Rs. 17 lakh plus applicable taxes and reimbursement of out of pocket expenses, for approval by the Members at the ensuing AGM.
Cost Audit
Mr. S Gopalan, Proprietor, S Gopalan & Associates, Cost Accountants, Chennai was appointed as the Cost Auditor of the Company for the financial year 2015-16 on a remuneration of Rs. 3 lakh plus applicable taxes and reimbursement of out of pocket expenses which was ratified by the Members at the 29th Annual General Meeting held on 23rd September 2015.
Mr. S Gopalan has been re-appointed as the Cost Auditor for the year 2016-17 on a remuneration of Rs. 3.50 lakh. As required under S. 148 of the Act, read with the relevant Rules, ratification of the members for the remuneration to the Cost Auditor for the year 2016-17 will be considered at the ensuing AGM of the Company.
Adequacy of Internal Financial Controls
Your company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audits and management reviews with documented policies and procedures. The system was also reviewed by an external agency, and no major weaknesses were reported. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings discussed by the Audit Committee. The Auditors of the Company have also furnished certificates in this regard, which are attached to their Reports.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance stipulated under the Regulations. A Report on Corporate Governance is attached as Annexure A along with a Certificate from the Auditors.
Secretarial Audit Report
As required under Section 204 of the Act, the Secretarial Audit Report issued by Mrs. B Chandra, Company Secretary in practice is given in Annexure B.
Disclosure of the CSR obligation amount in the Annual Report for 2014-15 was based on Profit After Tax, in line with Rule 2 (f) of the Companies (CSR) Policy Rules, 2014. The same has since been recomputed as per the clarifications issued by Ministry of Corporate Affairs during the year.
Other disclosures
a. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, to the extent applicable are given in Annexure C.
b. The extract of the Annual Return in Form MGT-9 is given in Annexure D.
c. The disclosures prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended are given in Annexure E to this Report. It is hereby affirmed that the remuneration to the employees are as per the Remuneration Policy of the company.
d. The Company has not accepted any deposits from the public during the year under report.
e. The information under Section 186 of the Act relating to investments, loans, etc. as at the year-end has been furnished in notes to the Financial Statement.
f. The CSR Policy related disclosures are given in Annexure F.
g. The details of familiarization programme for the Independent Directors have been disclosed in the Company''s website viz., http://manalipetro.com/ famaliar_polici.html.
Acknowledgement
Your Directors express their sincere gratitude to the Government of India, the Government of Tamilnadu, the Promoters and the consortium of Banks for the assistance, co-operation and support extended to the Company. The Directors thank the shareholders for their continued support.
The Directors also place on record their appreciation of the consistent good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Company''s performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.
For and on behalf of the Board
Ashwin C Muthiah
Chennai DIN: 00255679
August 4, 2016 Chairman
Mar 31, 2015
Dear Members,
The Directors present their 29th Annual Report on the business and
operations of your Company and the Audited Financial Statements for the
year ended 31sl March 2015.
Financial Results
(Rs. in crore)
Description 2014-15 2013-14
Profit Before interest & depreciation 77.56 53.22
Interest 2.48 1.90
Depreciation 5.55 6.56
Profit Before Tax 69.53 44.76
Provision for Taxation 25.54 15.71
Profit After Tax 43.99 29.05
Operational Highlights
The performance during the year was the best ever in the history of the
Company with turnover surpassing the Rs. 800 crore mark. The export
sales increased from Rs. 17.58 crore to Rs. 33.67 crore highest ever
recorded by the Company. The net profit for the year was higher by
about 51% at Rs. 43.99 crore against Rs. 29.05 crore in the previous
year.
Availability of bio mass fuel for the Captive Power Plant (CPP)
continued to be limited and the input cost also went up substantially
due to demand from other core industries such as paper mills.
Alternate fuels for the CPP were used to ensure operations at optimum
load, but with the cost becoming higher than the alternate power, the
CPP was shut down during December 2014. The Company went in for
purchase of power through energy exchanges and third parties to meet
the short-fall.
The bulk storage facility at Ennore Port became operational during the
year under review thereby ensuring uninterrupted availability of input
material for the derivative plants. Import of PO during the year was
about 10,000 MT which helped in better production and achieving highest
ever turnover.
Financial Review
The year 2014-15 witnessed moderate changes in interest rates and the
bank rate came down from 9% in March 2014 to 8.5% in March 2015. There
was decline in the overall bank credit growth and also aggregate of
bank deposits. The inflation also declined sharply mainly on account of
lower crude oil prices and other steps taken by the regulators.
The Company has been reaffirmed with ratings of CARE A signifying
'low credit risk' for long-term bank facilities and CARE A1
signifying 'lowest credit risk' for short-term bank facilities.
Dividend
The Company is in the process of taking up capital expenditure plans to
improve the sales and profitability further and needs to plough back
the profits for the same to avoid interest burden. In the light of
this, your Directors recommend a 10 % dividend i.e. fifty paise for
every equity share of Rs. 5/- each fully paid-up, for the year 2014-15,
aggregating to Rs. 8.60 crore, excluding dividend distribution tax. It
may be noted that your Company has been declaring dividend continuously
for the past ten years, in spite of the downturn in the economy
experienced globally and in India during the earlier years.
As on 31st March 2015, your company had 312 employees on its roll at
different locations including Senior Management Personnel, Engineers,
Technicians and Trainees.
Related Party Transactions
During the year under review, there were no transactions with related
parties referred to in S. 188(1) of the Act. The other transactions
with such parties were not material in terms of the policy framed by
the Audit Committee of the Company as published in its website viz.,
http://manalipetro.com/Policy_1.html.
Board of Directors and related disclosures
The Board comprises of eight directors of whom four are independent
including a woman director. All the Independent Directors have
furnished necessary declaration under Section 149 (7) of the Act and as
per the said declarations they meet the criteria of independence as
provided in Section 149 (6) of the Act.
The Board met six times during the year under review and the relevant
details are furnished in the CGR.
The Board has approved the Remuneration Policy as recommended by the
Nomination and Remuneration Committee (NRC) which inter alia contains
the criteria for determining the positive attributes and independence
of a director as formulated by the NRC. The policy on remuneration to
directors is disclosed in the CGR annexed to this Report.
Mr. Sanjiv Ralph Noronha (DIN: 01905639) resigned as a Director
effective from 11th August 2014.
At the Board Meeting held on 13th August 2014 Mr. G Chellakrishna (DIN:
01036398) and Ms. Sashikala Srikanth (DIN: 01678374) have been
appointed as Additional and Independent Directors of the Company for a
period of five years under Section 149 of the Act. Approval of the
members for the same under Sections 150, 152, 160 read with Schedule IV
to the Act will be considered at the ensuing AGM.
Mr. Ashwin C Muthiah, (DIN 00255679) Chairman retires by rotation and
being eligible offers himself for re-election.
Mr. R Kothandaraman was appointed as the Company Secretary (CS) and Mr.
Anis Tyebali Hyderi as the Chief Financial Officer (CFO) in the place
of the erstwhile CFO & CS Mr. S Vasudevan, who separated from the
Company on 31st May 2014.
Annual Evaluation of the Board, Committees and Directors The formal
evaluation of the Board and its Committees was done taking into account
the various parameters such as their roles and responsibilities,
composition and the adequacy, decision making processes and related
practices, focus on important and critical issues, progress monitoring,
governance and the like.
The evaluation of the individual directors, including the independent
directors was done taking into account their qualification and
experience, understanding of their respective roles (as a Director,
Independent Director and as a member of the Committees of which they
are Members/Chairpersons), adherence to Codes and ethics, conduct,
attendance and participation in the meetings, etc.
In compliance with the requirements of Schedule VII to the Act and
Clause 49 of the Listing Agreement a separate meeting of the
Independent Directors was held during the year.
The details of familiarization programme for the Independent Directors
has been disclosed in the Company's website viz.,
http://manalipetro.com/famaliar_polici.html.
Director's Responsibility Statement
Pursuant to the requirement of sub-sections 3 (c) and 5 of Section 134
of the Act it is hereby confirmed that
a) in the preparation of the annual accounts for the financial
year ended 31st March 2015, the applicable Accounting Standards had
been followed along with proper explanation relating to material
departures;
(b) the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 the year under review.
(c) the Directors had 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.
(d) the Directors had prepared the accounts on a "going concern"
basis.
(e) the directors, had laid down internal financial controls to be
followed by the Company and that such internal financial controls were
adequate and operating effectively and
(f) t he directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Details of Unclaimed Share Certificates
In accordance with the requirements of the Clause 5A of the Listing
Agreement, shares remaining unclaimed have been transferred and held in
a separate demat account. As per the information provided by the
Registrars and Transfer Agent, out of the 16,10,076 shares which
remained unclaimed by 6,628 shareholders at the beginning of the year,
7,725 shares were released to 16 shareholders during the year. As at
the end of the year 16,02,351 remained unclaimed by 6,612 shareholders.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai were
appointed as the Auditors of the Company at the 28th Annual General
Meeting (AGM) held on 13th August 2014 to hold office till the
conclusion of 30th Annual General Meeting. As required under Section
139 of the Act, ratification of their appointment to hold office from
the conclusion of the 29th AGM till the conclusion of the 30th AGM will
be taken up at the ensuing AGM.
Cost Audit
The Cost Audit Report for the year ended 31st March 2014, duly
certified by Mr. S Gopalan, Cost Accountant, due to be filed on or
before 27th September 2014 was filed on 26th September 2014. Mr. S
Gopalan, Proprietor, S Gopalan & Associates, Cost Accountants, Chennai
was appointed as the Cost Auditors of the Company for the financial
year 2014-15 on a remuneration of Rs. 3 lakh plus applicable taxes and
reimbursement of out of pocket expenses. He has been re-appointed as
the Cost Auditor for the year 2015-16 on the same remuneration.
As required under S. 148 of the Act, read with the relevant Rules,
ratification of the members for the remuneration to the Cost Auditor
for both the years will be considered at the ensuing AGM. Adequacy of
Internal Controls
Your company has in place adequate internal financial control systems
combined with delegation of powers and periodical review of the
process. The control system is also supported by internal audits and
management reviews with documented policies and procedures. The system
was also reviewed by an external agency, and no major weaknesses were
reported.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance
stipulated under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges. A Report on Corporate Governance is given as
Annexure A along with a Certificate from the Auditors regarding
compliance with the requirements of Corporate Governance is attached to
this report.
Secretarial Audit Report
As required under Section 204 of the Act, the Secretarial Audit Report
issued by Mrs. B Chandra, Company Secretary in practice is given in
Annexure B. As regards the observation of the Secretarial Auditor it is
clarified that the Company has been following up with the concerned
authorities for grant of consents under the pollution control laws
including for the augmented capacities and the same are expected to be
received soon.
Other disclosures
a. Information on conservation of energy, technology absorption,
foreign exchange earnings and outgo prescribed under Section 134 of the
Companies Act, 2013 ('the Act') read with Rule 8 of the Companies
(Accounts) Rules, 2014, to the extent applicable are given in Annexure
C.
b. The extract of the Annual Return in Form MGT-9 is given in Annexure
D.
c. The disclosures prescribed under Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
given in Annexure E to this Report. It is hereby affirmed that the
remuneration to the employees are as per the Remuneration Policy of the
Company.
d. The Company has not accepted any deposits from the public during the
year under report.
e. The information under Section 186 of the Act relating to
investments, loans, etc. as at the year end has been furnished in notes
to the Financial Statement.
f. The CSR Policy related disclosures are given in Annexure F.
Your Directors express their sincere gratitude to the Government of
India, the Government of Tamilnadu, the Promoters and the consortium of
Banks for the assistance, co-operation and support extended to the
Company. The Directors thank the shareholders for their continued
support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
For and on behalf of the Board
Ashwin C Muthiah
Chennai DIN:00255679
5th August 2015 Chairman
Mar 31, 2014
Dear Shareholders
The Directors present their 28th Annual Report on the business and
operations of your Company and the Audited Financial Statements for the
year ended 31st March 2014.
Financial Results
(Rs. in crore)
DESCRIPTION 2013-14 2012-13
Profi t Before interest & depreciation 53.22 43.84
Interest 1.90 2.14
Depreciation 6.56 6.36
Profi t Before Tax 44.76 35.33
Provision for Taxation 15.71 8.02
Profi t After Tax 29.05 27.32
Cash Profi t 38.12 31.82
Operational Highlights
During the year under review the operations of the Company were better
than the previous year in spite of cut-throat competition from overseas
polyol suppliers. The export sales increased from Rs. 2.83 crore to Rs.
17.58 crore highest ever recorded by the Company. The net profi t for
the year was higher by about 6% at Rs. 29.05 crore against Rs. 27.32
crore in the previous year.
Availability of bio mass fuel for the Captive Power Plant continued to
be limited due to demand from paper mills and also similar power
plants. Even at increased costs supplies were not forthcoming, forcing
the Company to operate the CPP at lower loads. Alternate fuels for the
CPP are being tried to ensure operations at optimum load. The Company
went in for purchase of power through energy exchanges and third
parties to meet the short-fall. These resulted in higher cost of power
and consequently the profi tability was also impacted.
Creation of bulk storage facility at Ennore Port was completed in April
2014 and the fi rst shipment was received during the fi rst week of May
2014. With this availability of adequate input material for the
derivative plants would be ensured, paving way for optimum utilization
of the facilities.
Financial Review
The year 2013-14 witnessed moderate changes in interest rates. During
the year bank credit registered a growth of 14.3% compared to 14.1% in
the previous year. Non-food credit increased by 17% Vis a Vis 8.50% in
2012-13. There was also a marginal increase in the deposits with Banks,
refl ecting the overall sentiments. The PLR of major banks increased to
10 - 10.25% from 9.7% - 10.00% in the previous year. In order to bring
down the infl ation, RBI also kept on increasing the repo rates and the
rates at the end of the year was higher by 0.50% compared to March
2013. Rupee witnessed unprecedented depreciation during
August/September 2013 but recovered slowly thereafter. This had some
impact on the margins of the Company.
The Company has been reaffi rmed with ratings of CARE A- signifying
''low credit risk'' for long-term bank facilities and CARE A1 signifying
''lowest credit risk'' for short-term bank facilities.
Dividend
Your Directors recommend a 10 % dividend i.e. 50 paise for every equity
share of Rs. 5/- each fully paid-up, for the year 2013-14, aggregating
to Rs. 8.60 crore, excluding dividend distribution tax.
Conservation of Energy
As required under Section 217(1)(e) of the Companies Act, 1956 (''the
Act'') read with Rule-2 of the Companies (Disclosure of particulars in
the Report of Board of Directors) Rules, 1988, information on
conservation of energy, technology absorption, foreign exchange
earnings and outgo, to the extent applicable are annexed and form part
of this report.
Fixed Deposits
Your company has not accepted any deposits from the public during the
year under report.
Human Resources
Your Company believes that achievement of its goals is reliant on the
abilities of its workforce to convert the plans into actions.
Therefore every effort is taken to retain the talents and also
introduce newer ideas from the younger generation, for the success
story to continue. Various HR initiatives are also taken to enhance the
competency of the employees through inclusive decision making process
by delegation, recognition, leadership development, etc. Your Company
imparts need based training to its employees with special focus on
youngsters, stimulating them to play an important role in shaping the
Company''s future. The industrial relations have generally been cordial,
except in relation to a wage dispute with the workmen from 2001, being
contested in the Supreme Court. The Management''s efforts to settle the
issue through dialogues have not been fruitful.
As on 31st March 2014, your company had 297 employees on its roll at
diff erent locations including Senior Management Personnel, Engineers,
Technicians and Trainees.
Particulars of Employees
Details prescribed under Section 217 (2A) of the Act, read with
Companies (Particulars of Employees) Rules, 1975, as amended are
attached to this Report.
Directors
At the Board Meeting held on 28th May 2014 Mr. G Balasubramanian (DIN:
06874838) has been appointed as an Additional Director and also as
Wholetime Director (Works) for a period of 3 years, subject to approval
of the Members at the AGM. As per Section 161 of the Act, he holds offi
ce till the ensuing AGM and it is proposed to appoint him as a Director
under Section 152 and also seek approval of the Members for his
appointment and remuneration as the Wholetime Director.
At the aforesaid meeting Brig. (Retd) Harish Chawla (DIN: 00085415) and
Mr. Kulbir Singh (DIN: 00204829) have been appointed as Independent
Directors of the Company for a period of fi ve years under Section 149
of the Companies Act, 2013 (the new Act). As per the provisions of the
new Act, their appointment is to be approved by the shareholders in the
general meeting and hence the same is proposed to be considered at the
ensuing AGM.
The term of offi ce of Mr. Muthukrishnan Ravi (DIN: 03605222), the
Managing Director ends on 28th July 2014 and the Board has re-appointed
him as the MD for a further period of 3 years and the same will be
considered for approval of the Members at the ensuing meeting.
Mr. T K Arun, Director retires by rotation and being eligible off ers
himself for re-election.
Director''s Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Act is hereby
confi rmed:
a) in the preparation of the annual accounts for the fi nancial year
ended 31st March 2014, the applicable Accounting Standards had been
followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that were 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 fi nancial year and of the profi t of the
Company for the year under review.
c) the Directors had taken proper and suffi cient 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 and
d) the Directors had prepared the accounts for the fi nancial year
ended 31st March, 2014 on a "going concern" basis.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance
stipulated under Clause 49 of the Listing Agreement
entered into with the Stock Exchanges. A Report on Corporate Governance
is made a part of this Report and a Certifi cate from the Auditors
regarding compliance with the requirements of Corporate Governance is
attached to this report.
Details of unclaimed Share Certifi cates
In accordance with the requirements of the Clause 5A of the Listing
Agreement, shares remaining unclaimed even after 3 reminders have been
transferred and held in a separate demat account. As per the
information provided by the Registrars and Transfer Agent, out of the
16, 16,678 shares which remained unclaimed by 6,645 shareholders at the
beginning of the year, 6,600 shares were released to 17 shareholders
during the year. As at the end of the year 16, 10,076 shares remained
unclaimed by 6628 shareholders.
Auditors
M/s. Deloitte Haskins & Sells, appointed as the Auditors of the Company
at the 27th Annual General Meeting held on 2nd August 2013 hold offi ce
till the conclusion of 28th Annual General Meeting and are eligible for
re-appointment. As per Section 139 of the new Act they can hold offi ce
from the conclusion of the 28th AGM till the conclusion of the 30th
AGM. Their re-appointment will have to be ratifi ed by the Members at
every AGM. In compliance with the requirements of the new Act, it is
proposed to appoint the retiring Auditors to hold offi ce till the
conclusion of the 30th AGM to be held in the year 2016, subject to
ratifi cation at the next AGM.
Cost Audit
Mr. S Gopalan, Proprietor, S Gopalan & Associates, Cost Accountants,
Chennai has been appointed as the Cost Auditors of the Company for the
fi nancial year 2013-14 pursuant to Section 233B of the Act. The Cost
Audit Report for the year ended 31st March 2013, duly certifi ed by Mr.
S Gopalan, Cost Accountant, due to be fi led on or before 27th
September 2013 was fi led on 4th September 2013.
Adequacy of Internal Controls
Your company has in place adequate internal control systems combined
with delegation of powers and periodical review of the process. The
control system is also supported by internal audits and management
reviews with documented policies and procedures.
Acknowledgement
Your Directors express their sincere gratitude to the Government of
India, the Government of Tamilnadu, the Promoters and the consortium of
Banks for the assistance, co-operation and support extended to the
Company. The Directors thank the shareholders for their continued
support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the
information available to the Company and assumptions based on
experience in regard to domestic and global economy, on which the
Company''s performance is dependent. It may be materially infl uenced by
changes in economy, government policies, environment and the like, on
which the Company may not have any control, which could impact the
views perceived or expressed herein.
For and on behalf of the Board
Chennai Ashwin C Muthiah
28th May 2014 Chairman
Mar 31, 2013
To The Shareholders
The Directors present their 27th Annual Report on the business and
operations of your Company and the Audited Statement of Accounts for
the year ended 31st March 2013.
Financial Results
(Rs. in crore)
DESCRIPTION 2012-13 2011-12
Profi t Before interest & 43.83 66.69
depreciation
Interest 2.14 1.92
Depreciation 6.36 5.88
Profi t Before Tax 35.33 58.89
Provision for Taxation 8.02 15.21
Profi t After Tax 27.31 43.68
Cash Profit 34.38 49.87
Operational Highlights
During the year under review the operations of the Company were
affected due to general economic slow-down aggravated by cut-throat
competition from overseas polyol suppliers. On account of these, there
was some setback in the operations vis a vis the performance in the
last couple of years, resulting in lower production, sales and profi
ts. The net profi t for the year was lower by about 37% at Rs. 27.31
crore against Rs. 43.68 crore in the previous year.
Availability of bio mass fuel for the Captive Power Plant (CPP) has
become dearer due to spurt in demand for casuarina wood from paper
mills and also similar power plants. Even at increased costs supplies
are not forthcoming, forcing the Company to operate the CPP at lower
loads. The Company is developing alternate fuels for the CPP to ensure
operations at optimum load. Also, plans are afoot to purchase power
through energy exchanges to meet the short-fall.
Creation of bulk storage facility for Propylene Oxide at Ennore Port is
in progress and is expected to be operational during the 2nd quarter of
FY 2013-14.
Financial Review
The year 2012-13 witnessed moderate changes in interest rates. The
repo rate increases during the year 2011-12 resulted in steep increase
in lending rates of banks and other operators. However, during the
year under review, these were retained at the previous year''s level in
the fi rst half and slightly brought down during the second half, to
induce economic growth. On the forex front, there was a sharp decline
in rupee value by about 6.7%. These resulted in marginal increase in
the cost of funds. Also the investible surplus was signifi cantly lower
due to decline in operations witnessed during the year and higher
capital spending for creation of storage facilities.
The Company has been rated with CARE A (-) signifying ''low credit risk''
for long-term bank facilities and CARE A1 signifying lowest credit
risk'' for short-term bank facilities .
Dividend
Your Directors recommend a 10 % dividend i.e. fi fty paise for every
equity share of Rs. 5/- each fully paid-up, for the year 2012-13,
aggregating to Rs. 8.60 crore, excluding dividend distribution tax.
Conservation of Energy
As required under Section 217(1)(e) of the Companies Act, 1956 (''the
Act'') read with Rule-2 of the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, information on
conservation of energy, technology absorption, foreign exchange
earnings and outgo, to the extent applicable are annexed and form part
of this report.
Fixed Deposits
Your company has not accepted any deposits from the public during the
year under report.
Human Resources
Your Company believes that achievement of its goals is reliant on the
abilities of its workforce to convert the plans into actions.
Therefore every effort is taken to retain the talents and also
introduce newer ideas from the younger generation, for the success
story to continue. Various HR initiatives are also taken to enhance the
competency of the employees through inclusive decision making process
by delegation, recognition, leadership development, etc. Your Company
imparts need based training to its employees with special focus on
youngsters, stimulating them to play an important role in shaping the
Company''s future. The industrial relations have generally been cordial,
except in relation to a wage dispute with the workmen from 2001, being
contested in the Supreme Court. The Management''s efforts to settle the
issue through dialogues have not been fruitful.
As on 31st March 2013, your company had 310 employees on its roll at
different locations including Senior Management Personnel, Engineers,
Technicians and Trainees.
Particulars of Employees
Details prescribed under Section 217 (2A) of the Act, read with
Companies (Particulars of Employees) Rules, 1975, as amended are
attached to this Report.
Directors
Mr. Babu K Verghese, Director resigned on 12th June 2013 and the Board
wishes to place on record its appreciation for the contributions of Mr.
Verghese during his tenure as a Director of the Company.
Board appointed Mr. Kulbir Singh as an Additional Director of the
Company on 12th June 2013 and he holds offi ce till the ensuing Annual
General Meeting. Pursuant to Section 257 of the Companies Act, 1956
notice has been received proposing his appointment as Director of the
Company at the ensuing AGM.
Purusuant to the provisions of the Companies Act 1956 and the Articles
of Association of the Company, Mr. Sanjiv Ralph Noronha, Director
retires by rotation and being eligible offers himself for re-election.
Director''s Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, it is hereby confi rmed:
a. in the preparation of the annual accounts for the fi nancial year
ended 31st March 2013, the applicable Accounting Standards had been
followed along with proper explanation relating to material departures;
b. the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 fi nancial year and of the profi t of
the Company for the year under review.
c. the Directors had taken proper and suffi cient 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 and
d. the Directors had prepared the accounts for the fi nancial year
ended 31st March 2013 on a "going concern" basis.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance
stipulated under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges. A Report on Corporate Governance is made a part of
this Report and a Certifi cate from the Auditors regarding compliance
with the requirements of Corporate Governance is attached to this
report.
Details of Unclaimed Share Certifi cates
In accordance with the requirements of Clause 5A, shares remaining
unclaimed even after 3 reminders to the concerned shareholders have
been transferred and held in a separate demat account. As per the
information provided by the Registrars and Transfer Agent, out of the
17,85,853 shares which remained unclaimed by 7,404 shareholders at the
beginning of the year, 5,475 shares were released to 23 shareholders
during the year. As at the end of the year 17,80,378 shares remained
unclaimed by 7,381 shareholders.
Auditors
Your Company''s Auditors M/s. Deloitte Haskins & Sells, Chartered
Accountants, Chennai, retire at the conclusion of this Annual General
Meeting and are eligible for re-appointment.
Cost Audit
Upto the year 2011-12, the Government of India had, through a specifi c
order, mandated the Company to conduct audit of the cost accounts in
respect of ''Chemicals'' manufactured by it and fi le the report as
prescribed under the relevant rules. In compliance with the above, the
Cost Audit Report for the year 2011-12 was fi led with the Central
Government on 08-01-2013, against the extended due date of 28th
February 2013.
From the year 2012-13, in terms of the general order issued by the
Government, the cost accounts of the Company in respect of all the
products manufactured are required to be audited and Mr. S Gopalan,
Proprietor, S Gopalan & Associates, Cost Accountants, Chennai has been
appointed as the Cost Auditors of the Company for the year 2012-13.
Adequacy of Internal Controls
Your company has in place adequate internal control systems combined
with delegation of powers and periodical review of the process. The
control system is also supported by internal audits and management
reviews with documented policies and procedures.
Acknowledgement
Your Directors express their sincere gratitude to the Government of
India, the Government of Tamilnadu, the Promoters and the consortium of
Banks for the assistance, co-operation and support extended to the
Company. The Directors thank the shareholders for their continued
support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the
information available to the Company and assumptions based on
experience in regard to domestic and global economy, on which the
Company''s performance is dependent. It may be materially infl uenced by
changes in economy, government policies, environment and the like, on
which the Company may not have any control, which could impact the
views perceived or expressed herein.
For and on behalf of the Board
Chennai Ashwin C Muthiah
12th June 2013 Chairman
Mar 31, 2012
The Directors present their 26th Annual Report on the business and
operations of your Company and the Audited Statement of Accounts for
the year ended 31st March 2012.
Financial Results (Rs. in crore)
Description 2011-12 2010-11
Profit Before Interest & 66.69 40.76
Depreciation
Interest 1.92 1.54
Depreciation 5.88 4.91
Profit Before Tax 58.89 34.31
Provision for Taxation 15.21 9.04
Profit After Tax 43.68 25.27
Cash Profit 49.87 31.60
During the year, the Company achieved a profit before tax of Rs. 58.89
crore and a profit after tax of Rs. 43.68 crore. Operational
Highlights
During the year under review, the process units were continued to be
operated at higher capacity and production was stepped up and
streamlined. The Company embarked on capital proposals for adding
certain balancing equipments and facilities to optimize the capacity
utilization. The new polyol facility in Plant 2, which was commissioned
in Feb. 2011, was operated satisfactorily during the year. The bio-mass
fired 4.2 MW co-generation captive power plant also performed well,
enabling the Company to overcome the problems on account of
restrictions imposed on power consumption.
In order to ensure availability of sufficient quantities of Propylene
Oxide (PO) for the derivative plants, your Company has entered into
agreement for storage of imported PO in bulk, which is expected to be
ready by early 2013.
During the year, 1,14,51,053 equity shares were transferred by SPIC to
Dr. A C Muthiah and SIDD Life Sciences Private Limited as inter se
transfer among promoters.
The Registrar of Companies, Tamil Nadu, Chennai accorded his approval
for change of the name of the Company as Manali Petrochemicals Limited
vide fresh certificate of incorporation dated 18th August 2011.
Dividend
Your Directors recommend a 12 % dividend i.e. sixty paise for every
equity share of Rs. 5/- each fully paid-up, for the year 2011-12,
aggregating to Rs. 10.32 crore, excluding dividend distribution tax.
Market Scenario
The Company achieved a turnover of Rs. 630.45 crore against Rs. 497.63
crore in FY 2010-11, an increase of 27ð%. This was possible due to
better selling price for the products and a marginal increase in sales
volume.
During the year under review, the country witnessed a slow- down in
economic growth and the manufacturing sector's performance was
adversely affected due to various factors like high inflation, higher
interest rates and frequent power cuts etc. Contrary to the general
trend, the Indian Polyurethane market registered a positive growth in
the last financial year. Sale of various grades of polyol like base
polyol, slab stock polyol and elastomers improved considerably.
However, reduction of duty on polyols to zero percent under Free Trade
Agreements with ASEAN countries caused severe margin pressure on your
Company. This was managed by a combination of better raw material
sourcing and restructuring of the product portfolio.
Future Outlook and New Products
Indian Polyurethane industry's performance during 2007-2012 has been
impressive with double-digit growth. The industry is expected to grow
further in the medium term and your Company is confident of increasing
its market share. Steps have also been initiated to foray into new
segments by developing polyols for visco elastic and flexible slab
stock memory foam application and to improve physical properties of
moulded foam. In keeping with its commitment to environment, your
Company is developing formulations that are more environment friendly
and widely based on the international markets.
Opportunities and Threats
The Company is poised to increase its market share in the
pharmaceutical and industrial application segments, where the value
addition is more. However, as stated earlier, duty concessions for
import of polyols and other products under the Free Trade Agreements
with ASEAN countries have opened up stiff competition. The Company
would have to operate with thin margins to ward off the competition.
Protective actions are contemplated to overcome the situation through
better value addition and new products.
Risks and Concerns
Availability of PO for the derivative plants at a reasonable cost could
be a major risk, as the Company has facilities to produce only 36,000
tPa of PO with limited scope for expansion. Import of PO in ISO tankers
would not be economical. However, on the storage facility of imported
PO in bulk becoming operational, your Company would be in a position to
meet its requirement of PO, without much difficulty and at a reasonable
cost. Environment and Safety
The periodic surveillance audits of ISO 9001 and ISO 14000 have been
done regularly and the re-certification audits were conducted in March
2012.
Conservation of Energy
As required under Section 217(1)(e) of the Companies Act, 1956 ('the
Act') read with Rule 2 of the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, information on
conservation of energy, technology absorption, foreign exchange
earnings and outgo, to the extent applicable are annexed and form part
of this report.
Fixed Deposits
Your company has not accepted any deposits from the public during the
year under report.
Industrial Relations
As on 31st March 2012, your company had 332 employees on its roll
including Engineers, Technicians and Trainees. Wherever necessary,
training is imparted at all levels.
Particulars of Employees
Details prescribed under Section 217 (2A) of the Act, read with
Companies (Particulars of Employees) Rules, 1975, as amended are
attached to this Report.
Directors
Mr. M Sivagnanam, Director resigned on 29th July 2011 and on 30th
September 2011, Mr. G Ramachandran, Managing Director took early
retirement and Mr. K K Rajagopalan, Director (Finance) retired. The
Board wishes to place on record its appreciation for the services
rendered by Mr. Sivagnanam, Mr.Ramachandran and Mr.Rajagopalan during
their association with the Company.
Brig (Retd.) Harish Chawla, Mr. Sanjiv Noronha and Mr. Muthukrishnan
Ravi were appointed as Additional Directors on 29th July 2011 to hold
office till the ensuing Annual General Meeting (AGM). Pursuant to
Section 257 of the Act, notices have been received from Members
proposing their appointment as Directors of the Company at the ensuing
AGM.
Mr. Muthukrishnan Ravi was also appointed as a Whole-time Director on
the said date and he became the Managing Director of the Company from
1st October 2011. The proposal seeking approval of his appointment and
remuneration is being placed before the Members at the ensuing AGM.
Pursuant to the provisions of the Act and the Articles of Association
of the Company Mr. T K Arun, Director retires by rotation and being
eligible, offers himself for re-election.
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Act, it is
hereby confirmed that:
(a) in the preparation of the annual accounts for the Financial Year
ended 31st March 2012, the applicable Accounting Standards had been
followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 the year under review;
(c) the Directors had 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 and
(d) the Directors had prepared the accounts for the Financial Year
ended 31st March 2012 on a going concern basis.
Corporate Governance
Your Company has complied with the requirements of Corporate Governance
as required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges. A Report on Corporate Governance is made a part of
this Report and a Certificate from the Auditors regarding compliance
with the requirements of Corporate Governance is attached to this
Report.
Details of unclaimed Share Certificates
As required under Clause 5A of the Listing Agreement, three reminders
were sent to the concerned shareholders during the year.
As per the information provided by the Registrars and Share Transfer
Agent, the following are the details of unclaimed share certificates:
No. of No. of
Particulars shareholders shares
Balance as on 01-04-2011 7,177 17,43,308
Add: Returned during the year 656 98,400
Less : Released during the year 429 55,855
Balance as on 31-03-2012 7,404 17,85,853
Dematerializing the balance shares remaining unclaimed by the
shareholders and transfer of the same to a separate demat account in
accordance with the requirements of the said Clause 5A is under
process.
Cost Audit
The Government of India has ordered the Company to conduct audit of the
cost accounts in respect of 'Chemicals' manufactured by the Company
and accorded its approval for appointment of Mr. S Gopalan, Proprietor,
S Gopalan & Associates, Cost Accountants, Chennai as the Cost Auditor
of the Company for the year 2011-12. The Cost Audit Report for the year
2010-11 was filed with the Central Government on 17-08-2011.
Auditors
Your Company's Statutory Auditors M/s. Deloitte Haskins & Sells,
Chartered Accountants, Chennai, retire at the conclusion of this Annual
General Meeting and are eligible for re-appointment.
Adequacy of Internal Controls
Your company has in place adequate internal control systems combined
with delegation of powers. The control system is also supported by
internal audits and management reviews with documented policies and
procedures.
Acknowledgement
Your Directors express their grateful thanks for the assistance,
co-operation and support extended to the Company by the Government of
India, the Government of Tamilnadu, the Promoters and the consortium of
Banks. The Directors wish to thank the shareholders for their continued
support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
Disclaimer
The Management Discussion and Analysis contained herein is based on the
information available to the Company and assumptions based on
experience in regard to domestic and global economy, on which the
Company's performance is dependent. It may be materially influenced
by macro economic/environment changes, on which the Company may have no
control and impact the views perceived or expressed herein.
For and on behalf of the Board
Chennai Ashwin C Muthiah
25th April 2012 Chairman
Mar 31, 2011
The Directors present their 25th Annual Report on the business and
operations of your Company and the Audited Statement of Accounts for
the year ended 31st March 2011.
FINANCIAL RESULTS (Rs. in Crores)
DESCRIPTION 2010-11 2009-10
Profit Before interest & 40.76 35.54
Depreciation
Interest 1.54 1.50
Depreciation 4.91 4.04
Profit Before Tax 34.31 30.00
Provision for Taxation 9.04 8.94
Profit After Tax 25.27 21.06
Cash Profit 31.60 29.01
During the year, the Company achieved a profit before tax of Rs.34.31
Crores and a profit after tax of Rs. 25.27 Crores. The process units
were continued to be operated at higher capacity. The new polyol plant
at Plant-2 commenced production in Feb. 2011. The trend of the profits
and sales turnover for the past few years is given in Page 4 of the
Annual Report.
OPERATIONAL HIGHLIGHTS
During the year, the debottlenecked PG plants and the retrofitted PO
plant were optimized and the production was stepped up and streamlined.
The benefits of these augmentation schemes could be realized during the
financial year. The new polyol plant train with a capacity of 17,000 MT
per annum of polyol, was successfully commissioned in February 2011.
The operation of the plant is being optimized. Thus, the production
capacities of the PO, PG and polyol for the company has gone up to
36000 MT, 20000 MT and 50000 MT respectively. The bio-mass fired 4.2 MW
co-generation captive power plant functioned to its best ability, thus
alleviating problems posed by the restrictions on power supply.
Production was also fortified at Plant-2 with standby nitrogen plant
and upgradation of the cooling water circulation system in view of the
large augmented capacity of the process plants at that site. Sufficient
storage tanks to handle the additional production have also been added.
Maximum utilization of the process plant can be achieved if sufficient
quantities of imported PO is available, which is currently imported
in ISO containers. Steps are being taken to install an import terminal
at Ennore Port to import PO in bulk to improve availability of PO.
Though the derivative plants of PG and polyol have capability to
process 60,000 MT of PO per annum, the Company can produce only
36,000 MT per annum and hence arrangements are being made to import the
balance.
During the year, 5,44,05,000 equity shares were transferred by SPIC to
Dr. A C Muthiah and SIDD Life Sciences Private Limited as inter se
transfer among promoters.
DIVIDEND
Your Directors recommend a 10 % dividend i.e. 50 paise for every equity
share of Rs. 5/- each fully paid-up, for the year 2010-11, aggregating
to Rs. 8.60 Crores, excluding dividend distribution tax.
MARKET SCENARIO
The market conditions in India continued to be good throughout the
year. The polyurethane market improved considerably in India. Since our
market share is less than 50% in all the segments, we sold all the
quantities that we produced, comfortably. Scope exists for further
improvement in market share with improved production capacities.
The international market also improved and hence better selling prices
that prevailed during the year helped to improve profitability, inspite
of increasing raw material costs.
During the year, the Company achieved a higher turnover of Rs. 496.72
Crores, an increase of 18 % over the previous year.
FUTURE OUTLOOK AND NEW PRODUCTS
Polyurethane industry is growing in excess of 20% in India. The
automobile industry is growing phenomenally and India is becoming an
export hub. Resulting from the expansion plans of auto companies and
other PU industries, the 2nd tier market is expected to double within
the next 5 years, and hence the outlook is good for the 3rd tier polyol
& isocyanate manufacturers.
The multinational foam suppliers to auto companies are blending their
formulations, and this has thrown open the possibilities for the
Company to sell the base polyols directly to them without the need for
completing the system with other chemicals / isocyanates. The
unsaturated polyester industry and food / flavor industries are also
growing in excess of 20%, and thus there is scope for expanding the
Glycol facilities further.
OPPORTUNITIES AND THREATS
The various free trade agreements with ASEAN countries could pave way
for large scale import of intermediate and finished products. However,
it also gives the Company an opportunity to import the raw materials at
concessional duties which would give it an edge in the market. The duty
levels are already low and in view of the expansion we have completed
and in view of the bulk storage tanks which we are planning, the threat
and opportunities are likely to balance each other.
RISKS AND CONCERNS
Chennai Petroleum Corporation Ltd. being the sole supplier of
propylene, even though is perceived as a big risk, their performance is
consistent and has not posed any big constraint so far. However, the
periodic long duration maintenance shutdown effected every alternate
year would impact our operations and profitability. The PO import
terminal planned by the Company would be of help in maintaining the
operations without any shortfall.
ENVIRONMENT AND SAFETY
The periodic surveillance audits of ISO 9001 and ISO 14000 have been
done regularly and the recertification audit is due in April 2011.
CONSERVATION OF ENERGY
As required under Section 217(1 )(e) of the Companies Act, 1956 read
with Rule-2 of the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988, information on conservation of
energy, technology absorption, foreign exchange earnings and outgo, are
annexed to and form part of this Report.
FIXED DEPOSITS
Your company has not accepted any deposits from the public during the
year under report.
INDUSTRIAL RELATIONS
As on 31st March 2011, your company had 358 employees on its roll at
different locations including Engineers, Technicians and Trainees.
Wherever necessary, training is imparted at all levels.
PARTICULARS OF EMPLOYEES
None of the employees of the Company was in receipt of remuneration in
excess of the amount prescribed by Section 217 (2A) of the Companies
Act, 1956 read with Companies (Particulars of Employees) Rules, 1975,
as amended.
DIRECTORS
Mr. N Suryanarayanan, Director resigned on 27th April 2011. The Board
wishes to place on record its appreciation for the valuable services
rendered by Mr. Suryanarayanan during his tenure as a Director of the
Company.
Mr. M Sivagnanam and Mr. G Raghavendran, Directors retire at the
forthcoming Annual General Meeting and are eligible for re-appointment.
Mr. M Sivagnanam offers himself for re-election, but Mr. G Raghavendran
is not seeking re-election.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, it is hereby confirmed:
a) That in the preparation of the annual accounts for the Financial
year ended 31st March 2011, the applicable Accounting Standards had
been followed along with proper explanation relating to material
departures;
b) That the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 the year under review.
c) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) That the Directors had prepared the accounts for the financial year
ended 31st March, 2011 on a "going concern" basis.
CORPORATE GOVERNANCE
Your Company has complied with the requirements of Corporate Governance
as required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges. A Report on Corporate Governance is made a part of
this Report and a Certificate from the Auditors of your Company
regarding compliance with the conditions of Corporate Governance is
attached to this report.
DETAILS OF UNCLAIMED SHARE CERTIFICATES
As per the information provided by the Registrars and Share Transfer
Agent, 17,43,308 equity shares of Rs. 5 each are remaining unclaimed by
7,176 shareholders, for which they are in the process of sending
reminders to the concerned shareholders as required under Clause 5A of
the Listing Agreement. The shares in respect of the unclaimed share
certificates would be dematerialized on completion of the prescribed
process and dealt with in accordance with the requirements of the said
Clause 5A.
COST AUDIT
The Government of India has ordered the Company to conduct audit of the
cost accounts in respect of Chemicals manufactured by the Company and
accorded its approval for appointment of M/s. S Gopalan & Associates,
Cost Accountants, as the Cost Auditors of the Company for the year
2010-11.
AUDITORS
Your Companys statutory Auditors M/s. Deloitte Haskins & Sells,
Chartered Accountants, Chennai, retire at the conclusion of this Annual
General Meeting and are eligible for re-appointment.
ADEQUACY OF INTERNAL CONTROLS
Your company has in place adequate internal control systems combined
with delegation of powers. The control system is also supported by
internal audits and management reviews with documented policies and
procedures.
ACKNOWLEDGEMENT
Your Directors express their grateful thanks for the assistance,
co-operation and support extended to the Company by the Government of
India, the Government of Tamilnadu, the Promoters and the consortium of
Banks. The Directors wish to thank the shareholders for their continued
support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
DISCLAIMER
The Management Discussion and Analysis contained herein is based on the
information available to the Company and assumption based on experience
in regard to domestic and global economy, on which the Companys
performence is dependent. It may be materially influenced by macro
economic/environment changes, on which the Company may have no control
and impacting the views perceived or expressed herein.
For and on behalf of the Board
ASHWIN C MUTHIAH
CHAIRMAN
CHENNAI - 600 032
DATE :27th April 2011
Mar 31, 2010
The Directors present their 24th Annual Report on the business and
operations of your company and the Audited Statement of Accounts for
the year ended 31st March 2010.
FINANCIAL RESULTS (Rs in Crores)
DESCRIPTION 2009-10 2008-09
Profit Before Interest and Depreciation 35,54 19,54
Interest 1.50 1.31
Depreciation 4.04 7.76
Profit Before Tax 30.00 10-47
Provision for Taxation 8.94 3.44
Profit After Tax 21.06 7.03
Cash Profit 29.01 1714
During the year, the Company achieved a profit before tax of Rs.30.00
Crores and a profit after tax of Rs.21.06 Crores. The main contributing
factors for the better profits are higher capacity utilization, higher
sales backed up by a favourable domestic demand. The trend of the
profits and sales turnover for the past few years are as per graph on
page 4. OPERATIONAL HIGHLIGHTS
Your company continued its efforts to reduce the cost of production and
to improve the quality of the products by debottlenecking the
facilities. This helped us to achieve better consumption norms. The
efforts led to additional production without substantial increase in
the consumption of utilities. During the year, the company achieved
highest ever production and sales turnover so far recorded by the
company. Ministry of Environment & Forest (MOEF), Government of India
accorded permission for the expansion and based on which consent,
Tamilnadu Pollution Control Boards (TNPCB) recognition for the
additional capacity has also been obtained. Higher capacity utilization
of plants has helped to lower specific consumption of key raw material
and energy inputs.
The Bio-Mass Fired 4.2MW co-generation captive power plant successfully
commissioned during the previous year, was helpful in mitigating the
power restrictions during the current year. The captive power plant is
being run at required capacity levels.
During the current year, the synthesis section of the propylene oxide
plant of Plant-ll was retrofitted to reduce the solid and liquid
effluents. While doing so, the production capability also improved and
the retrofit could be completed with a marginal investment of Rs.10
Crores. The plant was commissioned in March 2010 and the full benefit
of the project would accrue in the next financial year. The quality
improvement programme, which was taken up last year in the propylene
glycol plant of Plant-ll has resulted in a higher production levels.
The polyol plant of our Plant-I has been debottlenecked to 25000 MTPA.
The polyol plant of Plant-ll is being expanded by 17000 MTPA to 25000
MTPA. By the end of the next financial year the company will have
capacities of 36000 MTPA of propylene oxide, 20000 MTPA of propylene
glycol and 50000 MTPA of polyol. The additional propylene oxide
required beyond our internal capability of 36000 MT, will be imported.
DIVIDEND
Your Directors recommend a 7.5 % dividend i.e. Rs.0.375 for every
equity share of Rs. 5/- each fully paidup, for the year 2009-10,
aggregating to Rs.6.45 Crores. MARKET SCENARIO
Though the sale of propylene glycol was sluggish in the previous year
due to heavy imports into India, the sale improved with the continued
growth of
unsaturated polyester industries, food & flavour industries in India.
Moreover limited availability of international products in India during
the period aided in increasing the sale during the year.
The sale of slab stock polyol also continued to grow. Our market share
is less than 50% leaving scope for further improvement. We could not
substantially improve the sale of speciality polyol in view of very
stiff competition from multinational companies and restricted buying by
the user industries. We hope to improve in this area significantly in
the coming years.
This higher quantum of sales of both slabstock polyols and propylene
glycol increased your companys sales turnover to Rs.420 Crores in the
current year from Rs.395 Crores in the previous year.
FUTURE OUTLOOK AND NEW PRODUCTS
The polyurethane industries is growing continuously. We are also
expanding to maintain our market share. The bulk of the growth is in
the PU slab stock area. The glycol market continued to grow in the
unsaturated polyester industries and food & flavour industries. The
major automobile manufacturers have started expanding their capacities
in India and the exports are also on the rise. Similarly, the
refrigerator market is also improving significantly thus presenting a
good demand for PU chemicals. Your company is hopeful of improving its
market share in these areas.
OPPORTUNITIES AND THREATS
Though the concessional duty levels accorded under Free Trade
Agreements are a continuing threat, expanding markets are the
opportunities, which will help the company to retain its position.
Since the recessionary threat in other parts of the world is slowing /
receding, it is generally expected that the price levels would return
to normal, improving the profitability.
RISKS AND CONCERNS
Chennai Petroleum Corporation Ltd (CPCL) is the single source of supply
of propylene. This is a big risk. Any outages of the propylene recovery
plant can upset the production of your company. However, the chemical
terminal at several ports would probably help your company to manage
any unforeseen outages effectively and ensure continuous supply of
products.
ENVIRONMENT AND SAFETY
Your company continues to maintain International Quality Standards.
Periodic surveillance audit was conducted by auditors during December
09. Your company is planning to go for revised quality management
system as per ISO 9001 - 2008 version. Certification audit in this
regard will be done in the month of May 2010. Your company continues
good performance in the area of safety. Recently Unit - II has obtained
safety award from Tamil Nadu Government for highest reduction in
accident frequency rate for the year 2006.
CONSERVATION OF ENERGY
As required under Sec.217(1)(e) of the Companies Act, 1956 read with
Rule-2 of the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, information on conservation of energy,
technology absorption, foreign exchange earnings and outgo, are as per
Annexure forming part of this report. FIXED DEPOSITS
Your company has not accepted any deposits from the public during the
year under report.
INDUSTRIAL RELATIONS
As of 31st March 2010, your company had 366 employees on its rolls
including engineers and technicians recruited recently through training
programmes. The fresh engineers / diploma / graduate degree holders,
after
training will be inducted into permanent services of the company to
fill up vacancies that arise due to resignations. PARTICULARS OF
EMPLOYEES
A statement concerning employees as required by section 217 (2A) of the
companies Act, 1956 is attached to this report.
DIRECTORS
Mr. B. Viswabarathy, Director resigned from the Board with effect from
7* October 2009 and Mr. T.K. Arun, General Manager & Secretary of TIDCO
was nominated in his place with effect from 7th October 2009.
The Board wishes to place on record the valuable services rendered by
Mr. B. Viswabarathy during his tenure as the Director of the company.
Mr N. Suryanarayanan, Chief Financial Officer, M/s Southern
Petrochemical Industries Corporation Ltd., was appointed as a Director
by the Members in the last AGM held on 17th September 2009.
Pursuant to the provisions of the Companies Act, 1956 and the Articles
of Association of the Company, Mr Babu K Verghese and Mr. K.K.
Rajagopalan, Directors shall retire by rotation and being eligible,
offer themselves for re-election.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed:
(a) That in the preparation of the annual accounts for the Financial
year ended 31st Mar 2010, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(b) That the Directors had selected such accounting policies and
applied them consistently and made judgements and estimates that were
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 the year under review;
(c) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(d) That the Directors had prepared the accounts for the financial year
ended 31st Mar, 2010 on a "going concern" basis.
CORPORATE GOVERNANCE
Your Company has complied with the requirements regarding Corporate
Governance as required under Revised Clause 49 of the Listing Agreement
entered into with the Stock Exchanges, where the Companys shares are
listed. A Report on the Corporate Governance in this regard is made a
part
of this Annual Report and a Certificate from the Auditors of your
Company regarding compliance of the conditions of the Corporate
Governance is attached to this report.
COMPULSORY DEMAT
As announced by SEBI vide its Circular Ref. No.SMDRP / POLICY / CIR-9 /
2000, dt. 16.2.2000, the shares of the Company are traded compulsorily
in dematerialized form by all investors with effect from 8.5.2000.
50.77% of shares of your company have been dematted compared to 50.44%
previous year.
LISTING OF EQUITY SHARES
Your Companys equity shares continued to be listed on The Stock
Exchange, Mumbai and National Stock Exchange Ltd., Mumbai, during the
year under report.
Your Company has initiated necessary action to delist its equity shares
from the Calcutta Stock Exchange Association Ltd., pursuant to the
resolution passed at the Annual General Meeting held on 25.9.2004.
COST AUDIT
The Government of India has ordered the Company to conduct audit of
cost accounts in respect of Chemicals manufactured by the company and
accorded approval for appointment of M/s. S Gopalan & Associates, Cost
Accountants, appointed by the Company in this regard pursuant to
Section 233B of the Companies Act, 1956, to conduct cost audit for the
year 2009- 2010.
AUDITORS
Your Companys statutory Auditors M/s. Deloitte Haskins & Sells,
Chartered Accountants, Chennai, retire at the conclusion of this Annual
General Meeting and are eligible for re-appointment.
ADEQUACY OF INTERNAL CONTROLS
Yourcompany has installed adequate internal control systems in
combination with delegation of powers. The control system is also
supported by internal audits and management reviews with documented
policies and procedures.
ACKNOWLEDGEMENT
Your Directors express their grateful thanks for the assistance,
co-operation and support extended to the Company by the Government of
India, the Government of Tamilnadu, TIDCO, SPIC, the Promoter and the
Consortium of Banks. The Directors wish to thank the shareholders for
their continued and patient support.
The Directors also place on record their appreciation of the consistent
good work put in by all cadres of employees.
For and on behalf of the Board
CHANNAI-600 032 ASHWIN C MUTHIAH
DATE :20th April,2010 CHAIRMAN